Volatility and uncertainty seem to have become the regular course on the menu. Following the economic brunt of a pandemic which forced several restrictions, making it almost impossible for various businesses to operate, the world is now facing the repercussions of Ukraine’s invasion by Russia.
The impacts of these two unexpected events will be felt by global populations for the years to come. In a bid to condemn the actions of Russia’s President Vladimir Putin, the United States and European Union have imposed sanctions against the country.
The scope of these sanctions is to exclude Russia from the world economy, creating financial pressures to hinder its military efforts against Ukraine. In the context where global economies are still struggling with the shipping costs and supply chain fragmentation caused by the pandemic, restricted access to import from Ukraine and Russia continues to limit the options. This leads to further increases in costs.
The increase in expenditure is being borne by businesses who have no option but to hike their prices, hence impacting day-to-day consumers. The question is therefore raised as to whether the current sanctions are working when considering that the people are bearing the costs as well. Another matter which needs to be considered is that the conflict between Russia and Ukraine is anticipated to take years to resolve.
The Finance Minister of Malta Clyde Caruana portrayed quite a grim picture about the situation, stating that Malta must be prepared for the eventualities surrounding this crisis. He compared this situation to the bulk-buying scenario that used to take place in the early 1990s during the Gulf war. This implies that the Maltese may end up in a situation where food is bought in bulk. The Minister of Finance went on to say that the coming days, weeks, months and years will be marked as times that bring great change to the way that Europeans live. Inflation is being driven by the printing of money, the war and pandemic.
Although we may perceive the conflict between Russia and Ukraine as happening far away, Malta is still being directly impacted. Being a small country, Malta is influenced by the decisions taken by larger countries. Struggles in cost of living are expected to continue accelerating, impacting working and middle class families in Europe.
The Finance Minister argued that the sanctions themselves are hurting European citizens more rather than those in Russia. He identified this moment as a time where all should work together to prepare Malta for what will come. His emphasis is that work must be done to protect Malta’s standard of living, workers and employee market and that decisions taken by larger European countries do not impact the island negatively.