they have hit this warship, despite pressure saying it was caused by an explosion. he said they hit the wor warshi. so i asked him how that is possible, why this moscow warship is having very advanced air defense systems. >>. >> the israeli army says dozens of palestinians have been arrested and had weapons confiscated, part of what israel calls counterterrorism missions in the west bank. six palestinians were killed, including a 14-year-old boy, in the pastorate for hours. more rain is expected in south africa, where flooding has killed at least 341 people. the disaster near the east coast city of durban follows the heaviest rain in 60 years. the british prime minister announced some asylum-seekers
trying to enter the u.k. will be sent to rwanda for processing. the plan has been criticized by human rights groups and opposition politicians. the world's richest man once to buy twitter. . muska has put a bid amount into more than $43 billion for the entire company -- he recently bought a 9% stake, meaning he is already its largest shareholder tweet says it will. carefully review the offer. musk says the platform for short of his free speech principles, and it needs a complete overhaul. far-right candidate marine le pen has been in one side of the country, and her arrival met voters in northern port city. the second round will be on april 24. more of those stories and our website, aljazeera.com. "inside story" is next, here on al jazeera. ♪
mohammed: the war in ukraine is creating what the u.n. calls a perfect storm of crises for developing countries. fighting has driven up global food and fuel prices. 1.7 billion people could go hungry. so, what are the solutions? this is "inside story." ♪ hello and welcome to the program. i am mohammed jim jordan. russia's invasion of ukraine has -- mohammed jamjoom.
russia's invasion of ukraine has upended the flow of food fuel and many around the world. the u.n. u.n. warns the conflict's cascading effects could have an impact on nearly one point seven billion people. that's because it russia and ukraine are major food energy suppliers, growing much of the wheat, barley, maize, and sunflower oil that developing nations depend on. prices for these staple items have reached record highs since february when the war began the conflict and western sanctions have also disrupted fertilizer exports from russia and belarus . global oil and gas prices are up as well. >> the war is supercharging a three-dimensional crisis food , energy and finance that is doubling some of the world's most vulnerable people, countries, and economies. and all this comes at a time when developing countries are already struggling with the slate of challenges not of their making. mohammed: russia and ukraine produce about 30% of the world's wheat and burly.
the u.n. says at least 36 nations, including some of the poorest, get the majority of their wheat from them. food prices are up 34% compared to last year, the highest levels ever recorded by the u.s. and food and agriculture organization. crude oil prices have risen 60% compared to last year. russia and belarus also exported roughly one-fifth of the world's fertilizers, and their prices have more than doubled. ♪ let's go ahead and bring in our guests. in italy, abdolreza abbassian senior food market analyst and a , a former senior economist with the u.n. food and agriculture organization. in johannesburg parven nagala, a , development and humanitarian specialist and a regional director at oxfam for horn east and central africa in london, chris wiefer ,a specialist in emerging markets and chief executive officer of macro advisory, a strategic consultancy focused on russia and eurasia. warm welcome to you all, and thanks for joining us today on
"inside story." pi variant, let me start with you today. oxfam published a report this week saying over a quarter of a billion more people could crash into extreme levels of poverty in 2022 because of covet 19 -- because of covid-19, rising global inequality, and the shock of food price rises supercharged by the war in ukraine. how much more dire could this situation get? guest: the situation is getting more dire. i really want to appreciate the opportunity to be able to reflect on this, especially coming from the horn, eastern central africa region. in eastern africa we have approximately 30 million people facing a hunger crisis because of various factors, one of this is the climate crisis that cuts across the region. in this case we're seeing it manifested in the form of drought in certain countries such as ethiopia, somalia, kenya , but also other climate-change
manifestations in the form of floods in south sudan. so this has a multiplier effect for us in terms of how it is featured. as we talk about the ukraine crisis, we're seeing it reflected in the form of food prices. what we do note in the eastern african region is that at the moment, approximately 90% of the wheat is sourced from ukraine and russia. over the last couple of months, and we know there will be more, we have seen increases in terms of food prices to up to 20%. that is a major concern because not only are we seeing climate change and the drought, floods resulting in a hunger crisis, but also that prices, there are even more people who will not have access to the food that they need. the other one you mentioned is conflict, we have had conflict
in various parts of the continent, and that becomes a compounding factor for us, not to mention how much the ukraine crisis also plays into the dynamics. mohammed: chris, the world economy was already in a pretty tough state due to the pandemic. how much worse has the war in ukraine made things? guest: as you said, the global economy was pretty fragile at the start of this year, starting a recovery from two years of the pandemic, and there's absolutely no doubt that this conflict and the consequences of this conflict will add to those pressures and delay the recovery. previous speakers already talked about this, but the inflationary pressures, they will get worse as we go through this year and probably into next year. and that will have an impact on the local economy. so if you look at energy prices which are directly impacted by the conflict, the potential that
there could be a reduction in, say, russian oil and gas supplies, that has already led to a 40% increase in the oil price this year. looks like the sanctions may even raise the price higher. but the real impact of the global economy will be in the area of food. we mentioned that wheat is up 45% beginning this year. this is now planting season in russia and ukraine. there is no reason to assume any disruption in russia planting because it is well away from the conflict zone, but the ukraine planting area is directly in the conflict zone, so if that planting season doesn't go ahead, and right now it looks like it is not, then you are likely to have minimal exports from ukraine in terms of wheat and other critical grains at the end of this year, and therefore, you are likely to have
shortages, particularly of wheat, therefore leading to flour and other products later this year. and the other area in terms of global food is, russia, ukraine, belarus, this area is a big supply of fertilizer, potash which is used all over the world , in asia and africa, they sourced a lot of fertilizer from russia, arose, and the ukraine. and the prices of those product because of the input prices of gas and energy will also arise. no matter how you look at it we've had a bad start of the , year in terms of food inflation. it very much looks like it's going to get worse, over the rest of this year and coming into 2023. mohammed: abdolreza, you heard there, both of them spoke about the fact that even before the war global food , prices were already spiking, there were several factors that caused that, some of them include the coronavirus pandemic as well as climate change.
there are other factors as well. how much has the war in ukraine exacerbated this>> it's very difficult to put a price tag or something, but obviously it has raised the premium risk. markets were tight already. but there was no expectation that in the current kind of climate that we were in before, prices rising almost every month for the past 12 months before the war started, that we would get ourselves into this problem. not just anywhere, but where a lot of the world grain is sourced. take for example, the world food programme takes a lot of its grain from ukraine. now it has to look to other sources or pay higher prices. so basically what we have today is, it adds to the uncertainty about the supply, both short-term and near-term. also, it brought back again i would have geopolitics about the
shipments, not to mention the infrastructure damage especially, or primarily in , ukraine which makes it almost , impossible to predict when and how much of the ukraine grain is going to make it to the world market. so all of that means that if you are an importing country, you would need to source somewhere else, you need to go for plan b. that means that you have to rely on good weather this year. for harvests, if they will start soon. at least for wheat. right now current indications , are not so bad for the rest of the world. but we are in the climate change situation. nothing can be certain. mohammed: can i also follow-up with you about something chris mementioned, he was talking abot fertilizer. it's not just wheat, we have to
talk about fertilizer prices also spiking. what overall impact is that going to have? guest: huge. in fact, the fertilizer issue, it already made headlines going back to last june, so it is not a new problem. now you have an additional issue with fertilizer, which is that russia is the big exporter of it . obviously, we have to see how trade and fertilizer will be affected. then there is the issue of the gas, which you need to import to produce the fertilizer. that, again, is a huge issue. now, it definitely adds to the cost. if you are a very efficient producer and you could somehow also benefit from these high prices, you would make sure that your margins are still very healthy, he would pay for those high prices. assuming you even find it, because as i said, there is also the issue of supply.
so it is one huge, new, added uncertainty on top of all the other things we have to worry about. mohammed: parvin, i saw you nodding along to what abdolreza was saying, so i will let you jump in. i want to get your take on this as well, the more that fertilizer prices rise, the harder it is going to be to farm , right? guest: yes, it is true. there's two points that i would highlight with regards to that. one is the issue of price. when we look at african farmers, for instance in the eastern africa region, w are talking about smallholder farmers, most of them are women. if that is the case when you're talking about price, who is going to be most impacted, what are the mechanisms in terms of being able to support these farmers to be able to both sustain themselves, but also look at the future? it means in the long term that if they don't have access to the fertilizer, it has an impact on
their production, and subsequently, impacts their livelihood. so the price element is just one part of it. but also looking at the type of communities, many of whom are small-scale farmers that don't have really good coping mechanisms, and as such, we would have to look at what mechanisms we might need to put in place to support them, both in the long-term, but also in accessing fertilizer. mohammed: chris, what kind of effect is all of this having on investors? are they more weary about the possibility of investing in emerging markets? is that one of the effects here? guest: it is. we talked about the impact on people's lives and living in emerging markets and the rising cost of food, but to develop an emerging market requires capital and investment. essentially, it requires the
movement of capital from developed economies into developing economies. we saw that slowing down because of coronavirus. investors in the big, developed economies started to become more risk-averse, which means they would put their money somewhere safe, largely in dollar-based assets in developed economies, not taking risks in developing economies. and now, this situation will exacerbate that. i think the global concern you talked about, we really have noisier in terms of what happens next. critically, for example, you asked about the impact on the global economy and we talked about food. but the critical supply is gas. much of europe is dependent on russian gas. no matter what the political sentiment is, the reality is that europe simply cannot get that gas from anywhere else, and it certainly wouldn't even have a chance of getting that gas from anywhere else for about five or six years minimum, and
with huge investments. so if that gas were to be disrupted, you would have industrial disruption in europe, you would have a recession in some european countries, and therefore, it global recession. the reason i mention that is because it is a huge and certainty that investors are unaware of -- huge uncertainty that investors are aware of. so it leads to reluctance by investment funds to start taking risks. so long as there is uncertainty over the global economy, they tend to be more uncertain about where they put their money, and that usually leads to a reduction in the amount of money that is available for developing economies, which make their situation even worse, so i am afraid it is something of a perfect storm that we are now looking at, which started with coronavirus, and has been exacerbated with the uncertainty now hanging over the ukraine-russia conflict. the situation does not look good. mohammed: chris, if i could
follow-up with you as well, when it comes to developing economies, developing countries that are already struggling with debt financing related to the pandemic, the economic outlook couldn't be much worse right now, credit? guest: no, it is pretty bad. unfortunately, if you are a strategist looking at a case of investing in developing economies, it is very hard to see as an asset class, it simply isn't there right now. what other factor is that default possibility from russia. once you start getting into debt default, and we had one last week from sri lanka, that also adds to the more conservative stance by investors. they become a lot more weary of, particularly of developing economy risk, and therefore, it adds to the reluctance to invest. unfortunately, it is very difficult to look at the
developing economy right now and say this is a good time to invest. everything sensible tells you not to, and to wait, and unfortunately, that weighting will make the situation significantly worse for a lot of developing economies that need capital at this stage. mohammed: something else that is concerning people, abdolreza,'s even if the war were to end tomorrow -- there's no telling how much it will go on longer for -- but even if it were to end tomorrow, it would take a long time to come back to pre-pandemic levels when it comes to global food and oil prices, right? guest: frankly, i think we will never go back to pre-pandemic levels. in terms of overall supplier, you may. but supply routes will be very different. i think we need to give the market time to channel, to find new routes, i would say.
because, obviously, this is not just a war between russia and ukraine. it is unfortunately something like drawing the line, quite an extensive division of our planet, i guess. so you are going to get a bit of what you used to have during the cold war, in the sense. you will have different countries, friends and foes, and so forth. eventually trade will sort it all out, but in terms of changes in europe, adjusting to the new world with gas not coming from russia or whatever, also for food flows, you will wait a couple of years before we settle down with this new world order. this is unfortunate, especially for the poorest countries and developing countries which are
struggling. frankly, i don't know what solution could be presented there, but my wish is that the richer world would just try to not just think about it self as it did indicates of covid, which is very shameful, but when it comes to food, they should really start coming up with solid proposals that will at least cushion the poorer countries further years ahead of us. for me, the crisis hasn't even begun. the real crisis has still to start. mohammed: abdul raise act, do you have any idea on what it would take to solve these crises? what could be done? guest: well, head, or would anybody at this point? this more than anything else requires a corrective measure by all the countries, although leaders
including russia. i have been in this business over 30 years, and i have not seen a situation like this confronting the food sector. there are also other crises going on at the same time. so we do need some exceptional, i guess, measures in this case, and i think that when it comes to food, you would expect, especially countries like china, russia, to come along with the rest of the world, and at least for developing countries, that there will be no interruption in their supplies. one has to again, not forget the disaster happening in -- the humanitarian disaster happening any crane. that problem has to be resolved quickly and ukrainians have to be looked after first and foremost. they are not just any people. they are hard-working people and basically we live on their hard work. the whole world depends on them. so this is not just one little
war going on, this is hurting the entire planet. mohammed:. mohammed: parvin, i heard you reacting to what abdolreza was just saying. to want to jump in? guest: working with oxfam and having been involved in many crises across the world, what we have been talking about is the fact that it is not an either or in terms of the attention of the crisis on the road, it is about and hand. we recognize at the moment that the ukraine crisis has a significant impact across the globe, but we also have other crises on the continent. we are talking about yemen, afghanistan, in the eastern african region in terms of the hunger crisis, west africa, we have the food crisis in the sahel. so in essence it is about the international community looking
at the issues on the globe, in terms of how they do have a ripple effect. if there is anything all of us learned from the covid-19 pandemic, it was that we are interconnected. so what does that mean for us? picking up on the point that was being talked about, in the eastern africa region at the moment, in terms of servicing date, many countries had to look for resources to respond to the pandemic, but also look at what recovery efforts would look like . in terms of percentages, over 35% of tax revenues are going towards data servicing. we had a drop even before the ukraine crisis of you by over 2.7%. so when talking about multiplier effects, it is feeding into more and more crises, and some of it gets reflected in the form of conflict. so my point around that is that we need to be able to look at it
in a systems way. what does it mean? what are the lessons we are learning on food production, on the food supply chain? there have been mechanisms where we have had a working food supply system, but clearly, there are certain inconsistencies, which mean that if we have a trigger or a shock on a small part, it has a humongous effect. so it is challenging us also to look at our mechanisms. that is why i've made the emphasis on, what are we doing especially on sustainable food systems, how we are working with small-scale farmers that could close the loop on the immediate regional markets, because we do recognize that the way we have
got right now in terms of the food system, while it can very well sustain itself, small or big economic shocks have a ripple effect. mohammed: i want to talk about something you mentioned in your answer. you talked about multiplier effects, and also conflict. i am curious to get your perspective, how concerned are you that that this perfect storm of variables that the world is dealing with now, which includes climate change, the covid-19 pandemic, and now the war in ukraine driving up all these prices, how concerned are you that this all threatens to turn into social unrest well in ? guest: in terms of social unrest, there is that likelihood. we do know of countries, the arab spring was based on indications such as the crisis of food. if you remember what is happening in tunisia and sudan, those were the triggers. let's say, how can i put bread on my table? those were triggers for many of
the conflicts that we have. so in that sense, even now, people are questioning, what is the increase in terms of prices for me to feed my family? what does it mean in terms of looking at options? if there are no options, people take what we call negative coping mechanisms. while on one hand you might connect conflict about, there are other things, people who are missing meals. examples of families opting to marry off their young daughters because they want les miles to feed. so there are negative coping mechanisms that people adopt which include conflict. unfortunately. with resources, whether it is food, water, gas being the centers of the conflict. mohammed: alright, we have run out of time, so will have to leave the conversation there. thank you so abdolreza abbasian, much to our guests abdolreza
abbasian, parvin nagala, and , chris weafer. and thank you, too, for watching. you can see the program again anytime by visiting our website, aljazeera.com. and for further discussion, go to our facebook page. that's facebook.com/ajinsidestory. you can also join the conversation on twitter. our handle is @ajinsidestory. from me, mohammed jamjoom, and the whole team here in doha, bye for now. ♪