The United Nations chief warned Monday that the war in Ukraine is holding “a sword of Damocles” over the global economy, especially poor developing countries that face skyrocketing food, fuel and fertilizer prices and are now seeing their breadbasket “being bombed.”
Secretary-General Antonio Guterres told reporters that “Russia and Ukraine represent more than half of the world’s supply of sunflower oil and about 30 percent of the world’s wheat” and that “grain prices have already exceeded those at the start of the Arab Spring and the food riots of 2007-2008.”
He told reporters that 45 African and least developed countries import at least one-third of their wheat from Ukraine and Russia, and 18 of them import at least 50%. These countries include Egypt, Congo, Burkina Faso, Lebanon, Libya, Somalia, Sudan and Yemen.
“All of this is hitting the poorest the hardest and planting the seeds for political instability and unrest around the globe,” Guterres warned.
David Beasley, executive director of the World Food Program, told The Associated Press during a visit to the Ukrainian city of Lviv that 50% of the grain the program buys to feed “the 125 million people we reach on any given day, week or month” comes from Ukraine, as does 20% of the world’s supply of corn.
“So (the war) is going to have a dynamic global catastrophic impact,” Beasley said.
Ukraine War Could Trigger 20% Food Price Rise, Warns UN Agency
International food and feed prices could rise by up to 20% as a result of the conflict in Ukraine, triggering a jump in global malnourishment, the UN food agency said on Friday.
The Food and Agriculture Organization (FAO) said it was not clear whether Ukraine would be able to harvest crops if the war dragged on, while uncertainty also surrounded the prospects for Russian exports in the coming year.
FAO said Russia was the world’s largest exporter of wheat and Ukraine was the fifth largest. Together, they provide 19% of the world’s barley supply, 14% of wheat, and 4% of maize, making up more than one-third of global cereal exports.
Russia is also a world leader in fertilizer exports.
“The likely disruptions to agricultural activities of these two major exporters of staple commodities could seriously escalate food insecurity globally,” FAO Director General Qu Dongyu said in a statement.
FAO’s food price index hit a record high in February, and looks certain to climb further still in the months ahead as the consequences of the conflict reverberate around the world.
FAO said only part of the expected shortfall in exports from Russia and Ukraine could be met by other countries.
“Worryingly, the resulting global supply gap could push up international food and feed prices by 8 to 22% above their already elevated levels,” it said.
Between 20% and 30% of fields used to grow winter cereals, maize and sunflower in Ukraine will not be planted or will remain unharvested during the 2022/23 season, FAO predicted.
FAO said 50 countries, including many of the least developed nations, depend on Russia and Ukraine for 30% or more of their wheat supplies, leaving them especially vulnerable.
“The global number of undernourished people could increase by 8 to 13 million people in 2022/23,” FAO said.
The most pronounced rises would be seen in the Asia-Pacific region followed by sub-Saharan Africa, the Near East and North Africa.
FAO urged other countries not to impose export restrictions on their own produce. “They exacerbate price volatility, limit the buffer capacity of the global market, and have negative impacts over the medium term,” the agency said.
A number of countries worldwide have announced food export restrictions or are considering bans to protect their domestic supplies.
World Faces Food Crisis, Says Russian Billionaire Melnichenko
A Reuters report said:
A global food crisis looms unless the war in Ukraine is stopped because fertilizer prices are soaring so fast that many farmers can no longer afford soil nutrients, Russian fertilizer and coal billionaire Andrei Melnichenko said on Monday.
Several of Russia’s richest businessmen including Mikhail Fridman, Pyotr Aven and Oleg Deripaska have publicly called for peace.
“The events in Ukraine are truly tragic. We urgently need peace,” Melnichenko, 50, told Reuters in a statement emailed by his spokesman.
“One of the victims of this crisis will be agriculture and food,” he said.
Melnichenko is the founder of EuroChem, one of Russia’s biggest fertilizer producers, which moved to Zug, Switzerland, in 2015, and SUEK, Russia’s top coal producer.
Russia is a major producer of potash, phosphate and nitrogen containing fertilizers – major crop and soil nutrients. EuroChem, which produces nitrogen, phosphates and potash, says it is one of the world’s top five fertilizer companies.
The war “has already led to soaring prices in fertilizers which are no longer affordable to farmers,” Melnichenko said.
“Now it will lead to even higher food inflation in Europe and likely food shortages in the world’s poorest countries,” he said.
Russia’s trade and industry ministry told the country’s fertilizer producers to temporarily halt exports earlier this month.
International food and feed prices could rise by up to 20% as a result of the conflict in Ukraine, triggering a jump in global malnourishment, the United Nations food agency said on Friday.
The European Union on Wednesday sanctioned Melnichenko for Russia’s invasion. It said his attendance at a Kremlin meeting with Putin and 36 businessmen organized by the Russian Union of Industrialists and Entrepreneurs showed he was “one of the leading businesspersons involved in economic sectors”.
Melnichenko “has no relation to the tragic events in Ukraine. He has no political affiliations,” his spokesman said.
“To draw a parallel between attending a meeting through membership in a business council, just as dozens of business people from both Russia and Europe have done in the past, and undermining or threatening a country is absurd and nonsensical,” the spokesman said, adding Melnichenko will dispute the sanctions.
On March 9, Melnichenko resigned as member of the board and non-executive director in both EuroChem and SUEK, and withdrew as their beneficiary, the spokesman said. EuroChem has production assets in Russia, Lithuania, Belgium, Brazil and Kazakhstan.
Italian police last week seized his yacht – the 143-metre Sailing Yacht A – which has a price tag of 530 million euros ($578 million).
Russia Temporarily Bans Grain Exports To Ex-Soviet Countries
Russia on Monday temporarily banned grain exports to ex-Soviet countries and most sugar exports, but a senior minister said it would keep on providing special export licences to traders within its current quota.
Russia is the world’s largest wheat exporter with Egypt and Turkey among the main buyers. It competes mainly with the EU and Ukraine.
Russian Prime Minister Mikhail Mishustin on Monday signed an order banning the export of white and raw sugar until Aug. 31, and banning wheat, rye, barley and maize exports to neighboring Eurasian Economic Union states until June 30.
Deputy Prime Minister Viktoria Abramchenko, however, said the export of grain within the quota under individual licences would continue to be allowed.
Moscow last week voiced concern about the quick pace of its grain exports to neighboring ex-Soviet countries, with which it shares free customs zones under the Eurasian Economic Union. Supplies to the union are not subject to Russia’s grain export quotas and current taxes.
The measures were adopted “to protect the domestic food market in the face of external constraints,” the government statement said.
European wheat prices rose on Monday after Interfax news agency reported on Russia’s bank on grain exports. It did not initially mention the exclusions from the ban.
The government made no mention of the export licenses in its statement either, but said that international transit of grain via the Union would be allowed.
Russian wheat exports are down by 45% since the start of the current July-June marketing season because of a smaller crop, grain export taxes, and the export quota set at 11 million tonnes of grain, including 8 million tonnes of wheat, for Feb. 15-June 30.
The country still has 6 million to 6.5 million tonnes of wheat to export until June 30, Dmitry Rylko, head of the IKAR agriculture consultancy, said.
Top Soy Shipper Argentina Halts Meal, Oil Cargoes
Argentina has blocked agriculture traders from registering cargoes of soybean meal and oil for export, a move it usually makes before hiking taxes on shipments, amid expectations that the government will seek to tap the global rally in crops.
Argentina is the biggest exporter of soy meal for livestock feed and soy oil for cooking and biofuels. Farmers in the South American nation start harvesting beans at the end of the month, with the bulk of fieldwork done in April and May. Ukraine is a top global supplier of a competing oil made from sunflowers.
Crop export taxes provide an important — and often controversial — revenue stream for Argentina’s government, which is trying to push through a new economic plan backed by the International Monetary Fund. The government tends to close the export register before a tax hike to stop farmers from preempting and circumventing the increase with a flood of sales.
Soy meal and oil are currently taxed 31%, but speculation has been circling trading desks that the rate will rise to 33%. If that happens, the government stands to make an extra $400 million from the upcoming harvest, Lorena D’Angelo, a crop market analyst in Rosario, said in a tweet.
Argentina’s main farm groups lambasted the talk of a tax hike, saying in a statement that the agriculture industry can’t operate properly with unpredictable parameters.
Soy processors had bought and priced 2.2 million metric tons from farmers via forward contracts through March 2, according to government data, with none of that volume registered for export. Argentina is forecast to export 28 million tons of soy meal and 5.9m tons of soy oil this season, according to the U.S. Department of Agriculture.
Argentina had already intervened in crop markets since the start of the Russia-Ukraine war with a subsidy for the domestic wheat industry, mirroring an earlier policy for vegetable oils, as food protectionism picks up worldwide.
The global commodities rally hit home for Argentina in a second way on Monday as state-run oil driller and refiner YPF SA hiked prices at the pump by about 10% to cover the soaring cost of diesel imports.
YPF’s drilling plans in shale patch Vaca Muerta depend on fuel sales. But the company also accounts for more than half of Argentina’s gasoline and diesel consumption, so the increase will likely be a blow to efforts to slow inflation.
220,000 Ukrainians Have Returned Home In The Last 2 Weeks
In the last two weeks, 220,000 Ukrainians have made the trek home, the country’s border guard said — many were traveling when the Russian invasion began, others needed to tie up loose ends at their foreign jobs, some are returning to fight, and a few say it’s even harder to be a refugee than it is to be back in Ukraine.
On their journey last week from the Ukrainian town of Mykolaiv to Poznan, Poland, Zhanna Sinitsyna, her 30-year-old daughter Nadiia, and 12-year-old granddaughter Kira witnessed explosions and heard gunfire. Once in Poznan, the plan was to find work and send money to Mykolaiv, where Zhanna’s husband and 19-year-old son are part of efforts to defend the city.
They were unable to find an affordable place to stay in Poznan near areas with employment opportunities and quickly discovered they didn’t have enough money to purchase necessities. After just two days, Zhanna convinced Nadiia and Kira to return to Mykolaiv on Saturday, despite their concerns. “In my soul, Mykolaiv is my home,” Zhanna told The Washington Post. “And I need to be home.”
Missiles From Ukraine Military
The Russian military says that 20 civilians have been killed by a ballistic missile launched by the Ukrainian forces.
Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov said that the Soviet-made Tochka-U missile on Monday hit the central part of the eastern city of Donetsk, the center of the separatist Donetsk region.
He said that another 28 civilians, including children, were seriously wounded by the missile that carried shrapnel warhead.
Konashenkov said the missile was fired from an area northwest of Donetsk controlled by Ukrainian forces. He charged that the shelling of the area of Donetsk that has no military facilities represented a war crime.
NATO Exercise
A planned NATO exercise with about 30,000 troops from more than 25 countries from Europe and North America began in northern Norway on Monday.
NATO said that the drill, named Cold Response that includes 200 aircraft and 50 vessels, was “not linked to Russia’s unprovoked and unjustified invasion of Ukraine.”
The drill in NATO-member Norway, which shares a nearly 200-kilometer land border with Russia, will be held just a few hundred kilometers from the Russian border and was planned long before Moscow’s invasion of Ukraine.
Germany To Buy U.S.-Made F-35s
Germany said Monday that it will replace some of its aging Tornado bomber jets with U.S.-made F-35A Lightning II aircraft capable of carrying nuclear weapons.
Announcing the decision, Defense Minister Christine Lambrecht said Germany also will upgrade its Eurofighter Typhoon fighter jets for electronic warfare — a capability that’s also currently fulfilled by the Tornado jets.
Germany’s air force commander, Ingo Gerhartz, said the current war in Ukraine made it necessary to choose Lockheed Martin’s F-35s. Previously, the government had considered replacing the Luftwaffe’s Tornados with a mix of different U.S. and European-made aircraft.
The German military does not have nuclear weapons of its own, but as part of the system of nuclear deterrence developed during the Cold War it maintained bombers capable of carrying U.S. atomic bombs, some of which are stationed in Germany.
The opposition Left Party criticized the decision to purchase almost three dozen F-35s for Germany’s military.
“We reject arming the Bundeswehr with new, nuclear-capable combat jets,” said Ali Al-Dailami, the party’s deputy defense spokesman. He warned that equipping German pilots to drop U.S. atomic bombs could “fuel the risk of nuclear war in Europe.”
German Chancellor Olaf Scholz announced last month that the country would create a special fund of 100 billion euros ($113 billion) to bolster its armed forces and raise defense spending above 2% of gross domestic product, a measure on which it had long lagged behind other NATO countries on.
Slovakia To Get New F-16 fighter jets a year later
The first deliveries of new U.S.-made F-16 fighter jets to Slovakia will come a year later than expected, in 2024, the Slovak Defence Ministry said on Thursday.
The ministry said the delay was due to supply issues coming from the two-year-old coronavirus pandemic and the global chip shortage.
It said the first deliveries should arrive in the first half of 2024.
Slovakia, a NATO member, signed a deal in 2018 to buy 14 jets, worth around $1.6 billion.
It had picked the F-16s made by Lockheed Martin Corp over cheaper Swedish Gripen jets produced by Saab.
Fourth Set Of Sanctions Against Russia
The EU announced late Monday that the 27-nation bloc has approved a fourth set of sanctions to punish Moscow for its invasion of Ukraine.
France, which holds the EU presidency, said in a statement that the bloc approved a package targeting “individuals and entities involved in the aggression against Ukraine,” along with sectors of the Russian economy.
The exact details of the latest package will be revealed in the EU’s official journal.
Since the war started last month, the EU has adopted tough measures targeting Russian President Vladimir Putin, Russia’s financial system and the country’s oligarchs. Last week, the bloc agreed to slap further sanctions on 160 individuals and added new restrictions on the export of maritime navigation and radio communication technology.
Nearly Half Of Russia’s Reserves Are Frozen
Russia said on Sunday that it was counting on China to help it withstand the blow to its economy from Western sanctions, which it said had frozen nearly half of its gold and foreign currency reserves.
“We have part of our gold and foreign exchange reserves in the Chinese currency, in yuan. And we see what pressure is being exerted by Western countries on China in order to limit mutual trade with China. Of course, there is pressure to limit access to those reserves,” Russian Finance Minister Anton Siluanov said.
“But I think that our partnership with China will still allow us to maintain the cooperation that we have achieved, and not only maintain, but also increase it in an environment where Western markets are closing.”
Western countries have imposed unprecedented sanctions on Russia’s corporate and financial system since it invaded Ukraine on Feb. 24 in what it calls a special military operation.
A month ago, Siluanov said Russia would be able to withstand sanctions thanks to abundant reserves and was even considering offering Eurobonds to foreign investors once the market volatility subsides.
On Sunday he said the sanctions had frozen around $300 billion out of $640 billion that Russia had in its gold and forex reserves.
Siluanov also said Russia will fulfill its state debt obligations and will pay roubles to its debt holders until the state reserves are unfrozen.
It May Have To Service FX Debt In Roubles Due To Sanctions, Says Russia
Russia’s finance ministry is preparing to service some of its foreign currency debt on Wednesday, but such payments will be made in roubles if sanctions prevent banks from honoring debts in the currency of issue, the ministry said on Monday.
“Is that a default? … From Russia’s point of view, we are fulfilling our obligations,” Finance Minister Anton Siluanov said in an interview with state TV aired on Monday.
Western sanctions over events in Ukraine have cut Russia off from key parts of global financial markets and have frozen nearly half of the country’s $640 billion gold and FX reserves, triggering the worst economic crisis since the 1991 fall of the Soviet Union.
Siluanov said Russia has to pay coupons on its Eurobonds on March 16 and has already asked Western banks to carry out the transaction.
But should a major part of Russia’s reserves be frozen, the payment could run into “particular challenges” as the possibility of those payments going through would depend on sanctions.
The government is due to pay $117 million on two of its dollar-denominated bonds on Wednesday.
“If we see complications with executing the order then on Tuesday we will prepare a relevant transfer order in the rouble equivalent,” Siluanov said in the TV interview.
Russia has the necessary funds to service its external obligations and may also use a yuan part of its gold and forex reserves if there is such a need, he said.
Several Russian banks have been banned from the SWIFT international payments network, hampering efforts to move money outside of Russia.
“The freezing of the central bank and the government’s foreign currency accounts can be seen as a desire by several Western countries to organize an artificial default,” Siluanov said.
The Chinese currency accounted for 13.1% of the Russian central bank’s foreign currency reserves in June 2021, compared with just 0.1% in June 2017, with Moscow’s dollar holdings dropping to 16.4% from 46.3% in the same period.
China is Russia’s top export market after the European Union. Russian exports to China were worth $79.3 billion in 2021, with oil and gas accounting for 56% of that, according to China’s customs agency.
Russia Plans More Support For Suppliers and IT Sector
Russia’s government on Friday proposed a raft of measures, including some for suppliers of state-owned companies and its IT sector, as it seeks to weather the impact of Western sanctions on its economy.
Prime Minister Mikhail Mishustin said the government was actively working on a third package of measures to counteract the sanctions, which would seek to support small and medium-sized enterprises, as well as systemically important firms.
One measure will give firms under Western sanctions the right to withhold the names of parties they are working with.
The finance ministry said suppliers to state-controlled companies would be absolved of fines if they fail to meet contractual obligations this year owing to Western sanctions.
“Suppliers are experiencing difficulties fulfilling their contracts under earlier-agreed terms due to sanctions,” the ministry said.
The digital ministry reacted to a mass exodus of Western firms by suggesting Russian IT companies begin urgent discussions with foreign firms about a phased transfer of technical support components, to limit disruption.
It asked firms to send it information about any foreign companies’ products and services that they had contracted to receive or paid for.
It said the heads of foreign companies’ Russian offices should not be held liable for their companies’ actions, acknowledging that they were not the final decision makers.
Russia, Belarus To Boost Union State Cooperation
The prime ministers of Russia and Belarus reaffirmed their commitment to a union state between their two countries on Monday and stated the importance of cooperation in the face of Western sanctions.
“We are taking coordinated measures to protect our economic security and the technological sovereignty of Russia and Belarus,” Russian Prime Minister Mikhail Mishustin said after meeting his Belarusian counterpart Roman Golovchenko in Moscow.
“Above all, we consider it necessary to strengthen integration in the union state,” he added.
The two Slav neighbors are formally part of a “union state” and have been in talks for years to move closer together, a process that accelerated after Russian President Vladimir Putin propped up Belarusian leader Alexander Lukashenko in 2020 when his rule was threatened by months of mass street protests.
Western nations imposed sanctions on both countries.
“We are grateful to our Belarusian friends for their constructive position on the situation around Ukraine,” Mishustin said. “For us this is very important and valuable.”
“I am convinced that the illegitimate economic sanctions will not hinder the advancement of integration in the union state and the further development of our fraternal relations,” he said.
Russia To Strike Military Industries
The Russian military says it will carry out strikes to knock out Ukrainian military industries.
Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov said Monday that the Russian forces will “take measures to incapacitate enterprises of Ukraine’s military-industrial complex involved in production and maintenance and repair of weapons.”
He urged workers of those plants and residents of nearby areas to leave “potentially dangerous zones.”
Konashenkov’s statement came hours after Ukrainian authorities said two people were killed when the Russian forces struck the Antonov aircraft-making plant on the outskirts of Kyiv, sparking a large fire.
The Russian military also said that it will continue to target any foreign fighters who have come to Ukraine.
Russian Defense Ministry spokesman Maj. Gen. Igor Konashenkov said that the Russian forces will show “no mercy for mercenaries wherever they are in the territory of Ukraine.”
Russia Denies Report Of Arms From China
Kremlin spokesman Dmitry Peskov on Monday denied media reports alleging that Russia asked China for military assistance to help advance its offensive in Ukraine.
“No, Russia has its own potential to continue the operation, which, as we have said, is unfolding in accordance with the plan and will be completed on time and in full,” Peskov told his daily conference call with reporters.
Peskov also stressed that the operation in Ukraine was going as planned and that the Russian military were ensuring “the maximum security of the civilian population.”
He said that at the “beginning of the operation” that Russian President Vladimir Putin had ordered the military to refrain from “the immediate storming” of large cities including Kyiv because “armed nationalist formations set up firing points, place heavy military equipment directly in residential areas, and fighting in densely populated areas will inevitably lead to multiple casualties among civilians.”
He added that “at the same time, the Defense Ministry, while ensuring the maximum security of the civilian population, does not rule out the possibility of taking full control of large settlements that are now practically surrounded, expect for areas used for humanitarian evacuation.”
Canada Looking At Boosting Oil Pipeline Flows To U.S.
Canada is studying ways to increase pipeline utilization to boost crude exports as Europe seeks to reduce its dependence on Russian oil, the country’s natural resources minister said on Thursday.
Pipeline operator Enbridge Inc said in a statement it was in talks with the government “about how the industry can help relieve the current energy crisis”.
Most of Canada’s crude exports travel to the U.S. on Enbridge’s Mainline system, with another 590,000 barrels a day flowing on TC Energy’s Keystone pipeline.
TC Energy said in an email it “regularly engages with governments” across its businesses, and the Keystone pipeline is fully utilized.
“We are looking at whether our pipeline network is fully utilized,” Natural Resources Minister Jonathan Wilkinson said in a telephone interview. He said the aim was to make an “incremental” increase in exports to Europe.
Canada exports more than 4 million barrels a day of oil to the United States and a small portion of that is then re-exported to other countries.
“Both our liquids and natural gas systems are at or near capacity but we’re exploring options that may be taken to provide more energy to the U.S. and Europe. That includes using export facilities on the Gulf Coast for crude and natural gas,” Enbridge said.
Wilkinson said he would travel to Paris in two weeks for a meeting of the International Energy Agency, where he would get a better idea of Europe’s future needs.
The government is conducting the analysis to ramp up pipeline flows together with industry, Wilkinson said, adding that he expected to “have an answer in terms of what Canada can do” as soon as next week.
Even if Canada is able to increase pipeline export capacity, many producers have been reluctant to adjust spending plans to significantly boost output.
However, Suncor Energy’s chief executive, Mark Little, said earlier this week he expects Canadian production to climb by a “few hundred thousand” barrels this year as prices soar.
Canadian oil companies exported a record amount of crude out of the U.S. Gulf Coast at the end of 2021, most of which went to big importers India, China and South Korea.
French NGOs Threaten Court Action Unless TotalEnergies Leaves Russia
Two leading French NGOs plan to take legal action against TotalEnergies unless it cuts its business ties with Russia, they said in a letter to the energy major’s CEO.
Greenpeace France and Les Amis de la Terre (Friends of the Earth) France, in a registered letter to CEO Patrick Pouyanne, said the company must comply with a 2017 French law.
TotalEnergies declined to comment on the letter.
Russia represented 24% of TotalEnergies’ proven reserves and 17% of its combined oil and gas production in 2020, company documents show.
TotalEnergies holds a 19.4% stake in Russian gas producer Novatek, some of whose directors and shareholders are reported to be close to the Kremlin and are targeted by Western sanctions. The company also holds, directly or via Novatek, major liquefied natural gas assets and projects.
Planes Leased By Russia
The fate of hundreds of planes leased by Russian airlines from foreign companies grew murkier Monday after Russian President Vladimir Putin signed a law letting the airlines register those planes and continue flying them.
Russian state media said the law will let Russian airlines keep their fleets and operate foreign planes on routes within Russia.
Many of the planes used by Russian airlines are leased from foreign companies, including several in Ireland, a member of the European Union. Last month, the EU banned the sale or leasing of planes to Russia as part of sanctions to punish Russia for invading Ukraine. It gave leasing companies until March 28 to end current contracts in Russia.
Last week, Russia’s air-transport agency advised airlines with foreign-registered planes not to take them out of the country because of the risk they could be repossessed.
Various estimates place the number of foreign-owned planes operated by Russian airlines at around 500 or more, and the vast majority of them were inside Russia when the war started Feb. 24. Aviation consulting firm Ishka estimates that the foreign-owned planes are worth $12 billion, nearly half of that by Irish-based lessors.
