Possible ‘World War’ or Oil Price Rise? What Will Happen If Russia Invades Ukraine

A ministry spokesman said in a video published online that while large-scale drills across the country continued, some units of the Southern and Western military districts have completed their exercises and started returning to base. Video footage published by the defence ministry showed some tanks and other armoured vehicles being loaded onto railway flatcars.

However, United States has rejected the claim. A Russian invasion of Ukraine can happen anytime now, the White House said Thursday, igniting fears of an impending ‘world war’, as President Joe Biden announced plans to dispatch Vice President Kamala Harris and Secretary of State Tony Blinken to attend the Munich conference to meet world leaders and unite them against Moscow. White House Press Secretary Jen Psaki anticipated that an attack could take place at any time.

“We are in the window where we believe an attack could come at any time, and that would be preceded by a fabricated pretext that the Russians use as an excuse to launch an invasion,” Psaki told reporters at her daily news conference. “We have talked about this a bit here, we’ve seen these tactics used in the past. Those could include but not be limited to the report you just referenced, claims of provocation in Donbass, false state media reports, which I think you should all, everybody should keep their eyes open and be aware of potentially fake videos and accusations about chemical weapons or accounts of attacks on Russian soldiers that have not actually occurred,” she said.

But what will happen if Russia invades Ukraine? A few possible scenarios and repercussions:

Are Leaders Prepared for Aggression?

US President Joe Biden and German Chancellor Olaf Scholz have discussed Russia’s military build-up near Ukraine in a phone call Thursday and underscored the importance of reinforcing NATO’s eastern flank if Moscow invades, the White House said. A German government spokesperson said the two leaders agreed the situation in Ukraine must be assessed as “extremely serious” as there is still a risk of further Russian military aggression.

Biden and Scholz “reaffirmed their commitment to Ukraine’s sovereignty and territorial integrity and underscored the importance of continued transatlantic coordination on diplomacy and deterrence measures and the reinforcement of NATO’s eastern flank if Russia further invades Ukraine,” the White House said.

However, with all of the attention focused on whether or not Russia will invade Ukraine and how the West will respond, little public attention is being paid to what happens the next day in this crisis, writes Joshua C. Huminski for the Hill. According to him, the important question is, “What will Moscow do in response to the West’s response to Russia’s aggression, and where will this leave the West?”

There must be a response from the start if the West and NATO are to maintain credibility. Uncontested aggression breeds more uncontested aggression, and failing to respond may well set a dangerous precedent in the future, he says.

Every crisis, however, develops its own dynamic, which must be taken into account when devising a plan of action. Every geopolitical contest of wills necessitates planning for the move after the immediate move, and according to Huminiski Washington, London, Brussels, and even Moscow are not thinking about what comes next or what comes after.

Sanctions on Oil, Gas Could Affect Prices

Economically, there is the possibility of a suspension of oil and gas transportation, a significant weapon Moscow has used in the past to influence the behaviour of other countries, the report mentions. However, Russia is a significant exporter of other critical resources and has threatened to withhold them as well; at the end of January 2021, the vice speaker of Russia’s Federation Council suggested that Moscow would slow or halt natural resource transfers to Europe. The disruption in the sale of critical raw materials will have a significant impact on other markets, possibly as much as oil and gas prices.

For NATO members, the most powerful measure against Russia were it to invade Ukraine would be US sanctions cutting off Russian state banks from the dollar according to Russian executives, bankers, and former senior U.S. sanctions officials, the Reuters said in a report. Washington, and its allies in Europe, are finalising an extensive package of sanctions if Russia were to launch an invasion according to US and European officials.

The US package would expand a technology export ban to include any goods made with US components or software, as well as proposed sanctions against specific Russian billionaires. But sanctions experts say more than any other measure, aggressive action against Russia’s state banks would hit its economy the hardest.

“Banking sanctions are the most impactful measure the U.S. can carry out in the short term,” said Brian O’Toole, a former senior advisor to the director of the Office of Foreign Assets Control or OFAC in the U.S. Treasury Department, which designs and manages the implementation of sanctions.

Proposed sanctions against Russian banks would bar them from making any transactions in U.S. dollars, essentially freezing any dollar-denominated assets or liabilities held by the banks at home and abroad.

Cyber Attacks

Russia, which has already long been involved in a concerted cyber warfare against both Ukraine and the US, could further escalate its efforts, Huminiski writes.

On Tuesday, Ukraine’s defense ministry networks and two banks were knocked offline, with Ukraine’s information security center pointing the finger at neighboring Russia.

In another attack, last month, approximately 70 Ukrainian government websites were defaced, and the hackers disseminated ominous messages in Ukrainian, Russian, and sloppy Polish, according to a report by NPR.

Nord Stream 2

Josep Borrell, the EU’s foreign policy chief, warned on Tuesday that if Russia attacks Ukraine, the controversial Nord Stream 2 pipeline will not be operational, said a report by Politico.

Speaking on BBC Radio 4’s Today programme about potential sanctions against Russia, Borrell stated that Nord Stream 2 “will not” be allowed to operate in the event of a Russian strike. “This does not mean that Nord Stream 2 will cease operations indefinitely. But if Russia and Ukraine go to war, “I’m afraid to say that not only Nord Stream 2 will be affected, but the entire supply of gas to Europe from Russia will be affected,” Borrell said, adding that this would “certainly” be the case “have an impact on the price of gas in Europe”.

Following US President Joe Biden’s warning earlier this month that the Nord Stream 2 pipeline, which runs from Russia to Germany, would be halted in the event of a Russian strike on Ukraine, Western allies have struggled to present a united front on whether to target Nord Stream 2 in potential sanctions. German Chancellor Olaf Scholz emphasised unity with the United States but did not directly mention the pipeline – while French Economy Minister Bruno Le Maire stated that Europe should not be dragged into following the United States’ position on Nord Stream 2.

With inputs from Reuters