Vladimir Putin's latest economic assault on the West is fueling fears of a global food crisis
- On Monday, Russia pulled out of an agreement that allowed Ukraine to export grain.
- It then started bombing Ukrainian ports and threatened to attack ships.
Vladimir Putin's latest attack on the world economy has reignited fears that Russia's ongoing assault on Ukraine will trigger a global food crisis.
On Monday, Russia pulled out of the Black Sea Grain Initiative, a United Nations-brokered deal that had allowed Ukraine to export grains and oilseeds through a safe shipping corridor.
Moscow then started bombing Ukrainian ports – and on Thursday threatened to attack any ships headed for those harbors on the grounds they could be carrying weapons.
That sent benchmark wheat prices surging by as much as 8.5% on Wednesday, the second biggest single-day jump in over a decade (prices had jumped 8.6% in one day soon after the Ukraine war broke out in February 2022). Corn and soya bean costs have climbed this week as well.
Ukraine produces so much grain that it's often referred to as the "breadbasket of Europe" and is the world's seventh-largest wheat producer, according to the UN. The Black Sea agreement had helped keep benchmark prices of the foodstuff under control by boosting supply.
When international grain prices rise, it becomes more expensive for poorer countries to import those commodities – so Russia's withdrawal from the UN's initiative has fueled policymakers' fears that there could be a worldwide food crisis.
'Huge food crisis'
UN Secretary-General António Guterres said the Kremlin's decision to pull out of the grain deal would end "a lifeline for global food security" and extinguish "a beacon of hope", while the European Union's head of foreign policy Josep Borrell told journalists there could be a "big and huge food crisis in the world".
"This adds a significant layer of pressure on the price of wheat, with concerns from suppliers and consumers alike now swelling," Hargreaves Lansdown analyst Sophie Lund-Yates said Friday. "The possibility of a full-blown food crisis for poor nations can't be ruled out, and further volatility on the commodity markets is likely going to take a long while to abate."
Earlier this month, JPMorgan CEO Jamie Dimon warned of bigger threats to the world than an economic slowdown, underscoring the risks of food shortages and a spreading out of the conflict in Ukraine.
Since Russia invaded Ukraine in February 2022, Putin has tried to squeeze commodity supplies in a bid to disrupt the global economy and hinder Kyiv's Western allies.
Last year, Moscow repeatedly shut Nord Stream 1 to choke off Europe's supply of natural gas, before the key pipeline started leaking in late September. NATO believes it was sabotaged.
The West has also made Russia's economy a battleground in the ongoing Ukrainian conflict, with the G7 group of countries and the EU capping the price of Russian oil in a bid to cut the Kremlin's revenues so it has less money to fund its war effort.