PREVIEW
Moscow may block food exports to states opposing its war, blaming Western sanctions for rocketing wheat and grain prices
As the finance ministers and bank chiefs meet top officials from the International Monetary Fund and the World Bank over the food and fuel crisis sweeping developing economies, Moscow is stepping up diplomatic pressure threatening to cut grain exports to 'unfriendly states'. That is, those supporting the United States position.
Global divisions over Moscow's war on Ukraine could overshadow the IMF and World Bank's meetings in Washington DC this week (Dispatches, 20/4/22, Financial institutions prepare over $500 billion of funding as IMF warns of 'crisis on top of a crisis'). IMF managing director Kristalina Georgieva has warned that the global economy was fragmenting, divisions reinforced by the pandemic and Russia's war threatening the economic order presided over by the Bretton Woods institutions.
'Such a tectonic shift would incur painful adjustment costs. Supply chains, R&D and production networks would be broken and need to be rebuilt,' said Georgieva. 'Poor countries and poor people will bear the brunt of these dislocations.'
For this, Russia's President Vladimir Putin blames western sanctions for raising energy costs and cutting supplies of fertilisers. 'They will exacerbate food shortages in the poorest regions of the world, spur new waves of migration and drive food prices even higher,' said Putin at a food conference in Moscow on 5 April.
'A shortage of fertilisers is inevitable on the global market,' he added. 'We will have to be more careful about food supplies abroad, carefully monitor the exports to countries that are hostile to us.' Russia is the world's largest grower of wheat and produces over 50 million tonnes of fertiliser a year, 13% of the global total (AC Vol 63 No 6, A bigger piece of the potash).
Now Russia's diplomats are broadcasting Putin's message around Africa, Asia and Latin America, regions hardest hit by spiralling food prices and shortages of soil nutrients.
Russia's ambassador to Kenya, Dmitry Maksimychev, tweeted that the 'Russian Embassy in Kenya would like to point out to our Kenyan friends and partners that the real cause of the increase in prices in Africa is not Russia's special military operation in Ukraine, but the illegal unilateral 'sanctions' imposed by the United States, EU and their followers on Russia.'
African officials are taking a pragmatic view. The African Union, headquartered in Addis Ababa, has condemned Moscow's invasion of Ukraine but opposes sanctions against Russia, partly because of the collateral damage they could cause.
That worries the European Commission in Brussels. Officials fear that having been outmanoeuvred during the pandemic, the EU could be blamed for rising food prices.
We hear they plan to ramp up their €225 million fund for North African states hit by wheat and grain shortages. Markets in other African states, already rocked by the pandemic, report that food prices are rising at their fastest for at least two decades.
About half of Africa's $4.5bn trade with Ukraine, and about 90% of its trade with Russia is in wheat imports. Countries including Congo-Brazzaville, Tanzania, Senegal, and Congo-Kinshasa import over 50% of their wheat from Russia.
Supplies and prices of fertiliser from Russia and Morocco, the main exporters, are under heavy pressure as demand escalates. Lack of fertiliser, now seen across west and central Africa, will cut productivity and yields. In South Africa, fertiliser accounts for 35% of input costs.
Kenyan Presidential candidate Raila Odinga told Africa Confidential that his country could lose $100m in lost exports to Russia because of sanctions. But he supports, as does his rival William Ruto, a tough line against Moscow. Over $400m of wheat and maize imports from Russia and Ukraine to Kenya are threatened by this crisis. Many other African states report serious shortfalls.
Moscow's economic diplomacy has helped it claw back some support. South Africa, Egypt, Kenya and Nigeria were among countries abstaining from the vote to suspend Russia from the UN Human Rights Council on 7 April.
Kenyan officials have rejected Ukraine's request to address the Parliament in Nairobi, declining to grant a ministerial-level meeting. That has shocked some western officials hoping for stronger backing from Kenya.
It also follows Kenyan ambassador to the UN Martin Kimani's eloquent defence of Ukrainian sovereignty, equating its position with colonised states in Africa.
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