[1 Year of the Russia-Ukraine War] VI. Globalization Unfolding in a Completely Different Pattern After the Ukraine War

YouTube Link: https://www.youtube.com/watch?v=mk5-GsBoGQY

Lee Seung-joo, Director of EAI's Trade, Technology, and Transformation Center (and Professor at Chung-Ang University), assesses that the Ukraine war has become an occasion for the permanent uncertainty of the global economy. He explains that Europe's pursuit of decarbonization to counter concerns about energy market instability due to Russia's natural gas export restrictions is an example of efforts to respond to this persistent uncertainty. Director Lee Seung-joo predicts that the security competition through advanced technologies, as seen in the Ukraine war, is likely to emerge in the US-China strategic competition as well.

■ Lee Seung-joo_ Director of EAI's Trade, Technology, and Transformation Center; Professor of Political Science and International Relations at Chung-Ang University. He earned a Ph.D. in Political Science from the University of California, Berkeley. His main research areas include international political economy, the international politics of trade, and global digital governance. His major works include "The Political Economy of Cyberspace" (edited by Lee Seung-joo), "Institutional Balancing and the Politics of Mega FTAs in East Asia," "Northeast Asia: Ripe for Integration?" (co-edited), and "Trade Policy in the Asia-Pacific: The Role of Ideas, Interests, and Domestic Institutions" (co-authored).

Video Transcript

The impact of the Ukraine war on the global economy can be considered in various ways. First, it provided an opportunity to enter a new normal where uncertainty has become permanent. In this regard, German Chancellor Scholz's remark calling the Ukraine war a "turning point of an era" well represents the European perspective. It not only increased the instability of the world order but also raised questions about how we should rebuild the world after the Ukraine war.

In that sense, the Ukraine war not only provided an opportunity for a dramatic increase in global order uncertainty but also simultaneously presented the challenge of rebuilding the future world order. At the same time, one of the things that has been observed throughout the Ukraine war, and is still ongoing, is the imposition of large-scale sanctions on Russia and Russia's counter-sanctions against Western countries.

The scale of economic sanctions has become much faster and broader than ever before, and they are periodically updated, which can be considered an impact on the world order. The sanctions imposed by Western countries, including the United States, on Russia were on an unprecedented scale compared to the past. They are continuously being updated, and efforts to strengthen the sanctions against Russia are being intensified periodically. In the process, Russia is also imposing counter-sanctions on Western countries.

This has led both sides into difficult situations, and the impact on the global economy is not insignificant. As is well known, supply chain disruptions and significant uncertainties are intensifying in sectors such as energy and food. Another point from an economic or industrial perspective is that as Russia imposes sanctions on Western countries, primarily targeting resources, especially energy,

efforts to find countermeasures are also being strengthened. In that process, particularly among European countries, in addition to fostering eco-friendly industries for climate change response, the Ukraine war has been evaluated as a factor accelerating decarbonization. Many European countries have accelerated decarbonization starting from 2020 and have specifically raised their targets for carbon reduction. For example, before the Ukraine war, the carbon reduction target was set at 40%, but it was rapidly raised to 57% afterward. Consequently, the share of renewable energy rapidly increased from 32% to 45%. These developments suggest that major countries worldwide, through the Ukraine war, are strongly feeling the need for diversification not only as a response to climate change but also as a means to manage their dependence on energy, especially in the face of uncertainty like the Ukraine war.

Another point from an economic and industrial perspective is that the securitization of advanced technologies has been starkly revealed in the Ukraine war. For instance, the case of drones can be cited. Reports have repeatedly indicated that drones are being used extensively in the Ukraine war, and from the perspective of advanced technology or industry, this can be seen as a prime example of the rapidly blurring boundary between military and civilian technology. What does this signify? It not only signifies the securitization of advanced technology in the narrow sense within the Ukraine war but also, more broadly, suggests that the securitization of advanced technology will accelerate in the US-China strategic competition or technological competition. This might be a very significant change that the Ukraine war brings to the future global economy and advanced industries. Finally, as uncertainty becomes permanent, individual countries and major multinational corporations have been making efforts to diversify their supply chains, and some results are beginning to emerge from these efforts.

There have already been numerous reports that drones are being used extensively in the war in Ukraine, and this can be considered a prime example of the rapidly blurring boundary between military and civilian technology from the perspective of advanced technology or industry. What does this signify? Ultimately, this not only lends significance to the securitization of advanced technology in the narrow sense within the Ukraine war, but also allows us to cautiously forecast that the securitization of advanced technology will accelerate in the broader context of the US-China strategic competition or technological competition. This is perhaps a significant change that the Ukraine war will bring to the future global economy and advanced industries. Finally, as we face a phenomenon where uncertainty has become normalized, individual countries and major multinational corporations have been making efforts to diversify their supply chains; this is a result of...

This means that while supply chain disruptions have undoubtedly occurred, we have also witnessed phenomena where supply chain resilience has been strengthened to some extent or has improved beyond a certain level. Therefore, it served as an opportunity to confirm that Western countries have achieved a certain level of resilience against sanctions imposed by Russia on energy and other sectors. Early in the war, there were many predictions that Russia would face difficult times, especially Germany, by reducing or halting energy exports, and that they would endure a very painful winter. However, European countries responded much more effectively to the halt in energy exports than anticipated, and this evaluation is also being made concurrently.

In that sense, the strengthening of supply chain resilience has become a trend, and it served as an opportunity to confirm the achievements made during this intermediate stage.