Ukraine is another place for which there are reasonable political and military worries.
But at this point, it is not seen as likely to create macroeconomic issues. It certainly was when the war started.
If you're curious, you can go to the archives on the right hand side, and open up the link for February 2022. The posts about Russia and Ukraine occupy the top third of the month, and most of the posts for the following month too. I think it's fair to say that, back then, politicians were quite sure that the macroeconomic connections Russia had made with the rest of the world over the last 30 years were so important that Russia would back down. Apparently not.
Two years on, what we're left with is an ugly, money pit of a war, with no end in sight.
***
This is probably a good time to introduce you to two college level words.
Revanchism is the name given to a country's policy of attempting to recover lost territory. Russia has demonstrated a revanchist policy towards parts of Ukraine for the last 10 years or so, and has succeeded in conquering parts of their neighbor. Revanchism is about getting back what used to be yours.
A related ideas is irredentism. This is the belief (rather than the more active policy) that parts of your country or nation are outside your current borders, and should be united with it. The first round of Russia biting off parts of Ukraine back in 2014 was about acting on irredentist views that the Crimean peninsula should be part of Russia. Russia has also pushed this idea about a region called Donbas over which some of the current war is being fought (although the claim to Donbas is shakier).
Not surprisingly, revanchist and irredentist positions can have macroeconomic consequences. Venezuela bringing up what everyone thought was a settled claim on part of neighboring Guyana is an example.
***
One of the things that puzzles me about (national) states and their leaders is their interest in acquiring territory.†
Of course, there's a lot of historical precedent for this. And if you took me for principles, I mentioned that what is animating policies is often nothing more than "we've always done it this way".
But, what I wonder (and this definitely is pushed along by the fact that we've developed ways to measure the value of regions over the last century) is whether or not it's worthwhile to pursue territorial ambitions. For example, consider the U.S. It isn't that hard to envision some states as being a net drag on the rest of the country. Say ... Mississippi. Other states of roughly the same GSP are more likely to be net contributors to the rest of the country. Say ... Utah.
I think it's pretty clear that if somehow Mississippi was conquered by a foreign power, the U.S. would adopt a revanchist position to get it back. But I think it's a reasonable question to ask whether or not that would be worth it.
Now come full circle back to Russia and Ukraine. Are the parts of Ukraine that Russia wants to take back ... worth it? Further, are they still worth it after they've been wrecked by war?
Of course, if the answer is "no", then why start the war? But it seems like humans have a bias towards thinking the answer must be "yes", and then they find out the hard way that it is not. There is some game theory on this with something called all-pay auctions, where theoretically no one should overbid, while in practice just about everyone does.‡
† Do note that you need to recognize in posts like this whether I'm writing about "states": a name for the potentially infinitely-lived government of a country; or "states": a name for the the subdivisions of some countries. In this post I write about both. Sorry about that.
‡ Not every semester, but frequently, I touch on all-pay auctions in my micro principles classes when talking about high fixed costs, natural and/or platform monopolies, and network externalities.
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