In the past few days there has been a spate of news describing escalating tensions over Russia’s invasion of Ukraine.
First, NATO announced a new strategic deterrence concept aimed at the Russia-China alliance, while President Biden warned Putin about escalating the Ukraine conflict saying, “Don’t. Don’t. Don’t. You will change the face of war unlike anything since World War II.”
Putin responded to these threatening words, announcing a partial mobilization of Russia.
Calling the moves “urgent, necessary steps to defend the sovereignty, security and territorial integrity of Russia,” Putin said that Russia is fighting the full might of NATO. The US and its allies, he said, are seeking to “destroy” Russia.
Then Russia announced that they could use nuclear weapons to defend the annexed regions of Ukraine. Russia had just the day before moved to formally annex the areas of Ukraine under control of Russia’s soldiers.
“If the territorial integrity of our country is threatened, we will certainly use all the means at our disposal to protect Russia and our people,” said Putin.
Then Russia restricted travel for young men as part of its national mobilization, and called up 300,000 reservists. Russia’s domestic airlines have halted all sales of tickets abroad to men aged 18 to 65 without a waiver from the Ministry of Defense. The BBC reported lines of Russians trying to flee through the Georgia border.
Nearby nations are preparing for escalating conflict. Estonia has decided to confiscate firearms belonging to Russians living in the country. Meanwhile the President of Serbia is warning that there may be a great world conflict in the next few months. Tensions have increased between Turkey and Greece as they have started to revisit territorial disputes since the start of the Ukraine war. The EU also recently called for a war crimes tribunal over mass graves in Ukraine where bodies showed signs of torture after Russian occupation.
How does this or could this affect you? While Ukraine has had political and economic issues for many years, now, it is still an agricultural powerhouse. When it was part of the Soviet Union, Ukraine was responsible for 25% of the entire agricultural output of the USSR. If Russia was able to control the entirety of Ukraine, it would approximately double its wheat and corn and production. Even without controlling the entire country, the eastern and southern parts of Ukraine grow the most wheat. Combining just the exports of wheat by Russian and Ukraine, the two would more than double the amount of the second place exporter – the US.
We’ve seen Europe’s dependence on Russian fuel and how the conflict has caused fuel prices to rise worldwide, but especially in Europe. Should Russia also start controlling the food, it’s hard to predict specific outcomes, but food prices have already risen as a result of uncertainty over Ukrainian wheat exports.
Russia may be seeking a second lever in its geopolitical arsenal, adding food to fuel. Or it may be preparing for a period of imposed international isolation by “stocking up” on its neighbor food and fuel. Either way the effects on food and fuel will be upward moving prices even without the conflict going nuclear or spreading to additional countries.