Manish Tewari | The realpolitik of war in terms of commerce

It has been 21 weeks since the Russian aggression of Ukraine. The war has receded from many news cycles and front pages across the world notwithstanding the fact that millions of Ukrainians have been rendered homeless and countless others have been brutalised. The Russians, too, have their own narrative about the war and its depredations on Russian speaking minorities in the Donbas region. It comes out equally aggressively if you watch the pro-Kremlin TV channels like Russia Today or peruse their other information dissemination outlets.

In the middle of all this mayhem there is commerce. Recently, Russia and Ukraine signed a deal brokered by the United Nations and Turkey that would allow Ukrainian wheat, oilseeds and other agricultural products to be exported from Black Sea ports till now blockaded by the Russian Navy. Ukraine has also heavily mined the sea lanes in the Black Sea thereby seeking to prevent Russia from seizing more Ukrainian Ports. Russia in turn would get the right to export fertilisers and its own wheat de-horse sanctions to international markets. The ostensible reason for this deal inked in Istanbul is that the World Food Programme (WFP) has estimated that 47 million people, an overwhelming number of them in the global south, have already transitioned into a stage of severe hunger as an outcome of the Russian aggression of Ukraine.

According to reports attributed to the President of the Ukrainian Grain Association, Mykola Horbachov freeing up Ukrainian ports is the only method of preventing a global food crisis and also saving Ukrainian farmers. He alleged that the Russians had stolen about 500,000 tons of grain in occupied territories, and approximately one million tonnes of grain remains in the elevators under the control of the Russian forces. Benchmarked as a critical breadbasket of the world in terms of its agronomic production, Ukraine was responsible for 10 per cent of global wheat exports in 2021 while Russia grows about 17 per cent of all wheat globally.

However, before the ink had even dried on the Istanbul agreements Russian cruise missiles struck the the key Ukrainian port of Odessa. Russia has already captured the Azov Sea ports of Mariupol, Berdiansk and Skadovsk as well as the Black Sea port of Kherson. It now has Odessa in its cross hairs. It will have to be seen whether this agreement holds out and for how long.

There is a deeper moral question involved in this entire equation, howsoever noble and kosher the intentions may appear on the surface. While no one can quibble with helping the poor and needy nations out of a difficult food situation and rescuing millions from potential starvation, what happens to all the money that Russia and Ukraine will earn through these exports?

Obviously it is not going into any escrow accounts to finance any humanitarian activity in either of these two countries. It is going to reinforce and fund war chests of both these nations to further accentuate the already self-perpetuating cycle of violence that is causing needless civilian and military deaths. The question, therefore, is that if that if the United Nations and Turkey could broker this particular arrangement, what prevented it or still prevents it from at least brokering a cessation of armed hostilities by both sides?

Wheat or fertilisers are not the only commodity that is at a premium in this conflict. There are others that are available at a discount and the world is lapping it up. For example, India’s oil imports from Russia swelled to a high of about 950,000 barrels per day in June of 2022 accounting for close to a fifth of its overall imports. The reason is obvious; Russian oil is available at a discount. India is not alone in this endeavour. France, China, United Arab Emirates and even Saudi Arabia have increased their oil imports from Russia. Ironically, the European Union, in the forefront of opposing the Russian aggression of Ukraine, purchased 61 per cent of oil worth US $60 billion in the first hundred days of the war. Russia sold US $98 billion dollars of oil in the first 13 weeks after the war commenced, thus filling its coffers of war for intensified and more protracted conflict. However, it does not end here unfortunately.

In a reply to Parliament, the Indian government informed that Russia had also become the prime provider of fertilisers to India in April-June this year. India managed to import 7.74 lakh metric tonnes of fertilisers from Russia in the first quarter and this is more than a fifth of the total 36.4 lakh metric tonnes imported from across the world. The reason, again, is obvious: Russian fertiliser is selling at a discount for Russia needs the money to fund its war machine. India again is not alone in this regard. Many other nations despite sanctions have leveraged cheaper prices under the fig leaf of national interest, thereby feeding the cavernous belly of the monster of war. Ironically, the Russian rouble has turned out to be the best performing currency so far this year. The other currency that ofcourse continues to do well is the US dollar. It seems the war in Ukraine is working well for both the US and Russia at least in monetary terms.

It may sound as a bit of an oxymoron but notwithstanding a two year border stand-off China’s exports to India last year spiked by 46.2 per cent to US $97.52 billion while India’s exports to China swelled by 34.2 per cent to US $28.14 billion. The adverse balance of trade qua India grew by US $69.38 billion in 2021.

In May of this year alone, India exported goods worth $1.6 billion to China. In April and May combined, while its exports fell nearly 31 per cent from $4.4 billion in 2021 to $3 billion in 2022, its imports from China grew by 5.47 per cent in May 2022 compared to the corresponding period last year. For April and May combined, the imports from China increased by 12.75 per cent in 2022 juxtaposed against 2021. This even as the sixteenth round of military level talks ended in a stalemate in the middle of July with China refusing to vacate Indian territory illegally occupied by itself.

Anchor In the name of “realpolitik”, therefore, while some people have to die in national interest, others have to make money, again in the national interest. In the affairs of people and nations, the moral compass is always rubbished as empty emotion. Does it have to be that way?