The Gains Of War
That war is terrible business will be unanimously agreed upon. So, why do we talk here about the gains of war? The reason is simple: for many, war is good business. As an example, look at the on-going Russia-Ukraine war. Worries about supply of oil and gas immediately drove up their prices by as much as 50 per cent. As a result, companies exporting these critical commodities have been raking in money from the early days of fighting. Subsequently, pressure on European nations to curb imports from Russia have further driven up open-market prices. Countries now looking for cheaper energy supplies can get them from Russia at a discount – but, apparently, yet above the pre-war prices. Russia gains from this, even as Europe – unable to immediately find alternative sources ‒continues to be the major customer. This is, doubtless, the moment that US shale oil companies – languishing due to higher costs and falling demand – were awaiting. With the US pushing this as an alternative to Russian supplies, Europe may have few options but to buy it, even at higher rates.
Meanwhile, in sympathetic jugalbandhi, coal prices have shot up. Exporting companies, from Australia, Indonesia and elsewhere, are making a killing. So are Russian coal exporters. Coal-burning power plants – shunned for their production of carbon and impact on climate – are being re-opened, and global demand is increasing. Nuclear power, on the blacklist first after the disaster in 1986 in Chernobyl – ironically, in Ukraine ‒ and more so after Fukushima (2011), is back in favour. It is seen as a long-term, greener alternative to fossil fuel. Companies manufacturing these plants – including exporters in the US, France, China, Russia, and South Korea ‒ must be overjoyed at the strong revival in global demand.
Solar power and electric vehicles have been in favour for a while. These will get an added impetus as a result of an embargo on Russian fossil fuel and the consequent higher cost. Companies working in these areas are seeing an uptick in demand. China, the biggest producer of solar cells, and having cornered the supply of rare earths necessary for EV motors and batteries, would be happy. Newer fuels (ethanol, green hydrogen) with a lower carbon footprint are getting more attention, and will benefit enterprises working on them, as also – in the case of ethanol – sugarcane farmers.
Many farmers in India are also in seventh heaven for a different reason: the soaring global prices for wheat, caused by the disruption of supplies from two big exporters: Russia and Ukraine. In a rare reversal, the government’s Minimum Support Price (MSP) for wheat is below the global price, which has surged by as much as 50 per cent. This, a bumper harvest, and an improvement in quality are leading to an export boom. Following deals signed in February and March, India's wheat shipments touched a record 7.85 million tonnes in 2021-22: up 275 per cent from the previous year. This figure could touch 12 million tonnes in 2022-23, according to some traders. Farmers may complain about soaring fertiliser prices, as supplies from Russia are disrupted, but fertiliser companies are smiling.
Another beneficiary of the war has been the Indian steel industry. Here too, restricted supplies from the two adversaries have led to a demand-supply mismatch and a spurt in global prices. India exported 13.5 million tonnes of finished steel valued at Rs 1 lakh crore in 2021-22, an increase of about 30 per cent over the previous year. With global demand and higher prices, greater production in 2022-23 should mean even larger exports and profitability.
The biggest direct beneficiary of the war has, of course, been the armament industry. Countries around the world have decided that turning the other cheek may be good for saints, but nations need to fight when attacked – or even launch pre-emptive strikes – and, therefore, prepare for a possible war (for, who does not have an adversary). Most have increased their military budgets: some (Germany being a major example) by massive amounts. This war must be a dream-come-true for some companies in the US, France, and Israel – all big arms suppliers to countries around the world. Companies in the US must be even more thrilled at President Biden’s announcement of a $33 billion aid package for Ukraine (most of it for arms supplies). Buy shares in these companies if you want to make a killing (sadly, pun intended!).
Gains from the war have extended beyond economic benefits. Maps of Ukraine on TV have helped to enhance knowledge about geography, and even about history and culture, as people learn about locations, Ukraine’s past and the cultural-linguistic links of Donbas and Crimea with Russia. In popular thought, Kyiv too has transitioned from an item on restaurant menus (Chicken a la Kiev) to Ukraine’s besieged capital.
Recalling that the satellite TV revolution in India began with CNN’s from-the-battlefront coverage of the Gulf war in 1991, many TV channels must have hoped for an upsurge in TRPs triggered by live reporting from the frontlines in Ukraine. However, despite intrepid reporters and dramatic visuals, Indian viewers prefer the staple diet of daily verbal wars between political spokespersons on the domestic controversy-of-the-day. A gain that must be noted, though, is how easily names like Zelenskyy and even Zaphorizhzhia roll off Indian tongues: almost as smoothly as Kazhagam off Tamil tongues.
So, the war has seen huge gains for some, in many different areas. The biggest beneficiary, economically and politically, is certainly the US. Another big winner is President Zelensky: his carefully cultivated image has transformed him into a brave, leading-from-the-front, global hero, burying his pre-war sinking popularity. In the linguistic arena, the big gainer is the phrase “rules-based international order”. It is now the flavour of the times (of course, only after US and European interventions in Afghanistan, Iraq, Syria and elsewhere have run their course).
It's true and sad that hundreds have lost their lives, thousands have been injured, millions have fled their homes, and cities have been devastated. But then these are, in yesteryear’s popular phrase, “collateral damage”.
* Kiran Karnik loves to think in tongue-in-cheek ways, with no maliciousness or offence intended. At other times, he is a public policy analyst and author. His latest book is Decisive Decade: India 2030 Gazelle or Hippo(Rupa, 2021).
