The ongoing conflict between Russia and Ukraine has now persisted for over 90 days, and an end does not appear to be in sight.
Henry Kissinger’s suggestion at the World Economic Forum this week that Ukraine should cede territory to Russia has been firmly rejected by Volodymyr Zelenskyy. This war has only just begun.
Do you recall the motivations behind this conflict? If you do, you’re among the few who do.
President Biden seems oblivious to the complexities of the situation. During the Quad summit in Japan this week, he stated that Russia’s aggression against Ukraine was “unprovoked.” Once again, Biden’s grasp of the facts is quite tenuous.
Vladimir Putin, the aggressor, can point to over two decades of provocations on the part of the West. Declassified documents from the U.S., Soviet Union, Germany, the UK, and France published by the National Security Archive at George Washington University on December 12, 2017, confirm that the U.S. pledged not to expand NATO’s reach:
“U.S. Secretary of State James Baker’s famous ‘not one inch eastward’ assurance about NATO expansion in his meeting with Soviet leader Mikhail Gorbachev on February 9, 1990, was part of a cascade of assurances about Soviet security given by Western leaders throughout the process of German unification in 1990 and into 1991.”
Contrary to these assurances, NATO has significantly expanded eastward toward Russia’s borders, which Moscow views as a direct military threat. Additionally, the presence of regular U.S. military exercises in countries bordering Russia for over two decades has further inflamed tensions.
As the war extends into its third month, we find ourselves on a precarious edge where anything, including the specter of World War III, could unfold…
Appetite for Destruction
The United States is currently providing Ukraine with an astonishing array of weaponry, including M777 Howitzers, FGM-148 Javelins, FIM-92 Stingers, and Switchblade Kamikaze Drones. It’s a lucrative time for manufacturers of arms.
Without a doubt, the military-industrial complex boasts remarkable technology, but its hunger for destruction seems insatiable. There is never enough spending on ‘defense.’
This gross misallocation of resources towards destructive means will yield long-lasting consequences for decades to come. It will only exacerbate America’s staggering $30.5 trillion debt, with no corresponding economic advantage. This guarantees a future of diminished prosperity for American workers, who will ultimately bear the burden.
Furthermore, Biden is doubling down in this conflict. His public approval ratings have plunged to just 36%. The president is in dire straits and needs a miracle.
Perhaps he sees war as that miracle. Alarmingly, Biden has recently signed a massive $40 billion military assistance package for Ukraine. As noted by Ron Paul,
“To put this giveaway to Ukraine in perspective: just since late February, the US has provided nearly $60 billion in ‘assistance’ to Ukraine. That is almost half that country’s entire 2020 GDP! Washington has literally adopted Ukraine in our name and on our dime.”
Meanwhile, at a significant cost, Putin is making gradual progress. The invasion of Ukraine has proven far more challenging than the annexation of Crimea in 2014. Nevertheless, the recent capture of Mariupol has cemented a land corridor controlled by Russia between the Peninsula and the pro-Russian regions of Donetsk and Luhansk.
With control over the entire Ukrainian coast along the Sea of Azov and significant territories in the provinces of Kherson, Zaporizhia, Donetsk, Luhansk, and Kharkiv, the optimistic narrative from NATO seems increasingly fragile.
A dire reality is setting in: a costly and protracted war in Ukraine, where the initial $40 billion aid could balloon into trillions, just as it did in Afghanistan and Iraq.
Just three months in, the ramifications are spreading rapidly, echoing across the globe like invasive cancer.
Countdown to World Famine
Russia stands as the world’s third-largest producer of oil and natural gas. Although sanctions have restricted some of its energy exports, elevated prices have still resulted in substantial revenue for Russia.
Europe is now working toward an embargo on Russian oil later this year, which means that high oil and gasoline prices are likely here to stay. A full energy shock causing extreme price spikes could also be on the horizon.
Remember that carbon-based energy—not the renewable alternatives—drives the global economy. High energy prices and shocks will inevitably lead to economic pain and potential recession, perhaps even depression. This situation is bound to deteriorate further.
Already, irreversible damage is occurring in global food markets. While the effects are somewhat hidden for now, disaster approaches relentlessly.
Before the war, Ukraine accounted for 30% of the world’s sunflower oil, 6% of barley, 4% of wheat, and 3% of corn. The blockade of Ukraine’s Black Sea ports has crippled its primary export route. The war could also drastically reduce future crop planting by as much as 35%.
Additionally, Russia is a vital exporter of sunflower oil, wheat, and barley. It also holds the title for the largest exporter of nitrogen fertilizer, which it has now halted in terms of exports. The rising energy costs only compound the expenses associated with food production and transportation.
Since the war began, wheat prices have surged by approximately 30%, and sunflower oil prices have skyrocketed by 50%. Furthermore, the global cost of fertilizer has increased by an astonishing 230%.
It’s not difficult to envision the disastrous combination of soaring food prices and declining agricultural yields resulting in widespread chaos in the imminent future. Developing nations across Africa, Asia, and the Middle East will be especially at risk.
According to Sara Menker, CEO of Gro Intelligence, the world has only 10 weeks’ worth of wheat to navigate this crisis.
Based on these assessments, we could be on the brink of global famine within just a week or two.
Sincerely,
MN Gordon
for Economic Prism
