The global impact of the Ukraine war on food, energy and finance systems TOU

The global impact of the Ukraine war on food, energy and finance systems

 TOU

The global impact of the Ukraine war on food, energy and finance systems

Armed Conflict, Crime & Justice, Europe, Featured, Global, Global Geopolitics, Headlines, Human Rights, Humanitarian Crisis, Peace, TerraViva United Nations Opinion

UN Secretary-General at a press conference to present a new report on the global impact of the ongoing war in Ukraine

Credit: United Nations

United Nations, April 14, 2022 (IPS) – Now, with the Russian Federation’s invasion of Ukraine, the world’s attention has been focused on the horrific levels of war death, destruction and suffering.

From the beginning, the United Nations has been actively involved in providing humanitarian support to the people of Ukraine, who are paying the highest price, and to the host countries of the fastest growing refugee crisis in Europe since World War II.

But in all its dimensions the world has paid less attention to the global impact of war which has already witnessed increased poverty, hunger and social unrest.

War is supercharging a three-dimensional crisis – food, energy and money – that is hurting some of the world’s most vulnerable people, countries and economies.

And all this comes at a time when developing countries are already grappling with a slate of challenges – the Covid-19 epidemic, climate change and lack of access to adequate resources to finance recovery in terms of sustainability and growth. Inequality.

We are now facing a complete hurricane that threatens to ruin the economies of many developing countries.

That is why, in the early days of this war, I set up a Global Crisis Response Group on Food, Energy and Finance, facilitated by a task team at the UN Secretariat, reporting to the steering committee involving UN agencies and international financial institutions.

Today, we are launching the first report of the task team.

I am joined by UNCTAD Secretary-General, Rebecca Greenspan, who coordinates the task team, and the Deputy Secretary-General, who chairs the steering committee.

Ms. Grynspan will go through the recommendations.

But I want to highlight two main points that have become crystal clear in this report.

First, the impact of war is global and systemic.

About 1.7 billion people – a third of whom are already living in poverty – are now exposed to disruptions in the food, energy and financial systems that contribute to poverty and hunger.

Thirty-six countries depend on Russia and Ukraine for more than half of their wheat imports – including the world’s poorest and most vulnerable.

Prices were already rising – but the war has made matters worse.

Wheat and corn prices have been volatile since the war began but are still 30 percent higher than at the beginning of the year.

At the same time, Russia is the top energy supplier.

Oil prices have risen by more than 60 per cent in the past year, accelerating current trends.

Natural gas prices have also risen by 50 per cent in recent months.

And fertilizer prices have more than doubled.

As prices rise, so does hunger and malnutrition – especially for young children.

Inflation is rising, purchasing power is declining, growth prospects are shrinking, and growth is stagnating and, in some cases, profits are dwindling.

With many developing economies sinking into debt, bond yields have already been rising since last September, which has now increased the risk premium and exchange rate pressures.

This is setting in motion a potential vicious circle of inflation and stagnation – the so-called stagflation.

The report also shows that there is a direct link between rising food prices and social and political instability.

Our world cannot afford this. We need to act now.

And that leads to another point that is clearly outlined by this report: We can do something about this three-dimensional crisis.

We have the ability to hit.

The report makes more than a dozen recommendations, but I will focus on three basic ones.

First – we must not make things worse. This means ensuring a steady flow of food and energy through the open markets. That means lifting all unnecessary export sanctions, and this is not the time for protectionism. This means directing surplus and reserves to the needy.
And keeping a lid on food prices and calming volatility in food markets.

Second – we can maximize this moment so that the needs of our world are pushed for change. Look no further than the energy crisis. In the immediate future, countries must resist hoarding, and release strategic reserves and additional reserves. But now is also the time to turn this crisis into an opportunity. We must work to phase out coal and other fossil fuels and accelerate the deployment of renewable energy and work towards a just transition.

And third, we need to push developing countries out of financial straits.

There are deep pockets in the international financial system.

I have been a strong supporter of its reform. But developing countries need help now, and funding is there.

Therefore, we need to make them available to the economies that need them most so that governments can avoid default, provide social security nets for the poorest and most vulnerable and continue to make significant investments in sustainable development.

This is not a crisis that can be solved piecemeal, country by country. This global and systemic crisis needs global and systemic solutions.

The report includes concrete recommendations for increasing liquidity and fiscal space for international financial institutions.

As we approach the spring meeting of the World Bank and the IMF (April 18-24), we need political will and leadership. Resources are available.

We must speak with one voice: Today’s action will prevent tomorrow’s suffering. Above all, this war must end.

The people of Ukraine cannot tolerate the violence being perpetrated against them.

And the most vulnerable people in the world cannot be collateral damage in another disaster for which they take no responsibility.

We now need to calm down the guns and speed up peace talks.

For the people of Ukraine. For the people of the region. And for the people of the world.

IPS UN Office

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