How Russia’s attack on Ukraine may impact Canada

While the conflict may be happening on the other side of the world, experts warn Russia’s decision to invade Ukraine will have direct impacts on Canada, including on inflation, food prices and immigration.

Russian President Vladimir Putin’s long-feared invasion of the democratic country on Thursday jolted world markets, sending energy prices higher as Western countries issued rounds of economic sanctions against the former Soviet power.

On Friday, Russian troops bore down on Ukraine’s capital with gunfire and explosions, fuelling fears of a wider war in Europe that could have ripple effects even on those countries out of immediate harm’s way.

CTVNews.ca looks at how Russia’s invasion may impact Canada.

REFUGEES

Speaking during a press conference Thursday, Prime Minister Justin Trudeau said the Canadian government will be prioritizing immigration applications for Ukrainians and is launching a dedicated telephone line “for anyone at home or abroad with urgent Ukraine-related immigration questions.”

Defence Minister Anita Anand told CTV’s Your Morning on Friday Canadian officials are “doing whatever we can to assist” Ukrainian refugees who are fleeing Russian violence.

Anand said there are approximately 150 Canadian Armed Forces members in Poland prepared to help with the humanitarian effort as thousands of Ukrainians cross borders into neighbouring countries to escape the invasion.

In addition, Anand said there are “a number of options on the table” for getting Ukrainian refugees to Canada, but the first priority is ensuring they have safe passage out of Ukraine. Once solidified, this could mean accommodating more refugees in Canada.

Canada has the largest Ukrainian diaspora population outside of Russia, with roughly 1.3 million Ukrainians.

“We will continue to do whatever we can to assist the Ukrainian people at this time. It is an urgent issue. It is the issue affecting global stability at the current time, and Canada is here for Ukraine and the Ukrainian community,” Anand said.

MORE SUPPLY CHAIN ISSUES

Sylvain Charlebois, Dalhousie University professor of food distribution and policy, told CTVNews.ca the crisis in Ukraine will impact an already fragile Canadian supply chain, especially when it comes to food prices.

“What this conflict will do is bring to the agri-food sector a new layer of uncertainty, at the worse possible time,” Charlebois said in an email on Friday.

Having to deal with supply chain disruptions from the COVID-19 pandemic for the past two years, as well as nearly a month of blockades by “Freedom Convoy” protesters and their supporters, has slowed cross-border trade and impacted stock at grocery stores.

According to the Government of Canada, some key products imported from Ukraine include baked goods, sunflower oil, sugar and chocolate confectionary, and vodka, as well as iron, steel and minerals.

Ukraine is a major global supplier of crops such as corn and wheat, with Russia close behind. If these countries are unable to produce or get their product out to European markets, it could lead to shortages and cause increased prices for wheat.

“Ukraine is Europe’s breadbasket, so this conflict will impact global commodity markets in a meaningful way. Wheat, corn futures are all slowly reaching record levels,” Charlebois said.

GLOBAL STOCKS SHOW SHARP SWINGS

The European Union and other Western powers, including Canada and the United States, have agreed on a raft of sanctions targeting Russia’s banking sector, its oil refineries and defence industry that have caused global markets to tumble.

Stocks have swung sharply in the last few days amid uncertainty about how much Russia’s invasion will push up inflation, particularly oil and natural gas prices, and drag on the global economy.

The Canadian dollar traded for 77.93 cents US Thursday compared with 78.63 cents US on Wednesday due to the crisis.

Financials have also decreased in recent days despite banks announcing improved quarterly results. Experts warn the softness could come from worries that central banks may somewhat pause plans to raise interest rates next month because of the potential economic impact of the war in eastern Europe.

INCREASES ON OIL AND GAS PRICES

Canadians can expect even higher prices at the pumps following Russia’s attack on Ukraine, one expert told CTVNews.ca.

“Russia’s invasion of Ukraine will have obvious effects on the price of oil and gas, as these two markets are also connected,” Werner Antweiler, director of the Sauder School of Business Prediction Markets at the University of British Columbia, said in an email.

Energy economists, he said, expect the war in Ukraine to unsettle markets and raise crude prices well into the range of between US$100 and $120 per barrel.

Russia is one of the world’s largest producers of both oil and gas, and European consumers are particularly reliant on it.

On Friday, oil prices were steady after they had reached US$100 a barrel in volatile trading on Thursday, before falling back to $92, about where they had started the day.

According to the Canadian Association of Petroleum Producers, Canada imports roughly $550 million worth of crude oil a year from Russia. This is mostly consumed in Eastern Canada where there are no pipelines to get oil across the country.

“These prices will get passed on to consumers. Every one U.S. dollar increase in the crude price will translate into at least a 0.55-cent increase at the pump, if the Canadian dollar rises along with the price of oil,” Antweiler said.

This means in Canada, a one U.S. dollar increase in crude oil will translate to about 0.8 cents per litre, he said.

POTENTIAL CYBERATTACKS

The Canadian Centre for Cyber Security is reminding Canadian organizations, especially critical infrastructure network defenders, to “bolster” their awareness of and protection against Russian state-sponsored cyber threats amid the invasion into Ukraine.

Cyberattacks against Ukrainian government websites and affiliated organizations have been adding to the confusion of Russia’s military assault in the country, including data-wiping malware that cybersecurity researchers said infected hundreds of computers, including in neighbouring Latvia and Lithuania.

In a cyber threat bulletin, the Cyber Centre recommended Canadian organizations increase monitoring of their networks and quickly assess any “unexpected or unusual” network behaviour, as well as enhance the security of these networks.

The Cyber Centre says Canadian organizations should be prepared to isolate critical infrastructure components and services from the internet and corporate/internal networks if they believe the tech may be “considered attractive to a hostile threat actor to disrupt.”

The centre also advises organizations to have a “cyber incident response plan” to continue operations should an attack occur. Organizations are also asked to inform the Cyber Centre of any suspicious or malicious cyber activity.

Source: CTV, The Canadian Press, The Associated Press , February 25, 2022.