Aklog Birara (Dr)
Part one of five
On March 4, 2022, the International Monetary Fund (IMF) Executive Board met and received a briefing on “the economic impact of the war in Ukraine, and on possible fast-tracked financial assistance for affected countries.” There is no doubt that costs to human life and the damage to the economy in Ukraine are massive. More than two million Ukrainians have fled their homeland. Equally important, underreported, and underappreciated is the unprecedented and coordinated sanctions on Russia by the West. This punitive action has triggered a global inflationary pressure that can potentially cause popular uprisings in non-food producing countries. Yet, this and other unintended consequences of severe sanctions are dismissed by populists and liberals. The moral argument is that cost of defending Ukraine overrides everything else.
I agree with the initial assessment by the IMF that war will cause severe adverse consequences for the global economy. Price inflation in the US was 7.9 percent in February. CNN’s Business commentator Mark Wolfe reports as follows. “Rising inflation is hitting all sectors of the economy. The overall rate of inflation on an annual basis reached 7.5% at the end of January, the highest level since 1982. Gas prices, in particular, are rising especially fast, reaching $4.25 a gallon on Wednesday, March 9, up from about $2.86 per gallon last March. That means filling a 20-gallon tank right now costs $85, up from $57.20 last year at this time.”
Families need help
Wolfe quotes Moody’s analytics that had estimated “inflation was costing the average household $276 more per month, or about $1,100 per quarter. And given the instability in oil markets over Russia’s invasion of Ukraine, it wouldn’t be surprising if those costs increased to more than $300 a month. Many Americans, especially those who are low- and moderate-income, can’t afford to absorb such rapid price increases…. Families need help now.” If American families need help from their government and are most likely to receive stimulus checks, what would the poor in less developed countries do?
Energy Economist Mark Wolfe suggests that “The administration should ask Congress to authorize a payment of $1,100 per household to pay for four months of higher prices going forward and provide an option for the president to provide a second or even third check to low-and-moderate income families for an additional four months in the event that prices remain high. We don’t know when this crisis is going to end or when prices for essential goods and services will return to more affordable levels… Of even greater importance, helping families afford higher prices will send a message to the global community that the US will stand behind its citizens, especially those who are least able to pay the higher costs of rising prices on their own.”
Against this recommendation, consider what happens to the rest of the world where governments do not have the financial means to subsidize their citizens at a time of inflationary pressure.
Food and gasoline prices are rising at an alarming rate. In my neighborhood in Maryland, the price of a gallon of gas went up from $3.29 to more than $4.00. Long before the Russia and Ukraine war, the supply chain was already shaken. Inflation in the US has been going up for months. The war no doubt will worsen it. Inflationary pressure in Ethiopia, Egypt, oil rich Nigeria and several Middle Eastern countries that import food grains such as wheat is surging at an alarming rate. So, the hope of a global recovery after the devastating impacts of the Covid-19 pandemic is challenged by an unexpected war.
Why would people revolt?
When there is nothing to eat, people revolt. This occurred during the Arab Spring. War and the drumbeat for more war brings out the worst in humanity. War kills: war destroys investments. War is destabilizing. War undermines democracy and the rule of law. War induces price escalation in which some make profits; while most folks are unable to buy bread.
Douglas Fraser’s “The effects of war on food prices” published by the BBC last week wrote “As hostilities step up in Ukraine, the drumbeat of the wider economic war is getting louder. Energy and other commodity prices have been rising steeply, and the prospect of an embargo on Russian oil has accelerated that. Food prices were already rising before war broke out, due to Covid pandemic, supply chain disruption and energy prices increasing. As major exporters of grain and vegetable oil, conflict around the Black Sea is already disrupting shipping. As global commodities, food price inflation is gathering pace…. oil embargo on Russia has sent the price soaring once more.”
This alarming price escalation of commodities on which ordinary people depend reminds me of the near collapse of the world economy in 2008. Unintended consequences that emanate from bad public policy affect human life, peace, security, and stability across the board. In a globalized market system, no country can codon itself from harm. I remember in 2008 when I was at the World Bank my investor friends lost their investments over night. They blamed the market and not the policy and decision-makers. There was no war then. There is now.
The most vulnerable people around the world are not worried that much about price escalation of oil and gas. Among other things, they do not possess cars. They worry about bread though. Remember the popular Arab Spring that changed regimes overnight. “But it’s not just energy. Where raw materials are treated and traded as global commodities, war in Ukraine has sent other prices sharply up, and stock markets down. Reuters reports that last week saw nickel rise 19%, aluminum by 15%, zinc was up 12%, and copper increased 8%.,” says Fraser.
These industrial commodities are important for the global economy. But folks must eat first before they can worry and entertain other options. “The one to watch for all of us, even in the world’s poorer households where they have little concern about the price of gas for heating or oil for cars, is food. Securing a futures contract to supply wheat saw a 60% surge last week, and corn was up 15%. Russia and Ukraine together account for around 30% of internationally traded wheat. Not much comes to Europe, instead going from Black Sea ports to the Middle East and Africa.” The price of bread rose by 50 percent in Egypt. Price inflation in Ethiopia exceeds 30 percent.in oil rich Nigeria drivers stood in line to buy gasoline.
Do not attribute all the world’s problems to the war
I do not subscribe to the characterization of inflation as “Putin’s price hike.” He does not dominate the global economy. It is important to remember that prices were rising before the war. The war exacerbated the problem. it did not create it. So, blaming Russia does not make sense. Russia did not cause climate change. Russia did not create the COVID-19 Pandemic either. Nor did China. You cannot dismiss global warming or the Pandemic both of which feature prominent in price escalation. You cannot dismiss the fact on the ground that more than 80 million people suffered from malnutrition before the war. You cannot dismiss the fact that tens of millions of people in Afghanistan, Central African Republic, Chad, Democratic Republic of the Congo, Ethiopia, Iraq, Libya, Mali, South Sudan, Sudan, Somalia, Syria, Yemen, and Zimbabwe suffer from inadequate food and millions of children from malnutrition. The root causes of their predicaments remain unaddressed.
The Covid-19 Pandemic for which treatment has been unfairly and unevenly distributed leaving most Africans exposed to this global disease contributes to food price inflation. Sick farmers cannot farm and produce foods. In some countries, migrant workers who have farm produces have been unable to do so because of the Pandemic and restrictions associated with its management.
In the USA, officials attribute price inflation to disruptions in the supply chain. You look at congested ports in California and you would think that it is like a war zone. But there is no war in the USA. So, what is the real explanation then?
Someone should explain to me why policy makers do the opposite of what is best for the common good? How do you resolve the supply chain crisis by suffocating sources of food and other essential supplies?
Inflation affects low- and middle-income people the most.
An irritated Ethiopian complained that the cost of edible oil has gone through the roof. An official responded to him saying find an alternative to use. It is easy to say this but harder to offer a reasonable alternative that citizens need to survive.
FAO estimated that the cost of vegetable oils rose by 8.5 percent in a single month. This is explained by the fact that Russia produces “80% of the world’s vegetable oils.” This is why I argue that you will affect the supply chain if you take drastic and punitive measures against the sources of supply, any source for any commodity.
The IMF reported that “Price shocks will have an impact worldwide, especially on poor households for whom food and fuel are a higher proportion of expenses. Should the conflict escalate, the economic damage would be even more devastating. The sanctions on Russia will also have a substantial impact on the global economy and financial markets, with significant spillovers to other countries.”
War by another means
Punitive economic and financial measures (sanctions) by the USA-led West are instruments of punishment. In my mind it is a war-like punishment. Sanctions degrade relations among nations. They cause inflation and contribute to instability. They hurt the most vulnerable population regardless of country, nationality, or faith.
What concerns me is the orchestrated and synchronized Western media blitz concerning the Russia and Ukraine war. Although the parallel may seem far-fetched, I shall take the risk and illustrate using a parallel narrative of the TPLF-instigated war in Ethiopia and the war between Russia and Ukraine as reported by Western media.
First, in both cases, there is an assertion of moral ground and authority underpinning violations of human rights. in the case of the Tigray war in Ethiopia, the primary culprits were the governments of Eritrea and Ethiopia.
Second, Western corporate media was unabashed in representing the views of high government officials. It was relentless in sourcing and presenting fake data as accurate; in demonizing Ethiopian and Eritrean forces in tandem for rapes, killings, genocide, blockade of food aid to Tigreans, destruction of social and physical infrastructure etc.
Third, Western Corporate media refused to present counter view. For example, I personally wrote Op-eds to the BBC, the Washington Post and others countering misleading and unfair statements. None was published.
Fourth, the drumbeat by Western Corporate media emboldened the TPLF to pursue its insurgency, expanding the war to the Afar and Amhara regions, raping girls and women, looting, damaging, and destroying investment properties, displacing millions of people and encouraging other terrorist groups to make Ethiopia ungovernable.
Fifth, Western Corporate media placed the TPLF at par with the duly elected government of Ethiopia. In effect, Western government official and corporate media absolved the TPLF from accountability for crimes of war, genocide, crimes against humanity and economic crimes. The war continues unabated.
Neither Western government officials nor corporate media reported human atrocities, displacements of more than ten million Ethiopians and the massive destruction perpetrated by the TPLF. This lack of parity or balanced or even-handed treatment of Ethiopia in Black Africa on the one hand and Ukraine a White European country is out there for anyone with conscience to compare. There is a bias.
The synchronized propagation of one-sided and partisan narrative and verdict against Eritrea and Ethiopia eviscerated the trust and confidence tens of millions of Ethiopians and other Blacks in the global order dominated by the USA and in the democratic system of governance. Democracy is good if the core principles that underpin it are applied universally.
I am not saying all nations are equal. They are not. There are substantial differences between the Russia and Ukraine War and the civil war in Ethiopia. Ukraine is European and more developed, and Ethiopia is African and least developed. Russia is a Superpower with nuclear weapons. Ethiopia is one of the poorest countries in terms of per capita income. All three are, however, sovereign countries with their own national interests. Behind these differences are real human beings who deserve fair and equitable treatment. In any case, you cannot deny there are similarities to: war is war regardless of race or country.
In summary, the Russia and Ukraine war has triggered an inflationary spiral that will affect hundreds of millions of low- and middle-income people across the entire planet. Middle- and high-income countries are not spared. Americans have begun to complain about escalating prices of consumables. This is a global matter as much as the COVID-19 Pandemic was. The solution is global not national.
I subscribe to the fundamental principle those who commit genocide, war crimes, crimes against humanity and economic crimes must be held accountable in a court of law. For those of us who have been calling and urging Western democracies led by the USA to hold the TPLF accountable for war crimes, genocide, crimes against humanity economic crimes though looting, deliberate damages and destruction, the response was deafening and hypocritical. The sense I get is that Africans killing Africans is a norm. For this reason, Western democracies must be careful that treating European lives as more worthy than African Black lives will establish a precedent that generations of Africans and other Blacks are likely to remember.
The Russia and Ukraine war worries me as much as the ongoing civil war in Ethiopia. The drumbeat for more war is not the answer. I suggest that it will be wise to tone down the war drumbeat and come up with a constructive resolution that protects the national and security interests of both Russia and Ukraine. After all, it is Russians and Ukrainians who must coexist as neighbors. Bridging the gap in sentiment is much more compelling imperative than inducing mutual destruction. Ethiopia did this with Eritrea after a brutal war led by TPLF that claimed the lives or more than 80,000. War is brutal in more ways than one.
The renowned former US Secretary of State, Dr. Henry Kissinger is right. In his Op-ed in the Washington Post on March 5, he said “Public discussion on Ukraine is all about confrontation. But do we know where we are going? In my life, I have seen four wars begun with great enthusiasm and public support, all of which we did not know how to end and from three of which we withdrew unilaterally. The test of policy is how it ends, not how it begins.
Far too often the Ukrainian issue is posed as a showdown: whether Ukraine joins the East or the West. But if Ukraine is to survive and thrive, it must not be either side’s outpost against the other — it should function as a bridge between them.” I understand this to mean that the end game is not to pressure Ukraine to join NATO but to save it as an independent bridge between Europe and Russia.
I do hope and pray that Dr. Kissinger’s fresh perspective saves the entire world from a looming 3rd World War.
Finally, it saddens me to record that Western governments and their corporate media are making matters even worse by being openly partisan, vitriolic, and warmongering. They did the same thing concerning the TPLF initiated war in Ethiopia in which human atrocities and massive economic destruction have and are still taking place. This too deserves accountability in a court of law. This too must stop now.
Part II will follow
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The war in Ukraine does not show any sign of letting up. It is rather pushing towards a dangerous face off between the bully in Kremlin and the West. The bully is now concocting an excuse to start using banned weapons of mass destruction. Already there is evidence that the bully is using banned cluster bombs around civilian domiciles. Now he is preparing to use chemical weapons. He thinks he can get away with it since nothing was done after he and his orphan in Syria used such banned weapons on insurgents there. Nobody bothered to disturb a hair on Nasser when he used chemical weapons on Yemeni rebels several times in 1964 thru 1967. But if the bully in Kremlin start using chemical or biological weapons in Ukraine that will be too dangerously close to the NATO member countries. Folks, this does not look good at all. One wrong move by either side could mean the beginning of the end of it all!!!
One more thing. If this bully ends up using chemical or biological weapons on Ukraine and gets away with, that will embolden others to use similar weapons on their weapons. I have said this several times before. If that superpower wannabe in Al-Qahirah decides to invent our old country using his orphans in Khartoum as his beasts of burden there will be no doubt in my mind he we will use such banned weapons of mass destruction. So the old country should be prepared for such calamity on what comparable measures it will respond. It is reported that Egypt is not a signatory of the ban of using such weapons. It had used chemicals and nerve agents on fellow Arabs. Then what makes you think it will not use it on ‘abd’s’ aka niggers’? It is also reported that Egypt has stock piles of both chemical and biological weapons. I am not scaring anyone but it is a fact. When you hear Egypt has a special unit in its armed forces trained to wage war in jungle environment, you should ask why? Israel is not a jungle country. Libya or Sudan is not a jungle country. Present and future governments of the country should always bear this in their mind.