Prof. ST Hsieh
Director, US-China Energy Industry Forum
April 15, 2022
We all know war hurts, the ongoing Ukraine war has caused unspeakable human sufferings to both Russia and Ukraine, the two waring states. By some estimates Ukrainian economy has been halved after 50 days of war while Russia is facing sovereign default. For those European nations which are not in the war zone are facing significant economy downturn as they increase defense spending with long term energy shortage. Even the Ukraine war is immediately stopped, tension with Russia will continue and full recovery will take years, if not decades.
Even the US is facing significant economic challenges with inflation running at 40 years high with no relief in sight. China, Japan, India etc. are also hurting because Ukraine war has disrupted the global supply chain, which was already broken due to the endless COVID-19 global pandemic started in 2020.
However, as the following report/analysis shows that, unfortunately, the most vulnerable peoples, in the poor and helpless nations around the world even far away from Ukraine battle fields, “heavily indebted low-income and emerging market economies” are facing threat of feminine.
As a result, “The World Food Program has said that 41 million people in West and Central Africa may be affected by a food and nutrition crisis this year, as the region confronts the highest prices in a decade for products like grain, oil and fertilizer.” The size of populations around the world that may face persistent basic food supply challenges is disturbing. Refuges, pandemics, poverty will expand and no nation in the world will be able to sleep in peace.
Ukraine war is entering its 50th day, it is long enough. It is so disappointing that there are no efforts to make peace, rather the US and allies are supplying Ukraine with more lethal weapons every week. Future generations will not forgive us.
The war in Ukraine unsettles countries all around the world
The Washington Post, April 15, 2022
For countries nearby, the war in Ukraine represents a profound crisis of security and politics. Russia’s full-fledged invasion of its neighbor has seemingly ended an era of post-Cold War complacency in European capitals and shaken up the continent’s geopolitics. Refugees are pouring out of Ukraine, while allies are flooding the country with weapons and heavy military equipment to bolster the Ukrainian resistance. Both Russian and Ukrainian officials speak of the conflict in existential terms, as a decisive battle over the fate of their nations and the global political order. Others spy a prelude to World War III.
But the war has deeply affected countries much further afield, too. The havoc in Ukraine and the sweeping regime of new sanctions imposed on Russia have roiled a global economy already stumbling amid a protracted recovery from the pandemic. Analysts point to evidence of massive supply chain disruptions, leading to sky-high oil and natural gas prices as well as shortfalls in agricultural exports from Russia and Ukraine — all of which in turn have driven up inflation for consumers all around the world. Per Bank for International Settlements figures, 60 percent of “advanced” economies are experiencing annual inflation rates above 5 percent; the majority of emerging economies are seeing rates above 7 percent.
In the United States, ordinary Americans are feeling the pinch at the pump, with fuel prices soaring and likely to dominate the country’s upcoming midterm elections. In Britain, consumer price inflation reached its highest levels in three decades.
But the situation is far more dire in poorer nations with fewer means to cope. Across the developing world, the cost of essential commodities — from wheat and cooking oil to coal and natural gas — had already risen to worrying highs before Russian forces advanced into Ukraine in late February.
In some places, the war appears to have tipped things over the edge. “Taken together with the uneven recovery from COVID-19, the surge in inflation, and the tightening of monetary policy, the war adds to an already inhospitable environment for fragile, heavily indebted low-income and emerging market economies,” wrote economic historian and geopolitical commentator Adam Tooze.
That’s the case in Sri Lanka, which is on the verge of temporarily defaulting on its debts while weeks of power cuts and surging food and fuel prices prompted mass protests against the government. “The effects of the covid-19 pandemic and the fallout from the hostilities in Ukraine have so eroded Sri Lanka’s fiscal position that continued normal servicing obligations has become impossible,” the Finance Ministry said in a recent statement.
Across the Arabian Sea in Pakistan, the unbearable spike in cost of living dovetailed with a slow-rolling political crisis led to the ouster of populist Prime Minister Imran Khan last weekend. His rivals, now in power, face the no-less daunting task of assuaging public anger over inflation, while going to international lenders cap in hand in search of a new deal to service Pakistan’s debt.
“For the future shape of the world economy, how the world deals with debt crises triggered by this war in places as far apart as Sri Lanka and Tunisia are likely to be at least as important as Russia’s desperate efforts to circumvent sanctions in its trade with China and India,” Tooze wrote.
In much of the Arab and Muslim world, iftar dinners during Ramadan are being marked by shortages of customary foods, with soaring prices making basic staples scarce. Fadhila Khalfawi, a resident of the Tunisian capital Tunis told the Christian Science Monitor that she’s now breaking her fast with a meager soup and salad. “I don’t really know a lot about war, but from what I can see, this war is taking place in Ukraine, but its impacts are being felt in Tunisia,” Khalfawi said.
Tunisia is heavily dependent on wheat imports from Ukraine and Russia. And it’s hardly alone: Countries like Egypt, Turkey, Bangladesh and Iran buy more than 60 percent of their wheat from the two warring states. The trickle-down effects of the conflict are coming into view.
At least 20 percent of Ukraine’s planted wheat “may not be harvested due to direct destruction, constrained access or a lack of resources to harvest crops,” the U.N. Food and Agriculture Organization said last week. Its world food-price index in March reached the highest level since it started in 1990.
“The U.N. agency cut its forecast for global cereals trade to 469 million tons, down 14.6 million tons from its March estimate, citing the interruption of exports from Ukraine and Russia,” noted my colleague David J. Lynch. “Lower trade volumes will crimp food imports across much of the Middle East and North Africa, raising concerns over hunger and political instability.”
“The World Food Program has said that 41 million people in West and Central Africa may be affected by a food and nutrition crisis this year, as the region confronts the highest prices in a decade for products like grain, oil and fertilizer,” wrote my colleague Amy Cheng. As my colleague Max Bearak recently reported, Ukrainian farmers are well aware of the gravity of the situation. “Ukraine is actually full of grain. Our stocks are full,” Dmytro Grushetskyi, an industrial farmer in central Ukraine, told him, gesturing to the inability to move their product in the middle of the war. “But now we can’t get the grain out, which means Ukrainian farmers, and the rest of the world, are screwed.”