July 30, 2023 (MLN): War between Russia and Ukraine had not only roiled energy but also the global food market. Countries together feed a heavy chunk of the population. Thus, while energy markets had to rebalance eventually global food chain required brokering a peace deal.
That peace deal allowed the transportation of grain to global markets for a year.
On July 17, the deal expired without being extended. Over the year grain worth $8-9 billion traveled through with 32MT heading towards demand centers. Now that is temporarily finding a route with the Danube River as the deal is not extended yet and food prices are heading north.
Reportedly, Russia wanted Rosselkhozbank to be connected back to the Swift system while the UN suggested a dedicated subsidiary of the bank. Hence, the deal broke.
Thus, Ukraine's Foreign Ministers' arrival in Islamabad on July 20 is more than symbolic. While categorically denying direct supply of weapons to Ukraine the conversation must have also touched upon the recent grain deal.
No surprise that Pakistan's Foreign Minister, Bilawal, spoke to Russia's Lavrov to push diplomacy for global food stability. FM Bilawal also contacted the Turkish counterpart in pursuit of the same objective.
Whether Pakistan can use good offices to convince Russia is far from certain. Perhaps, Pakistan can offer to buy more fuel from Russia and show neutrality in the war to reopen grain exports.
Reeling under inflationary pressure, Pakistan would take whatever help it can to control food prices. Most of the food was transported to China (8MT), Spain (6MT), Turkey (3MT), Italy (2MT), Netherlands (2MT) & Egypt (2MT) but reverberates globally. It's vital for us to regain global political relevance to ensure peace and stability for everyone. Don't forget, political prowess requires economic power. Please fix the economy.
The author is an independent economic analyst and writes on Twitter and Linkedin.
Posted on: 2023-07-30T12:19:39+05:00
