Russia-Ukraine War Is Propelling Us Into a New Age of Global Political Upheaval

Russia-Ukraine War Is Propelling Us Into a New Age of Global Political Upheaval

(A)

1)

Rather than a revolution, we witnessed the collapse of developing countries due to economic stress.

Sri Lankans have been dealing with rising food and energy prices for months.

But the government has been unable to contain the pressure as it runs out of foreign currency to import essentials.

The ruling party has finally reached its limits with COVID-19 and the war in Ukraine.

But these signs are not the country's only problem.

2)

The world is facing a perfect storm of soaring energy prices, supply chain disruptions, and armed conflict.

COVID-19 did not end quickly, and millions died.

At first, the worst political crisis was averted.

But that concern appears to have been just a delay.

3)

Unlike previous energy crises involving only oil, this is a crisis about oil, gas, metals, coal, food, and many other commodities.

Mills, the CEO of Qamar Energy, said:

"Some countries will handle it well. But, others will have revolutions and coups. So, it will be precarious, and I don't think it's the worst yet."

4)

Russia and Ukraine are superpowers in food production.

Both countries export a combined 12% of all calories consumed in the world, mainly wheat.

In addition, Ukraine is the source of about 50% of all sunflower seed oil used on the world market.

(B)

(5)

A recent agreement between the two countries would have allowed importing several million tons of grain.

But Russia's new strike against the port of Odesa has been called into question.

Countries such as Egypt, Tunisia, Laos, Ecuador, and Nigeria rely heavily on imports from Russia and Ukraine.

Somalia imports more than 90% of its wheat from Russia or Ukraine.

(6)

In addition to wheat and gas, Russia is a significant fertilizer producer.

We cannot export to other major agricultural powers like Brazil.

"The critical period for food prices will arrive next year,

There will be a rise in fertilizer prices and a heatwave caused by climate change.

And harvest yields will decline around the world."

A fragment of a rocket in a wheat field in the Ukrainian Kharkiv region on July 19, 2022.

(C)

(7)

Germany is already discussing rationing gas during the coming winter as it struggles to pivot away from Russian supplies.

The German foreign minister said the gas issue could trigger a revolt.

(8)

These are challenging times for Europe and the developing world.

Pakistan has lost access to natural gas imports.

(9)

Pakistan's minister of state for oil said.

'Europe is trying to reduce its dependence on Russia, so they have bought the gas we were going to buy,'

It is a reflection of the mechanism of global inequality.

(10)

Optimistic talk of a rising Asian century has all but disappeared.

How can millions of people be prevented from starving?

How can fragile, heavily armed states avoid chaos in Middle Eastern countries?

More challenging debates have replaced them.

(11)

There was a positive economic outlook for Eurasia and the idea that this, in turn, would benefit the poorer countries.

Battaghelidj of the Middle East think tank said:

"The consumer markets that everyone thought existed no longer existed.

Sanctions squeezed large consumer markets like Russia and Iran.

Rising commodity prices will squeeze the poorer countries of Eurasia."

(D)

(12)

Central banks worldwide are responding to rising prices by raising borrowing rates from historically low levels.

The idea behind this strategy is generally to slow economic activity and remove some of the purchasing pressure on commodity prices.

But even if central banks succeed in causing a global recession, inflation is driven as much by supply-side pressures as demand.

And prices are not expected to fall as much.

(13)

Armed conflict and political dysfunction are the two leading causes here.

The United States is not assisting.

Two of Asia's major oil producers, Russia and Iran, are blocked by U.S. sanctions from supplying energy to world markets.

The blockage was the result of the war in Ukraine.

They are also barred from supplying gas to markets because of the U.S. decision to violate the terms of the 2015 Iran nuclear agreement.

If the rest of the world bought energy from Russia and Iran, the United States would risk being blocked from international banking.

(14)

It is also challenging to build an alternative financial channel for trade to compete with the United States.

Legal and administrative mechanisms are not in place today.

(15)

Without Russia, Ukraine, Iran, and the U.S. agreeing peacefully, energy prices will rise.

In other words, many more countries will be pushed down the same path of economic and social collapse that Sri Lanka is already on.

(16)

"When energy costs go up, everything else goes up," Batmanghelidj said.

Unfortunately, I am convinced that we have reached a tipping point. Until a new political reality emerges, the situation is likely to get even worse.