The depth of the COVID-19 crisis is vivid in the world’s memory, and the virus is still affecting many countries. What can be learned from it, looking at the global impact of the war in Ukraine, beyond the Ukrainian tragedy itself?
First, nations can endure hardship when connected with a moral purpose, hence the overwhelming support of Ukraine, notwithstanding the economic price. People rise to challenges in truly remarkable ways. This speaks to their often-underestimated resilience. For example, agility, adaptability, and ingenuity will support the change in behavior and industrial processes required to cope with the economic disruption triggered by trade sanctions, including the rollout of strict Russian gas-saving measures. The same qualities will help build up new renewable power generation capacity in record time as part of a war effort mobilizing society.
Second, governments’ firepower is exceptional, as demonstrated during the health crisis. An economic recession, should it materialize, can be cushioned by fiscal policy in the European Union and beyond. A rise in government debt levels can be effectively managed through financial repression.
Third, there is no such thing as a permanent state of crisis. Crises are reframed: They find their own resolution. Until then, they tend to follow a cycle of hope and despair. This drives stock market volatility. But volatility follows a declining trend as normalcy is redefined, for better or for worse.
Finally, if the COVID crisis is any template, and as hard as it may be to envisage it today due to the suffering of the Ukrainian population, a more stable and resilient world may emerge.
Many commentators fret about the beginning of a new cold war. I see the last gasps of the old one.