Speaker 1: This is the best of Bloomberg opinion. I'm Vonnie Quinn.
Speaker 1: The divining event of two was undoubtedly Russia invading Ukraine February.
Speaker 1: The war force continues latest tally's estimate, more than forty
Speaker 1: one thou people dead, more than fifteen thousand missing, and
Speaker 1: about fourteen million displaced. The invasion that chocked the world
Speaker 1: saw Russian troops entering Ukraine from the northeast and south.
Speaker 1: Two months following that, I spoke with Ukrainian philosopher Vladimir
Speaker 1: your Malenko in an effort to grasp the enormity of
Speaker 1: what had happened. How do Ukrainians understand Vladimir Putin? If
Speaker 1: he were to be removed by his own people or
Speaker 1: an outside force, would Russia look different. I'm not sure.
Speaker 1: I'm not sure it will look different. Obviously, the problem
Speaker 1: is not only putting it himself, and if there is
Speaker 1: a replacement for somebody else, most probably will have the
Speaker 1: same personality or even the worse personality, although it's difficult
Speaker 1: to imagine worse. So Ukrainians do not have any illusion
Speaker 1: with regard to this. We understand that Russia in its
Speaker 1: current form is seeing itself as a wounded empire which
Speaker 1: tries to, you know, regain what it understands this past
Speaker 1: glory and conquering Ukraine or even annihilating Ukraine. Ukrainians independence
Speaker 1: and Ukrainian self consciousness is one of the key elements
Speaker 1: for restoring this empire. So for us, it's a real
Speaker 1: existential fight. We understand that Russians want to conquer these
Speaker 1: territories and have the Ukraine without Ukrainians. You wrote a
Speaker 1: threat attempting to put into words why Russians hate and
Speaker 1: humanize Ukrainians so much. It's producing a lot of cognitive
Speaker 1: dissonance that Russia wants Ukraine to sort of come back
Speaker 1: into the cradle. And at the same time there's so
Speaker 1: much hatred directed at Ukrainians, which Vladimir Putin maintains come
Speaker 1: from the same Soviets nest as you like. I think
Speaker 1: we have to understand that Russia is not a nation,
Speaker 1: it's an empire. So an illusion that sometimes you see
Speaker 1: it in America in Europe is to consider Russian generation
Speaker 1: as a kind of a nation state, where for example,
Speaker 1: there are Russians living with certain homogeneity ethnic, cultural, linguisticy, etcetera.
Speaker 1: It's not the case, especially actually a continental empire, which
Speaker 1: conquered so many different technicities, which has its colonies inside
Speaker 1: its body. So it also considered Ukrainians and Belarusians as
Speaker 1: part of this kind of imperial body. And when it,
Speaker 1: for example, sees Ukrainians saying that no, look, we are
Speaker 1: not Russians. We are a different nations with different organization
Speaker 1: of society, culture, language, etcetera, this produces very difficult feeling
Speaker 1: in Russia because it believes that Ukrainians and Delusians and
Speaker 1: Russians is the same construct, the same nation, and every
Speaker 1: deviation from this Russian nation, as they say, is an
Speaker 1: example of Nazism, you know. So I think that they
Speaker 1: are legging behind in developing their own national identity. Their
Speaker 1: concept of empire means that empire doesn't have borders, Empire
Speaker 1: is always expanding. Ukrainians developed this idea that well, this
Speaker 1: is our land. We have certain borders. We don't want
Speaker 1: to go any further these borders. But here inside our borders,
Speaker 1: we organize our society in the way we like, and
Speaker 1: we don't want to expand anywhere. And so a lot
Speaker 1: of where when people talk about a Soviet identity as
Speaker 1: a Ukrainian, what does that make you think is that
Speaker 1: relevant to the current train. Well, in Ukraine, obviously there
Speaker 1: are people who have some kind of nostalgia about Soviet Union,
Speaker 1: but much less than in Russia. Russia really developed a
Speaker 1: political project of coming back to this glorious Soviet past.
Speaker 1: Ukrainian political imagination is not centered on the past. It's
Speaker 1: centered on the future. For Ukrainians, the past is a
Speaker 1: very traumatic thing. So basically Russian slogan was we can
Speaker 1: do it again, meaning the victory in the Second World War.
Speaker 1: Our major slogan is never again, which is kind of
Speaker 1: a slogan also common with Europeans. Why Russians are developing
Speaker 1: this idea of ruleski mere Russian world, it's also an
Speaker 1: artificial construct to replace this idea of Soviet people. There
Speaker 1: is a kind of artificial invention in which every particular
Speaker 1: group will be just assimilated into some kind of utopian
Speaker 1: Soviet people, which is very artificial. Let's talk about NATO
Speaker 1: for a second. Do Ukrainians accept that Ukraine cannot be
Speaker 1: at least as the world is now part of NATO. Well,
Speaker 1: public opinion polls show support of NATO membership is very high.
Speaker 1: It has never been as high as now over seventy.
Speaker 1: But at the same time, what is NATO. Nature is
Speaker 1: a security guarantee, and Ukrainians do need this because they're
Speaker 1: living with such a monster neighbor. We understand that nature
Speaker 1: is composed of many different countries, and you need consensus
Speaker 1: to get Ukraine into nature. Maybe it's better to have
Speaker 1: bilateral security agreements with the United States, with United Kingdom,
Speaker 1: with Poland. The second thing is that Ukrainian army can
Speaker 1: be very efficient and in a way Ukraine can turn
Speaker 1: into kind of a security provider, not only security recipient,
Speaker 1: for other countries. So I imagine, for example, Ukraine in
Speaker 1: the future to be a kind of a country which
Speaker 1: will share its military and security experience with other countries
Speaker 1: of the world, maybe with NATO members. Do Ukrainians understand
Speaker 1: why Vladimir Putin might feel threatened by NATO. No, Ukrainians
Speaker 1: don't understand it. So we just look at the map
Speaker 1: of Russia and we can't understand how Russia can be
Speaker 1: encircled as they say, or fear the attack of NATO
Speaker 1: or whatever. But the problem of Putin is that he
Speaker 1: creates a reality which he constructs in his imagination. So
Speaker 1: his propaganda was saying that Russia is not waging war
Speaker 1: with Ukraine on Ukrainian territory, but with the United States
Speaker 1: and nature. This was his propaganda for the past eight
Speaker 1: ten years. So basically Putting created a reality which he
Speaker 1: first invented in his head. And now this is the
Speaker 1: reality that Ukrainians do have military support from the West
Speaker 1: a lot of it. Has the West lived up to
Speaker 1: its expectations in the eyes of Ukrainians. I mean, there
Speaker 1: obviously have been attempts from the very beginning to punish
Speaker 1: Russia and to help Ukraine, But has it been enough,
Speaker 1: particularly since Ukraine has always looked West, has looked for
Speaker 1: leadership and guidance and inclusion. Look, Ukraine was not taking
Speaker 1: seriously all all those years. Our warnings were not hurt.
Speaker 1: So when we were telling the West that after Russian
Speaker 1: invasion of Georgia, Ukraine will be next. After Ukraine, nature
Speaker 1: countries will be next. When Ukrainians were warning Europe that
Speaker 1: dependency on Russian gas and oil exports is very bad,
Speaker 1: we were warning Europe at least since two thousand and six,
Speaker 1: We were not very much hurt attentively, and I think
Speaker 1: that Ukrainian self description as a kind of both the
Speaker 1: land of the Western civilization and which is fighting against
Speaker 1: something barbarian, undemocratic and the enemy of the civilized democratic war.
Speaker 1: This self description is now more and more accurate, and
Speaker 1: therefore the West should stop looking for compromises. Once it's over.
Speaker 1: Will Ukraine still want to be part of the likes
Speaker 1: of the European Union and other Western institutions, Yes? Why not?
Speaker 1: Why why shouldn't it strive to these institutions. So of
Speaker 1: course it wants to be part of nature, part of
Speaker 1: the EU. But at the same time Ukrainians understand that
Speaker 1: European Union has been made possible because security was guaranteed
Speaker 1: basically by nature by United States since the end of
Speaker 1: the Second World War, and Europe concentrated its efforts on welfare, economy, equality,
Speaker 1: human rights, etcetera. Unfortunately, Ukrainian situation is different. We will
Speaker 1: be for decades with the country neighboring Ukraine a nuclear
Speaker 1: power which WANs to destroy us. Therefore, we should think
Speaker 1: primarily about our security, whether we are in nature, whether
Speaker 1: we are in the EU. So I think that after
Speaker 1: our victory, Ukraine will be a kind of a country
Speaker 1: with very strong state presence in the security sector and
Speaker 1: quite liberal economy, Vladimir, do you understand how Russia might
Speaker 1: continue to be part of institutions, So, for example, the
Speaker 1: U N. Security Council. I mean, it's out of the
Speaker 1: Human Rights Council, but it's still very much part of
Speaker 1: the United Nations. And in a far flung future, maybe
Speaker 1: not even that far away, you might have to work
Speaker 1: with Russia. I mean your own president has said that. No,
Speaker 1: I don't understand it. Frankly, I don't understand how U N.
Speaker 1: Security Council as an institution can function after these events.
Speaker 1: It's unacceptable that any country of the world has a
Speaker 1: veto power. If it's not able to reform itself. United
Speaker 1: Nations will be over as organizations. But you do accept
Speaker 1: that Russia, and it's one forty four million people, is
Speaker 1: not going away, and at some point when this is
Speaker 1: resolved somehow, it's still going to be a major player
Speaker 1: on the world stage. Look, we don't know, because if
Speaker 1: my interpretation is correct, and Russia is not a nation
Speaker 1: state but an empire, Russia is the only empire that
Speaker 1: survived the twentieth century, or the only European empire that
Speaker 1: survived the twentieth century. But it doesn't mean that it
Speaker 1: will survive the twenty first century. If you look at
Speaker 1: Russian interpretation of what's going on, they basically admit that
Speaker 1: if they do not expand, they will collapse, as it
Speaker 1: collapsed when the Soviet Union dismountled, and therefore the war
Speaker 1: in Ukraine is so existentially important for them. Ukrainian philosopher
Speaker 1: Volatimer yo Malenko in April, this is the best of
Speaker 1: Bloomberg opinion. You're listening to the best of Bloomberg opinion.
Speaker 1: I'm Vonnie Quinn. Just more than six months after the
Speaker 1: start of Russia's war on Ukraine, the man who presided
Speaker 1: over the end of the Soviet Union died, the President
Speaker 1: Reagan and I of the Treaty on the Elimination of
Speaker 1: Intermediate and Short Arrange Muscles. Nikail Gorbachev won the Nobel
Speaker 1: Peace Prize in for quote the leading role he played
Speaker 1: in the radical changes in East West relations in the
Speaker 1: scheme of history. However, his was a complicated role. I
Speaker 1: spoke with Bloomberg Opinions Clara Ferra Marquez about the complex
Speaker 1: legacy of the man who ended the Cold War. Clara,
Speaker 1: what for you is the lasting legacy of Michael Gorbachev?
Speaker 1: I think it's a really interesting and a far more
Speaker 1: difficult question. And I think a lot of people realize,
Speaker 1: and particularly in the West, where we have a very
Speaker 1: particular view of Gorbachev and what he did and what
Speaker 1: he represents for many of us at the end of
Speaker 1: the Evil Empire, it's in reality a lot more complicated.
Speaker 1: So he was clearly a man of the system, a
Speaker 1: man who wanted to work within the system. Obviously, he
Speaker 1: did not start out to collapse the Soviet Union. That
Speaker 1: was unintended consequence largely of economic and this school reforms.
Speaker 1: He changed the world. He was able to end the
Speaker 1: Soviet Union largely peacefully, and that is remarkable. But also
Speaker 1: you know that a lot of the ill conceived economic
Speaker 1: reforms that he brought in, the chaos that he left
Speaker 1: in his wake, allowed kleptocracy to take roots, and in
Speaker 1: many ways he is responsible for where Russia is today.
Speaker 1: Russians too, of course, putain many of us in the
Speaker 1: West who supported the system, but the economic plundering that
Speaker 1: was possible was to a degree because of right, there's
Speaker 1: a little bit more of a complicated legacy than just
Speaker 1: he presided over the end of the ussr absolutely think
Speaker 1: about him as a bit of a political rule shact test.
Speaker 1: You know, to us in the West, he's the man
Speaker 1: that Margaret Thatcher said she could do business with the
Speaker 1: Many and the former Soviet States, he's the man that
Speaker 1: brought down the wall. But for Russians, and I think
Speaker 1: in particular what matters for us as we look at
Speaker 1: this today is really what he means for the Britain
Speaker 1: regime and for them, he is the man who lost
Speaker 1: an empire, the man who brought national humiliation to a
Speaker 1: great nation. And I think that's really very very important
Speaker 1: in undis ending where we are today. So just to
Speaker 1: go back to Paristoica and Glass nows those reforms were
Speaker 1: life changing events, countries, state changing events. Were there any
Speaker 1: remnants of what Gorbach had introduced, Well, now that's a
Speaker 1: difficult one. I'd say almost no. So if you think
Speaker 1: about the three things that he really wanted to bring,
Speaker 1: he really wanted a thriving economy, he wanted openness, and
Speaker 1: he wanted democracy, and under putin, all three have been undone.
Speaker 1: But the concept of Parasto and the concept of glass
Speaker 1: and stars slightly different, and they are self reinforcing. Glass
Speaker 1: means transparency, clarity, It was about openness, and really that
Speaker 1: began very strongly after ch a novel which was a
Speaker 1: failure of the system that kept so many secrets. And
Speaker 1: Peristoia was the reconstruction. So that's what Pedistroian means, to reconstruct.
Speaker 1: And what happened, in fact is so relevant to today
Speaker 1: because when he started to unpicket, he found that the
Speaker 1: Soviet Empire was also on nothing. It was built on violence,
Speaker 1: it was built on lies. And really that's what we
Speaker 1: will find with the Putin regime. Archie Brown and The
Speaker 1: Guardian said, Gorbachev was asked a couple of years ago
Speaker 1: what has epitaph should be, and he replied, we tried.
Speaker 1: He was devastated, apparently by the war, and at the
Speaker 1: same time, Clara, he must have seen this coming in
Speaker 1: some ways. I don't want to compare it to other
Speaker 1: rises and falls of other regimes and so on, but
Speaker 1: in some ways these things are visible in advance, right
Speaker 1: and certainly in the case of Russia, this was potentially
Speaker 1: extraordinarily visible, especially to a statesman like Gorbachov, who then
Speaker 1: handed off to Yelson, who then handed off to Putin.
Speaker 1: I think, in terms of thinking about the collapse of
Speaker 1: the Soviet system. Two things are important. One is that
Speaker 1: they themselves think about this. Beijing thinks about this, So
Speaker 1: Beijing spends an awful lot of time studying paristoric again
Speaker 1: because going back to the Rulesha Act test, it really
Speaker 1: says everything about fishing and not much about Mihil Gorbachev.
Speaker 1: The second thing is just in terms of the visibility.
Speaker 1: So when we look at the Soviet collapse, the most
Speaker 1: important thing is really to think that what was obvious
Speaker 1: was that it would come to an end. It wasn't
Speaker 1: at all obvious how it would come to an end
Speaker 1: or when. And I think the same as through today.
Speaker 1: We have an extremely brittle system and a system that
Speaker 1: is hollowing itself out, stagnant economy and impossible plundering of
Speaker 1: resources at the top of predicting when that can end,
Speaker 1: I mean that is almost impossible. You mentioned that Beijing
Speaker 1: studied Paristroiker. What lessons did Beijing learn from this study?
Speaker 1: What so called errors of Paristroika would Beijing seek to
Speaker 1: try and avoid. I mean, interestingly, I would argue they
Speaker 1: take all the wrong lessons from this. They look at
Speaker 1: gorbashof I mean, obviously there were violent incidents, but by
Speaker 1: and largely was averse to violence, and Beijing sees certain
Speaker 1: I think you think they once made a comment about,
Speaker 1: you know that the iron grip that gorbashof did not have.
Speaker 1: They really see this assay of demonstration that forces required.
Speaker 1: If somebody wants to pull out of your empire, you
Speaker 1: pulled them back in by force, and obviously that's what's happened,
Speaker 1: for example with Hong Kong. The other thing they think
Speaker 1: about it as economic and political reform, which comes first,
Speaker 1: and they really see as a problem that what happened
Speaker 1: in Russia was that political reform was done first, so
Speaker 1: that there was openness, there was an ability to discuss
Speaker 1: the errors, and everything was out in the open, and
Speaker 1: they see that's as fundamental, but it is. It's a
Speaker 1: really interesting study because it has chain and show over time.
Speaker 1: So Clara, you would have seen this happening when you
Speaker 1: were a youngster in school and so on, but you
Speaker 1: did arrive in Russia not that long after some of
Speaker 1: these changes were enacted. What was it like. Was it
Speaker 1: a free and open society where there was a view
Speaker 1: towards market economics and so on, or was the Yellson
Speaker 1: era already showing signs of Strain. I think what the
Speaker 1: Alton era really showed was that we were heading towards
Speaker 1: the sort of personalist, kleptocratic system, and at the time
Speaker 1: it perhaps wasn't so obvious. We saw a different direction
Speaker 1: of travel. So I arrived in Russia in August nine seven,
Speaker 1: so just before the financial crisis the year after, and
Speaker 1: it was a time that was extremely chaotic, extremely painful
Speaker 1: economically and also quite violent. To be clear, this was
Speaker 1: not an easy time at all, but it was a
Speaker 1: hopeful time in the sense that people did see something
Speaker 1: better down the line. They were sort of living through
Speaker 1: this period, even during the crisis, which is absolutely catastrophic.
Speaker 1: I'd say a lot of that has been reversed, the
Speaker 1: hope in particular, but also this idea that we could
Speaker 1: escape stagnation. Take the auto industry or take the aviation
Speaker 1: industry for example. Clara Putin, How would Vladimir Putin have
Speaker 1: been shaped by the events that Mikhail Gorbachev oversaw. I
Speaker 1: think there are two very important events I think important
Speaker 1: to understand where Puttin is today and the plistical man
Speaker 1: that he is one is effectively nine eight nine, he
Speaker 1: was the young KGB officer in Dresden, in Germany, and
Speaker 1: there's an episode that he's written about. He was at
Speaker 1: the KCB headquarters and there was a mob approaching, and
Speaker 1: he was desperate to preserve what was inside, and he
Speaker 1: called the Red Army and he asked for reinforcements and
Speaker 1: they said we we haven't got to orders from Moscow,
Speaker 1: so you can't do anything. And then they said something
Speaker 1: that stayed with him, which is they said Moscow is silent.
Speaker 1: And this particular phrase for him was really a sort
Speaker 1: of demonstration of powerlessness. It was a humiliation. He felt
Speaker 1: the country no longer existed, and he wanted to reverse
Speaker 1: this destruction of an emph He said later that the
Speaker 1: thousand years of our work was Undone the second important
Speaker 1: moments is that he did consider the role that a
Speaker 1: collapsing economy place. So for him, macroeconomic stability was and
Speaker 1: remains absolutely crucial, and he very often positions himself in
Speaker 1: contrast with the chaos of the nine nineties. Obviously, that's
Speaker 1: very ironic given where we are today with the Russian economy,
Speaker 1: where he himself has pushed the economy back to pretty
Speaker 1: much that period. How is Gorbachev seen by the majority
Speaker 1: of Russians? If there is a majority opinion one. Well,
Speaker 1: Russian's opinions on quite complicated and it depends to some
Speaker 1: extent what age you are. But I think for a
Speaker 1: long time he was actually completely ignored. He was a
Speaker 1: fringe figure. He complained about the Prutain regime. Though I
Speaker 1: would say that he saw Ukraine in Russia's orbit the
Speaker 1: way that prusin. I mean that doesn't mean he advocated
Speaker 1: an invasion. In fact, he clearly spoke up against it,
Speaker 1: but he didn't have a radically different view. I think
Speaker 1: it's important to understand the role that political deaths play
Speaker 1: in the regime like this, the political death funeral, the eulogy,
Speaker 1: the whole pageantry around it is not about the person
Speaker 1: whose diet's about those stuff behind. The tributes have been
Speaker 1: exactly as you would expect. So Frutin criticizing the failures
Speaker 1: that he is now undoing, so the loss of empire,
Speaker 1: but really glossing over some of the failures that tell
Speaker 1: you a lot about the region today. So for example,
Speaker 1: excessive military spending, for example, the misadventures in Afghanistan, or
Speaker 1: the stagnating economy, all of that he will not talk about,
Speaker 1: so he will use it in that sense and really
Speaker 1: succeed the sort of Soviet tinged nostalgia. That is the
Speaker 1: only thing that the current regime has to replace ideology,
Speaker 1: and they cannot pull the country together on the basis
Speaker 1: of ideology, so they've gone back to a lot of
Speaker 1: the old Soviet imagery, the old Soviet narrative. Bloomberg Opinions
Speaker 1: that Clara Ferreira Marquez, this is the best of Bloomberg opinion.
Speaker 1: You're listening to the best of Bloomberg opinion. I'm Vannie Quinn.
Speaker 1: The war on Ukraine is having devastating effects. Beyond the
Speaker 1: crucible of the war itself. The impact on global food
Speaker 1: supplies was immediate and vast, thanks to port blockades, sharp
Speaker 1: increases and prices, and countries implementing measures to protect domestic supplies.
Speaker 1: Food security, particularly in North Africa and the Asia Pacific
Speaker 1: regions particularly impacted early in the food crisis. I spoke
Speaker 1: with Boomberg Opinions David Fickling for an assessment of the
Speaker 1: potential damage. I think we're approaching a quite unusual turn
Speaker 1: in the sort of history of global food security. To
Speaker 1: be honest, if you look back at the long history
Speaker 1: of this, you know one of the crucial things that
Speaker 1: helped keep the world fed over the past fifty years
Speaker 1: while the world population has doubled, is actually trade. People
Speaker 1: talk a lot about the growth of sort of chemical
Speaker 1: fertilizers and farm machinery, which have both been very important
Speaker 1: in the twentieth century in keeping the world fed, but
Speaker 1: trade is a really important part of that because, of course,
Speaker 1: if you have drought and crop failures in your region,
Speaker 1: then there's no amount of fertilizer or farm machinery that
Speaker 1: will solve the fact that your crop just won't grow.
Speaker 1: So a really important thing that I think is underappreciated
Speaker 1: is that the cost of ocean freight in the nineteenth
Speaker 1: century dropped by about and so you suddenly have this
Speaker 1: global trade in grains and about a quarter of all
Speaker 1: the calories we consume it and now traded across borders.
Speaker 1: So it's very important that this is a global trade.
Speaker 1: But I think something's undappreciated is that it's quite a
Speaker 1: concentrated trade. The world's bread baskets are rather few. There's
Speaker 1: probably about six of them the US Midwest, the South America,
Speaker 1: sort of Argentina, Brazil, that area, areas of western Europe,
Speaker 1: and the Ukraine and the former Soviet Union and Russia,
Speaker 1: and I think most importantly the playing between the Indus
Speaker 1: and the Ganges in northern India and Pakistan and eastern China,
Speaker 1: between the Yank Sea and the Yellow Rivers. Those six
Speaker 1: read baskets are absolutely crucial to the world's growth. Of
Speaker 1: these relatively few number of crops that we depend on, wheat, rice, corn, soybeans.
Speaker 1: More than half of wheat and rice and corn are
Speaker 1: grown if you put those those areas together, soybeans disclosed.
Speaker 1: Now for most of the time, that's not too much
Speaker 1: of a problem because although there's just half a dozen
Speaker 1: of these bread baskets, if you get a draft in
Speaker 1: one region, it tends to pair with good rainfall and
Speaker 1: another region that leads to higher crop yields, because essentially
Speaker 1: the rainfall has to go somewhere. It evaporates on one
Speaker 1: side of the ocean, it tends to drop on the
Speaker 1: other side of the ocean, And when we talk about
Speaker 1: things like El Nino and Landinia, that's essentially about rainfall
Speaker 1: ending up in different places. However, as the climate is changing,
Speaker 1: a lot of that is getting a lot less secure
Speaker 1: than it has been in the past. The weather has
Speaker 1: a lot to do with the fact that there's going
Speaker 1: to be a shortage. It is not just Russia's war
Speaker 1: in Ukraine. Absolutely one of the world's top three wheat producers.
Speaker 1: May be slightly surprising in fact, is India. You don't
Speaker 1: think of India as a big wheat producer because there's
Speaker 1: not a big wheat exporter normally, because it's almost all
Speaker 1: consumed at home. What we've seen in India over the
Speaker 1: past a couple of months, we've seen this very extreme
Speaker 1: heat wave and that has caused India to embargo exports
Speaker 1: of wheat. Places like the Middle East. They were very
Speaker 1: dependent on wheat from Ukraine. That's obviously been damaged by
Speaker 1: the war in Ukraine. The places they were hoping to
Speaker 1: get their wheat supplies from with India, but now injury
Speaker 1: is not supplying that either. Obviously you see these high
Speaker 1: prices in the US as well, So you really see
Speaker 1: how some relatively small changes, and especially if you throw
Speaker 1: gear politics in the mix, as with the war in Ukraine,
Speaker 1: suddenly what looked like a decent spread of food baskets
Speaker 1: can very quickly that are rather short. You also point
Speaker 1: out on a recent piece food dependent nations can import nutrition,
Speaker 1: but they must have the foreign exchange to pay for it,
Speaker 1: and we know that because of the dollar strength, that's
Speaker 1: in short supply in many of these countries. Yeah. Absolutely,
Speaker 1: and of course a weak currency becomes a problem for
Speaker 1: especially the poorest in the country, even if there is
Speaker 1: the availability of imported nutrition. I mean, another interesting example
Speaker 1: you look at Brazil. Brazil recently not a country that
Speaker 1: you really associate with a sort of open trade policy,
Speaker 1: but they've been drastically cutting the tariff rates essentially to
Speaker 1: zero for all food imports. The eye of values, of course,
Speaker 1: that the inflation is very high in Brazil, and it
Speaker 1: is a problem for people in Brazil that they can
Speaker 1: afford to eat. Well. That is a decent policy approach,
Speaker 1: but the problem is it's not nearly sufficient, because if
Speaker 1: you look at the way the real the currency has
Speaker 1: fallen in recent years, Brazili the big food producer anyway,
Speaker 1: and it's probably not going to lead to any increase
Speaker 1: in food imports because Brazilians simply can't afford the market
Speaker 1: global price of food. Now, David, how bad does this
Speaker 1: get in terms of people actually starving people in places
Speaker 1: you might even associate balmon and food and securityers. The
Speaker 1: past few decades mostly have been an extremely successful period
Speaker 1: of bringing down rates of under nutrition under nourishment. That
Speaker 1: progress continued to slow down through but then just in
Speaker 1: and then particularly twenties, since of course the covide pandemic,
Speaker 1: we've really started to lose ground on that. Now part
Speaker 1: of that is essentially driven by the pandemic and driven
Speaker 1: by incomes. People don't have the money to spend on
Speaker 1: food that they used to have, but it's not just
Speaker 1: because of that, and I think particularly at the moment,
Speaker 1: we see all sorts of factors a eading to a
Speaker 1: much more insecure environment for food. Clearly, you have the
Speaker 1: crop failures that we're seeing. We're in the third year
Speaker 1: of a Landinia event, which causes all sorts of disruption
Speaker 1: to the food system in that way, that's why you
Speaker 1: see a lot of these low yields on crops from
Speaker 1: Latin America. That tends to be the case with it
Speaker 1: with a landing near event. On top of that, of course,
Speaker 1: energy prices are very high and that pushes up the
Speaker 1: cost of fertilizer, so that's another thing that decreases yield.
Speaker 1: And then you throw into the mix the war in
Speaker 1: Ukraine is a factor. Ukraine and Russia are both big
Speaker 1: food exporters. Then you can add some of these export embargoes. Obviously,
Speaker 1: you know, an interesting one was India's wheat embargo follows
Speaker 1: very rapidly on the heels of an export embargo in
Speaker 1: Indonesia for palm oil, which has actually now been revoked,
Speaker 1: but went on for a while. Injury is one of
Speaker 1: the biggest importers of palm oil. India needs palm oil
Speaker 1: for basic nutrition for Indians. They lose that nutrition from Indonesia.
Speaker 1: They embargo their wheat exports elsewhere, and you see these
Speaker 1: knock on effects everywhere. Malaysia embargoing exports of chicken, but
Speaker 1: of course you've got an ava influenza atbreak around the
Speaker 1: world at the moment, and the price of corn, which
Speaker 1: is essentially the price of raising chickens, is also very high.
Speaker 1: So there are all sorts of impacts like this. Can
Speaker 1: the World Food Program, for example, do much about this? Well,
Speaker 1: traditionally that's exactly what the World Food Program is for.
Speaker 1: And in fact, it's its origins essentially are as a
Speaker 1: US export program. It's deep origins are in World War
Speaker 1: One when Herbert Hoover was seeing sort of famine in
Speaker 1: Belgium and decided to use some of the US's significant
Speaker 1: agricultural surpluses to solve that problem. So that is what
Speaker 1: the World Food Program does. It uses the agricultural surplaces
Speaker 1: from from the US and to a lesser extent, Europe
Speaker 1: as a way of applying supplementary nutrition around the world.
Speaker 1: That works as long as you don't have these simultaneous
Speaker 1: bread basket failures and as long as they don't come repeatedly.
Speaker 1: But that's the risk with climate change. And you know,
Speaker 1: I think a key instance here in twenty you had
Speaker 1: very dramatic heat waves and drought in Russia that caused
Speaker 1: a real collapse in agricultural production there, and they were
Speaker 1: head with flooding in Pakistan. Normally, of course, the rainfall
Speaker 1: it was the same climate system. Normally, you would say,
Speaker 1: you know, there's a drought one place, there's rainfall elsewhere.
Speaker 1: But the flood in Pakistan was so severe that Pakistan
Speaker 1: also suffered a collapse in production. So two of the
Speaker 1: world's big wheat belts collapsed at the same time, which
Speaker 1: is not something that we've seen before, but it is
Speaker 1: something that as global warming increases the risk of that.
Speaker 1: And remember there's only fix or some of these red
Speaker 1: baskets around the world. The risk of that goes up
Speaker 1: quite substantially. Is Eastern in China at least a functioning
Speaker 1: bread basket for the world at moment. China is an
Speaker 1: interesting case, but it also an interesting case around geopolitics.
Speaker 1: You see occasional reports out of China saying that, you know,
Speaker 1: they're the agricultural yields are not as good as expected,
Speaker 1: and there are you know, there are sort of food problems.
Speaker 1: But I would say China is pretty well supplied with
Speaker 1: food at the moment, and actually over a police applied.
Speaker 1: If you look at the stockpiles that they have of
Speaker 1: key grains, they are extremely high. They've got enough stockpiles
Speaker 1: to last, you know, in most cases well beyond a year,
Speaker 1: when a lot of other parts of the world are
Speaker 1: very short. Now. I think in part that is actually
Speaker 1: a product of geopolitics. You know, China is less sure
Speaker 1: of its trading relationships than it was a few years ago,
Speaker 1: and there's a bit of a sort of fortress China
Speaker 1: approach to that. So we did stop piling this stuff
Speaker 1: at home, and it is not available for its its
Speaker 1: trading partners, and other nations to feed their own shortages.
Speaker 1: If there was to be a letter up on Russia's
Speaker 1: war in Ukraine, how much would that alleviate the situation.
Speaker 1: It wouldn't happen immediately because actually, to some extent, the
Speaker 1: larger problem with Ukraine at the moment is of course
Speaker 1: that we've we've missed the planting season largely for a
Speaker 1: lot of the crops for this year, and that's pretty significant.
Speaker 1: And if you look at some of the US Power
Speaker 1: of Agricultures projections, the bigger supply crunch for wheats is
Speaker 1: actually for the coming marketing year. For the coming marketing year,
Speaker 1: they lose about a third of their output, So that's
Speaker 1: going to be the more significant one. Of course, a
Speaker 1: big factor behind this is what happens with the global climate.
Speaker 1: We are three years into a Landinia event and the
Speaker 1: climate shifts that that causes. It's likely that we're going
Speaker 1: to see a shift into an Alnnio event, which favors
Speaker 1: different bread baskets. But when we move into that, we
Speaker 1: have the real core of the high prices that we're
Speaker 1: seeing for agricultural produce is that stocks are low and
Speaker 1: stocks have been running down essentially over this three year
Speaker 1: learning near event, So we need to rebuild those stocks,
Speaker 1: and that's not going to come overnight. That would be
Speaker 1: the product of a number of years. I suspect climate change.
Speaker 1: Notwithstanding that, we will again see very cheap prices for
Speaker 1: food over the next decade, but it will be a
Speaker 1: number of years before things really get back on track.
Speaker 1: Bloomberg Opinions, David Fickling. In March, Helen Thompson's book Disorder,
Speaker 1: Hard Times in the twenty one century. It was published
Speaker 1: the University of Cambridge professor of Political Economy, makes the
Speaker 1: case that political turbulence around the world is founded in
Speaker 1: the tussles for fossil fuel energies, specifically oil. She says
Speaker 1: they have fundamentally reshaped the global political order and will
Speaker 1: continue to while energy transitions play out. Here's a small
Speaker 1: part of our conversation. So, Helen, are we at a
Speaker 1: pivotal point now in how the global economy oper rates? Yeah,
Speaker 1: I think that we are. I think we're actually at
Speaker 1: a pivotal point before the war. I think that what
Speaker 1: we could see during the latter part of last year
Speaker 1: and the months autumn before Omgon hit was that the
Speaker 1: world economy is facing some pretty serious energy constraints. At
Speaker 1: any point when there's any significant growth. The world economy
Speaker 1: is now running into high energy prices, and we're not
Speaker 1: just talking about high oil prices. We're talking about high
Speaker 1: natural gas prices and high coal prices too, And I
Speaker 1: think high core prices has really taken a lot of people,
Speaker 1: including myself. We try to follow the energy situation quite
Speaker 1: by surprise, and I think that that goes to show
Speaker 1: the depth of the issues that we're now facing, particularly
Speaker 1: when we bear in mind that we would like the
Speaker 1: world economy to be moving away from coal as rapidly
Speaker 1: as possible given the need to address climate change. One
Speaker 1: of your main visas is that the US failed to
Speaker 1: secure the stability of its relationships in the Middle East,
Speaker 1: and that created an instability around energy, which reverberates. So
Speaker 1: in a sense, this shouldn't have taken any of us,
Speaker 1: and by surprise by that piece, that's right. I think
Speaker 1: that what we can see during the two thousands and
Speaker 1: tens is that the United States, in terms of its
Speaker 1: own energy needs, is in a much stronger position than
Speaker 1: it had been since the nineteen seventies. Because the shale
Speaker 1: oil and gas boom allowed the United States a higher
Speaker 1: level of energy independence much reduced energy dependence. What was revealing, though,
Speaker 1: was the way in which as the United States achieved
Speaker 1: that it's very success had so many disruptive consequences in
Speaker 1: the Middle East, in particular because it was very problematic
Speaker 1: from the Saudi point of view to now find that
Speaker 1: American shell producers were big rivals, and as that came
Speaker 1: at a time when the United States and the Obama
Speaker 1: was also trying to improve relations with Iran, and then
Speaker 1: things didn't work out very well in Syria. Despite the
Speaker 1: fact that Saudies and States have started on the same side,
Speaker 1: what we see through the two thousands and the end
Speaker 1: as the shell boom goes on is a complete deterioration
Speaker 1: of US Saudi relations and although to some extent they're
Speaker 1: repaired during the Trump presidency, is that Trump tries to
Speaker 1: hug the hat is hard, he still isn't really able
Speaker 1: to influence the Saudis when it comes to the price
Speaker 1: of oil, and as the US shale boom foltered during
Speaker 1: the pandemic, another American president was left trying to persuade
Speaker 1: our oil producers to produce more oil. The problem now
Speaker 1: is the exception probably of Saudi Arabia and United Arab
Speaker 1: em Ence, it's not quite clear how many of them
Speaker 1: really can produce more oil, particularly I think there are
Speaker 1: difficulties with Kuwait. So there's a great global energy rivalry
Speaker 1: now between the US, Russia, and China. Are we doomed
Speaker 1: to see nuclear powers face off until this energy revolution
Speaker 1: is somehow enacted? Yeah, I mean in a way. The
Speaker 1: way to think about what's happened over the last decade
Speaker 1: in particular, is that two competitions ensued. The first actually
Speaker 1: was in Europe and in some sense as being the
Speaker 1: most geo politically lethal, and that was a competition between
Speaker 1: the United States and Russia to sell natural gas in Europe,
Speaker 1: and the Russian point of view, that was a really
Speaker 1: different situation and than the one that they've enjoyed in
Speaker 1: the two thousand's when they could take really the European
Speaker 1: gas market for granted. I think the big change that's
Speaker 1: happened in the United States, ironically in good part as
Speaker 1: a consequence of the U S SHL boom, is that
Speaker 1: Saudi Arabia now has to think much more carefully about
Speaker 1: who it's selling its oil too, and that means that
Speaker 1: there's also a competition, I think between Saudi Arabia and
Speaker 1: Russia to sell oil to the Chinese. The Chinese leadership
Speaker 1: have a very strong awareness of China's strategic vulnerabilities around energy.
Speaker 1: China is also trying to influence the price by stockpiling.
Speaker 1: So we've got complicated dynamics because it's not just actually
Speaker 1: a competition between the producers, We've got this very large
Speaker 1: consumer in China not really prepared to accept a passive
Speaker 1: position in all this. Cambridge University professor Helen Thompson, author
Speaker 1: of Disorder, Hard Times in the twenty one century. That's
Speaker 1: it for our special best of Bloomberg Opinion. Please do
Speaker 1: reach out though with thoughts and opinions of your own.
Speaker 1: Email me at v Quinn at Bloomberg dot net and
Speaker 1: don't forget where available as a podcast on Apple, Spotify
Speaker 1: or your favorite podcast platform. Were produced by Eric mollow
Speaker 1: till next year on Bloomberg Opinion