On 14 April, UN Secretary-General Antonio Guterres presented a new report on the global impact of the ongoing war against Ukraine. By Antonio Guterres
(IPS) – Since the Russian Federation’s invasion of Ukraine, world attention has been focused on the terrifying scale of death, destruction and suffering brought about by this war. Since its inception, the United Nations has been actively involved in providing humanitarian assistance to the people of Ukraine – as well as to the host countries of Europe’s most rapidly escalating refugee crisis since World War II.
But less attention has been paid to the global consequences of the war in all its dimensions in a world that has already witnessed poverty, hunger and social unrest before. The war is charging a three-dimensional crisis – food, energy and finance. It is squeezing some of the world‘s most vulnerable people, countries and economies.
All this is happening at a time when developing countries have previously faced some challenges for which they are not responsible – the Covid 19 pandemic, climate change, as well as a lack of access to adequate resources to finance economic recovery in the context of persistent inequalities.
We are now facing the greatest possible danger, which threatens to destroy the economies of many developing countries. That is why in the early days I established the Global Crisis Response Group on Food, Energy and Finance. It is supported by a working group in the UN Secretariat and reports to a steering committee involving all UN agencies and international financial institutions.
I would like to specifically highlight two of its points here. First, the consequences of war are global and systematic. Up to 1.7 billion people – a third of all those already living in poverty – face disruptions to food, energy and financial systems. This is triggering increases in poverty and hunger.
36 countries depend on Ukraine and Russia for more than half their wheat imports. These include the poorest and most vulnerable countries in the world. Prices were already rising before. But the war has made the situation much worse. Since the fighting began, prices for wheat and maize, already volatile, have risen and are 30 per cent higher than at the beginning of the year.
At the same time, Russia is an important energy supplier. Oil prices have risen by more than 60 per cent in the past year, accelerating prevailing trends. The same is true for natural gas prices, which have been 50 per cent higher in recent months. Fertiliser prices have more than doubled. As prices rise, so does hunger and malnutrition – especially among young children.
Inflation is rising, purchasing power is dwindling, growth prospects are shrinking, development is stalling and in some cases, profits are falling. Many developing countries are drowning in debt. Bond yields have risen since September last year, leading to increased risk premiums and exchange rate pressures. This sets in motion a potential vicious cycle of inflation and stagnation – so-called stagflation.
The report also shows that there is a direct link between rising food prices on the one hand and social and political uncertainties on the other. Our world cannot afford this at all. We have to act now.
And that leads to the second point that is made clear in this report: We can do something about this three-dimensional crisis. We have the opportunity to cushion the blow. It offers more than a dozen recommendations. But I would reduce the messages to three basic points.
First, we must not make things worse. That is, we must ensure a steady flow of food and energy through open markets. It follows that all unnecessary export restrictions must be lifted. Now is no time for protectionism and economic barriers. It means giving surpluses and reserves to those in need. And it means keeping food prices in check and calming volatility in food markets.
Second, we can use this moment to bring about much-needed transformations. We need look no further than the energy crisis. In the short term, states must resist the temptation to hoard and release strategic stocks and additional reserves. But now is also the time to turn this crisis into an opportunity. We must work towards a gradual phase-out of coal and other fossil fuels and accelerate the deployment of renewables and a just transition.
Third, we must bring developing countries back from the financial brink. The international financial system has deep pockets. I have been a strong advocate for its reform. But developing countries need help now, and the funds are there. We must make them available to the economies that need them most, so that governments can avoid default, provide social safety nets for the poorest and most vulnerable, and continue to make vital investments in sustainable development. This crisis cannot be solved piecemeal or per country. This emergency requires global and systemic solutions.
