By Mario Villar
United Nations, Apr 13 (EFE).- The impact of the Russian invasion of Ukraine on the food, energy and financial markets has unleashed a “three-dimensional crisis” that is hitting poor countries hard and which requires an urgent response, the United Nations warned on Wednesday.
According to the international organization, up to 1.7 billion people – a third of whom live in poverty – are right now very much impacted by the problems that Moscow’s invasion of its neighbor has created in these three areas.
The situation comes during a period that was already particularly delicate, given that many of the countries with fewer resources are still very exposed to the coronavirus and are having enormous difficulties in recovering from the pandemic.
“We are now facing a perfect storm that threatens to devastate the economies of many developing countries,” said UN Secretary-General Antonio Guterres at a press conference to present a report focusing on this “global” crisis resulting from the invasion of Ukraine.
The war situation between Russia and Ukraine as two of the world’s main producers of grain – together growing about 30 percent of the world’s wheat and barley – has caused food prices to shoot up to levels not seen in many years, 34 percent higher than they were last year.
The war has also hugely increased the prices of fertilizers, natural gas and petroleum, driving up inflation around the world and, in the less developed countries, increasing hunger and malnutrition.
Vulnerable populations are “highly exposed” to these price movements, given that they devote a larger portion of their income to food and energy, the UN report said, going on to note that the poorest countries tend to be net food importers.
The problem is accentuated by many governments’ inability to help the people in their jurisdictions who are suffering, having no resources to do so because of debt paybacks and with loan rates prohibitively high, all of which has worsened since the start of the war on Feb. 24.
“The most vulnerable people around the world cannot become collateral damage in yet another disaster for which they bear no responsibility,” Guterres said, adding that the situation is setting up a “vicious circle” of inflation and stagnation which the world cannot allow.
So, the UN after the start of the war created a working group including numerous top officials whose first proposals are included in the report presented on Wednesday.
In the food area, the organization is asking for countries to forego protectionism and act to quell the volatility in the markets by, among other things, releasing products from the food reserves that many nations maintain and lifting trade barriers.
“We must act today to prevent a food, fuel and finance crisis tipping the world into a new era of unrest,” said the secretary-general of the UN Conference on Trade and Development, Rebeca Grynspan, at the same press conference.
In energy, the UN in the short term is also planning to release crude reserves to stabilize prices and to take measures to enable countries and citizens in precarious circumstances to more easily pay for the fuel they need.
Regarding fuel subsidies, the international body is asking that only those who really need them be entitled to receive them, not “everyone,” especially in countries with fewer resources.
In addition, the UN is demanding that new measures be tried to reduce demand, for example by accelerating already-scheduled investments in Europe to improve energy efficiency.
In the medium term, the UN is asking for a more decisive effort to increase renewable energy and to progressively reduce and end the use of coal and other fossil fuels.
In the finance area, the priority for the UN is – as soon as possible – to rescue the developing countries that are on the edge of the abyss; that is, those who are in danger of defaulting or seeing their economies ruined by a lack of resources.
Guterres insisted that the international financial system has plenty of funds to be able to do this and must use all available tools to support those who need it.
As the UN chief said, it is “crucial” for all countries to understand the urgency of taking action in these areas so that appropriate decisions can be made at the spring meetings of the International Monetary Fund and the World Bank.