A Costly Casualty of War in Ukraine: Wheat Exports

The war that Vladimir Putin started when his forces invaded Ukraine on the morning of February 24th has already caused immeasurable destruction and incurred costs that have shaken the global conscience. Some of those costs, including the more than 10,000 dead soldiers, upwards of 1,000 civilian casualties, and over 2.5 million people displaced, have come directly at the hands of Russian violence. In response, a large coalition of countries have voluntarily accepted the economic costs of gas price hikes, lost investments, and hostile trade relations in order to impose economic sanctions on Russia that aim to make Putin’s invasion too costly to continue. As a tragic consequence of Vladimir Putin’s decision to attack a sovereign nation, casualties to soldiers and civilians will almost certainly rise as the war persists, as will the economic pressure faced by Russian oligarchs and ordinary citizens alike. All of these costs are the intrinsic components of modern war, but they are not the only damages that will come from the fighting.

The isolated field of conflict that limited the costs of war to the combatants and their allies has long been gone. Because of the connectedness of the global economic system, costs have been imposed involuntarily on people in countries that have no direct ties to the war in Ukraine. Far from the battlefields of Kharkiv and Kyiv, the people of the Middle East and North Africa have been caught in the economic crossfire of the conflict. As wheat exports in the warring countries have slowed to a halt, the countries that rely on the shipments to feed their people are facing a growing challenge.

Russia and Ukraine are the world’s largest and fifth-largest wheat exporters, respectively, which means that the disruption of the countries’ wheat supply is not a missing drop in the bucket but an abrupt stoppage of the faucet that feeds the Middle East and North Africa. Egypt, the world’s largest importer of the staple crop, buys 86% of its wheat from Russia and Ukraine. Yemen sources a third of its wheat from Russia and Ukraine, while Tunisia and Lebanon source half of their wheat from Ukraine alone. Even before the invasion, droughts, the Covid-19 pandemic, and inflation had driven wheat prices to dangerous highs. Despite the supply shocks, long-standing government bread subsidies in Egypt and Tunisia had kept consumer prices constant. Now, the shortage of Russian and Ukrainian wheat is making those subsidies prohibitively expensive. In Egypt, wheat prices have risen 57% since the beginning of the year, meaning the government would have to spend an additional $1.5 billion (0.4% GDP) to keep subsidies in place.

For consumers in the region, the skyrocketing price of wheat is more than a minor inconvenience. Bread is the primary source of calories for much of the Arab world, and the shortage that is unfolding could lead to widespread starvation in a region where a third of people were already underfed. 45% of citizens in war-ravaged Yemen were undernourished in 2020, a number that will only be exacerbated by rising wheat prices. The humanitarian crisis that will follow is another item on the long list of injustices for which Vladimir Putin is to blame.

If history is any indication, the effect of the wheat supply disruption could extend well beyond hunger. In North Africa, rising food prices have often sparked political instability. The last time Egypt raised its subsidized bread prices, in 1977, riots led president Anwar Sadat to reverse course. More dramatically, food prices played a prominent role in several Arab Spring uprisings and were the impetus for the 2019 Sudanese Revolution that ousted the ruling regime. The threat of future hunger-driven unrest is imminent in the Middle East and North Africa, where 14 of the 18 countries in the region are considered to be politically unstable by the World Bank.

Although the situation is dire, analysts from the International Food Policy Research Institute (IFPR) and the World Food Programme say that the problem is mainly monetary, rather than the result of the global wheat supply. According to Joseph Glauber of the IFPR, the total quantity of food is enough to make up for the loss of Russian and Ukrainian wheat, but countries in the particularly import-dependent Arab world are struggling to pay for it. To solve the problem and prevent a humanitarian crisis, other countries and NGOs could provide the funding to supply the region with food. But as the world focuses its attention on punishing Russia for the horrors of the war in Ukraine, a concerted effort to aid those who are peripherally affected is likely a distant afterthought for those with the power to help.