In a short period, the war in Ukraine has already had a major effect the world economy. The United States and the European Union have levied sanctions on an unprecedented scale against Russia, energy prices have skyrocketed, and with the Black Sea closed, the world’s most fertile region is no longer linked to its markets. This will cause an appreciation of food prices that could wreak havoc in the European periphery.
Russia and Ukraine are important sources for raw materials that are now all but shut off from the world economy. Ukraine, for example, exports about half the world’s supply of semiconductor-grade neon, hitting an industry that had already been plagued by pandemic-related shortages. While this bears the potential to significantly appreciate manufactured goods from cars to consumer electronics, it is primarily industrialised nations that will shoulder the costs.
The war’s impact on the Middle East
Rather, it is the war’s effects on the food prices that should really worry us. Russia and Ukraine boast some of the most fertile soil in the world, making them world-leading exporters of agriculture produce. Especially grains and oil seeds can be produced here at relatively low cost, and in close proximity to their main export markets. Many countries are highly dependent on basic foodstuffs from Russia and Ukraine, especially those in the Middle East.
Egypt imports almost 70 per cent of its wheat from Russia and Ukraine. In 2019, 73 per cent of the Egyptian…
