The group chief economist for Swiss Re has called on the G20 nations to act in order to both avert a food crisis and reshape the social contract.
Writing on the firm’s website, Jerome Jean Haegeli said that an international effort was needed to guarantee that developing nations have access to essential commodities would help keep the shock of the invasion from spreading in the form of widening inequality.
Haegeli drew attention to the ‘shockwaves’ sent throughout the global agriculture and energy markets by Russia’s invasion in April.
He wrote: “Since Ukraine and Russia are key exporters of wheat and other crops, the conflict has spurred volatility. Combined, these nations account for 12% of calories traded globally, UN agencies have said. Great swathes of the Ukraine, the ‘Breadbasket of Europe’, have gone unplanted, as tanks, not tractors, crisscross fields. Black Sea ports are shuttered. Energy prices have jumped, boosting transportation and fertiliser costs. Potash supplies for crops like soybeans are tight, as producer Belarus also faces sanctions.”
He added: “The upshot? The United Nations’ Food and Agriculture Organization (FAO) Food Price Index jumped to record levels in March as cereal, vegetable oil and meat hit historical peaks. […] As disastrous as the Ukraine war has already been, it will be even more tragic if its effects are amplified globally in the form of a widening equality gap. That’s why it is so critical for world leaders to work together now to preserve efficient global trade — and to ensure that people in vulnerable countries are not blocked from access to essential goods like food due to sharply rising prices.”
Haegeli outlined several steps that should be taken immediately by the G20 nations.
These include:
- Administering appropriate lending programs to ensure that food affordability is maintained.
- Providing technical assistance in establishing social protection schemes in the worst-affected and least well-equipped nations.
- A broad international effort to ensure vulnerable nations have enough cash to secure commodities on global markets.
- Pursuing policies that help keep supply chains for food and fertiliser open.
Haegeli also warned that the stability of governments could be undermined by a food crisis.
He wrote: “We saw this in 2008 when food-related riots contributed to the toppling of Haiti‘s government. When food prices spiked again in 2011, experts contend they were a match that helped light the flames of the ‘Arab Spring’ in the Middle East and North Africa.”
He concluded by speaking about the crisis in Ukraine and its ramifications for the world.
He wrote: “The war and its effects are rippling through the interconnected global economy. This is why a G20-backed initiative aimed at reducing downside risks to economic equality like access to food is so critical, in the form of special lines of emergency credit to address hunger that harbours the potential to further chip away at economic resilience. Let’s make certain money is flowing so that food supplies can move where they are needed the most, so the global inequality gap does not widen. And let’s not wait to do it.”
