WEDNESDAY, MARCH 30, 2022 GLOBAL IMPLICATIONS OF RUSSIA-UKRAINE WAR

 WEDNESDAY, MARCH 30, 2022  GLOBAL IMPLICATIONS OF RUSSIA-UKRAINE WAR

Some recent articles: (just scan them)

SOARING FOOD PRICES:

“David Beasley, the head of the World Food Programme (WFP), warned the world to prepare to face soaring food prices, catastrophic hunger, and growing instability as Russia and Ukraine together export 30% of the world's wheat. With Biden banning the import of Russian petroleum products, the price of crude oil is expected to rise amid these sanctions. The cost of standing up for freedom and standing alongside the Ukrainian people, but it's going to cost us. "

OIL TAKES OVER THE STAGE

“More broadly, one of the war’s main implications for the Middle East comes from global oil prices that have reached heights we haven’t seen in nearly a decade. Saudi Arabia and the UAE now enjoy big-budget surpluses.

FOOD AND OIL

“Russia and Ukraine together account for a quarter of world wheat exports and a fifth of corn sales. In recent years, nearly half of Ukraine’s wheat exports have gone to North Africa and the Middle East, where many governments subsidize food purchases for millions of their citizens. The interruption of so much of the world’s wheat supply, and Ukraine’s inability to plant crops for next year, sharply raises the cost of these subsidies for governments already reeling from the costs of COVID-19. This is a region where higher food costs have often triggered violent social unrest.

INDIA, GROWTH, FOOD, AND INFLATION

“The war in Ukraine also poses problems for India, which will become the world’s most populous country in the next five years, according to the U.N. India’s economic growth remains strong, but price inflation, especially for food, is now surging and could become a major economic and political headache

“Russia’s war in Ukraine also complicates India’s increasingly ambitious foreign policy. Even today, India’s defense ties with Russia run deep: Russia is India’s leading supplier of arms, by far.

Thus India has complications in balancing ties with Moscow and Washington, and Russia’s invasion of Ukraine has made that dance much more awkward.

SOUTH AMERICAN ISSUES

Even in South America, thousands of miles from the violence in Ukraine, the war’s impact can be felt. This region is home to some of the world’s leading commodity exporters, and many governments across the region are now benefiting from higher prices for agricultural products, oil, and metals. But, (from Monday), Brazil might lose its #1 position as a soybean grower because of the lack of fertilizer.

South America took one of the toughest economic hits from COVID-19, which stunted economic growth, killed jobs, stoked inflation for both governments and consumers, and widened income inequality in countries where it was already distorting national politics. Even if higher export earnings, created by the supply shock that Russia’s invasion of Ukraine will exacerbate, help governments rebalance their books, consumers will still pay more for food and fuel.

Inflation may also fuel political unrest.  With food prices going through the ceiling, unstable economies might see turmoil and even revolts.

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Okay, how did we get so tangled?  Global trade and global commitments are getting hit by the ongoing regional war.

As the war continues, Ukraine will have trouble planting crops - leading to some global food shortages.  (From above): “Russia and Ukraine together account for a quarter of world wheat exports and a fifth of corn sales.”  So will wheat and corn get planted during a war?  Maybe “man does not live on bread alone” (Matthew 4:4) - but bread (and wheat) is part of most countries' food consumption.  

Inflation will hit the global economy.  If you want bread, you’ll have to pay more.  If you want potash and fertilizers, you’ll have to pay more.  If you want soybeans (Monday’s topic), you’ll have to pay more.  If you want oil and natural gas, you’ll have to pay more.

Infrastructure may take years to rebound in Ukraine.  Rebuilding houses and roads (with a depleted workforce) will probably be a priority as compared to planting wheat and corn.  

Food shortages can lead to political instability in third world countries - and riots, and even overthrowing governments can occur.  

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So, who benefits from the Russia-Ukraine war?  Really nobody - no countries - as products that come out of Russia and Ukraine don’t get to market (notably fertilizer, energy, wheat, corn).  Maybe the United States will benefit as our agriculture and energy products might be in greater demand.

An old Ben Franklin quote is:

“For the want of a nail, the shoe was lost,

For the want of a shoe, the horse was lost,

For the want of a horse, the rider was lost,

For the want of a rider, the battle was lost,

For the want of a battle, the kingdom was lost,

And all for the want of a horseshoe nail.”

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Yes (in Karen’s opinion) this war among neighbors will cost almost every person around the globe.  The status quo will change, shifts will happen.  

“Hang onto your hats”, there will be outcomes from Russia/Ukraine that can’t even be imagined.

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But - LOVE WINS!!

Karen

March 30, 2022