War in Ukraine could last years, NATO chief

From the very beginning, I have the strongest belief that Russia-Ukraine conflict has been instigated by the United States to weaken one of the largest crude oil producing country. I also have sympathy with the people of Ukraine who have been dragged in this war by offering a ‘lollipop’. NATO/European Union membership. 

While no efforts have been made by United States to solicit ceasefire, tons of ‘outdated’ arsenals have been hurdled into Ukraine. My faith gained further strength after reading one of the statements Head of NATO, “War in Ukraine could last for years’.    

Reportedly, the Head of NATO said on Sunday, the war in Ukraine could last for years, as Russia stepped up its assaults after the European Union recommended that Kyiv become a candidate to join the bloc.

Jens Stoltenberg said supplying state-of-the-art weaponry to Ukrainian troops would boost the chance of freeing its eastern region of Donbas from Russian control, Germany's Bild am Sonntag newspaper reported.

"We must prepare for the fact that it could take years. We must not let up in supporting Ukraine," Stoltenberg, the Secretary General of the military alliance, was quoted as saying.

"Even if the costs are high, not only for military support, also because of rising energy and food prices."

British Prime Minister Boris Johnson, who visited Kyiv on Friday, also spoke of a need to prepare for a long war.

This meant ensuring "Ukraine receives weapons, equipment, ammunition and training more rapidly than the invader," Johnson wrote in an opinion piece in London's Sunday Times.

"Time is the vital factor," he wrote. "Everything will depend on whether Ukraine can strengthen its ability to defend its soil faster than Russia can renew its capacity to attack."

Ukraine received a significant boost on Friday when the European Commission recommended it for candidate status, decision EU nations are expected to endorse at a summit this week.

That would put Ukraine on course to realize an aspiration seen as out of reach before Russia's February 24 invasion, even if membership could take years.

The industrial city of Sievierodonetsk, a prime target in Moscow's offensive to seize full control of Luhansk — one of the two provinces making up the Donbas — faced heavy artillery and rocket fire again, the Ukrainian military said.

"Russian forces will likely be able to seize Sievierodonetsk in the coming weeks, but at the cost of concentrating most of their available forces in this small area," analysts at a Washington-based think tank, the Institute for the Study of War, wrote in a note.

Serhiy Gaidai, the Ukrainian appointed Governor of Luhansk, told Ukrainian television, "All Russian claims that they control the town are a lie. They control the main part of the town, but not the whole town."

In the twin city of Lysychansk across the river, Gaidai said on the Telegram messaging app, residential buildings and private houses had been destroyed, adding, "People are dying on the streets and in bomb shelters."

Ukraine's military acknowledged that "the enemy has partial success in the village of Metolkine," just southeast of Sievierodonetsk.

Russia's state news agency TASS said many Ukrainian fighters had surrendered in Metolkine, citing a source working for Russian-backed separatists.

One of Russian President Vladimir Putin's stated goals in ordering troops into Ukraine was to halt the eastward expansion of the North Atlantic Treaty Alliance and keep Moscow's southern neighbour outside the West's sphere of influence.

However, the Western media continue to say, the war has killed thousands, reduced cities to rubble and sent millions fleeing. It is having opposite effect — convincing Finland and Sweden to seek to join NATO — and helping to pave the way for Ukraine's EU membership bid.

 

Russia still enjoys control over global food and fertilizer supplies

Economists and policymakers say Russia still enjoys hidden leverage on Ukraine and the global food supply. They worry that self-imposed export restrictions on fertilizer by Russia, the top global provider of the product, could further drive up the cost of food and damage global harvests in 2023 and beyond.

Russia’s invasion of Ukraine has been a factor in the 30% surge in international food prices and 10% rise in the US food prices over the last year, as supply chains continue to sputter in the wake of the coronavirus pandemic.

The price pressures exerted on agricultural markets by Ukrainian exports like wheat and sunflower oil have been so far mostly caused by issues with their transportation, with cargo ships stuck in blockaded ports that Russian authorities say need to be cleared of mines.

A shift in Russian fertilizer policy could go a step further, leading to problems with food production in addition to distribution.

“If the fertilizers don’t flow, then the world will produce less,” United Nations Food and Agriculture Organization (FAO) Chief Economist Máximo Torero said in an interview. “That’s why we’re saying that next year we could have a problem of food availability, and also of food access like what we have today.” Lower use of fertilizer results in lower crop yields regardless of supply chain issues, Torero said.   

“That’s what will create the problem of food availability, in addition to food access. That’s what worries us, that’s for us the most dramatic scenario. And that’s what we need to avoid,” he added.

Even without an export restriction, international companies have been hesitant to purchase fertilizers from heavily sanctioned Russia, which is the world’s top exporter of soil additives containing nitrogen, as well as those with phosphorus and potassium — all byproducts of the vast Russian energy industry.  

In 2019, Russia exported 5.5 billion kilograms of these fertilizers, more than double the amount of the second biggest exporter, the European Union, and nearly four times as much as third biggest exporter, Belgium, according to figures from the World Bank.

This commercial hesitancy caused the US to offer “comfort letters” last week to companies considering purchasing Russian grain and fertilizer. These notices assure buyers that they won’t face penalties for using unsanctioned products.

“Fertilizer has, as you know, has become a huge problem, and Russia is a large fertilizer exporter. They just need to open up their own markets and end this war, end the blockade that they are responsible for and allow food to flow,” US Ambassador to the UN Linda Thomas-Greenfield told the BBC last month.  

At a meeting of the UN Security Council in May on food security, Secretary of State Anthony Blinken stressed that “the sanctions imposed by the United States and many other countries deliberately include carveouts for food, for fertilizer, and seeds from Russia, and we’re working with countries every day to ensure that they understand that sanctions do not prevent the flow of these items.”  

Countries most reliant on nitrogen-based fertilizer exports from Russia and Russian-allied Belarus include Singapore, Mongolia and Panama, with the US receiving more than 20% of its imported fertilizers from the two countries, according to German market research firm Statista.  

Russia, for its part, sees a contradiction in the Western position of levying aggressive sanctions against the country while at the same time demanding commercial access to its agricultural commodities and energy byproducts.  

“The EU openly declared an all-out economic and trade war against our country — in full oblivion to Russia’s standing as a key global supplier of basic agricultural products (wheat, barley, sunflowers, mineral fertilizers and fodder crops), including to low-income countries, that are subject to risks of food shortages,” the Russian Foreign Ministry said in a statement. “Instead of making groundless allegations European leaders should rather turn their attention to redressing the systemic miscalculations in their own macroeconomic, monetary, trade, energy and agro-industrial policies.”  

“We are deeply concerned about a possible food crisis and are well aware of the importance of supplies of socially important commodities,” the foreign ministry added. “Russia expects to have a good wheat harvest this year, which will allow our country to offer 25 million tons of grain for export from August 01, 2022. Our capacity for exporting fertilizers from June to December 2022 will amount to at least 22 million tons (20% of global consumption over this period).”  

US lawmakers are less than keen to rely on Russian reassurances.  

Rep. Josh Harder  introduced legislation last month that would extend a government relief program for farmers dealing with rising input costs. 

The Department of Agriculture funding arrangement, known as the environmental quality incentives program, “provides agricultural producers and non-industrial forest managers with financial resources and one-on-one help to plan and implement improvements” that can lead to “healthier soil and better wildlife habitat, all while improving agricultural operations.”  

Harder’s bill would institute a temporary cost-sharing agreement of up to 100 percent between farmers who take up the program and the Agriculture Department.  

Farmers in the program who work “to develop and implement a nutrient management plan for their operation will be getting access to these payments,” Harder told the House Agriculture Committee in May.   

 “This is more critical than ever as we’ve seen the cost of everything go up around us, and we know how much it’s hurt our producers, especially when they’re trying to buy input like fertilizer,” he said. “So as fertilizer prices surge, folks need alternatives, and this is going to help address this. It’s also going to further conservation practices. It’s going to reduce fertilizer use, lower costs.”  

While Russia has denied that its invasion has contributed to a food crisis, the FAO blames the conflict in no uncertain terms.   

“It is clear that the war has resulted in a massive, and deteriorating, food security challenge,” the agency said in a March assessment. “It has already significantly disrupted livelihoods during the agricultural growing season, through physical access constraints and damage to homes, productive assets, agricultural land, roads and other civilian infrastructure.”

Spoils of Putin's war in Ukraine

I found reading the article titled “Spoils of Putin’s war” by Bloomberg on impacts of war in Ukraine on global economy interesting. While one may not necessarily endorse the content, there is a need to also explore the other side of the story.

Vladimir Putin may have failed to take Ukraine in a swift military strike, but his war has already been a success. The global economy is splintering, and the West’s conflicting imperatives—as well as those of the developing world—are slowly revealing themselves.

Putin has a long record of trying to sow discord, using misinformation to power sock puppets in the Brexit referendum and political campaigns of Donald Trump, among other examples. Though his latest gambit has backfired spectacularly in terms of weakening NATO, from the standpoint of economic division, the war on Ukraine may prove his crowning achievement. The fault lines are emerging.

There are at least four groups of diverging interests. In Ukraine and the Baltic states, defeating Russia is literally existential. But in Germany, France and Italy, the calculation is very different.

When it comes to imposing energy sanctions with teeth, Germany and Italy are dependent on Russia for roughly half of their natural gas imports and don’t have the infrastructure to implement a quick substitute. Berlin has even drawn up a three-phase plan if Russian gas is turned off, telling carmakers they may have to shut production lines to ensure families can heat their homes over winter. The Bundesbank has warned of recession if supplies are cut.

Italy has started rationing energy in public buildings. France is equally leery, knowing from the Gilet Jaunes (yellow vests) protests the kind of social unrest that can result from high fuel prices.

While Europe’s biggest powers say they plan to wean themselves off Russian imports, they need time. The renewed attempts to negotiate a ceasefire, even if it means asking Ukraine to cede even more territory to Russia, may be a solution, at least for the time being.

Across the English Channel and beyond the Atlantic, the economic consequences of the war (inflation notwithstanding) are looking less critical. The US is unwavering in its support for Ukraine’s resistance—not only to push Russia back to its borders but to send a clear message to China about its territorial ambitions in Taiwan.

But it helps that America’s economic considerations happen to align with its geopolitical goals. Supplying arms and munitions promises a bonanza for its powerful military industrial complex, while America’s relative self-sufficiency on energy and food insulates it from the worst repercussions of the war.

Moreover, there are longer-term financial benefits that may flow its way. As Republican Senator Pat Toomey of Pennsylvania said at the World Economic Forum in Davos last month, “Don’t take this the wrong way, but there is a huge economic opportunity. Europe is not going to be independent of natural gas. Why not burn American gas rather than Russian gas?”

In the UK, with little direct exposure to Russian gas and similarly aligned with President Joe Biden’s hard stance on Kremlin aggression, some business leaders think British industry can substitute for closed German factory lines. Not to mention that the UK is home to some of the biggest defense contractors in Europe.

While Europe wrings its hands and America and the UK see advantage, much of the rest of the world faces a grimmer prospect thanks to Putin’s war.

Russia is threatening a global food crisis by blockading the Black Sea, raising the prospect of a humanitarian catastrophe in the developing world and exposing the fragility of supply chains yet again after the initial protectionism of the pandemic. Export restrictions on food staples have been imposed by 19 countries.

Beata Javorcik, Chief Economist of the European Bank for Reconstruction and Development, estimates that 17% of the world’s traded calories are now landlocked. At Davos, she warned of riots and social upheaval as rocketing food prices bankrupt governments in the developing world.

Famines will indeed be blamed on Putin—but he is offering a simple way out: drop the sanctions. That’s arguably an impossible offer to an increasingly divided world.