Media: Trump's presidency could be turning point for Gaza, Ukraine conflicts

The election of Donald Trump as the next US president could mark a pivotal moment for the ongoing conflicts in Gaza and Ukraine, both of which are currently devastating large swathes of the global landscape.

Trump has promised to bring these wars to an end, but even if he is successful, the economic fallout will be felt for years to come, Caliber.Az reports, citing Bloomberg.

The wars in Gaza and Ukraine have already become two of the most tragic humanitarian disasters of the 21st century. With combatant fatalities exceeding 180,000 and civilian deaths surpassing 40,000, the toll is immense, and millions more have been displaced. In Gaza, indirect deaths, driven by starvation and disease, are estimated to be over 60,000. These numbers are devastating, with the destruction in Gaza expected to take years to clear.

However, despite the scale of these tragedies, global stock markets seem surprisingly unperturbed. As of late November 2023, a Bloomberg index of global equities showed a 25% increase since Russia's invasion of Ukraine and a 32% rise since Hamas's attack on Israel. This seeming indifference could be due to the fact that wars often produce both winners and losers, and in some cases, the economic impact on countries outside the war zones has been minimal.

Ukraine’s economy has been severely impacted, and Gaza’s economy has all but collapsed. Meanwhile, European nations have been hit hard by the cut-off of cheap Russian natural gas, particularly Germany, where major industrial firms have warned of potential cuts in production.

Yet, US liquefied natural gas exports to Europe have surged, benefiting American companies. Additionally, defence industries, especially in Germany, have seen their stock prices climb, anticipating increased orders due to heightened security concerns.

Despite these shifts, the overall economic damage to the global economy appears relatively minor. According to a calculator developed by Germany's Kiel Institute for the World Economy, the cumulative economic loss from these conflicts could total around $300 billion, or 0.25% of global GDP. This suggests that countries outside the immediate war zones may experience minimal long-term losses, and the US, with its strong defence industry and energy resources, could even come out ahead.

However, the consequences of war are not so easily measured by GDP alone. As Sergei Guriev, Dean of London Business School, points out, producing tanks and weaponry does not improve quality of life, and the long-term financial burden of war, especially for the countries funding the conflict, is significant. For example, the European Union will need to significantly increase military spending, with estimates suggesting that European NATO members could face an additional $2.8 trillion in debt by 2034, further stretching their already fragile finances.

The rebuilding of Ukraine alone could cost close to $500 billion, according to the World Bank. While there may be some benefits, such as increased private investment if the EU strengthens its defence capabilities, much will depend on how Trump handles these conflicts. If he succeeds in securing peace, particularly with regard to Ukraine and Gaza, it could strengthen global security. However, a peace deal that favours the aggressors could lead to further instability and even more costly consequences for global security.

Ultimately, the resolution of these conflicts, whether through peace deals or continued warfare, will have lasting economic and geopolitical implications. As Guriev warns, “how the conflicts end matters,” and the risks of a bad peace—one that emboldens aggressors—could lead to even greater global instability, especially if other major powers, like China, take advantage of the situation. While no one benefits from prolonged war, the path to peace remains fraught with uncertainty.

By Aghakazim Guliyev