Bread as the new world currency
Which countries will suffer the most from the shortage of Ukrainian grain due to the blockade of onions?
Russia's blockade of the ports of Azov and the Black Sea and the occupation of some settlements in southern Ukraine pose a real threat to countries that depend on Ukrainian grain, corn and other goods.
Earlier, Ukraine successfully exported most agricultural products (80-90 percent) by sea - from five to six million tons per month from Odessa, across the Black Sea, Kherson, the South and Mykolayiv.
Due to the forced transition to land transport, this figure, and thus exports, fell to catastrophic rates - for example, in March 2022, Ukraine exported only 200 thousand tons.
Rail and road traffic are much slower and have much lower bandwidth. In March, the Ukrainian government banned the export of some strategic goods: millet, rye, oats and buckwheat. But wheat, sunflower oil and corn can be exported.
What does the war in Ukraine mean for the Arab world?
Due to the arid climate, some countries in North Africa and the Middle East depend on Ukrainian agricultural products. As early as 2021, Ukraine and Russia controlled up to 30 percent of the grain market in this part of the world. According to the US Department of Agriculture, in January 2022, Ukraine provided 12 percent of world exports of wheat, 16 percent of corn, 18 percent of barley and 19 percent of oilseed rape.
Hunger, inflation, stagnation. Where is the world economy going and how is it affected by the war in Ukraine?
The shortage of Ukrainian grain, along with rising bread and energy prices, could lead to significant popular discontent. Especially in big countries like Egypt and Algeria.
Apart from the fact that there is no grain, there is no more fertilizer. And without fertilizer there will be less harvest in the next sowing cycle and more famine. Infrastructure destruction and the lack of an economy will bring Libya, Yemen and Syria to the brink of survival. Two years of pandemics and years of drought have made the Arab world poorer and more vulnerable to external global changes.
Before the war there was a jump in the prices of these goods. The number of undernourished increased from 440 million to 1.6 billion. By the beginning of 2022, 276 million people worldwide were already facing severe famine. This number is expected to increase by 47 million.
Countries such as Egypt, Somalia, Libya and Mauritania are about 50 percent dependent on Ukrainian grain. Seychelles - almost 100 percent, and Lebanon 80 percent.
The Arabian Peninsula will be less affected due to large financial reserves from the sale of oil, but the problems there cannot be completely ruled out. For example, Qatar imports 64 percent of its wheat from Ukraine.
Especially having in mind the growth of inflation in the region of 14.8 percent in 2021, according to the IMF. As in a real war, there are some hot spots.
Cereal exports: the hottest spots
Consider a few examples of how the described lack of Ukrainian exports can significantly weaken the economic and food security of Arab countries.
Lebanon
The situation is particularly threatening in the spring in Lebanon, which lost its main port of Beirut in 2020 after an explosion of saltpetre. As a result, in February 2022, the country had storage capacity with reserves for only one month.
The difficult economic situation and political turbulence have forced the country to rely on World Bank grants and subsidies (to lower bread prices for the poorest). But this "help", as acknowledged by the Lebanese government, is not infinite.
Meanwhile, 75 percent of Lebanese already live in poverty, and the local currency has fallen by 90 percent against the US dollar. Without an urgent replenishment of grain stocks and the creation of new warehouses, Lebanon could be on the brink of starvation.
Lack of food can cause even fiercer protests than in 2019, because people will not lose anything - they have nothing to eat.
Egypt
The situation in Egypt is difficult, although not so difficult. The country's demand for grain is 12 to 14 million tons a year - this country is 80 percent dependent on grain imports. Of that, 60 percent are products from Ukraine and Russia.
For example, in 2021, Egypt imported 5.5 million tons of only four key agricultural products from Ukraine (corn, wheat, sunflower oil and sunflower meal). About 70 million people depend on subsidized bread. President Abdel Fattag Al-Sisi set aside $ 3 billion in August 2021 for these purposes.
The problem is that these subsidies are the basis of the social contract between the state and the population. Destroying this foundation can cause discontent among people. Rising prices have already led to revolutions twice - in 2008 and 2011.
Today, Russia uses Egypt's vulnerability in agriculture, as one of the tools of propaganda and hybrid war against Ukraine.
The main narrative of Russian propagandists to turn the Egyptian government against Ukraine is the thesis that Ukraine does not make concessions to unblock ports, to export grain, to take revenge on Egypt for neutrality when it comes to sanctions against Russia.
At the same time, the Kremlin will prove to be a "reliable partner" ready to provide the necessary products to avoid a food crisis.
The Kremlin recently tried to sell stolen Ukrainian grain to Cairo, but did not find support from the Egyptian authorities, which refused to accept Russian ships with stolen products.
Russia's attempts to sell Ukrainian grain will not stop there - it will most likely repackage Ukrainian products under Russian flags and try to sell it again.
That is why the vigilance and activity of the Ukrainian side is important here - to constantly communicate with all colleagues dependent on Ukrainian agricultural products and to prevent the sale of stolen Ukrainian grain in advance.
Yemen
Due to the global food crisis, this poses a huge threat to Yemen. This country is about 50 percent dependent on grain imports from Ukraine and Russia. The war-torn country is already the "poorest child" in a large Arab family, and is struggling with a major global food crisis.
According to the UN, 17 million Yemenis are already at risk of starvation, and 30,000 Yemenis are already directly suffering from hunger.
In the world
The war in Ukraine, climate change and problems in the supply chain will increase hunger not only in Arab countries. There is a real danger of starvation. Prior to February 24, the world had 800 million hungry people, another 30 percent of whom were at risk of malnutrition.
Now, according to UN WFP Executive Director David Beasley, the price of the consumer basket rose 34 percent in April from 2021. And in places like Syria, Yemen and Libya, it could rise 100 and -200 percent, respectively.
At the end of the year, when the crisis really hits the MENA region (Middle East and North Africa), a new wave of mass migration can be expected, including in Europe.
So what are the solutions? Continuation of exports: how to release stocks in Ukraine
Of course, the best option for all is Ukraine's victory in the war.
A temporary alternative is to push the Russian occupiers to the borders from February 23, 2022, and temporarily push them back to Crimea. To achieve this, Ukraine needs the strong support of partners.
It is now important to continue systematic work on involving other countries in the process of unblocking Ukrainian ports. For example, Turkey, USA, Canada, Great Britain under the auspices of the UN. Ports must be unblocked, ignoring Russian blackmail.
The leader of this process should be the UN with the participation of the Black Sea countries: Turkey and Romania. Romania is already helping Ukraine in this matter, but it is worth noting that the main Romanian port was not ready to accept such a large amount of cargo.
Today, most agricultural products cross the Danube to Constanta, because only this port can accept large quantities of products in large containers. In addition to Ukrainian grain, Istanbul also brings Romanian, Bulgarian and Serbian grain.
In addition, today many Gulf countries have started renting capacity in Constanta for their cargo, which will leave Ukraine.
But the nuance is that Kontanca is not adapted for so much load. Therefore, other ports are already being considered as an alternative, such as the Bulgarian ports of Varna and Burgas.
Not everything is so easy with the railroad. Ukrainian rails are wider than European ones, so the grain will have to be reloaded into new wagons, which will mean a waste of time. Here you can work with containers that are quickly overloaded with cranes. But even under such conditions, Ukraine will be able to export only 10 to 20 percent of pre-war quantities of grain by rail.
However, all this does not solve the main problem - if Ukraine and its world partners do not find a way to unblock ports in the next month, hundreds of millions of people around the world will starve in the near future.