WE are seeing attempts to place the responsibility on Russia for developments in the global food and energy markets and the growing problems there. But the situation with the global food market did not become worse yesterday or even with the launch of Russia’s special military operation in Donbas, in Ukraine. And it was well explained by the President of Russia Vladimir Putin on June 3, 2022 who answered questions from Rossyia 1 TV channel.
The Russian leader reminded that the situation took a downturn in February 2020 during the efforts to counter the coronavirus pandemic when the global economy was down and had to be revived.
The financial and economic authorities in the United States, according to President Putin, of all things, found nothing better than to allocate large amounts of money to support the population and certain businesses and economic sectors. The money supply in the United States grew by 5.9 trillion in less than two years, from February 2020 to the end of 2021—unprecedented productivity of the money printing machines. The total cash supply grew by 38.6 percent.
Apparently, the US financial authorities believed the dollar was a global currency, and it would spread, as usual, as it did in previous years, would dissolve in the global economy, and the United States would not even feel it. But that did not happen. And that was the first step—and a big one—towards the current unfavorable food market situation, because, in the first place, food prices immediately went up.
The second reason, according to President Putin, was European countries’ shortsighted policies, in regard to energy. Many political players in the United States and Europe have been taking advantage of people’s natural concerns about the climate, climate change, and they began to promote this green agenda, including in the energy sector.
It all seems fine, except for the unqualified and groundless recommendations about what needs to be done in the energy sector. The capabilities of alternative types of energy have been overestimated: solar, wind, any other types, hydrogen power—those are good prospects for the future, probably, but today, they cannot be produced in the required amount, with the required quality and at acceptable prices. And at the same time, they began to belittle the importance of conventional types of energy, including, and above all, hydrocarbons.
What was the result of this? Banks stopped issuing loans because they were under pressure. Insurance companies stopped insuring deals. Local authorities stopped allocating plots of land for expanding production and reduced the construction of special transport, including pipelines.
All this led to a shortage of investment in the world energy sector and price hikes as a result. The wind was not as strong as expected during the past year, winter dragged on, and prices instantly soared.
On top of all that, the Europeans did not listen to Russia’s persistent requests to preserve long-term contracts for the delivery of natural gas to European countries. They started to wind them down. This had a negative effect on the European energy market: the prices went up. Russia has absolutely nothing to do with this.
But as soon as gas prices started going up, fertilizer prices followed suit because gas is used to produce some of these fertilizers. Everything is interconnected. As soon as fertilizer prices started growing, many businesses, including those in European countries, became unprofitable and started shutting down altogether. The amount of fertilizer in the world market took a dive, and prices soared dramatically, much to the surprise of many European politicians.
The crop yield depends on the quantity of fertilizer put into the soil. As soon as it became clear that our fertilizers would not be in the world market, prices instantly soared on both fertilizers and food products because if there are no fertilizers, it is impossible to produce the required amount of agricultural products.
One thing leads to another, and Russia has nothing to do with it. The collective West made a host of mistakes themselves, and now they are looking for someone to blame. Of course, Russia is the most suitable candidate in this respect.
Mr. Gagni is Special Projects Editor, Philippines Graphic Magazine