War & sanctions will weaken many nations leading to a ‘New World Disorder’

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Are we prepared for an Emergency Situation

Akhtar Jamal
Istanbul

As a result of super-powers rivalry, war in Ukraine and unprecedented sanctions on Russia, dozens of developing countries including Pakistan may face a dangerous crisis due to food-grain shortages and ever rising prices of oil, gas followed by inflation.

In some cases the essential grains like wheat, sugar and oil and energy supplies are to be badly disturbed and may remain suspended for weeks if not months. Such a situation may cause panic and disorder in many Asian, African and even some South American states.

The oil prices, if supply is halted are expected to go more than US$200 with rising inflation and hurdle in smooth supply chain.

Pakistan, Turkey and many other countries are already hit by rising inflation and facing multiple economic crisis adding pressures in local currency.

The backlash of war, destructions in Ukraine and sanction on Russia would ultimately force many countries once again looking towards to big powers to come to the rescue in the form of loans, credits and grants through new Marshal Plan-style assistance. .

According to experts, Russia hit by severe Western sanctions will not sit idle but react strongly to curtail exports of grains, and petroleum products.

Food and Agriculture Organisation (FAO) has warned on March 11, 2022 that “food and feed prices would become 20% higher due to Ukraine war. Similarly IMF Chief has cautioned that Ukraine war will lower world growth rate. It will lead increased enemployment.

It is important to note that the US has a big stocks and reserves of oil, gas and grain the could last for years.

According to Daily Mail report on March 12, just before imposing sanction on Moscow, UK has already managed to buy Russian goods worth 2.6 billion pounds. The items of purchase included gas, coal, oil and coke were bought for about a billion pounds. When President Biden announced his ban on Russian oil, OPEC Secretary General Mohammad Barkindo was quoted by media as saying that Russian oil exports cannot be replaced. Russia alone accounts for 7% of the global supply.

“There is no capacity in the world that could replace 7 million barrels per day,” he said. “We have no control over current events, geopolitics, and this is dictating the pace of the market,” he added.

Agricultural experts argue that devastated Ukraine will no more be able to exports its surplus grains and agriculture products at least for years. The worst-hit would be smaller and economically weak nations where public unrest may result in disorder.

Energy experts in Vienna are warning that the stocks capacity or facility in most developing states are either very limited or even non-existence while major states have enough food and oil stockpiles for months.

Sensing the possible food shortages Egypt on March 11, 2022 announced a ban on exports of wheat, lentils, pasta, wheat, flour and fava beans.

Another factor which would hit the labor exporting nations will be rising unemployment. Hundreds of thousands Central Asian workers are now unable to send their earning in Rissia back their families. Kyrghizstan has already decided to pull back its workers from Russia while Uzbeks and Tajiks working in Russia may also return soon.

If Russia truely become worst hit by Western sanctions, it would react and will stop or delay supplying basis commodity to the world.

When there will a disreption in supply, oil prices will become double if not tripple.

Oil prices surged past $130 a barrel recently, highest since 2008, after President Joe Biden announced that the US would ban crude, gas and coal imports from Russia.

Such a bad scenario could spark off riots and disorder in many countries providing opportunities to political rival, seperatist forces or foreign-sponsored terrorists to advantages in hardly governed states or regions.

Dozens of vulnerable governments would be left with limited options including seeking support from the world’s richest nations even at the cost of their national and strategic interests.

 

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