The war between Russia and Ukraine has caused global unrest, but as it is with every conflagration, there are always winners and losers. No, not at the end of the war – but as the war is ongoing. There are often those who benefit from the war and those who are hurting.

As the war between Russia and Ukraine enters its eighth month since Russia invaded its Eastern European neighbours on Thursday, 24 February 2022, we take a look at those who are benefiting from the war – as well as those who are hurting.

Indeed, war casualties do not only involve the parties that take up alms. By virtue of the global connectivity of our world today, a country that is millions of miles and continents away can experience the full burn of a crisis taking place in another region.

So, who are those benefiting from the Russian-Ukraine war, and who are those hurting – perhaps the most?

Russian-Ukraine War – Who is Benefitting?

As the conflict between Russia and Ukraine continues to inflict untold suffering and devastation, many around the world are profiting from the crisis. Many of these countries and companies are able to benefit from the war as a result of global sanctions on Russia and the restriction of trade in Ukraine by Russia.

Depressingly, given the spiraling climate crisis, fossil fuel firms – and their investors – are the biggest winners of the war, reaping the benefits of surging energy prices and new governmental measures to expand oil production.

Coal companies and offshore drilling services have done the best out of the geopolitical crisis, both registering an astonishing 42% increase in their market value.

Aside from those involved in the extraction, processing, and distribution of fossil fuels – which, remarkably, directly relate to seven of the 20 highest-performing sectors – arms manufacturers are, predictably, the other major beneficiaries.

Such firms have seen a 15% increase in their market value due to the heightened demand for military hardware and the commitment by NATO governments to expand military spending.

Agricultural commodity traders have also seen 10% growth in market capitalization in the past two months, profiting hugely from the market instability and rising commodity prices brought about by the conflict.

This has led critics to argue that, in many ways, these traders actually promote the disruption in food systems that they then benefit from.

The situation is decidedly gloomy. Amid continuing war in Ukraine, escalating tensions between Russia and the West, a cost-of-living crisis in Europe and the wider world, and ongoing global warming, investors are backing those firms that directly benefit from geopolitical conflict, commodity market instability, and our continued dependency on fossil fuels.

Below, we have highlighted the biggest beneficiaries from the ongoing war and the related industries cum sector that help to facilitate the benefits.

Steel & Ore

Ukraine and Russia are the key suppliers of pig iron and semi-finished products at the global market – around 60% of the market share. The main importers are USA, EU, and Turkey.

Seller’s market in fact, disappeared – supplies from Russia, and Ukraine formed almost 60% of the global pig iron market. As a result, pig iron prices rose to around $1,000/t.

Major Beneficiaries: Turkey and India benefit from the fact that Europe shifts Russian quotas for the supply of rolled steel. There is a strong rise in demand for all Turkish metal products, which pushed scrap prices above $650/t.

Copper

According to ICSG, in 2021, the global production of refined copper amounted to 24.5 million tons, and real consumption was 25.3 million tons. The deficit was 475 thousand tons, almost the same as in 2020.

The volume of Russian copper production in 2021 amounted to 875 thousand tons, which accounted for 4% of global production. The reduction of Russian export of this metal could cause tensions in the growing, and tight market.

Major Beneficiaries: China, Chile, Indonesia could benefit from potential problems with copper supply from the Russian Federation. Indonesia is going to end copper ore export in 2023 in an effort to increase investment in the downstream sector, and export of higher-value-added products.

Aluminum

In 2021, the global demand for primary aluminum rose by 8.8%, to 69 million tons, while supplies increased by 3.9%, to 67.8 million tons. So there was a shortage at the global market of 1.2 million tons compared to the surplus of 1.9 million tons in 2020.

In 2021, Russia produced around 3.76 million tons of aluminum which accounted for almost 6% of global production. The EU satisfies 17% of its needs in metal with supplies from Russia. The US sanctions against a shareholder of the Russian producer Rusal but not against the company immediately sent aluminum prices up by 30% as buyers began to look for additional suppliers.

Major Beneficiaries: Despite Rusal being sanctioned to a limited extent, the company has already lost supplies of raw materials from Australia, and Ukraine. According to Wood Makenzie, the only way for Rusal to obtain alumina is to buy it from China. Thus, the beneficiary of Rusal’s problems may be China, which is going to increase its stake in the company.

Nickel

Russia accounts for about 7% of global nickel production, and 10-12% of the metal export. Currently there is a surplus in a global nickel market. However Fitch Ratings raised its nickel spot price forecast on the LME for 2022 to $20,000/t from $16,000/t due to increased supply risk.

Major Beneficiaries: The main global nickel supplier is Indonesia. This country is actively increasing metal production, which means that in case of cessation of supplies from the Norilsk Nickel, local companies could replace Russian supplies.

Oil and Gas

Western sanctions against Russia, and the refusal of many companies (British Petroleum, Shell, ExxonMobil, etc), and countries to supply Russian energy sources unbalanced the global energy trade, which led to higher prices. According to Fitch, Russia supplies about 10% of the global energy resources, including 17% of natural gas, and 12% of the oil.

As for oil, the situation looks somewhat clearer. Although there are no signals about the desire to increase production from the UAE, and Saudi Arabia, as they “enjoy” the price rise, it is they who most likely will become the beneficiaries of Russian supply replacement.

The reports on questionable activities, sabotage and conspiracy around the Nordstream 2 Pipeline and the Alaska XL Pipeline is a clear indication that there is more than meets the eye. It goes further to prove that there countries and powerful firms cum individuals who are benefiting from the oil crisis facing the world as a result of the Russian-Ukraine war.

Major Beneficiaries: U.S.A., Qatar, Norway, U.A.E, Saudi Arabia, Australia, Algeria. In addition to Russia, Norway, and Algeria supply large volumes of gas to Europe, but they don’t have significant additional volumes to save Europe from a shortage in case of a Russian supply cut. The similar situation with a major supplier of liquefied natural gas (LNG) – Qatar. The largest LNG exporters, Australia, and the USA, can partially help Europe. The USA has already agreed with the European Union on the supply of an additional 15 billion QM of LNG in 2022.

Grains and Agricultural Products

According to the Food, and Agriculture Organization, between 2016/2017, and 2020/2021, Russia, and Ukraine accounted for 19% of global barley production, 14% of wheat, and 4% of corn. At the same time, both countries account for more than half of the production of sunflower oil, and its share of export is 63%.

Ukraine, and the Russian Federation are the leading exporters of agricultural products to many countries in the Middle East, and North Africa. Logistrical disruptions due to Russian aggression have already driven up the price of bread, and other basic products in the region. Prices for wheat, sunflower oil, and other types of agricultural products in March demonstrated the highest level in the history of monitoring due to the supply shortage.

Major Beneficiaries: Other major exporters – EU, Canada, the USA, Brazil, Argentina, Australia – can benefit from the grain supply reduction. However, in reality the situation is much more complicated than it might seem.

Armaments and Ammunition

War is the best time for corporations that produce any kind of weapons, and equipment. Since the beginning of the military aggression of the Russian Federation against Ukraine, the shares of American suppliers of weapons, and ammunition, such as Raytheon, Boeing, Lockheed Mertin, and others, have skyrocketed. This is due to rising defense costs in many countries.

A serious factor is also that the countries will buy new weapons, and equipment to replace the supply of existing ones to Ukraine.

Major Beneficiaries: United States. The US defense budget for 2022 us $778 billion. The largest military budget in history, $813 billion, is planned for 2023. US military-industrial corporations receive half of all funds provided to defense.

Russian-Ukraine War – Who is Hurting?

U.N. Assistant Secretary-General Ahunna Eziakonwa says inflation and trade disruption have put countries in a “very precarious situation.” Bur if the question is ‘which countries are suffering the most?’ the correct answer is Africa – all of Africa!

Russia’s war in Ukraine has disrupted Africa’s promising recovery from the COVID-19 pandemic by raising food and fuel prices, disrupting trade of goods and services, tightening the fiscal space, constraining green transitions and reducing the flow of development finance in the continent, said United Nations Assistant Secretary-General Ahunna Eziakonwa.

Joseph Sany, vice president of the Africa Center at USIP, said: “The critical question before us today is: How can African countries and their partners leverage their abundant resources and human capabilities to address the short-term impact of Russia’s invasion in Ukraine and advance their long-term development and security needs?”

The major ways in which the crisis has affected Africa is in the way it has divided African leaders as regards their support or disapproval of the Russian invasion, the economy, and the food crisis resulting from the shortage of grains supply across the continent.

African Leaders at a Cross Roads on Russia’s Invasion of Ukraine

First, it is possible to say that the war caused a political difference of opinion among African states. Countries like Eritrea, Mali and the Central African Republic voted in favor of Russia within the United Nations in March and April in the voting on Russia’s violations.

Many African countries either did not participate in the vote or abstained. On the other hand, many states took a stance condemning Russia’s invasion of Ukraine. However, there were also more radical responses to the war on the continent. Soldiers in the Central African Republic pledged allegiance to Russia and declared that they were ready for a war against Ukraine. It can be understood from this that Russia’s efforts to increase its presence in Africa have started to bear fruit in recent years.

As it is known, the Central African Republic is one of the countries where Russia is most influential in Africa. The country has been struggling with problems such as political crises, poverty and terrorism for decades.

The Central African Republic, which could not solve these problems with the support given by Western actors, particularly the U.N., France and the U.S., increased its interaction with Russia, which was on the rise in Africa. Undoubtedly, the U.N. Security Council’s decision to impose an arms embargo on the country was also influential in its decision-making. Faustin-Archange Touadera, the president of the Central African Republic, has been a key ally of Russia on the continent since 2017. He enjoys great political and military support from the Kremlin.

How the Russian-Ukraine War Affects the African Economy

The Ukraine-Russia war had negative effects on the African continent economically as well. It is known that these effects will increase over time.

Many Russian companies are inactive due to international sanctions. Moscow is expected to suspend its activities in many African countries where it has a presence. This will cause great damage not only to Russia but also to the economies of the African countries.

For example, the Russian energy company Lukoil withdrew from a gas project in Equatorial Guinea due to these sanctions. It is also likely that the company will put investment decisions in countries such as Ghana and Cameroon on hold.

How the Russian-Ukraine War Increases Food Scarcity in Africa

In Africa, over 340 million people currently face food insecurity due to the impact of the war in Ukraine. This figure is 17 percent higher than in 2021. The continent’s over-reliance on Ukraine and Russia for food importation means that the food crisis will get worse. A rewarding solution would be for African nations to prioritize food sovereignty to curb the looming food crisis.

Food sovereignty is a systemic change in the food system. The scheme places local farmers at the center of modern agriculture. It empowers local farmers to produce and distribute crops that thrive within their regions without fear of unfavorable trade regulations, climate change, lack of infrastructure, and drought.

The deepest impact of the Ukraine-Russia war in Africa has begun to be felt in the food crisis, which is already a grave situation. The war jeopardizes a very large segment of Africa’s access to food. As it is known, Ukraine and Russia are among the top five international exporters of barley, sunflower and corn. In addition, these two states have a one-third share of world wheat exports. In 2020 alone, African states imported $4 billion of agricultural products from Russia and $2.9 billion from Ukraine.

For example, in order to meet the food needs of its population of 206 million, Nigeria, which is the fourth largest wheat importer in the world, buys 25% of its imports from Ukraine and Russia. Countries such as Sudan, Uganda and Tanzania meet almost half of their wheat imports from these two states. However, as a result of this ongoing war between Ukraine and Russia, the prices of food products imported from these two countries increased. As a result, the African people, who have not been able to heal from the wounds of the pandemic yet, face a more dire picture amid rising food prices.

International cooperation is essential in resolving this food crisis individuals in Africa are facing since the economies of many states on the continent are struggling with major problems and some of them have difficulty paying their debts. For this reason, states struggle to provide adequate public services and social aid programs for their citizens.

The representatives of international organizations such as the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO) have recently called on the international community to support agricultural activities to stop this food crisis. On the other hand, it should not be forgotten that these organizations have put pressure on many African states for many years and ensured that they do not reduce or completely stop subsidizing fuel and food to the public. After all, the neoliberal policies of these international organizations that have lasted for several decades form the basis of many problems that Africans are facing today.

Credit(s): https://www.opendemocracy.net/, https://gmk.center/, United States Institute of Peace, Reuters , Guardian, Ashish Kumar Sen