Since the Russian invasion of Ukraine, the general rule that separates the economic winners from the losers is how dependent the two warring countries are on the energy, food and minerals they provide. The winners are those who can gain market share by replacing the supply of these raw materials, which Russia and Ukraine cannot provide, through blockades or economic sanctions.
There are some unexpected winners and one certainty in geopolitical space: new investments will seek institutional democracies at the expense of autocracies in which one leader determines the country’s fate, as in Vladimir Putin’s Russia.
Almost all countries lose the war on inflation and risk turning lower world economic growth into recession in the fight against high interest rates.
“The economic impact left by the epidemic and the geopolitical changes created by Russia’s invasion of Ukraine will have strong results in the next ten years and will open a window of opportunity for countries producing food, energy and minerals. In this sense, Argentina’s former Minister of Production and Labor of Latin America. (2018-2019) and RFI Dante Sica, co-founder of Abeceb, a consulting firm specializing in trade and investment in the region, said, “This is a great opportunity to guarantee global security in these three sectors.”
South America, a producer and exporter of agricultural, energy and mineral commodities, is a clear winner in the war in Ukraine, while Central America is an importer of raw materials. Countries like Venezuela, Colombia, Ecuador and Bolivia are strong oil and gas producers. Mexico in North America also joins this group. Chile and Peru are important ore producers. Uruguay and Paraguay, food.
Argentina is one of the largest exporters of agricultural products, especially wheat and corn, which are the products that Ukraine and Russia supply the most to the world. The country has the world’s second largest shale oil and gas reserves. It may be self-sufficient and still supply Europe, but investments are lacking to extract, transport and export the gas.
“The Mercosur countries and the European Union now have a great opportunity to ratify the free trade agreement. This will make Mercosur a premium supplier to Europe and will guarantee Europe the supply it needs,” he said in 2019. One of the negotiators and architects of the agreement is still awaiting ratification.
Brazil in the best position in the region
Brazil is Latin America’s biggest earner: it exports food, energy and minerals.”Brazil is the highest earning country in Latin America. It has a solid economy, has large global companies and is more global than its neighbours. real is the most valuable this year became the winning currency”, compares business consultant and international analyst RFI, Marcelo Elizondo.
“But all of Latin America faces a challenge to capitalize on this opportunity: it will need to improve logistics capacity, increase investment rate and institutional quality,” he warns.
arabic podium
The podium of the top earners in the world is with Qatar, Saudi Arabia, Kuwait and the United Arab Emirates, all oil and gas exporters. These countries also maintain a low inflation rate compared to the rest of the world. Although they are importers of agricultural products, the value of energy has increased more than food.
“Gulf countries did not have broad monetary policies during the pandemic, they have more open economies and provide a lot of consumer subsidies. This allows them to control inflation,” says Marcelo Elizondo.
unexpected winners
An unexpected winner was Taiwan, whose vulnerability became evident after the comparison with Ukraine.
“Taiwan is winning because after the Russian invasion it became more difficult for China to advance over Taiwan. If the cost to China of invading Taiwan was high, it is now much greater. Power is advancing in vulnerable countries”, explains Diego Portales University of Chile and North America Patricio Navia, geopolitical analyst at New York University.
“The world is now looking through a magnifying glass at China’s expansionist movements. China’s progress in Hong Kong and Taiwan was disturbing,” says Marcelo Elizondo.
Two more unexpected winners appear on the board: Venezuela and Saudi Arabia.
Accused of human rights abuses by the US and liberal democracies and seen as international pariahs, the two countries gained geopolitical projection thanks to their need for oil.
In the case of Venezuela, the US lifted sanctions and took a pragmatic approach. And next month, President Joe Biden is heading to the Middle East, including a visit to Saudi Arabia.
“Venezuela was fortunate that the United States urgently needed more oil. From being an enemy and an international pariah, Venezuela suddenly became an asset the United States needed to control inflation and population discontent,” says international analyst Patricio Navia. . .
“Venezuela may appear to be winning in the short term with a pragmatic approach to the US, but considering that investments will seek consolidated democracies and institutional quality, the Nicolás Maduro regime may lose. In the medium term, no one invests in Venezuela today or Nicaragua or Cuba”, Dante Sica said. guarantees.
“Venezuela produces 20% of what it used to produce. It needs investments to recover. After the example of Vladimir Putin, Nicolás Maduro’s regime may not be reliable. Investments will want guarantees,” says Elizondo.
world leadership
Even one of the biggest winners is the United States. They took on the role of the real enemy of Russia and ranked the major democracies.
“The winners are Russia’s potential adversaries. In that sense, the United States has won so far, but the war has a cost for everyone. The longer the war drags on, the more the United States costs. The Americans may begin to win. Why so much for war when there are more pressing domestic issues?” question how much money is spent”, considers Patricio Navia.
“In the realm of geopolitics, the United States has managed to unite all European countries behind NATO, which now seems to be strengthened. The Russian invasion of Ukraine, under which President Joe Biden did not have much leadership, united the liberal democracies of the world. Ultimately, between Russia and the United States”, says the expert.
losing countries
The biggest losers in this four-month war have been countries that are highly dependent on agricultural products from Russia and Ukraine, such as Lebanon and most African countries. There is a risk of famine in these countries. Meanwhile, this is the biggest concern in the world: lack of food security.
On average, Africa is 44% dependent on wheat from Russia and Ukraine. Mozambique, Togo and Kenya get about 40% of their wheat from the warring countries. Others, such as Tanzania, Madagascar, and Senegal, depend on 60%. In Egypt, this dependency rises to 80%. Somalia and Benin depend on Ukraine and Russia for 100% of their wheat supplies.
Eastern Europe, which is heavily dependent on Russian gas, is another big loser, especially with Poland and Bulgaria.
In Asia, India is losing as a food importer.
china undefined
Analysts find it difficult to categorize China. They see the country in an uncertain position, not paying the price of war but not seeing the benefits of global leadership. It allows Russia and the United States to wear themselves out, but simply being an observer can damage reputation.
“China has good relations with Russia and feels that the involvement of its potential enemy, the United States, in this war has given it certain advantages. However, China has also lost the opportunity to show world leadership. In this world war, many countries play a stronger role in offering a solution to the conflict. like an observer when betting”, reflects Patricio Navia
If China neither participates in nor pays the economic costs of the war, its zero covid domestic policy imposes strict limits that affect its growth and highlight the risk of recession in the neighborhood.
“China is not on the international stage as it was four months ago. It’s not a loser, but it’s clear there’s no winner either. It’s an uncomfortable situation and doesn’t want to get into it,” adds Marcelo Elizondo.
Europe pays the price of dependency and intimacy
By region, Europe is the biggest loser. Some countries lose more than others. Germany and Italy, which are more dependent on Russian gas, lose more. France is less dependent, less losing.
Ukraine destroyed by Russia is the bitterest loser. But even though Russia eventually won the war, it is seen as the nation that lost the most in the future. As long as Vladimir Putin is in power, the country should be treated as an international pariah.
“Even if Russia annexes Ukraine, the Russian economy will be ruined and it will be difficult to recover before Vladimir Putin leaves power. Even if Russia wins the war, Putin is already a loser. Ukraine will always be a zone of resistance.” .Patricio Navia.
Winners in Losing Territories
Russia produces 43% of the world’s palladium used in automobile catalytic converters. South Africa is the second largest producer and could benefit from it. African country of iron and gold. South Africa is a winner on a losing continent.
Russia is the third largest producer of nickel used in lithium-ion batteries for electric vehicles. Indonesia is the world’s leading producer.
Europe is a clear loser, but Norway is one of the biggest winners as it exports gas and oil. The countries that replace Russian gas the most in Europe are Norway, Qatar and the USA. Norway is the world’s third largest gas producer after Russia and Qatar.
Europe is a loser, but interestingly, the European Union is a winner. From a geopolitical point of view, the war strengthened the European integration project.
Navia emphasizes, “Vladimir Putin’s occupation showed everyone that, despite the problems, integration around the same values is much better. The European Union is more united and strengthens its ties with the United States.”
Democracy, the biggest winner
Now investments tend to seek guarantees and legal certainty. Before the war, investments were all about authoritarian regimes, but strengthening democracies after burning with Vladimir Putin may be one of the biggest “victories” of the war.
“In economic matters, the world will begin to look at institutional quality. Autocracies will lose investment, democracies will win. Investments will seek more democratic commitments. Foreign companies will demand guarantees that only democracies can provide,” stresses Marcelo Elizondo. “This will make the provider countries stable and reliable,” he defines.
“Investment will seek places of peace, and when we say peace zone we also mean democratic quality. This has now become an economic value. Environmental, social sustainability and good governance will be on the investment agenda. The democratic environment will be one of the variables of the investment decision,” said Dante Sica. reinforces it.
In two respects, almost no country in the world can escape: the sharp rise of inflation and the shrinking of the consumer market from a less economically growing world, including the risk of recession.
“In the short term, we will go into a world of higher inflation and lower economic growth, and that creates more risk. Alliances, priorities and investments are restructured,” says Dante Sica.
source: Noticias
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