The Russian invasion of Ukraine has exposed an international panorama marked by a “new Iron Curtain” that separates Russia from the West and that some experts fear could trigger a global food crisis .
On Wednesday, the director of the World Bank, David Malpass, said in an interview with the BBC that the world is facing a “catastrophe humanitarian” due to the food crisis resulting from this war.
The US economist warned that the record increase in food prices will push hundreds of of millions of people into poverty and poorer nutrition if the conflict in Eastern Europe continues.
The World Bank estimates a “huge” increase of 25% in food prices, which will mainly affect the poorest countries.
Although it is true that hen there have been other major wars in recent decades, no other strong economy has ever before been subjected to such a punitive package of sanctions as the ones the West has applied to Russia.
And all the countries, to a greater or lesser extent, will be affected, analysts predict.
“Wars cause food crises. Syria, Iran, Iraq… all those countries suffer from food shortages. But the West is especially sensitive to the consequences of this war -the one in Russia and Ukraine- due to the importance of the actors involved, ”says BBC Mundo the environmental lawyer and expert in international law Cristiane Derani, from the Center for Environment, Energy and Natural Resources Governance of the University of Cambridge (C-EENRG), United Kingdom.
For understand why, we must situate ourselves in the complex system of interdependence that emerged in the Cold War and that drew Russia as a key player in the world economy.
Alliances in the middle of the Cold War
The alliance between the West and Russia in the world food chain emerged with an agreement that was signed the same year that, for For the first time, a sitting American president was officially visiting China, thanks to Richard Nixon’s “ping pong diplomacy.”
It was the year 1979
and the world was immersed in a period in which the tense geopolitical management between the United States and the Soviet Union seemed to exhibit symptoms of relaxation.
“The former USSR and the United States signed the Soviet-American Grain Agreement, which marked the beginning of what is today strong interdependence between the economies Western countries and Russia in the global food system”, explains Derani.
The deal came about after the Soviets made a “secret” purchase of 18 million metric tons of wheat and corn, some of which were sold at prices subsidized by the United States government.
This event went down in history as “the great grain robbery”.
The controversial sale, which caused significant increases in the price of food in the United States, led to the agreement of 1970, under which Washington had to give prior authorization grain purchases of more than 8 million tons.
We are talking about a time when the shortage of harvests had forced the Soviet Union to look for grain abroad, hoping to avoid the ham bruna or another crisis.
A few years later, in 798, the United States authorized the USSR “the largest grain purchase in history” up to that time, according to a report by The Washington Post.
The sum amounted to 25 million metric tons of wheat and corn in 12 months, around 10% of the production forecast that year for the US .
At that time, the Jimmy Carter administration was promoting new initiatives to combat the increase in grain and other food prices.
Shortly afterwards, he would impose an embargo on grain sales to the Soviet Union in retaliation for the invasion of Afghanistan -and the Soviets began to buy grain from Canada, Argentina and Australia.
It was a decade of economic rapprochement that, however, was not without controversy.
“In the decade of 1970, the Soviet Union became a major importer of cereals, which raised fears that it could reap an undue share of the profits from East-West trade through the power of its state trading bodies and by keeping its purchasing intentions secret,” he summarized in a report published in the American Journal of Agricultural Economics the economist Josef C. Brada, of the University of Arizona (USA).
In 1991, with the collapse of the former Soviet Union , the economy of the current Russia and Ukraine collapsed.
But, over the years, both powers would grow thanks to new agreements and investments that allowed them to reverse their role and go from being large importers to net exporters.
“Mutually beneficial relationships ”
“Until the Russian invasion of Ukraine in February 2022, the European Union (EU) and Russia were major trading partners in a wide variety of goods, including agri-food products ”, reads a recent report of the European Parliament.
“Russia was the fifth largest importer of EU products in 2014. In addition, Russia is a major world exporter of several basic products, including sunflower oil, wheat and barley”, he adds.
This collaboration lies in a Bilateral Partnership and Cooperation Agreement (PCA) that Russia signed with the EU in 1997 to develop mutually beneficial economic relations.
In 2020 there was another impulse, this time focused on his ex-Soviet neighbours, after negotiations for a new EU-Russia agreement, launched in 2007, were suspended after the Crimean crisis.
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As of that year, “Russia co began to invest heavily in food self-sufficiency and in its economic relationship with the former Soviet republics, which progressively became its main partners for food trade“, adds Derani.
All those deals and investments paid off.
“Investors arrived in Russia who managed to increase productivity to record levels in the region, with a better use of resources and machinery. The market and transportation infrastructure grew. Russia’s and Ukraine’s trade with the rest of the world has improved significantly,” Joe Glauber, a senior researcher at the International Food Policy Research Institute (IFPRI, for its acronym in English), explains to BBC Mundo.
“It was a very radical change that took place mainly in just two decades that shows the dynamism of the markets”, says the expert , who was chief economist at the United States Department of Agriculture.
In the last 25 years, Russia went from importing half of its food to becoming an exporter net of products such as wheat.
The country exports more than 35 million tons of wheat per year, being the main exporter of wheat in the world.
Ukraine ranks fifth among global exporters of this grain, after Russia, the US, Canada and France, according to figures from 2020 of the United Nations Statistical Database on Merchandise Trade (Comtrade).
Some North African countries, particularly those in the eastern Mediterranean, are heavily dependent on both Russia and Ukraine for their wheat supply.
These countries are already looking for new suppliers -such as France, the United States, Argentina or India- that could become the new “barns of world”.
“The EU made some changes in the regulations to be able to import grain from Latin America, which could have positive effects in countries like Argentina or Brazil, which are large producers”, adds Glauber.
In addition, Russia is the largest exporter of oil to world energy markets -which, in turn, has an effect on the cost, transport and storage of raw materials- and a major exporter and importer of food, fertilizers and other food products.
According to David Beasley, director of the World Food Program, the world’s largest humanitarian organization for food assistance against hunger, Russia and Ukraine represent jointly “the 17% of world exports of wheat, the 15% of the corn world and the 75% of sunflower oil [del que Ucrania exporta el 50% y Rusia el 25%]”.
The issue of fertilizers is also important because their lack could exacerbate a crisis in the global food system.
Russia exports the three main types of fertilizers -nitrogen, phosphorous and potassium-, Glauber points out. Represents the % of world trade of nitrogenous fertilizers and the 17% of world exports of potassium fertilizers, according to United Nations data.
Along with Canada and the United States, it is one of the largest suppliers of fertilizers for all of Latin America.
Its shortage could have global implications, especially in countries where the impact of high prices can significantly reduce their use and result in poor harvests, at a time of reduced global stocks and prices Record global prices.
Record prices
As the war progresses, the demand and price of products and raw materials from Russia and Ukraine will continue to increase. And, with it, the concern about food safety, say analysts.
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Shortly after the Russian invasion of Ukraine, wheat prices in Europe skyrocketed.
Glauber says that “it is important understand that we are talking about global markets, so even countries that do not import from Ukraine or Russia are experiencing an increase in the price of wheat or sunflower oil”.
The expert warns that “in the next 18 months, the price to pay for the economic consequences of this war will be high”.
“The global situation in question of p Food production is going to be very expensive. Countries will adapt and find new buyers, but until then, the prices will continue rising“, says the economist.
“There will be problems in the short term, although that does not mean that we are going to run out of food because history has shown that the global market chain is very resilient. It will be up to the richest countries to help the poorest, which will be the most affected”.
However, the Food and Agriculture Organization of the United Nations (FAO) had already warned about rising food prices before the conflict arose, saying that in 2021 peaked at years.
It is a trend that had already increased with the increase in inflation and the pandemic.
The double face of sanctions
In In this context of high prices and increasingly reduced stocks of food products such as wheat, the imposition of economic sanctions on Russia takes on an alarming dimension for some specialists.
“Sanctions are framed in accordance with international law, but if they lead to food insecurity and even hunger in the world, would be against human rights and, therefore, could be considered illegal“, warns Derani.
“Not all economic sanctions against Russia are likely to lead to food insecurity. But the financial and trade sanctions that affect production and consumption throughout the global food chain will seriously damage the already fragile balance, “adds the expert.
“It is important to establish a link between sanctions, humanitarian law and human rights. How far can we go with those sanctions? They can cause more damage than war itself because its effects destroy the present and future expectations of entire generations.
“We must look at recent history. Economic sanctions have never ended a war. What they have done is impoverish people and states. The war must end through diplomacy.”
Gauber agrees on the complex equilibrium of the situation.
“Sanctions are complex because, at a strategic level, it is not convenient to leave many loopholes so that countries cannot look for shortcuts and thus reduce their impact. But, on the other hand, they should not cause unintended consequences, such as countries not being able to export something as basic as food”, says the economist.
“What is worrying is that if countries begin to implement restrictions on exports, as we saw in 1997 Y 1979, or in 2010 Y 2011, This bad situation could turn into a much worse one.”
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