Sir Winston Churchill is credited with first saying, “Never let a good crisis go to waste.” The Covid pandemic greatly accelerated the social changes brought about by digitalization of work, commerce and communications. Many of those are most likely to persist after the pandemic’s retreat, including: remote work, online delivery, changes in labor relations, the division of parental responsibilities, mobility patterns and consequential impacts on residential and commercial property development. Will the Ukraine-Russia war be such a global gamechanger? Looking beyond the humanitarian tragedy, the war is causing several fundamental global changes which are likely to have long lasting effects on lifestyles and consumption. It also reveals that collective international action in response to a common threat is possible even when its short-term effects are painful.
First, energy. The price of oil skyrocketed, as if a massive carbon tax had been imposed overnight. Despite the complaints about increased prices, the jump in prices did not so far affect energy demand, which perhaps puts the effectiveness of a carbon tax into question. Responses have been to find alternative sources of supply and alternative energies to meet the demand but not a reconsideration of demand or of reliance on high-risk sources.
Second, grains. The price of grains and fertilizers has sharply increased, which is raising questions about sources and prices for the supply of agricultural produce and animal feed. Perhaps the most beneficial consequence is that countries are realizing the importance of local supplies. The pandemic and the war have severely upset global supply logistics and delivery and perhaps indicate the benefits of a local economy.
Third, sanctions. Countries are imposing sanctions which are not only designed to cause damage to Russia but are against their own economic interests. If leading countries are willing to join together for a common cause and take actions which require a significant risk to their own markets and financial systems, will they now be willing to do so for combatting climate change?
Fourth, business profits. Leading business interests are taking voluntary actions which damage their own profits by closing down their activities in Russia. That may indicate that the business sector may be willing to sacrifice profits for a moral and ethical cause, such as climate change, far beyond what is being required of them today.
Fifth, migration. 2 million people have left the Ukraine, and more are expected to leave, a mass movement of people who suddenly lost their homes and became refugees crossing borders. That has happened before (such as 2 million Syrian refugees and migrants escaping hostilities in Africa). The scale and intensity of mass migrations indicates what is likely to happen when climate change brings acute droughts, flooding or other extreme life threatening events.
Will these changes have long-term effects? Will higher oil and food prices change people’s behavior towards less driving, using smaller, electrical or ride-share cars, reducing meat consumption and favoring local rather than long distance tourism? Is it a massive social experiment capable of changing the economic system (from global supply chains towards localization) and changing consumerism (living with higher prices for household necessities)?.
Although the crisis is still unfolding and, sadly, may even get worse, it is perhaps worth paying attention to what could be its wider consequences and giving some thought to opportunities for radical change in a future post war “recovery” package.