As the Opposition spokesperson on foreign affairs and foreign trade I warned on February 21, 2022 of the perilous state the world would plunge into should Russia invade Ukraine. I thought that not only would the world’s largest economies impose financial sanctions on Russian banks, but any conflict and the associated sanctions would have a devastating impact on the production and export of food to Western markets and the largest wheat importers in the Middle East and North Africa (MENA) — Turkey, south-east Asia, and sub-Saharan Africa. This would deepen the current global food crisis and aggravate the severe supply chain disruption as a result of the impact of the pandemic. Furthermore, sanctions would reduce Russian oil supplies, immediately driving up global oil prices.

Unfortunately, many Jamaicans did not understand the extent of how a Russian military invasion of Ukraine would directly impact their personal lives, declaring; “It’s their war and not our problem; we need to focus on ourselves.”

However, the fact was, and still is, that war impacts everyone globally, including Jamaica. Beyond the humanitarian catastrophe, there are broader and longer-term geopolitical and economic implications from the conflict that will affect global supply chains, energy and food sectors, and many other industries directly and indirectly (APCO Worldwide).

The Russian Federation is the second-largest oil producer in the world, producing 10.1 million barrels per day of crude oil and natural gas condensate (2021 BP Statistical Review of World Energy) and ranked as the top exporter of nitrogen (N) fertilisers, and the second-leading supplier of both potassic (K) and phosphorous (P) fertilisers.

There are 25 countries that are dependent on supplies of Russian fertiliser. Last year, Russia stood out as the top global wheat exporter, shipping 32.9 million tonnes of wheat and meslin, or 18 per cent of international shipments. Ukraine stood as the fifth-largest wheat exporter in 2021, exporting 20 million tonnes of wheat and meslin and a 10 per cent global market share. Russia and Ukraine held nearly 30 per cent of the worldwide market share of wheat exports.

Ukraine also produces half of the world’s sunflower seed oil; the substantial production bases of both themselves and Russia of the global maize, barley and rapeseed, and sunflower oilseed markets gave a combined world export market share of close to 64 per cent. Approximately 50 nations rely on these two countries for roughly 30 percent of their wheat import needs.

Although this war is thousands of miles away, already it has had devastating effects on other people’s personal lives worldwide. The pockets of the poor have been hit the worst, and Jamaicans have not escaped the fallout.

For example, global prices for crude oil are now as high as US$125 a barrel, compared to US$58 per barrel one year ago. The oil price cost affects everything — commercial and domestic electricity, transportation, and food production. What’s more, the cut-off of these significant global suppliers of wheat, sunflower oil, and fertiliser will significantly increase the prices of some of the essential commodities (eg flour and cooking oil) and could potentially create an agricultural food security crisis without the access to fertiliser for the planting and harvesting of spring crops.

So is the Russian Ukraine war a Jamaica problem? In summary, yes. The cost of food, electricity, transportation, mortgage payments, rent, construction supplies, and gas/fuel have increased and are expected to continue rising. It will affect hire purchase rates and the cost of borrowing money for employers and reduce job creation by making investing more expensive.

Over the past eight months the Bank of Jamaica has moved its benchmark interest rate from 0.5 per cent to 4.5 per cent. While this may take some time to impact personal interest rates, it will be debilitating to an individual’s disposable income when it does. In other words, a $13.5-million mortgage at 8 per cent over 25 years has a monthly payment of $104,195, and if the same 4 per cent increases this rate to 12 per cent this monthly mortgage payment will increase by 36.4 percent to $142,185. Add this to a 30 percent increase in electricity and transportation costs, along with a 20 percent increase in food, and you will see we have an emergency.

Time we change our old habits

Minister of Finance Dr Nigel Clarke announced that the Government plans to spend close to $2 billion to assist over 450,000 vulnerable Jamaicans with their electricity costs due to the global oil price increase. The Government would pay 20 per cent of the Jamaica Public Service (JPS) bill for all households that consume 200 kilowatt hours (kWh) or less, per month, between April and July this year. In addition, $600 million is earmarked to give transport operators $25,000 vouchers in the latter part of April to help with rising fuel costs; $200 million through the Development Bank of Jamaica for revolving loan financing to public passenger vehicle operators; and $152 million to increase transportation assistance to students on the Programme of Advancement Through Health and Education (PATH). That’s almost $3 billion to “cushion” the impact of war on electricity and transportation costs.

While this is commendable, it is a short-term Band-Aid being placed on a gaping wound. It’s time we change our old habits and look towards sustainability.

Last month the chairman of the Dangote Group, Aliko Dangote, called on the Nigerian Government to prepare for the looming food crisis, which he predicted would hit over the next two to three months with disruptions in food supply chains and access to fertiliser. He advised the Nigerian Government to stop their export of maize immediately. But he did not stop there. He made two additional moves: He called on the Government, food processors, and other concerned parties in Nigeria to urgently sit together to strategise solutions to avoid the impending crisis, and he opened Africa’s largest fertiliser plant in the world in Lagos with the capacity to produce 3 million metric tons of urea annually, making it the second-largest plant in the world ( CNN Business).

Over the past five years Nigeria has produced 35 million bags of blended fertiliser. It is projected that this new plant could earn the country US$5 billion in export revenue each year. They are pivoting their economy to leverage their competitive advantage by helping with fertiliser supplies.

How will Jamaica pivot?

We have repeated for decades that our national trade policy is export-driven, and this position was reiterated in the 2019 National Trade Policy: “At the national level, Jamaica’s trade policy can be said to be always export-led, even when the country introduced an import substitution policy in the 1950s…” Notwithstanding this policy, over the past 10 years, we have consistently imported four times more than we exported, which over the past 40 years led to the Jamaican economy having only anaemic growth, and per capita income has grown only marginally in real terms while that of other countries has grown.

The Government needs to urgently put in place a Food and Energy Crisis Task Force to foresight, forecast, and plan effectively for our economy due to the global shocks caused by the novel coronavirus pandemic and now the Russian Ukraine crisis. Our dependence on international trade for raw materials, food production, oil, and fertiliser dictates that we cannot adopt a wait-and-see attitude. Instead, we must be proactive and strategic now to globally reposition Jamaica given opportunities and a careful analysis of the goods and services in which we have or can develop an export competitive advantage.

In February 2021, with foresight, I tabled a motion in Parliament calling for “a fundamental mindset shift to structurally transform our economy into an internationally competitive, value-added, export country focusing on products and services in which we can identify a global competitive advantage; that we commence a process of strategic global repositioning based on a ‘foresighting’ of global opportunities and a careful analysis of the goods and services in which we have or can develop a competitive advantage”.

One year has passed, and to date it has not been debated. Are we serious about the welfare of our country, or is it much ado about nothing?

We need to see our strategic global repositioning not as a one-time action, but as creating a capacity for continuously recalibrating our production to maintain a competitive advantage given rapidly changing global and technological developments.

Lisa Hanna is Member of Parliament for St Ann South Eastern, People’s National Party spokesperson on foreign affairs and foreign trade, and a former Cabinet member.