Yves here. The reason I doubt the idea that the West is trying to precipitate famine in poor economies is that the UK and Europe will suffer the worst food shortages this fall and winter since World War II as a result of the very same sanctions against Russia. So if the putative leaders can be indifferent to the prospect of large-scale suffering at home, they sure won’t lift a finger to help people they already deemed disposable in Africa and Latin America.
Some commentators are predicting large-scale revolts and/or tectonic plate shifts, like Europe aligning itself with Europe rather than the US in the name of food security and cheaper energy. With the last 100+ years invested in Soviet and now Russia hatred, it’s hard to see even starvation in Europe, if the most extreme outcomes take place, producing that degree of political change in even a half a generation.
The trigger for this Michael Hudson post was a meeting of the Chairperson of the African Union, President of Senegal Macky Sall with Putin. Sall’s remarks, from a partial transcript of the meeting:
Anti-Russia sanctions have made this situation worse and now we do not have access to grain from Russia, primarily to wheat. And, most importantly, we do not have access to fertiliser. The situation was bad and now it has become worse, creating a threat to food security in Africa.
This morning, I spoke with my colleague from the African Union Commission. I told him that there were two major problems – the crisis and the sanctions. We must work together to resolve these problems so that sanctions are lifted on food products, in particular, grain, and fertiliser.
More explanation from Nezavisimaya Gazeta: African nations to seek Putin’s help in avoiding famine (translated at TASS):
Talk about the starvation threat in Africa has been going on for a while. Agricultural shipments via Black Sea routes are stalled, particularly because Kiev has mined the waters around Odessa for fear of Russia trying to seize the port. In fact, Africa seeks to overcome two shocks in one go because due to the coronavirus pandemic, the economic situation on the continent left much to be desired even before the launch of Russia’s special military operation in Ukraine. Although Russia and Ukraine produce only a third of global wheat and barley exports, much of those are focused on Africa rather than on wealthier countries. This is why logistics and sanctions issues may trigger a genuine famine.
“The visit of the African Union’s delegation is actually nothing extraordinary because the parties exchange delegations a couple of times a year. It is during the pandemic that food price issues started to emerge. Besides, complications with foreign currency payments and Russia being prevented from making full use of maritime transport are creating additional difficulties. In particular, even if some companies agree to insure Russian vessels, their high rates inevitably affect prices for final customers,” Deputy Director of the Russian Academy of Sciences’ Institute for African Studies Leonid Fituni pointed out.
Contrast that discussion with how Politico’s European newsletter reacted to the Sall-Putin meeting. Rather than trying to alleviate probable famines in many poor countries, the US and Europe are full on “the solution to any problem is better propaganda”. From its morning European newsletter:
PUTIN’S FOOD WAR
AFRICAN UNION CHAIR BUYS INTO PUTIN’S FOOD PROPAGANDA: So much for the EU’s Africa partnership. Senegalese President Macky Sall, who is also the chair of the African Union, has called on the EU to remove sanctions on Russia wheat and fertilizers — even though neither the U.S. nor the EU have banned imports of Russian fertilizers or wheat — giving credence to Vladimir Putin’s skewed logic. The comments came after Sall met the Russian president in Sochi on Friday. POLITICO’s Eddy Wax has the write-up.
FACT OR FICTION: While EU officials insist the EU has not sanctioned Russian fertilizer, the EU’s fifth sanctions package does mention potash and combined fertilizers. High time, Playbook reckons, to do a quick recap of what the EU is and isn’t restricting.
Fact: The EU has not banned the import of Russian fertilizers. In fact, the bloc continues to import those products from Russia.
Also fact: The EU has sanctioned Belarus fertilizers. And in its fifth sanctions package, the EU placed a quota on Russian fertilizers to avoid circumvention by Belarus, with a yearly cap of 837,570 tons on potash and 1,577,807 tons on combined fertilizers containing potassium — a limit that is higher than the EU’s past imports from Russia.
Fiction: Neither the EU nor the U.S. have sanctioned Russian wheat. Many European and American companies have stopped working with Russia, so it is likely that imports of its food into the EU will fall this year, but it is difficult to see why that’s bad news for Africa. In fact, the less Russian wheat the EU buys up, the more there is for African countries.
What’s really going on: Wheat, corn and sunflower oil prices have skyrocketed worldwide — all these are key Ukrainian exports. They have soared because markets anticipated less supply from Ukraine, because of Russia’s blockade of Ukrainian ports, bombing of its grain silos and the mining of its fields.
Needless to say, this diatribe is a combination of patronization and fabrication. According to Politico, African leaders have no clue as to why they are suffering from rising food and fertilizer shortages, and have been duped by evil Putin into thinking the Western sanctions have made their already bad situation worse.
Commercial ships nor stuck in Ukraine ports left the Black Sea as soon as the war broke out because their insurance didn’t cover transit in a war zone. Commentators have pointed out that arming Ukraine with wunderwaffen to shoot at Russian ships from shore makes cargo ships less likely to want to come back any time soon.
As we’ve repeatedly pointed out, Russia is not and never has blockaded the Black Sea; it had one humanitarian corridor for shipping and has been trying to open a second. It also clear Ukrainian mines out of the Mariupol port.
The idea that Russia mined fields is another Ukraine fabrication; Russian soliders have been instructed to avoid targeting them to the extent possible. Residents in Mariupol said Ukraine was mining roads and some fields nearby. Ukraine has been pushing images of one explosion that it claims was Russia blowing up grain harvesting equipment. Note Russia has no reason to do so, so either this is yet another Kramatorsk-level false flag, or at best, Ukraine made the facility a military target by storing equipment and/or munitions there.
But the point of this long-winded intro is the press and EU officials are already pre-positioning the blame cannons for the coming cold and hungry winter solidly on Putin.
That is a long-winded way of saying that the West, particularly the EU, has imposed and continues to ratchet up sanctions not out of any real strategy except a fervid desire to hurt Russia. They simply can’t admit that the sanctions have not only failed but are hurting them and others far more. They keep trying to pound Russia even more out of the irrational belief that doing more economic harm will have to bring Russia to its knees, when they’ve already hobbled themselves and are on their way to self-amputating.
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Destiny of Civilization
Is the proxy war in Ukraine turning out to be only a lead-up to something larger, involving world famine and a foreign-exchange crisis for food- and oil-deficit countries?
Many more people are likely to die of famine and economic disruption than on the Ukrainian battlefield. It thus is appropriate to ask whether what appeared to be the Ukraine proxy war is part of a larger strategy to lock in U.S. control over international trade and payments. We are seeing a financially weaponized power grab by the U.S. Dollar Area over the Global South as well as over Western Europe. Without dollar credit from the United States and its IMF subsidiary, how can countries stay afloat? How hard will the U.S. act to block them from de-dollarizing, opting out of the U.S. economic orbit?
U.S. Cold War strategy is not alone in thinking how to benefit from provoking a famine, oil and balance-of-payments crisis. Klaus Schwab’s World Economic Forum worries that the world is overpopulated – at least with the “wrong kind” of people. As Microsoft philanthropist (the customary euphemism for rentiermonopolist) Bill Gates has explained: “Population growth in Africa is a challenge.” His lobbying foundation’s 2018 “Goalkeepers” report warned: “According to U.N. data, Africa is expected to account for more than half of the world’s population growth between 2015 and 2050. Its population is projected to double by 2050,” with “more than 40 percent of world’s extremely poor people … in just two countries: Democratic Republic of the Congo and Nigeria.”
Gates advocates cutting this projected population increase by 30 percent by improving access to birth control and expanding education to “enable more girls and women to stay in school longer, have children later.” But how can that be afforded with this summer’s looming food and oil squeeze on government budgets?
South Americans and some Asian countries are subject to the same jump in import prices resulting from NATO’s demands to isolate Russia. JPMorgan Chase head Jamie Dimon recently warned attendees at a Wall Street investor conference that the sanctions will cause a global “economic hurricane.”He echoed the warning by IMF Managing Director Kristalina Georgieva in April that, “To put it simply: we are facing a crisis on top of a crisis.” Pointing out that the Covid pandemic has been capped by inflationas the war in Ukraine has made matters “much worse, and threatens to further increase inequality” she concluded that: “The economic consequences from the war spread fast and far, to neighbors and beyond, hitting hardest the world’s most vulnerable people. Hundreds of millions of families were already struggling with lower incomes and higher energy and food prices.”
The Biden administration blames Russia for “unprovoked aggression.” But it is his administration’s pressure on NATO and other Dollar Area satellites that has blocked Russian exports of grain, oil and gas. But many oil- and food-deficit countries see themselves as the primary victims of “collateral damage” caused by US/NATO pressure.
Is World Famine and Balance-of-Payments Crisis a Deliberate US/NATO Policy?
On June 3, African Union Chairperson Macky Sall, President of Senegal, went to Moscow to plan how to avoid a disruption in Africa’s food and oil trade by refusing to become pawns in the US/NATO sanctions. So far in 2022, President Putin noted: “Our trade is growing. In the first months of this year it grew by 34 percent.”But Senegal’s President Sall worried that: “Anti-Russia sanctions have made this situation worse and now we do not have access to grain from Russia, primarily to wheat. And, most importantly, we do not have access to fertilizer.”
U.S. diplomats are forcing countries to choose whether, in George W. Bush’s words, “you are either for us or against us.” The litmus test is whether they are willing to force their populations to starve and shut down their economies for lack of food and oil by stopping trade with the world’s Eurasian core of China, Russia, India, Iran and their neighbors.
Mainstream Western media describe the logic behind these sanctions as promoting a regime change in Russia. The hope was that blocking it from selling its oil and gas, food or other exports would drive down the ruble’s exchange rate and “make Russia scream” (as the U.S. tried to do to Allende’s Chile to set the stage for is backing of the Pinochet military coup). Exclusion from the SWIFT bank-clearing system was supposed to disrupt Russia’s payment system and sales, while seizing Russia’s $300 billion om foreign-currency reserves held in the West was expected to collapse the ruble, preventing Russian consumers from buying the Western goods to which they had become accustomed. The idea (and it seems so silly in retrospect) was that Russia’s population would rise in rebellion to protest against how much more Western luxury imports cost. But the ruble soared rather than sunk, and Russia quickly replaced SWIFT with its own system linked to that of China. And Russia’s population began to turn away from the West’s aggressive enmity.
Evidently some major dimensions are missing from the U.S. national-security think-tank models. But when it comes to global famine, was a more covert and even lager strategy at work? It is now looking like the major aim of the U.S. war in Ukraine all along was merely to serve as a catalyst, an excuse to impose sanctions that would disrupt the world’s food and energy trade, and to manage this crisis in a way that would afford U.S. diplomats an opportunity to confront Global South countries with the choice “Your loyalty and neoliberal dependency or your life – and, in the process, to “thin out” the world’s non-white populations that so worried Mr. Dimon and the WEF?
There must have been the following calculation: Russia accounts for 40% of the world’s grain trade and 25 percent of the world fertilizer market (45 percent if Belarus is included). Any scenario would have included a calculation that if so large a volume of grain and fertilizer was withdrawn from the market, prices would soar, just as they have done for oil and gas.
Adding to the disruption in the balance-of-payments of countries having to import these commodities, the price is rising for buying dollars to pay their foreign bondholders and banks for debts falling due. The Federal Reserve’s tightening of interest rates has caused a rising premium for U.S. dollars over euros, sterling and Global South currencies.
It is inconceivable that the consequences of this on countries outside of Europe and the United States were not taken into account, because the global economy is an interconnected system. Most disruptions are in the 2 to 5 percent range, but today’s US/NATO sanctions are so far off the historical track that price increases will soar substantially above the historic range. Nothing like this has happened in recent times.
This suggests that what appeared in February to be a war between Ukrainians and Russia is really a trigger intended to restructure the world economy – and to do so in a way to lock U.S. control over the Global South. Geopolitically, the proxy war in Ukraine has been a handy excuse for America’s to counter China’s Belt and Road Initiative (BRI).
The choice confronting Global South countries: to starve by paying their foreign bondholders and bankers, or to announce, as a basic principle of international law: “As sovereign countries, we put our survival above the aim of enriching foreign creditors who have made loans that have gone bad as a result of their choice to wage a new Cold War. As for the destructive neoliberal advice that the IMF and World Bank have given us, their austerity plans were destructive instead of helpful. Therefore, their loans have gone bad. As such, they have become odious.”
NATO policy has given Global South countries no choice but to reject its attempt to establish a U.S. food stranglehold on the Global South by blocking any competition from Russia, thereby monopolizing the world’s grain and energy trade. The major grain exporter was the heavily subsidized U.S. farm sector, followed by Europe’s highly subsidized Common Agricultural Policy (CAP). These were the main grain exporters before Russia entered the picture. The US/NATO demand is to roll back the clock to restore dependency on the Dollar Area and its eurozone satellites.
The implicit Russian and Chinese Counterplan
What is needed for the world’s non-US/NATO population to survive is a new world trade and financial system. The alternative is world famine for much of the world. More people will die o the sanctions than have died on the Ukrainian battlefield. Financial and trade sanctions are as destructive as military attack. So the Global South is morally justified in putting its sovereign interests above those of the wielders of international financial and trade weaponry.
First, reject the sanctions and reorient trade to Russia, China, India, Iran and their fellow members of the Shanghai Cooperation Organization (SCO). The problem is how to pay for imports from these countries, especially if U.S. diplomats extend sanctions against such commerce.
There is no way that Global South countries can pay for oil, fertilizer and food from these countries and also pay the dollar debts that are the legacy of U.S.-sponsored neoliberal trade policy subject to U.S. and eurozone protectionism. Therefore, the second need is to declare a debt moratorium – in effect, a repudiation – of the debts that represent loans gone bad. This act would be analogous to the 1931 suspension of German reparations and Inter-Ally debts owed to the United States. Quite simply, today’s Global South debts cannot be paid without subjecting debtor countries to famine and austerity.
A third corollary that follows from these economic imperatives is to replace the World Bank and its pro-U.S. policies of trade dependency and underdevelopment with a genuine Bank for Economic Acceleration. Along with this institution is a fourth corollary in the form of the new bank’s sibling: a replacement for the IMF free of austerity junk economics and subsidy of America’s client oligarchies coupled with currency raids on countries resisting U.S. privatization and financialization takeovers.
The fifth requirement is for countries to protect themselves by joining a military alliance as an alternative to NATO, to avoid being turned into another Afghanistan, another Libya, another Iraq or Syria or Ukraine.
The main deterrent to this strategy is not U.S. power, for it has shown itself to be a paper tiger. The problem is one of economic consciousness and will.
“Bill Gates has a warning about population growth,” World Economic Forum/Reuters, September 19, 2018. https://www.weforum.org/agenda/2018/09/africas-rapid-population-growth-puts-poverty-progress-at-risk-says-gates.
Lananh Nguyen, “‘It’s a hurricane.’Bank chiefs warn of a weakening economy,” The New York Times, June 1, 2022.
Kristalina Georgieva, IMF Managing Director, “Facing Crisis Upon Crisis: How the World Can Respond
April 14, 2022. https://www.imf.org/en/News/Articles/2022/04/14/sp041422-curtain-raiser-sm2022.
“Putin meets with African Union Chairperson at Sochi, June 3, 2022.” President Sall was accompanied by Moussa Faki Mahamat,Chairperson of the African Union Commission.http://en.kremlin.ru/events/president/news/68564. For a elated discussion on the sanctions see https://www.nakedcapitalism.com/2022/06/sanctions-now-weapons-of-mass-starvation.html.