— Eurasia Review
WHEN Russia bombed the port of Odessa, it was not a good start for the new grain export deal. If anyone believed that this agreement between Moscow and Kyiv would have a positive ripple effect on the war raging elsewhere in Ukraine, surely the Russian military has destroyed that wishful thinking.
The international outcry against Russia’s bombardment of Odessa, as in its previous strikes on shopping malls, train stations and hospitals, has been fierce. “Hitting a crucial target for grain export the day after the signing of the Istanbul Accords is particularly condemnable and demonstrates once again Russia’s total disregard for international law and commitments,” tweeted Josep Borrell Fontelles, which coordinates the foreign policy of the European Union.
Despite Russia’s action, the grain export deal is likely to hold. After all, Russia technically did not violate the agreement. The Kremlin promised only to avoid hitting ships carrying food to the outside world.
More importantly, the agreement was designed to benefit all parties. Ukraine needs the export earnings from the roughly 22 million tonnes of wheat, corn and other produce in its warehouses, and it needs to get rid of that surplus to make way for this year’s harvest. Turkey will earn money by facilitating the transport and sale of goods. And Russia, under a side deal, will get sanctions relief for its own agricultural exports, which will bring in billions of dollars given both Russia’s record harvest and global food prices. students.
The deal also helps Russia address reputational damage related to its naval blockade of Ukrainian ports, which has helped drive up food prices around the world. Russia has hit back at accusations that it weaponized food by blaming the West for causing the food crisis with its punitive sanctions against the Kremlin. Russian Foreign Minister Sergei Lavrov is on a tour of Africa in an effort to boost the Kremlin’s brand, which depends not only on agricultural trade, but also on huge amounts of arms sales and the services of security companies. safety like the Wagner group.
The recent grain deal, brokered by Turkey and UN Secretary-General António Guterres, will take some time to implement. A whole surveillance system must be put in place to ensure that the ships that leave contain only food and that they do not return full of weapons. There are mines around Odessa that should be avoided or removed. So countries in the Middle East and Africa will have to wait a while to see the Ukrainian and Russian grain they have depended on for so long.
Even then, it is unclear how much the resumption of grain shipments will have on food prices. These prices jumped dramatically in March, after Russia invaded Ukraine. “Cooking oils, grains and meats hit all-time highs, meaning groceries cost a third more than the same time last year, according to the monthly food price index. of the Food and Agriculture Organization of the United Nations,” The Guardian reported in April. Wheat prices alone jumped nearly 20% last March.
Soaring food prices have, in turn, brought people to the streets around the world, from Peru to Palestine to Indonesia, to protest their governments’ inaction on inflation. The Sri Lankan government, which had been in place for most of the past two decades, fell due to the unprecedented economic crisis the country is currently experiencing. In the Sahel, 18 million people are facing severe famine due to reduced harvests, while 13 million people are experiencing severe drought in the Horn of Africa. Usually it’s the World Food Program that steps in to help. But the WFP buys more than half of its wheat from Ukraine. An estimated 47 million people are on the brink of starvation.
Who should all these people blame for their predicament?
Food prices were already on the rise before Russia invaded Ukraine. Supply chain issues linked to the Covid pandemic, soaring prices for inputs like fertilizer linked to rising energy prices, reduced harvests linked to climate change – all of these have contributed to the rise prices from 2020.
A lesser known factor has been financial speculation. After the food price spikes of 2007-2008, the International Food Policy Research Institute published an analysis that would prove prophetic:
“The flow of speculative capital from financial investors into agricultural commodity markets has been drastic, and the number of future contracts being traded is increasing over time. From May 2007 to May 2008, the volume of grain futures and options traded globally increased significantly. Excessive speculation in the commodity futures market could, in principle, drive up futures prices and, through arbitrage opportunities, spot prices above levels warranted by market fundamentals. supply and demand.
The recent drop in food prices—after the spike in March, the cost of a basket of foodstuffs began to fall—proves that “excessive speculation” did indeed play an influential role. Commodities have yet to leave Ukraine or Russia, so the decline is more related to expectations that a coming recession will reduce demand, which, as economist Ann Pettifor points out, has dampened speculation financial. The supposed laws of supply and demand have nothing to do with it.
However, I don’t think these factors allow Russia to get away with it. Vladimir Putin has clearly targeted Ukrainian agriculture as part of his overall assault on the country. It was not just the blockade of Ukrainian ports, which the Russian government had signaled its intention to do a few days before the invasion. Once the war began in earnest, the Russian military struck grain terminals, blew up silos and burned fields, diverted Ukrainian grain to sell as Russian exports, stole agricultural equipment and destroyed a bridge connecting Ukrainian farmers to export markets in Romania.
These measures were aimed at cutting off Ukraine’s access to its own food supply and depriving it of export earnings. But another strategy could also have played.
Those close to Putin have spoken of the Russian leader’s belief that he can outlast the West, which will eventually face shifts in public opinion after months of rising energy prices. Even more worryingly, Putin pushed for a grain blockade in the hope that it would ‘lead to instability in the Middle East and cause a new flood of refugees’, according to Russian economist Sergei Guriev, former chief economist of the European Bank for Reconstruction. and Development. Former Russian President Dmitry Medvedev effectively acknowledged Russia’s militarization of food when he wrote in April that “many countries depend on our supplies for their food security.” Turns out our food is our silent weapon. Quiet, yet powerful.
Russia would not be the first country to use food as a weapon in this way. African expert Alex DeWaal identifies seven cases of governments using this tactic, which the United Nations has declared a war crime. The Saudi-led coalition behind the war in Yemen, for example, has blocked ports and prevented food deliveries from reaching starving Yemenis, and, although the blockade has been eased, it is still in place in parts of the north. The Ethiopian government restricted the flow of food and funding to the Tigray region in an attempt to starve the rebel state into submission. Syria, South Sudan, Myanmar, Venezuela, the governments of these countries have also bet on this brutal and unfortunately effective strategy.
Why Russia signed the agreement
PUTIN is clearly worried that time is not, in fact, on his side. Although he has continued to pursue maximalist goals, once again recently asserting that regime change in Kyiv is a priority, Russian forces have reached what may prove to be the culmination of their territorial acquisition. Ukraine’s effective use of high-mobility artillery rocket systems to target Russian artillery positions and logistics centers behind the line of engagement not only halted the Russian advance in key areas, but paved the way for a Ukrainian counteroffensive to retake the city of Kherson and other southern territories.
Yes, inflation is taking its toll in the West. The European Union, preparing for the impact of reduced Russian energy imports in winter, has just reached an emergency agreement to reduce natural gas consumption by 15% from next month until next March . Americans’ willingness to pay a price to prop up Ukraine — higher energy costs and the risk of escalation — has fluctuated since March and likely won’t last forever.
But Putin faces a tougher challenge. He doesn’t have the soldiers for an indefinite war of attrition. Its military-industrial complex was hit hard by the sanctions, so much so that it went to beg Iran for drones. The Russian economy has been essentially gutted, with domestic production at a standstill and foreign companies that accounted for 40% of Russia’s gross domestic product not coming back anytime soon. The only thing holding Russia back from the precipice is its energy exports. These are important, of course, but they will not be enough to save the country from a downward spiral à la Venezuela.
That’s why Putin needs to start selling his grain, salvage Russia’s reputation as one of the world’s biggest food importers, and consolidate whatever gains he can in the territories the Russian military has seized from Ukraine. Sensing desperation, Kyiv will press what he thinks is his advantage.
This war will not end with a clear victory – Russia will not take over all of Ukraine, Ukraine will not deprive Russia of all its ill-gotten gains – but only with what both sides can claim as a victory. In the meantime, as the standoff continues in one of the world’s major breadbaskets, the eventual delivery of food to the world’s hungry will be a win for everyone.
CounterPunch.org, July 29. John Feffer is the director of Foreign Policy in Focus.