How Russia’s invasion of Ukraine would affect the Peruvian economy in the medium and long term


Ukrainian Military Forces servicemen stand guard in the so-called government quarter in Kyiv on February 24, 2022 as Russia’s ground forces invaded Ukraine from several directions today, encircling the country within hours of Russian President announcing his decision to launch an assault. – Heavy Russian tanks and other equipment crossed the frontier in a string of northern regions as well as from the Kremlin-annexed peninsula of Crimea in the south. They were also advancing into the Western-backed government’s territory along the eastern front, where a separatist insurgency has claimed more than 14,000 lives since 2014. (Photo by Sergei SUPINSKY / AFP)

the president of Russia, Vladimir Putin, ordered the invasion of Ukraine. There are dozens of dead in various cities and people are fleeing their houses that are destroyed. However, head of the Kremlin He said that he wants to remain part of the world economy, despite his actions.

Infobae consulted Ricardo Moscoso, internationalist lawyer, professor at the UPC Business School and editor of the book “Economic Integration. Peruvian strategies for internationalization”, on how the war between Russia-Ukraine in the medium and long term in the Peruvian economy and in other Latin American countries, as well as what would happen if China and the United States decide to participate in this armed conflict.

For the professor, on the export side “there would not be much variation” in the “Peruvian commodities” because the European Union is the third destination market and, above, are the United States and China, however, on the import side, they changed their point of view.

“I consider that there would be effects on the international market due to the price of energy products and their derivatives in the national territory, such as oil. We are talking about an increase in a barrel of oil by approximately 150 dollars, even a little more, something that would affect the pocket of the consumer taking into account that gasoline of 97 and 98 are costing in Peru between 16 to 20 soles. Probably the price could be increased by 4% or 5%”he opined.

Moscoso estimated that these calculations are based on armed conflicts that they previously affected our economy like World War II.

“At that time the affectation in our country was towards imports, on the one hand; but exports of our commodities also fell. Now the situation, in a possible Third World War, would come in energy issues, considering that Russia worldwide is one of the nations that has the greatest position of dominance in oil production in the world and that would be a blow to the world market, above all, because it has a very particular control within the Organization of Petroleum Exporting Countries (OPEC). Those percentage variations would establish a considerable damage to the world market. The oil import market is going to affect Peru”, he explained.

Russian President Vladimir Putin speaks about authorizing a special military operation in Ukraine's Donbass region during a special address televised on Russian state television, in Moscow, Russia.  February 24, 2022, in this still image taken from video.  Pool Russia/via REUTERS TV
Russian President Vladimir Putin speaks about authorizing a special military operation in Ukraine’s Donbass region during a special address televised on Russian state television, in Moscow, Russia. February 24, 2022, in this still image taken from video. Pool Russia/via REUTERS TV

Thus, the UPC professor revealed that if, on the one hand, the price of “oil imports would increase” it is also a new opportunity to find a new market niche for exports in the European market with gas from Camisera.

“When gas exports are paralyzed, through the gas pipeline that passes through Ukraine, in northern Eurasia, suddenly, The Peruvian market could become an attractive niche for gas exports to meet the energy needs of Central Europe, that is, the countries that are in the industrial zone: Germany, Poland and northern Italy, which are, in practice, the countries that consume the most gas in the winter period and for industrial purposes”he stated.

And he added that the “gas market in Peru is not so diversified” because we do not have “infrastructure to meet domestic demand.”

“It is a question of planning that the government has in not redistributing the gas to the population and these difficulties in transporting the gas mean that a large part of the production is derived from exports,” he stated.

CHINA AND UNITED STATES

Moscoso commented that Peru is a partner “commercially from both China and the United States”However, currently many Latin American countries are closer to the Asian country.

“For the South American region, there is already talk of the new Silk Road and it is an expansion policy of Chinese President Xi Jinping to have economic dominance in the Atlantic and Pacific markets. He already began his rapprochement operations with South American countries about a decade ago and Peru is one of the countries, with which it has solid economic relations. At least one fifth of the volume and even a little more go to China and not only in imports, but as direct investment in Peru. China got into the Peruvian and Chilean market in the purchase of mining concessions”assured.

In the event that China decides to enter the Russia-Ukraine war, the UPC professor explained that in the case of Peru, the volume of exports could be increased.

“At the beginning there would be a paralysis due to the fear of what could happen, but for war production, minerals and exports of these commodities are needed. China preferably extracts a large part of the raw material from South American nations, especially Peru and Chile as strategic partners. Most likely, these products will have to skyrocket like the price of oil. In wars, the most consumed is oil and its derivatives such as oil and commodity products used for the production of weapons. The export of traditional products, such as iron and copper, would increase”, he said.

Pedro Castillo asked
Pedro Castillo asked “not to invest in bullets or ammunition” after Russia’s bombing of Ukraine. Photo: Andean Agency

“We do not know very well what the claims of Xi Jinping are, who will govern until his last days, due to the communist system. It is an atypical system because they promote the free market, but politically they have a marked communism, through the Communist Party of China”, he added.

The editor of “Economic Integration. Peruvian strategies for internationalization” explained that China and United States they are “partners” they participate in the World Trade Organization and in the Asia Pacific Economic Cooperation Forum (APEC) and, although the relations in this aspect are peaceful, there was a time when there was a conflict of interests.

“It was three years ago when Donald Trump increased the tariff price of products derived from coal and steel, and restricted access to the United States of some technological products. It was a trade war. But that was a state policy, not from the same Republican party as Trump, perhaps Barack Obama applied it in a more diplomatic way in his second government to try to contain the entry of the Chinese market into the United States. The North American country already saw China coming fifteen years ago, that is, they knew that it was going to become the world economic power in the world. The United States has not only lost that economic role, but it is also losing its military role, for example, it is withdrawing from its bases in Afghanistan and they have lost a position of dominance in the Middle East. The only front they do not want to lose is the hegemonic participation in Europe. That is why all the attention is on Ukraine and Russia,” he opined.

“The international scene is being reordered and it is very similar to what happened before the Second World War. The hegemonic forces are trying to guarantee their subsistence and commitment to their citizens”, he concluded.

KEEP READING

Pedro Castillo asks “not to invest in bullets or ammunition” after Russia’s bombing of Ukraine
Embassy of Peru in Poland willing to help with any assistance requirement to nationals
The Foreign Ministry of Peru spoke before the start of the armed conflict between Russia and Ukraine
Peruvian in Kiev recounts the moments of tension experienced after Russia’s bombing of Ukraine




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