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War of the Sunflower Superpowers : Also: Zelenskyy takes centre stage
March 15, 2022
Ari Winkleman
Vladimir Putin’s decision to wage war has already brought destruction to the places and people of Ukraine, but it could also put millions of people at risk far from cities like Kyiv, Kharkov, and Mariupol. That’s because the war is making key food staples around the world more scarce and pricier, raising the prospect of food shortages and social unrest.
“Countries as far afield as Nigeria, Yemen, and Bangladesh are already feeling the effects of reduced grain exports,” says Peter Ceretti, a senior analyst with Eurasia Group. “But the knock-on effects could be much worse: soaring fertilizer prices, export bans, and a failed planting season in Ukraine could all mean that millions around the world go hungry.”
How bad is it? Prices for basic foodstuffs such as wheat,sunflower oil, and corn have hit record highs in recent days, as has the UN’s food price index, which measures the cost of several key staples together. With scant near-term prospects for peace, a global food crunch is coming.
The Ukraine war has made a bad situation worse. Even before the Russian invasion, the world was facing higher prices for energy, food, and shipping as post-pandemic demand roared back faster than supplies. The war has compounded all of that.
This is, in fact, a war between two superpowers … of agriculture. The world’s number one exporter of wheat has invaded the world’s number five exporter of the grain – together Russia and Ukraine provide about 30% of wheat in global markets. Ukraine has now banned exports entirely as a wartime security measure, and financial sanctions on Russia are making global buyers wary of purchasing Russian bushels at all.
The sunflower side of it. That yellow band on the Ukrainian flag is meant to depict the country’s vast golden fields of sunflowers. Ukraine is the single largest exporter of sunflower oil, accounting for more than 40% of the global supply. Russia isn’t far behind at about a quarter of the market. Sunflower oil is a crucial cooking oil for households in many developing countries (and it’s also the source of the crisp in potato chips.) The war has already halted activity at Ukraine’s sunflower crushing plants, causing a knock-on surge in demand for substitutes like palm oil, which is now also seeing soaring prices.
Fertile soil for a bigger crisis. What do farmers need to produce wheat and other crops? Aside from sun, land, water, and love, they need fertilizer, and lots of it. Who is the number one exporter of fertilizer? Russia. Moscow has already banned fertilizer exports, raising production costs for farmers from Boise to Brazil.
Who gets hurt the most? Higher food prices rattle the kitchen table in all countries, but those on the brink are the most vulnerable. More than 800 million people are already food insecure, says the UN, warning that 44 million people in 38 different countries could be pushed into outright famine this year.
For the Middle East and North Africa, it’s a perfect storm of challenges, says Ahmed Morsy, a Middle East analyst at Eurasia Group. “It’s three or four different pressures at the same time, from food and energy prices to global inflation at large. It’s unlike anything we’ve ever seen.”As for food, the region is heavily dependent on Russian and Ukrainian grain. In Egypt, the largest single importer of Russian and Ukrainian wheat, market prices for bread have soared 50% already this month, with the government warning that wheat reserves are dwindling. Crisis-wracked Lebanon is facing shortages as well, while Libya, Tunisia, and Algeria are all on edge. War-ravaged Yemen, meanwhile, depends on the two countries for about 40% of its wheat imports, and is already facing famine.
Zelensky takes center stage
Zelensky addresses MPs in the British Parliament’s House of Commons.
EYEPRESS via Reuters Connect
On Wednesday, we’re tracking two developments that could shift the Russia-Ukraine story.
First, from Kyiv, Ukraine’s President Volodymyr Zelensky addressed a joint session of Congress on Wednesday. In his short address, Zelensky played to Americans’ sense of nationalism, history, and emotion, referencing the leaders atop Mount Rushmore as well as Martin Luther King’s “I Have a Dream” speech. “I have a dream. These words are known to each of you,” Zelensky said. “Today, I can say I have a need. I need to protect the sky.”
Zelensky again called for the US and NATO to impose a no-fly zone over Ukraine, and he also asked Congress to push for new sanctions each week to help starve the Russian war machine. His plea reportedly moved members of Congress to tears.
Last week, Congress approved nearly $14 billion to go to Ukraine, and the Biden administration is set to release $800 million on top of the $350 million in military aid they quickly sent when war broke out.
So what more can the US do? “The American people want Biden to do more,” says Jon Lieber, Eurasia Group’s lead US political analyst. “But Biden is running into the political and practical limits of what he can do.” He’s already sanctioned the Russian economy “back to the 1990s,” and the war has led to dozens of US-based businesses pulling out of Russia.
There are two things Biden has clearly stated he will not do: facilitate the transfer of Soviet-era jets from Poland to Ukraine and impose a no-fly zone, which Biden said would risk a direct military clash with Russia. In short, he’s not risking World War III.
As for a no-fly zone? “The American people agree with the president,” says Lieber, referencing a new poll showing that only 23% of Americans support the idea of imposing a no-fly zone over Ukraine (when defined as meaning that Russian planes could be shot down).
Biden’s critics have said he is letting Putin dictate the terms of US engagement in Ukraine, with Sen. Lindsay Graham accusing him of “folding like a cheap suit” over the Polish planes once they figured out that Putin would see any additional steps as an escalation.But the US is in a bind, says Lieber. “They want to help Ukraine but are afraid of Putin, who continues to press the war in the face of near-universal international condemnation.”
Second, Russia has a payment due Wednesday of $117 million in interest on two sovereign Eurobonds.
There are three more payments due this month. If the debt isn’t paid, this will mark the first sovereign default on foreign currency debt since the Bolshevik Revolution more than a century ago. (It defaulted on domestic debt in 1998.) Sanctions, which block Russian access to dollars and euros, will probably leave Russia unable to pay on Wednesday. The economic impact could last for years as Russian borrowing costs climb higher, and many of Russia’s heavily indebted largest companies are later forced into bankruptcy.
Listen: Cyberattacks in Ukraine are the latest example of how cyberspace is increasingly a theater of conflict around the world. As part of the Global Stage series, a partnership between Microsoft and GZERO Media, the 5-part podcast “Patching the System” will explore the biggest cyber risks and challenges for governments, corporations, and consumers alike. Through the Cybersecurity Tech Accord, a public commitment from more than 150 technology companies, private sector tech leaders are working to create solutions and foster greater cyber resilience.
Hour after hour, day after day, trains from the East arrive at Berlin’s main station, each carrying hundreds of refugees from the war in Ukraine.
Since Russia’s invasion began three weeks ago, close to 3 million Ukrainians have fled, in the largest displacement of Europeans since the Balkan wars of the 1990s. And so far, more than 120,000 of them have made their way here, to Germany.
Ukrainians wait to board a train to Poland as they flee Russia’s invasion in Lviv.
REUTERS/Kai Pfaffenbach
100,000: Over 100,000 Brits have signed up for a new government program to host Ukrainian refugees in their homes. The UK has been criticized for granting so few visas to Ukrainians thus far, but those without UK family ties will now be eligible.
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