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The “War” and the Price of Bread

                             

Image source : ABC 7

Aklog Birara (Dr)
Part two of five 

I believe African countries and Africa’s immense youth will be better off when the world enjoys peace and stability. Peaceful coexistence among citizens within countries and mutually respectful relations among all nations are imperative for sustainable and equitable development. Evidence on the ground shows that less developed countries such as Ethiopia continue to suffer immensely from lack of peace and stability. For example, an estimated 70 percent of Ethiopian youth in urban areas are either unemployed or underemployed.   

What does youth do in search of opportunities? 

The simple answer is that they migrate out of their homelands. Each year, hundreds of thousands Ethiopian youth migrate to the Middle East and to the rest of Africa. The COVID-19 Pandemic has restrained this flow. The best and more predictable option is to create favorable economic and political governance conditions so that they enjoy productive lives within Ethiopia. 

What do ordinary Ethiopian households do when food and other essential prices hit the roof? 

In both instances, the most reliable option is to create a resilient economy. In the meantime, the USA and other developed nations can mitigate social and economic risks for ordinary Ethiopian– the majority of whom are below the age of 35 –by not initiating punitive financial and economic sanctions.

The suspension of Ethiopia from the Africa Growth and Opportunity Act (AGOA) by the US Administration sends the wrong signal to Ethiopian youth, especially employed women who support extended families. It forces youth, including girls to migrate out of Ethiopia. 

This is the reason I object to the draft resolution, H.R.6600 – Ethiopia Stabilization, Peace, and Democracy Act that is consequential if passed into law. It will make matters worse and not better in Ethiopia. It will destabilize an already fragile country. It will undermine peace because it does not deal with the root causes of Ethiopia’s ethnicized and conflict prone system. It will undermine democracy because it challenges and diminishes the legitimacy of an elected government. The Ethiopian people must be the primary stakeholders with the right to challenge the government they elected. 

This is not to say that I do not acknowledge the degradation of human rights by various fronts, or the perpetration of atrocities based on ethnicity. The foreign policy instrument of economic and financial punitive measures punishes the poorest of the poor the most. In other words, HR 6600 does the opposite. 

Fort these reasons, it is advisable for US Congress not to pass HR 6600 into law. Forcing countries and governments such as Ethiopia that is defending itself from total collapse to obey America’s will has far-reaching social and political consequences throughout Africa. The background to HR 6600 shows callousness in diplomacy. The government of the United States failed to demand accountability from the TPLF for crimes of war, genocide, and crimes against humanity. Its treatment of the TPLF at par with the elected government of Ethiopia is colonial and or imperial. How fair is that?

The TPLF invaded the Afar and Amhara regions. It looted private properties. It committed genocide of the Amhara and Afar. It caused massive damages to social and economic infrastructure. The costs involved in the two regions are in the tens of billions of dollars

The Oromo Liberation Front’s Army called Shine is also committing atrocities based on ethnicity and faith in general and targeting the Amhara in particular. So, why did the West led by the USA fail to demand accountability for these human and economic crimes by the TPLF and OLA/Shine? Why is Ukraine, a European natation treated differently from that of Ethiopia, a Black African state? 

Asymmetrical foreign policy measures do not strengthen trust and confidence in the international system or world order. 

I compare the Russia and Ukraine war with that of the 15-month war in Ethiopia and find US policy towards both troubling. To his credit, former US Secretary of State Dr. Henry Kissinger shed light on Ukraine crisis. In his Washington Post Op-ed March 5 entitled “To settle the Ukraine crisis, start at the end,” Dr. Kissinger opined that “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.” He is not talking about Russian but US policy. 

“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 wish current US policy and decision-makers would accept this option and avert a cataclysmic third World War. Russia and Ukraine share more commonalities than acknowledged by the Western press. At the end of the war, they must live as neighbors. 

Dr. Kissinger who understands the history of both countries far better than most said this. “The West must understand that, to Russia, Ukraine can never be just a foreign country. Russian history began in what was called Kievan-Rus. The Russian religion spread from there. Ukraine has been part of Russia for centuries, and their histories were intertwined before then. Some of the most important battles for Russian freedom, starting with the Battle of Poltava in 1709, were fought on Ukrainian soil. The Black Sea Fleet — Russia’s means of projecting power in the Mediterranean — is based by long-term lease in Sevastopol, in Crimea. Even such famed dissidents as Aleksandr Solzhenitsyn and Joseph Brodsky insisted that Ukraine was an integral part of Russian history and, indeed, of Russia.”

At the end of the day, the Russian and Ukrainian people must live with one another as neighbors. The same is true for Tigreans and other nationalities in Ethiopia, especially the Afar and Amhara that are neighbors to Tigray. Tigray is part of Ethiopia. 

Ukraine is a sovereign and independent country. Russia must accept this reality too. But why corner Ukraine and force it to become a member of NATO? I like Kissinger’s proposal that Ukraine can and must become a bridge between Russia and Europe but not a satellite or subservient to any power. 

Independent Ethiopian observers within and outside the country feel strongly that USA is pro-TPLF because China plays a substantial role in Ethiopia’s infrastructural and industrial development. This assumption is flawed. China-Ethiopia relations began long before the current government of Ethiopia took power. Further, Ethiopia’s relations with all countries are based on mutual respect and mutual interests. Ethiopia’s primary responsibility is to serve and defend its own national interest, including its territorial integrity and sovereignty.

Ethiopia faced increasing pressure from the West led by the USA since the TPLF-instigated and led began in November 2020. If passed, HR 6600 elevates this to a dangerous level. The push to pass this punitive measure undermines the strong and amicable relations between the USA and Ethiopia that go back to 118 years. In the 1950s, the late Richard Nixon, Vice President of the US at the time, visited Ethiopia and said that “Ethiopia was one the US’s most stalwart and consistent allies.” The passage of HR 6600 undermines this well-established relationship that serves the national interests of both countries. 

My core argument is this. Punitive sanctions against nations and pushes towards showdowns in Ethiopia or the rest of Africa, the Middle East or Europe do not promote world peace. Harsh financial and economic measures undermine peace and stability. They embolden extremist and terrorist groups. 

The civilized and humane way out both in Ethiopia and Ukraine is a concerted effort for peaceful resolution of conflicts. The United Nations system has prime responsibility to lead the effort for peace whether in Ethiopia or between Russia and Ukraine. Otherwise, the UN, including the Security Council lose their relevance to humanity. 

The unfinished war in Ethiopia caused hyperinflation and desperation among ordinary citizens. An Ethiopian retiree on a monthly income of Birr between 1000 to 3000 cannot afford to buy cooking oil and grain to feed his/ her family. The Russia and Ukraine war will further aggravate hyperinflation throughout Africa and the Middle East. The current spread of hyperinflation reminds me of the Arab Spring of December 2018. A desperate Tunisian set himself aflame because of the “cost of bread.” 

The unintended consequence of the Russia and Ukraine and the Ethiopia Tigray wars is hyperinflation and desperation among ordinary people. 

The IMF’s balanced assessment 

On the adverse social, economic, and financial implications of the war, the IMF offers a balanced picture “In Ukraine, in addition to the human toll, the economic damage is already substantial. Sea ports and airports are closed and have been damaged, and many roads and bridges have been damaged or destroyed. While it is very difficult to assess financing needs precisely at this stage, it is already clear that Ukraine will face significant recovery and reconstruction costs.” The parallel I shall draw is the devastating effects of the civil war in Ethiopia initiated by the TPLF that still rages more than 15 months after it began. The devastation is immense. Sadly, there is no end in sight. 

It makes no sense to assess the impact of the war without reference to Russia as well. “The sanctions announced against the Central Bank of the Russian Federation will severely restrict its access to international reserves to support its currency and financial system. International sanctions on Russia’s banking system and the exclusion of a number of banks from SWIFT have significantly disrupted Russia’s ability to receive payments for exports, pay for imports and engage in cross-border financial transactions. While it is too early to foresee the full impact of these sanctions, we have already seen a sharp mark-down in asset prices as well as the ruble exchange rate.”

My sense is that entire globe will feel the contagion effects of the war one way or the other. This is because the world is interlinked and interdependent in terms of the market and the movement of people between and among countries today more than ever before. The Pandemic attests to this. So does the escalating cost of fuels. More worrisome to me is the escalating cost of food and other essentials such as cooking oils. 

Contagion is real

The war in Ukraine is “a catastrophe” for the world which will cut global economic growth, the President of the World Bank, David Malpas, has told the BBC. “The war in Ukraine comes at a bad time for the world because inflation was already rising.” I agree with the head of the World Bank, my former employer, that the biggest global concern ought to be “about the pure human loss of lives” that is occurring. Thousands have died and thousands more may die. The way out is peace. 

Although forgotten by the Russia and Ukraine war, massive killings have been taking place in Ethiopia for years; and are still taking place as I write this commentary. But today the Russia and Ukraine war dominates the news. The economic and financial impacts of both wars are simply devastating. As Mr. Malpas put it, “the economic impact of the war stretches beyond Ukraine’s borders, and the rises in global energy prices in particular “hit the poor the most, as does inflation”.

The war has pushed food and other prices of staples that were rising before higher and faster. People in poor countries have begun to feel the pain. 

Escalating cost of bread may cause civil unrest in poor and food importing nations. 

The BBC reported last week that “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.” Ordinary people in destination countries in the Middle East and the entire Africa will pay higher prices for essentials including foods.

Remember that prices were rising before the war. The Pandemic, climate change unbearable heat in North America and droughts in parts of South America as well as disruptions in the supply chain were contributing factors to shortages and price escalation. “It is pointed out that lower harvests hit prices, and therefore affect poorest households first…as many as eighty million people are affected by malnutrition…. Food prices have been affected by Covid. Some produce has lacked the migrant farm labor to harvest it, from Malaysian palm oil to Scottish berries. Easing of infection restrictions has seen demand come back, and that pushes up prices” reports the BBC. 

Ethiopians complain about escalating prices of cooking oil. This too is a global phenomenon that affects ordinary folks with low or middle incomes. “And as Russia produces around 80% of the world’s vegetable oils, which helps explain an 8.5% rise in one month, according to the FAO, and 37% over the year.

In the USA, the most developed economy in the world, ordinary consumers are complaining right and left. In February, inflation rose to 7.9 percent, the highest in forty years. The same is true in the UK. 

The most important conclusion and message is this. The Russia and Ukraine war is driving food, cooking oil and other essentials’ costs higher and higher. Poor and low-income families across the globe, most notably in the Middle East and Africa will face the pain. It will be prudent for government leaders to produce viable solutions and mitigate social unrest. Blaming hyperinflation on external factors alone is not going to be the appropriate response. 

While I subscribe to the IMF’s projection that “Countries that have awfully close economic links with Ukraine and Russia are at particular risk of scarcity and supply disruptions and are most affected by the increasing inflows of refugees,” non-European food importing countries will face serious internal trauma emanating from hyperinflation. European neighboring nations to Ukraine can always resort to the IMF, the World Bank, the massive wealth assets of EU countries as well as the USA, while African countries do not enjoy the same privileges. 

Whether you assess it from the diplomatic and security angle or from the economic and financial angle, the implications of the Russia and Ukraine war are huge and concerning. 

Part three will discuss the disastrous consequences of punitive sanctions. 

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Part I of the article is available HERE

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