Thursday 10 November 2022

The Green Arctic: Lessons Learned

On one level the game was quite inconclusive. The players didn't manage to achieve an accommodation. This showed how hard it is for sovereign nations to pool their sovereignty, to sacrifice their partial interest in exchange for a greater - if intangible - good. Reaching agreement in the Arctic would have been to the benefit of everyone, but that would have meant setting aside purely selfish concerns in order to do so. The inability to achieve this was, in many ways, the expected outcome. The tragedy of the commons hasn't been solved in human history, except in some very rare circumstances, and the inability to do so in a game is not an unusual outcome. However, the absence of an outcome different from our expectations does not mean that the game didn't throw out some interesting possibilities.

In the game play we saw emerging two possibilities that are worthy of further thought. One centred around the use of technology and the other centred around a coalition of like-minded parties. The game play centred on the use of farmed fishing technologies as a means to increase the catches of cod and salmon. This is worth further thought. It is unlikely that current fish farming technologies could be grafted into the Arctic Ocean, but they could form the basis for an eventual solution to the question of fishing quotas.

Equally, it must not be assumed that maritime technologies are static. The game play started to highlight the possibility of maritime technologies becoming much greener than they currently are, so that the environmental footprint per TEU, for example, is much reduced compared to current levels. This has already happened in the past decade, admittedly due to much tougher EU maritime emissions standards, but it shows that it could be done. It is also the case that there is scope to develop mineral and hydrocarbon extraction technologies that are far more sympathetic to the natural environment. Once again, we are already on this trajectory, and it could be the case that further impetus along this road might allow for greater exploitation of the Arctic region than we currently envisage.

This suggests an interesting pathway scenario game to explore this possibility. The pathway could examine the development of technologies that achieve a greater environmental efficiency in the use of the Arctic. It would have to run parallel with the development of an appropriate regulatory and enforcement structure to ensure that the newer technologies are rapidly adopted. The dramatic tension in the game would be provided by the questions of who would finance the development such technologies and who would enforce their use. This is game that would have some merit.

The second interesting possibility for further gaming centred around the issue of finding a coalition of like-minded parties. In the game play, Russia, China, and Japan started to converge on their views of how the Arctic Ocean should be used. This was at variance to the views expressed by Canada, the United States, and the European Commission. The game play started to head towards the creation of two blocs concerning Arctic usage. One with a distinct feel of NATO about it, and the other with a distinct Asiatic feel. I found that to be really interesting.

Much of this coalescence was driven by the construction of the game. However, the national objectives of the players reflected current policy intentions towards an unfrozen Arctic, so we don't feel that this was an unreasonable trajectory. The core issue is the way in which the players view the enclosure of the Arctic as distinct and separate national territorial units. 

It was correctly observed that we didn't provide the players with maps outlining the various national territorial claims in the Arctic. Whether or not this hampered the game play is a question still to be resolved, but the above map shows that there is ample scope for territorial disputes in the Arctic Ocean. Russia lays claim to most of the eastern half of the Arctic Ocean as sovereign territory. What if Russia, in conjunction with China and Japan, were to assert those claims and a user council to govern economic activity within the Arctic Ocean that it claims as territory?

This would provide an interesting end state game. The basic premise would be that the Arctic can no longer be governed within the purely voluntary framework offered by the Arctic Council. In this case a new Arctic Council (AC2) would be needed that recognised the needs of the Arctic states and allowed the greater participation in regulation and enforcement of the Arctic by a broader range of Arctic users. Such a game could focus on establishing generally agreed national boundaries, with the Lomonosov Ridge being a clear point of dispute, and a broader understanding within the coalition of how the usage would be divided. The dramatic tension would be provided by the question of who would join the AC2 and how the usage would be divided within it. The purpose of the game would be to explore future pathways for the development of the Arctic Council.

The two lines of thought originating in the game suggest that it was a worthwhile exercise in undertaking, even if it produced an inconclusive result. Rather than allowing us to drift into a future that might not be to our liking, it gives us the possibility to develop a vision for how the Arctic should emerge in the second half of this century. If we feel that the future of the Arctic should be one of conservation rather than exploitation, or vice-versa, then we now have a framework in which to position those considerations. If the default future outlined in the Blue Arctic scenario is not one of our choice, then we need to build an alternative future that better suits our views. This game is one step towards enabling that process.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Wednesday 9 November 2022

The Green Arctic Game

The focus of the Green Arctic Game is to examine the possibility - or impossibility - of reaching an international consensus that the Arctic should remain a global commons that is held in trust on behalf of humanity. In this scenario, the pristine nature of the Arctic environment would be preserved for posterity and future generations. That would involve the parties to the Arctic exercising a degree of self-restraint and limiting its use as a commercial waterway, restricting the exploitation of the hydrocarbon and mineral deposits in the region, and acting to preserve the fish stocks found in the region. There are commercial incentives for the parties involved in the Arctic to exploit it to the full. Can they come together to overcome these temptations?

In designing the game, we decided to follow the template set out in our Blue Arctic pathway scenario. The Green Arctic Game was to be an end state game that examined the possibility of the Blue Arctic developing into the Green Arctic. We maintained the same players as before - Canada, the US, Russia, China, Japan, and the European Commission. It was correctly pointed out that this largely excludes the Global South. This is true, but it's hard to see what interest the Global South could exert in a game about the Arctic. This may have been a significant oversight, but that was a risk we were prepared to take.

As with the Blue Arctic, Canada favoured an enclosed Arctic and reaching consensus through the Arctic Council. Russia favoured an enclosed Arctic, to be policed through national action. The US was in favour of the Arctic as a global commons, but with a weak institutional base; whilst the European Commission was in favour of the Arctic as a global commons, with an enhanced institutional basis. China was indifferent about the tenure of the Arctic and the institutional structure as long as it was open for large scale commercial exploitation. Japan was of a similar view and tended to side with the US, whilst China was naturally drawn towards Russia.

We felt that the focus of the discussion should be a quota framework for the commercial use of the Arctic. Only three players were members of the Arctic Council (Canada, the US, and Russia). It was upon the non-members to influence the members as best they could. There were four focus points - the amount of freight passing through the Arctic (measured in TEUs), the amount of hydrocarbons and minerals extracted in the Arctic (expressed as bpd equivalents), and the amount of Cod and Salmon fished in the Arctic. We set a baseline of the current usage in 2050 in the Blue Arctic scenario and asked the players to set about reaching an agreement to limit the usage to sustainable levels. These were lower than current levels.

There were six rounds of negotiation using the structure of a committee game. The objectives of some players were to see usage lower than the 2050 baseline, whilst those of other players were to achieve a level that was higher than the 2050 baseline. We also included a range of sub-objectives for the players to use as negotiating points and it was interesting to see whether the players could find those other touch points and utilise them.

In the six rounds of negotiation, no consensus results emerged. The players were close to an agreement on fishing quotas at one point, but an eventual solution eluded them. This is something of an expected result, that has some important consequences. We will go into greater detail on this in our next post. For now, suffice it to say that we didn't solve the tragedy of the commons. However, as nobody else has in 2,000 years of trying, we ought not to feel too despondent just yet.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Tuesday 8 November 2022

The Green Arctic: Introducing The Game

For much of human history the Arctic has been a closed environment. Historically, the region has contained some of the more extreme conditions on the planet that had left it generally unsuitable for widespread human habitation. As a result of this, the Arctic is largely underdeveloped in economic terms. Key pieces of physical infrastructure - such as roads, ports and airports – are not to be found there in great abundance. This lack of economic development has left the region largely unspoiled from an environmental perspective. There is a general lack of human settlement and there are minimal amounts of economic activity. The warming planet is expected to change this situation. 

As a result of global warming, the Polar ice cap is melting. As the Polar ice cap retreats, the Arctic Ocean has started to assume a degree of importance as a potentially navigable waterway. The waterway could open a navigable route between East Asia and Europe on the one hand, and East Asia and the East Coast of North America on the other. This would reduce the maritime transit route for goods by a significant degree. Given the operation of wind and tides in the Arctic Ocean, the eastern coast (the Northern Sea Route, or Russian Passage) is likely to be open to commercial navigation before the western coast (the North West Passage, or Canadian Route).

The Arctic region contains significant mineral and hydrocarbon deposits. As the region warms, these deposits will become more accessible on a commercial basis. There is concern that the commercial development of these deposits could lead to a degree of environmental degradation within the region. The governance of the region has been led by the Arctic Council, which provides a framework whereby the region is used as a common asset by its members on a voluntary basis. One uncertainty about the future is concerned with the degree to which the Arctic nations would seek to enclose these commons once they assume significant commercial and financial value.

The Arctic Ocean also contains an important fishery. As the waters of lower latitudes start to warm, fish stocks may well migrate northwards into the Arctic region. Much commercial fishing is governed by international treaty, but these frameworks are largely absent for the Arctic region. A potential point of diplomatic disagreement could be the framework structure to regulate fishing in the Arctic region.

It is these factors that create the scope for a game. We tend to assume the shrinking of the polar ice cap and its potential for commercial exploitation as the most likely future. This is what we have dubbed as 'the Blue Arctic'. It could be that the residual winds, currents, and tides result in an Arctic that isn't fully navigable (which we dub the 'White Arctic'). However, we see the White Arctic as more in the nature of a wild card event. 

Should the Blue Arctic prevail, the Arctic nations could react in one of two ways. First, they could consider the Arctic to remain a global commons. In this case, they could co-operate to restrict the degree of commercial development of the fisheries, the exploitation of the hydrocarbons and minerals, and to limit the use of the navigable waterway, all on a voluntary basis. In this possible future - the 'Green Arctic' scenario - the Arctic is preserved for humanity as a common resource. The second possibility is that the Arctic nations seek to exploit the region by enclosing it, develop the fisheries, mine the hydrocarbons and minerals, and utilise the navigable waterway. This future would probably involve the militarisation of the Arctic, hence the label the 'Red Arctic'.

Of these possible futures, the most likely outcome, given the current policies and actions, would be the Red Arctic. The enclosure and exploitation of the Arctic is already underway. In a previous exercise, we undertook a pathway scenario game that examined the Blue Arctic as a baseline scenario. Details of that game can be found here: Introducing the Unfrozen North. Taking the outcome of that game as a starting point for this game, we looked to develop an end state scenario game that explored the possibility of achieving the Green Arctic. What sort of issues would arise in negotiating a settlement? Could we find a way to solve the tragedy of the commons? If so, what sort of investment do we need to make today to achieve that future outcome? 

In short, just how difficult would it be to achieve the Green Arctic scenario? That was the purpose of the game and the question it sought to answer.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Wednesday 12 October 2022

How can we play a wild card in a matrix game?

One of the important uses of a matrix game is to help us to unfold a future narrative. Almost by definition, that narrative needs to cover a long period in time, possibly decades. We have undertaken a number of matrix games within this time frame, but we have tended not to introduce wild cards. Our disinclination to play a wild card is based upon the belief that the outcome of the game should rely upon the actions of the players rather than the influence of some random event. This is possibly not a reasonable position to hold. In our Middle East matrix game, covering the period 2020 to 2050, it was pointed out that a 30-year period in this region without some form of seismic event was quite unlikely. The point was well made and led us to start to think about how we could introduce wild cards into a matrix game.

Perhaps it's best to start with what a wild card might be. In the world of futures, a wild card is defined as a low probability event that has a high impact. They are the type of event that have the capacity to re-shape the course of the future. For a more formal treatment of wild cards, see our paper from 2013 here: Playing the Wild Card (WFR 2013) As an example, the Covid pandemic could be seen as an archetypal wild card. A priori, it had a very low probability of spreading across the globe, shutting down whole economies, and disrupting societies at a global level. When it did just this, it had a huge impact upon us all. On the way we live, on the way we earn, and on the way in which we interact with each other. On a normal reckoning, one such event would occur within a given region of the world every 10 to 20 years. In a 30-year time period, we could expect one or two wild card events to occur. This is the case we have been persuaded by, and which we are to trial in our South China Sea game.

Our South China Sea matrix game is set to examine a potential course of geopolitical developments within the region over the period 2020 to 2050. During this game, we have decided that there shall be one wild card event. There are five dimensions to this that we wish to capture: what happens, how severe the event is, where it happens, in which turn it appears, and the number of players affected. We aim to undertake this at random using some form of randomiser, such as a six-sided die (a D6). We can unpack these five dimensions in turn.

The hardest part of the task is to identify six potential events. The significance of six events, as opposed to seven or five will be made apparent shortly. The six potential events that we have identified for the South China Sea region are: an ageing leadership structure with potential succession issues; a sequence of destructive earthquakes; a series of volcanic eruptions; a disruptive solar flare; the onset of a digital darkness; and a disruptive pandemic. Each of these events can be assigned a number from one to six, a D6 can be rolled, and that is the event we have to weave into the fabric of the game.

Whilst all wild card events, by definition, are high impact in the degree of destruction they wield, they are not all the same in intensity. Using one of the internal grading systems that we use for horizon scanning, there are six grades of intensity: high impact but low intensity; the event inspires corrective action; the event creates concern outside of the region; the event gets noticed at the global level; the event creates a lot of noise globally; and the event moves the needle globally. Once again, each of these degrees of intensity can be assigned a number from one to six, a D6 can be rolled, and that intensity of impact can be woven into the game.

There then arises the question of where the event takes place. Fortunately, most of the maps we use in our games are hex based maps, with the hex conveniently being a six-sided figure. Once again, each hex side can be assigned a number from one to six, a D6 can be rolled, and that location of impact can be woven into the game. We also need to consider the turn in which the event takes place. In a game of six turns, to each turn we can assign a number from one to six, a D6 can be rolled, and that timing of the impact can be woven into the game. Finally, we need to map the extent of the impact of the event on the number of players affected. In a nine-player game there is scope roll a D6 to assess the number of players affected and to assign the impact as emanating outwards from the epicentre of the impact.

This will give us the ability to weave a wild card into the scenario. The umpires will pre-determine all of these aspects of the wild card and apply them to the game. As the game is currently on-going, it would be better to lay this matter aside until the game is concluded. However, once the game is concluded, we shall return to highlight how we determined what to add to the game, how it was woven into the game, and how it may have influenced the game. But that is a story for another day.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Thursday 23 June 2022

Has the United Nations run it's course?

The original purpose of the United Nations was to provide a forum through which peace could be maintained across the globe. In some regards, it has been very successful in this objective. There has not been a general conflagration at the global level since 1945. The wars that have broken out in the Post-War era have been limited in scope. The two major superpowers of the Cold War era - the United States and the USSR - whilst having a few contact points, generally stepped back from a full scale engagement.

Whilst having from the outset a peace-keeping and peace-making function, the United Nations, by design, did not have the means by which to undertake these functions. Right from the start, the UN was dependent upon the military inputs from the member states. This was the price paid for American involvement and support. Equally, the mission of the UN was broadened to include protecting human rights, delivering humanitarian aid, promoting sustainable development, and upholding international law. This was the price America paid to include the rest of the world.

The record of the UN since 1945 has been patchy. At times, it has been invaluable in co-ordinating international co-operation. It would be difficult to imagine Saddam Hussein being expelled from Kuwait in the absence of the UN providing the legitimacy of the action and the US providing the material means by which the expulsion took place. At other times, he UN has overseen a costly and embarrassing failure. One example that comes to mind is the genocide at Srebrenica, where the Serb military killed over 8,000 Bosnian men and boys, who were supposed to be receiving the protection of a UN force in a UN designated 'safe area'.  

If the record on delivering peace and security is mixed, the record on sustainable development is even more mixed. The UN embraced a set of Millennium Development Goals at a summit in the year 2000. These goals were supposed to be achieved by 2015. Largely, they weren't. The Millennium Development Goals were then followed by a set of Sustainable Development Goals that are supposed to be achieved by 2030. These are currently being missed to a large extent. The Sustainable Development Goals were further augmented by a set of Climate Action Goals. Adopted in 2015, these also are largely being missed. 

The record on upholding international law is a bit more positive. The International Court of Justice does actually function as a court of justice. It is well respected across the globe and it's judgements tend to bind the parties who are subject to the judgements. The International Criminal Court has been successful in prosecuting the perpetrators of crimes against humanity and the UN Convention on the Law of the Sea has established international maritime property rights and a means to enforce them judicially rather than militarily. This is a major achievement. Less of an achievement has been the role of the UN in promoting human rights. The number of countries operating through a democratic framework has declined in recent years. There is an increase in arbitrary detention and the over-riding of minority rights around the world. 

Taken in the round, the recent performance of the UN against its stated objectives leaves a lot to be desired. This is due to a number of factors. First and foremost is the variable support that members give to the organisation. Some are happy simply to pay lip service to the UN, others blow hot and cold over time towards it. It is difficult to maintain a long term programme when it can be buffeted about by short term considerations. The question of funding arises from time to time as some members baulk at paying their dues to the organisation, especially if it seen as giving voice to the adversaries of those members in question.

It would be fair to say that the UN suffers from a general lack of respect at the political level. It is used as a convenient tool at times, and as a mere inconvenience to be ignored at others. A case in point might be the mission of Secretary-General Guterres to broker peace between Russia and Ukraine. After being given a frosty reception in Moscow, the Secretary-General was met in Kiev by a Russian missile salvo. This represented a demonstration of Russian contempt for the office, secure in the knowledge that it could veto any motion of censure the organisation might be tempted to propose.

It is the mixture of contempt and ineffectiveness found in the UN that causes some to question whether or not it has run it's course. The structure of the UN reflects the political realities of 1945. There has been a little bit of updating over the years, but the current structure of the organisation is at serious variance to the contemporary political reality. The organisation stands in need of a significant update, but renewal is nowhere to be found. 

This leaves us in an interesting position. The UN doesn't command the respect that it needs. It largely struggles to achieve its stated objectives. It reflects a world that no longer exists. It has spread itself thinly over a wide ranging number of issues, and it can't command anywhere near as many resources as required for their delivery. In the light of this, perhaps the United Nations has run it's course? Perhaps winding it up would be better than it collapsing? Whichever, the future is bound to be quite different from the past.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Thursday 9 June 2022

Has America squandered it's unipolar moment?

With the dissolution of the USSR in 1991, the world was left with a single superpower - the United States. This situation created great opportunities for the US. America occupied a position of undisputed military and diplomatic pre-eminence. The US economy was the key driving force in the global economy. America set the rules by which the world traded, interacted, and dealt with each other. The US Dollar was the de facto global currency and the American banking system provided the financial plumbing through which the world became more integrated. US technology rose to dominance and the internet - largely an American invention - helped to shape the modern world. Such ascendancy begs the question of how that power would be used? Would it be used for the benefit of the US? Would it be used for the benefit of the wider global community? 

The USSR and Warsaw Pact started to dissolve into a number legacy states, some of which functioned normally as members of the international community (Czechoslovakia is an example here), others became failed states (Yugoslavia springs to mind here). More thoughtful Americans realised that this zenith moment was unlikely to last for long. New challengers were emerging, especially in East and South Asia, and the old challengers could well find themselves revitalised. For those of this view, a short period of dominance had arisen to allow the United States to determine the global architecture for the twenty first century. Such ambitions would require a degree of sacrifice on the part of the American people, as they needed, on occasion, to sacrifice their narrow interests for the interest of the wider global community. This has turned out to be too much to ask.

The period of global dominance started well. George Bush Sr (known as 'Bush 41' - the 41st President of the United States) was an internationalist who believed in consensus building and collective operations as the basis for action. He was followed by President Clinton for two terms, who continued much along the same lines. A sharp discontinuity arose with the election of George Bush Jr (known as 'Bush 43'). Whereas Bush 41 represented the old patrician approach to foreign affairs, Bush 43 advanced an agenda more in tune with the Neo-Conservative agenda. Bush 41 advocated a consensual, collegiate, approach to dealing with international issues. In contrast, Bush 43 followed a more unilateral path, ignoring collective institutions such as the UN and NATO, except when it suited him to use them. The contrast is most stark in their dealings with Saddam Hussein of Iraq. Bush 41 built an international consensus around dealing with the invasion of Kuwait, sanctioned action through the UN, and then limited the use of force to simply liberating Kuwait. Bush 43 did none of this. He invaded Iraq almost unilaterally, and certainly against the advice of his NATO allies. He gained a flimsy sanction of legality from the UN and then went on to preside over the abandonment of core American values. He did this because he could and there was no other agency capable of stopping America.

It is the abandonment of core American values in Abu Ghraib and the detention centre at Guantanamo Bay that marks the turning point in the American unipolar moment. The foreign policy of the United States has traditionally been value driven. It seeks to promote liberal democracy, respect for individual liberties, and traditional market based economics. From a political dimension the actions of the US government in the international arena under Bush 43 fell far short of this ideal. It is inconceivable that Bush 41 would have allowed any of this behaviour to occur whilst he was president. A comparison of the two Bush presidencies shows how far we have travelled. 

Bush 43 was followed by President Obama for two terms. He came to office promising a change. That change didn't come. Guantanamo Bay is till open and claims that the US is following a moral foreign policy still ring hollow. Obama personally oversaw the extra-judicial killing of Osama-Bin-Laden rather than his apprehension and trial. This indicated that there would be no return to a principled foreign policy. Obama was followed by President Trump, who even abandoned the rhetoric of Obama in the exercise of naked power. This is now having unfortunate consequences for America in the world.

Over the same period that The United States enjoyed its unipolar moment as the sole superpower, the tectonic plates of the world economy were shifting. The biggest change was the rise of China from being the 10th largest economy in 1990 to being the 2nd largest economy in 2020, and set to overtake the US later in this decade. With the economic rebalancing has come political, diplomatic, and military rebalancing. Away from the US and in favour of China. We no longer live in a unipolar world and more of a bi-polar one. Again!

It is time to take stock and see where we are before assessing how America has used it's unipolar moment. President Biden has taken office at a time of weakness for the United States. President Trump managed to antagonise many of the traditional allies of America, whilst appearing to favour those who didn't quite share the values of the West. President Biden has inherited that legacy. His term started badly when the Americans were chased out of Afghanistan by the Taliban and their anointed Afghan government collapsed with minimal resistance. 20 years of war and little to show for it. This was followed by the Russian invasion of Ukraine, a war which continues to rage as I write. The response of America and the European allies has been to sanction Russia, the consequence of which is a large and growing Russian trade surplus. All this has done is to underscore how much America needs China to enforce it's policy. However, the confrontation with Russia is a bit of a distraction. The main confrontation will be with China. How that may turn out is a matter for conjecture.

The main point is that the US has experienced a period of time where is has enjoyed undisputed power. That moment has passed. China is now strong enough to oppose US policy and offers a credible alternative to those nations who are not inclined towards the western agenda. The abandonment of the US values driven foreign policy by Bush 43, and it's continuation by Obama, Trump, and Biden is starting to feel like a self inflicted wound as the wider world falls out of love with America. It needn't have been like this. Had the trajectory set by Bush 41 and Clinton continued, the US would have been in a much stronger position today than the one in which it now finds itself. It is this loss of moral authority that will cost America dearly in the decades to come. 

This is unlikely to change. Bush 43 acted as he did because the American people wanted him to. The issue of climate change provides an example of how this has played out. Clinton signed America to the Kyoto Protocol to limit global warming. On taking office, Bush 43 took the United States out of the framework. This was because he couldn't ensure that the Senate would ratify the treaty, which was because the Senators had been pressured by their constituencies to reject the framework. On this matter, when it came to the key moment, the United States, reflecting the American people, placed their narrow sectional advantage ahead of the common good. This is another example of how America could have shown leadership, but failed to do so.

In the end, the unipolar moment has come and gone. There is little tangible to show for this former dominance. International institutions more frequently fail to have an American flavour to them. The American president is unable to call to heel those countries that act against US interests. It is even arguable that the spread of liberal democracy, the respect for the individual, and a belief in market based economics has halted, or even, to a degree, reversed. In this respect, it feels as if the American unipolar moment has been squandered.

Stephen Aguilar-Millan
© The European Futures Observatory 2022

Thursday 31 March 2022

Could The War In Ukraine Break The Global Food Supply Chain?

One month into the war in Ukraine and some of the second and third order effects are starting to become evident. The disruption to Russian energy supplies are already being felt in the oil and gas markets. However, while these attract our attention, there are also little noticed changes that could have a much deeper impact. We have yet to tease out fully the impact of the war - or special operation, as some like to call it - upon other markets and other regions of the world. One such market is that of foodstuffs, and one such region is North Africa and the Middle East.

The combined output of Russia and Ukraine represents just under a third of the global supply of wheat. The war is likely to disrupt this supply both in the short term and the long term. In the short term, the amount of acreage under cultivation in Ukraine is likely to fall owing to the war. Even if, a 2022 harvest is gathered, the disruption of the Black Sea ports - Odessa, Kherson, and Mariupol - is likely to interrupt significantly the flow of wheat. If Russia increases its acreage by a compensating amount, this is unlikely to have an impact on global wheat markets because of difficulties in accessing letters of credit and counter-party trade to actually deal in Russian wheat. There is also the possibility of a Russian export ban for wheat, except to favoured customers.

All of this suggests a bit of a hole in the supply of wheat in the short term. It could be offset by drawing from reserves, but these are about a third below what would be considered normal. It is not only the wheat market that has come under pressure. Other grains, such as barley, and sources of vegetable oil, such as sunflower, are dominated by Russia and Ukraine. Prices of these 'soft' commodities are already rising by very large amounts (30% between the invasion of February 24th and mid-March).

There are further concerns about the long term consequences of the war upon the acreage under cultivation. In recent days, there has been some discussion about the possible use of NBC (Nuclear, Biological, and Chemical) weapons in the context of the war. The long term consequences of using such weapons is at present unknown. The fear is that their use would poison the soil for some time to come - possibly decades, possibly generations. If that were to happen, then we would be thinking of a permanent reduction in the acreage under cultivation rather than a temporary one. This would lead us into a much different world than the one we are accustomed to.

In addition to issues around the acreage under cultivation, there are also more general issues around global arable yields. Russia and Belarus - both suffering from international sanctions - are leading suppliers of potash, a key ingredient in modern fertiliser manufacture. Modern agriculture is heavily reliant upon mechanisation - which faces increases in the cost of fuel - and fertilisation - which relies on products which originate in Russia. Arable products are then, in turn, used as animal feedstuffs. It is not difficult to see that the cost of all foodstuffs are set to rise in the very near future.

It is possibly even more disturbing when we consider where these impacts might be felt. Much of the Russian and Ukrainian grain harvest is transported across the Black Sea to Turkey, where it is processed from the raw grains into a state where it can be sold to the consumer. The processed grains are, in turn, shipped on largely to the Middle East, North Africa, and parts of Asia. Something in the region of 800 million people rely upon this source of grains. These are rather volatile parts of the world. It is not beyond our imagination to envisage a Second Arab Spring. It was the rise in food prices that fuelled the original Arab Spring of 2011.

The western response to this is likely to be - as it was a decade ago - inadequate. It does, however, create an opportunity for Russia, which has a footprint in the region, and China, which has ambitions in the region, to extend their influence even further than they already have. Europe and North America could counter this, but one wonders if they are prepared to devote levels of financial resources that are commensurate with those of, say, the BRI? 

Whether this possibility constitutes a break in the global food supply chain is a matter of conjecture. It does suggest a different future from the past which we are accustomed to. There is the possibility of an increasingly hungry world, which creates the potential to use food aid as a source of soft power. In that case, politics would replace commerce in deciding who gets to eat and who goes hungry. 

Stephen Aguilar-Millan
© The European Futures Observatory 2022