Eduvation Blog

Collateral Damage in an Economic War

Good morning, whether you’re celebrating Mermaids, Piano, or Lemon Chiffon Cake today.

As we approach the end of March (“International Ideas Month”), I want to dig deeper into the global impacts of Russia’s war on Ukraine, and consider some of the repercussions for higher education too.  

The invasion has obviously had devastating impacts on the infrastructure, people, and universities of Ukraine. (Since Mar 3, I’ve written about Putin’s brutality, the war in space and cyberspace, the world’s outrage, and of course PSE’s expressions of solidarity, boycotts of Russia, and supports for Ukraine – and much else. You can find all my Ukraine-related issues here.)

But Russia’s violation of the world order, and the global sanctions in response, are going to have lasting repercussions far beyond Europe, no matter how the ground war ends (see “Potential Futures for Ukraine” for a dozen or so possibilities).

The western world has engaged in unprecedented, aggressive economic warfare against Russia, whose economy is “headed for collapse.” But aside from legitimate legal and moral questions, the unintended consequences may include lasting economic repercussions worldwide, from potato chips to microchips…

“We’re waging an all-out economic and financial war on Russia. We will cause the collapse of the Russian economy.”Bruno LeMaire, French finance minister

“Issuing sanctions on Russia will have a reverberating impact on not only Russia, but the entire world.”Dawn Tiura, president, Sourcing Industry Group

Lost Russian Markets

The West has economically excommunicated the world’s 11th-largest economy, to punish and pressure Vladimir Putin and his inner circle for flagrantly violating international law. The inevitable corollary, however, is that the West loses access to some export markets…

Canadian farmers may face export restrictions, warns the Conference Board of Canada.

Multinational corporations walking away from operations in Russia are losing substantial investments that will impact their balance sheets and share values, observes the Conference Board of Canada. Thousands of European companies are becoming collateral damage, observes the New York Times, from Italian luxury boutiques in Red Square to German automakers like VW, BMW and Mercedes-Benz in Russia’s south, to French energy companies operating in Russia’s Arctic Sea.

“The price of making peace possible, or to return to the diplomatic table is that we at least make the economic sanctions bite.”Robert Habeck, German economic minister

McDonald’s has “temporarily” closed 850 restaurants throughout Russia (aside from a few independent franchised locations), which Russian politicians have proposed nationalizing – perhaps under the name Uncle Vanya, using the golden arches on their side as a logo. (It’s likely just a trademark filing by a squatter, but Russia has a long history of copyright infringement.) Seizure of enemy-owned property in wartime has occurred worldwide for centuries, though.

Bombardier aerospace supplies 30% of Russia’s business jet market, and Russian clients provide about 6% of the Montreal-based firm’s revenues.

Russian talent is already being boycotted by sports leagues, film festivals, and ballet companies – and higher education is cutting research ties and cancelling speakers accordingly (see my roundup, “Academe’s War on Russia”). At the same time, PSE institutions are throwing their doors open to refugee scholars and students from Russia and Ukraine, while high tech workers are fleeing both countries (an estimated 70,000 from Russia already).

Migrant workers in Russia from Uzbekistan, Tajikistan and Kyrgyzstan have been replacing Russia’s aging workforce, and sending more than $6B home to their families each year. The collapse of the ruble and banking restrictions will have “a profound impact” on those workers and their home countries in Central Asia.

“It isn’t a stable equilibrium for us to try to have perma-sanctions and treat Russia like North Korea. They’re much too important.”Kenneth Rogoff, economics prof, Harvard U

Imports Disrupted

Obviously the war zone, closed seaports, and airspace bans have disrupted crucial international cargo routes, but Ukraine and Russia are also critical sources for the interconnected global economy…

Closed Russian airspace and avoiding troubled airspace above Ukraine, Belarus and Moldova means increased costs to fly freight from Europe to Asia or the Pacific Rim, and between Asia and North America. Major freight train routes from Asia to Europe also depend on safe passage through Russia.

The price of metal is already rising, since Russia is responsible for 3.5% of the world’s copper production, 11% of nickel, and substantial aluminum as well. Aluminum prices have risen 20%. Russia is the world’s second-largest exporter of cobalt and vanadium, key elements in making rechargeable batteries and large-scale energy storage devices.

Construction projects that rely on Russian steel could face cost overruns or supply shortages in the face of tariffs and import restrictions.

Automakers like Volkswagen have had to suspend some manufacturing operations in Germany because crucial wiring systems produced in Ukraine could not be delivered through a warzone. 22 Ukrainian companiesprovide wire harnesses, electronics, seats and other components to EU automakers. And, the rest of the world’s automakers depend on Russian platinum for catalytic converters.

Semiconductor manufacturers are bracing for shortages of neon gas from Ukraine and palladium from Russia, which will further intensify microchip shortages that have been impacting the auto and computer sectors since the pandemic. Russia produces 40% of the world’s palladium, and prices have risen 27%. Two Ukrainian companies produce about half of the world’s neon gas, used to control the lasers that etch circuits into microchips. The US may depend upon Ukraine for as much as 90% of its neon gas imports.

“The unintended consequences of economic sanctions and financial warfare measures are difficult to predict at the outset.”Gregory Chin, political economy prof, York U

Following a 2-year pandemic, the war on Ukraine is reminding us all that globalized supply chains are extremely fragile. Instead of focusing on cutting costs, business and governments are turning their attention to resilience and economic sovereignty.

A “Global Food Fight”

This military conflict and the resulting sanctions will inevitably impact food stability, in the affected countries themselves but also throughout the world. Ukraine has long been considered “Europe’s breadbasket,” and Russia and China may just turn food into a weapon of war…

Global grain supplies have already been impacted by the crisis. Russia and Ukraine have banned the exportof wheat, meat, and other critical food staples. Spring crops will likely go unplanted in Ukraine, while Russian crops will face sanctions or embargo. (Ukrainian farmers have been using their tractors to haul away Russian tanks.) Russia and Ukraine account for 29% of the world’s wheat exports, 19% of corn, and 80% of sunflower oil. Central Asia and Northern Africa depend on them for the majority of their wheat. NPR calculates that “1 out of every 8 calories traded between countries” comes from Ukraine or Russia. And while Canada could potentially ramp up production to help meet the need, “we can’t do that instantly”: we would need to allocate agricultural land, plant more intensively, and enhance storage and transportation infrastructure over several years. The UN Food & Agriculture Organization (FAO) forecasts that global food prices will rise as much as 22% due to the war.

Nations hoarding food may prove “catastrophic” for the global food supply, warns US agriculture secretary Tom Vilsack. As importers across Europe, Africa and the Middle East scramble for new sources, exporters like Hungary, Argentina, and Turkey have imposed export restrictions, to ensure they retain sufficient domestic supply. China already holds half the world’s wheat supply in storage, and is likely to hold back rice exports as well.

“It’s like pandemic hoarding, but it’s not toilet paper, it’s millions of bushels of grain that normally feed large portions of the world.”Tom Vilsack, US Agriculture Secretary


Global food prices hit an all-time high last month, exceeding their previous peak from 2011, according to data from the UN FAO. Egypt has fixed the price of bread. France is considering a food voucher program to help middle-class families afford to eat, amidst what Emmanuel Macron calls a “worldwide food crisis.”

Canadian food prices are expected to rise in the months ahead, starting with grain-based products like bread and pasta as early as April. uSaskatchewan prof Stuart Smyth observes that “wheat futures have gone up significantly, but it will take time to ripple through the supply chain and impact consumers.” uGuelph profSimon Somogyi explains that wheat is also a key component for cattle feed, so it will next impact the prices of meat and dairy products. Dalhousie prof Sylvain Charlebois explains that the impacts depend upon the length of the conflict in Ukraine, and how China reacts: “China is a big part of this.” (But then, it also doesn’t help that US farmers are still recovering from a 2021 drought, in which Montana produced half its usual harvest.) Columbia U prof Laura Veldkamp explains that, unlike the volatility of gas prices, food prices can be expected to see a steady climb.

Fertilizer exports from Russia and Belarus could drive rising prices, and disrupt agriculture for many of the world’s poorest farmers. (Russia and Belarus deliver 82% of globally-traded potash, and 50% of phosphates.) Prices were already at record highs before the war, when the UN warned that rising costs for fuel, fertilizer and food could spell famine for millions in troubled nations like Afghanistan. Now Russia has announced a ban on fertilizer exports to unfriendly countries. (Dalhousie prof Sylvain Charlebois says 50% of fertilizers used in Canada come from Russia, Ukraine and Belarus.) Fertilizer prices have jumped 40% due to the Ukraine crisis.  New York Times

Farm equipment manufacturing and deliveries have been disrupted, much like automotive ones, because of semiconductor and parts shortages.  Global

Newfoundland cod processor Icewater Seafoods survived the collapse of the NL cod fishery by shifting to importing Russian cod. Now, they have dropped their largest supplier, and their 225 employees may lose a month’s worth of salary or more. (Oh, and cod prices are rising into premium territory.)

Even junk food isn’t safe. Potato chip prices are going to rise, not just due to rising costs of packaging and transportation, but because sunflower and cottonseed oil prices have doubled already, just due to the effects of the pandemic on supply chains. Ukraine produces 46% of the world’s sunflower-seed and safflower oil – and Russia another 23% of it. Even domestic prices for these oils in North America will respond to a massive increase in prices on global markets. Of course ultimately, “consumers… will eat those costs.”  Time

Impacts on PSE

So, what are the implications for higher education of these economic repercussions? Here are just a few I can imagine…

Globalization Undermined

Putin’s assault on the rule of law has undermined the confidence of multinationals, banks and investors in the stability of doing business abroad. Moscow and Beijing could “pull the rug out” at any time, nationalizing assets and overturning trademark and patent protections. Just as skyrocketing fuel costs drive airfares upward, closed airspace is making many international travel routes non-viable. International research partnerships, transnational education programs, curriculum licensing and MOOC delivery may all be much more tentative in the months ahead.

Weaker Donor Confidence

Major corporations are likely to be far more conservative in their charitable contributions to PSE causes, if only due to global financial uncertainty and volatile stock markets. Next time I’ll summarize the impacts of inflation on consumer confidence, which may well impact private donor support too.

Industry Partnerships

Applied research or experiential work partnerships between CdnPSEs and major companies like Bombardier may be set back by the loss of significant assets or customers in Russia. At the same time, institutions with strengths in mining exploration or materials engineering may find new opportunities to help the West replace crucial metals and gases currently sourced from Ukraine and Russia. And it appears likely that agribusiness partners will be looking for ways to enhance crop yields, develop new fertilizers and cooking oils, and improve access to global markets.

Program Demand

Depending upon the duration of global sanctions and their impacts, PSEs may see student interest wane in programs associated with struggling sectors (such as travel and tourism or aviation), and grow in others (such as supply chain management, international finance, mining and agriculture). Rising food prices could even spark accelerated interest in meat and milk alternatives. Efforts to re-shore manufacturing and reduce reliance on global supply chains could intensify demands for automation, both AI and robotics – prompting more research opportunities and program demand in related fields. (Those fields were already given a boost by the pandemic, of course.) There will also likely be effects related to the energy sector and geopolitics, which I’ll tackle in future issues.

Refugee Talent

I outlined a couple of weeks ago the ways in which global PSEs are stepping up to offer safe harbour to refugee scholars and students from Ukraine, Belarus and even Russia. As tens of millions of people are displaced, Western PSEs may have the opportunity to recruit some impressive new talents for research and teaching.

Technology Shortages

I wrote 2 years ago about the abrupt shortage of laptops in the pivot to emergency remote work and study due to the pandemic. Since then, 2 years of supply chain snafus have kept components for everything from EVs to video games in perpetual shortage. Now, disruptions to global supplies of palladium and neon gas will mean even more challenges for the supply of pretty much anything containing microchips, from lab equipment and server infrastructure to classroom projectors or videoconferencing systems. PSEs can expect cost overruns and delivery delays in their IT plans.

Of course, the war on Ukraine’s biggest economic impact is on Russia’s key export, petrochemicals. Next time, we’ll look specifically at global energy repercussions because of Putin’s invasion…  




It’s certainly unusual for me (an English major and marketer) to spend so much time on economics, but that is a key way the war on Ukraine will reshape the higher education landscape to come. At the same time, Business schools are putting what they do into a larger ethical and social context…

Challenge the Purpose of Business

The Sprott School of Business at Carleton U believes “in igniting imagination, in embracing diverse perspectives and working in partnership to create shared value for our local and global communities.” This remarkably calm, 1-min spot tells us “today the world is loudly demanding new definitions for old ideas” like wealth, prosperity, and equity. “For the changemakers, success includes failures, leaders follow their teams, and learning isn’t linear.” The Sprott School’s campaign tagline is “Challenge the Purpose of Business.”  YouTube



As always, thanks for reading!

Do drop me a line (or comment below) if you have thoughts or observations about other potential PSE impacts of these economic repercussions. Like most emerging shifts, my readers will likely spot them “in the trenches” before I read about them in my sources.

Stay safe and be well!


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