Sanctions against Russia risk exacerbating global famine, says new analysis

A new report from a leading political consultancy says increasing sanctions against wheat-rich Russia for its unprovoked invasion of Ukraine could trigger a "hunger hurricane" in North Africa, the Middle East and other famine-affected regions of the world.

The report raises difficult questions about war, sanctions and the consequences — intended or not — for global human welfare. Academics and think-tank researchers diverge on how to solve the emerging war-famine conundrum.

Many geopolitical experts in the United States argue severe economic sanctions are required to cripple Russia's war efforts.

But rather than punishing Russia with protectionist trade restrictions, this new report concludes, the U.S. and other leading nations should increase global agricultural trading to prevent destabilizing levels of food insecurity. Such food insecurity could likely morph into mass migration and resource-driven social unrest.

"Nearly three months into the war, there seems to be little doubt as to whether there will be a global food crisis," says the report.

The white paper from the Eurasia Group, a New York City-based political risk consultancy, and Twin Cities-based DevryBV Sustainable Strategies, was made public on Monday and funded by Bayer, a German maker of pharmaceuticals and agriculture products.

On Tuesday, European Commission President Ursula von der Leyen told the World Economic Forum in Davos, Switzerland, that nations are mobilizing their "full economic power" to drain Russia's economy.

Peter Ceretti, an analyst with Eurasia, calls such embargoes "draconian" and argues instead to keep food trade open, noting countries such as Yemen and Syria receive nearly half of Ukraine's annual wheat exports. In Somalia, another nation dependent on wheat from Europe's breadbasket, the report notes that 40% of the East African nation's population has severe food insecurity, double the rate from January.

Earlier this month, Congress sent a $40 billion Ukraine aid package to President Joe Biden's desk. Among billions for military support, the bill included a carveout for $5 billion in global food aid. U.S. Rep. Ilhan Omar said she spoke to Biden about this topic firsthand last month.

"As someone who has experienced displacement and hunger firsthand," Omar said in a statement to the Star Tribune, "I have been deeply concerned about the global hunger as a result of the Russian invasion and have been particularly concerned about making sure sanctions do not inadvertently contribute to this crisis."

Analysts with Eurasia say the problem is not only that crops are unable to reach markets. Restrictions on inputs, such as fuel or seeds, can also drive up price volatility.

"The biggest, best response from a global standpoint would be to keep food trade free and open and flowing and make sure that U.S. sanction policies are really carved out," Ceretti said in an interview on Tuesday.

Much has been made about an economic blockage by Western nations and companies against Russia, for its incursion into Ukraine. The tag-teaming, many pundits argue, has isolated the Russian economy more severely than the country's senior leadership anticipated. And some add it should continue.

Jeffrey Sonnenfeld, with the Yale School of Management, argues that many global food companies have mistaken the "wrong noble objective," preventing food scarcity, with another goal — avoiding a potentially catastrophic World War III.

"Wheat is fueling Putin's war machine," said Sonnenfeld, in an interview on Wednesday. "I say, regretfully, shame on the ag businesses for not pulling out dramatically."

Food economists are increasingly raising alarm that the war in Ukraine may well set off hunger beyond what the world has seen in recent years. More than 808 million bushels of wheat sit in silos in Ukraine. Unexploded Russian munitions rest in farmers' fields, and the Russian navy blocks essential Black Sea ports.

While Russian wheat enjoys high bids at market, it's also been unable to move as much of its product out-of-country as expected. Last week, a Russian envoy blamed food shortages on "Western counterparts."

At home in the U.S., the world's largest agricultural multinationals have toed a careful line in Ukraine. Minnetonka-based Cargill, which chartered a ship hit by a projectile in the Black Sea in late February, has said it will "continue to operate our essential food and feed facilities in Russia."

A spokeswoman for Arden Hills-based Land O'Lakes on Wednesday told the Star Tribune the company has no direct business ties with Russia but believes that "food security is national security."

While other major U.S. companies, such as Starbucks and McDonald's, have publicly withdrawn from Russia, food conglomerates and wholesalers — such as Chicago-based ADM (formerly Archer Daniels Midland Co.) — operate differently from household brands.

"From the perspective of a U.S. company, it's very, very difficult to do business [in Russia] right now given all the reputational risk that exists here," said Ceretti.

Public pressure to punish Putin exists in the U.S., as well as in many Western European nations. At Yale University, Sonnenfeld has tracked over 1,000 companies that have moved at least some business out of Russia in response to the nation's invasion of its neighbor. Many analysts say this corporate cold shoulder has effectively hamstrung Putin.

But even in announcing new sanctions on Russian elites and investments in-country, the White House exempted "essential humanitarian" goods, including agricultural items, from its list of prohibitions.

Carlisle Ford Runge, an economics professor at the University of Minnesota who has written extensively on the use of hunger as a weapon of war, said a nation that spends $40 billion on weaponry aid to Ukraine must also get serious about preventing mass starvation around the globe.

The Western nations that have imposed these sanctions on Russia have sufficient agricultural supplies among them "to help make up the deficit associated with the blockages being imposed due to war," Runge said on Wednesday.

When politicians and diplomats refer to it as a "serious food challenge," he said, that's "a polite way of saying that people are going to die of starvation if we don't mount a response to the crisis."