Monday, May 02, 2022

Collateral Damage of the Russian Invasion

 Hampered by Covid debt and foreign aid cuts poorer countries are now facing hunger from the reduction in grain supplies arising from the war in Ukraine and sanctions imposed upon Russia as well as fuel and fertiliser shortages. The UN warned last week of developing countries becoming “collateral damage” of the Ukraine war.

 Prices were already rising before Russia’s invasion. Now, the IMF’s World Economic Outlook estimates inflation would reach 8.7% in developing economies compared with 5.7% in rich countries, driving millions more into poverty as energy, transport and food networks are increasingly affected. Oxfam has estimated that a quarter of a billion people face poverty this year because of rising food and fuel prices, calling it “the most profound collapse of humanity into extreme poverty and suffering in memory”. Rising oil prices are being felt on the forecourts, with petrol up 63% in Sudan, 50% in Sierra Leone and 42% in Ghana compared with 9% in Britain.

“The rising cost of getting aid into areas like north-west Syria, which is hugely dependent on humanitarian aid, means that it’s the people who need help most who are suffering,” said Jessica Adams, head of communications at Syria Relief. “Our costs in meeting the needs have gone up – petrol for trucking water into camps costs more, building homes for displaced Syrians in tents costs more as building materials have gone up. This is against a backdrop where donations to Syria are reducing – so in a conflict like Syria … living has become unaffordable.”

“You cannot isolate oil from the other markets – gas prices are higher, coal prices are higher, food prices are higher and you have supply-chain bottlenecks. There are a lot of headwinds that are affecting economics all over the world,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “If you look at it from a consumer’s point of view, they are being hit left and right all over the world.”

In Sri Lanka, the lack of foreign currency reserves has sparked a movement to bring down the government, which has struggled to import food, medicine and fuel, leading to blackouts and farmers struggling to transport cropsIn Peru there have been anti-government protests over fuel and fertiliser prices, while Egypt has tried to avert similar anger with price controls.

The UN’s agencies raised concerns about how rising food and fuel costs will affect their operations, predicting a $136m rise in operational costs in West Africa. In east Africa it has warned of refugee families getting into debt and selling off their belongings because they fear ration cuts

“The developing countries are facing a perfect storm of soaring food and fuel prices with already limited fiscal space and high debt ratios. We need urgent measures to prevent great human suffering and the world tipping into an era of social and political unrest,” said Rebeca Grynspan, secretary general of the UN conference on trade and development (Unctad).

Inflation bites hardest in developing world as Ukraine war raises prices | Global development | The Guardian

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