Business Insider

A new class of oligarchs could rise from Putin’s seizure of Western assets, says an expert in Russian finance

Huileng Tan – March 22, 2022

• Russian President Vladimir Putin has threatened to take over assets of foreign companies that leave the country.
• The assets could be auctioned off, Russia’s Economy Ministry has suggested.
• A fire sale of the assets could create a new class of oligarchs, said a Russian finance expert.

Russia has announced it’s considering seizing the assets of foreign companies that exit the country — and it could create a new class of oligarchs, an expert on Russian finance told Insider.

Those who manage to acquire ownership of seized assets at fire-sale prices through state auctions could become the new class of tycoons, said Hassan Malik, a senior sovereign analyst at Boston-based investment management consultancy Loomis Sayles.

“There’s certainly a risk that you just see the creation of a new class of crony capitalists or oligarchs,” Malik told Insider.

As international companies exit Russia en masse, they are leaving behind assets such as factories and offices that are in working condition. Russian President Vladimir Putin has threatened to take over such idle but productive assets, telling government officials the Kremlin would seek to “introduce external management and then transfer these enterprises to those who actually want to work,” according to the Associated Press.

Russia’s Economy Ministry has suggested the assets could be auctioned off, Bloomberg reported on March 10. The auctions could mirror a controversial 1990s “loans-for-shares” program launched by former Russian president Boris Yeltsin, Malik told Insider. At the time, rich Russian businessmen and banks close to the authorities lent the government money in exchange for stakes in state-owned industrial companies. The shares were acquired at “dirt-cheap prices,” The New York Times wrote in 1996.

Malik described the deals as “sweetheart deals” because when the Russian state “predictably defaulted” on the loans, the creditors seized their shares. This created a generation of outrageously rich oligarchs, said Malik, who is also the author of “Bankers and Bolsheviks,” a book about finance in the early 1900s during the Russian Revolution.

Russia’s richest man, Vladimir Potanin, built up his vast fortune through the “loans-for-share” scheme when he acquired metals giant Nornickel. Potanin has a net worth of $24.7 billion, according to the Bloomberg Billionaires Index. Billionaire Roman Abramovich (net worth $14.5 billion) acquired a controlling stake in oil company Sibneft through the program.

Today, the Russian government — in need of funds amid sweeping international sanctions over the Ukraine war — could offload seized foreign assets to favored investors at a discount again, Malik told Insider. “I think it’s a real risk given Russia’s history,” he said.

Some foreign investors could be eyeing Russia

The Kremlin may also open such auctions up to foreign players, which could entice opportunistic investors eyeing a way into the market, said Malik.

“There may be players from countries where they feel relatively insulated from the threat of Western sanctions,” he said.

Potential investors could hail from China, India, or countries in the Middle East that have not condemned Russia’s invasion of Ukraine, said Malik.

Among them, China is most likely to take an active role in pursuing investments in Russia, as it has more leverage in its power relations with the West than do many other countries, said Malik. Large, state-owned companies are unlikely to take the risk of running afoul of international sanctions, but investors could set up a holdings company that only operates and trades in China and Russia to get around restrictions, he said.

China appears to be eyeing opportunities in the Russian market already.

Chinese ambassador to Russia, Zhang Hanhui, told a group of business leaders in Moscow on Sunday to seize opportunities presented by a “void” in the country, the Russia Confucius Culture Promotion Association wrote on its official WeChat account.

Zhang did not mention sanctions, but told business leaders the international situation was “complex,” with large companies facing issues in supply chains and payments. “This is a time when private, small- and medium-sized enterprises can play a role,” said Zhang.

Yahoo! News

What are hypersonic missiles? Russia’s newest weapon in Ukraine war.

Niamh Cavanagh, Producer – March 21, 2022

Russia’s military has claimed to have twice unleashed hypersonic missiles in its invasion of Ukraine, apparently destroying an arms depot in the process, during its monthlong onslaught.

On Saturday, the Russian Ministry of Defense claimed it had struck an underground missile and ammunition warehouse in a village that borders Romania, and on Sunday, that it had destroyed a fuel depot near the southern city of Mykolaiv.

Defense Ministry spokesperson Igor Konashenkov claimed the attack used its newest Kinzhal, or “dagger,” hypersonic missile, in Ukraine.

“The Kinzhal aviation missile system with hypersonic aeroballistic missiles destroyed a large underground warehouse containing missiles and aviation ammunition in the village of Deliatyn in the Ivano-Frankivsk region,” Konashenkov claimed.

RIA Novosti, a Russian state news agency, said the attacks were the first time the next-generation weapons have been used since Russian troops were deployed to Ukraine on Feb. 24.

However, on March 9, Ukraine’s National Guard shared a picture of an unexploded hypersonic missile in the city of Kramatorsk in the breakaway region of Donetsk. Reports did not verify whether it was a “dagger” missile.

‘Ideal weapon’

The advanced missile, which Russian President Vladimir Putin previously described as an “ideal weapon,” was one of several new weapons he unveiled in his state of the nation address in 2018. During that speech, Putin boasted that the missiles could hit almost any point across the world and evade the United States’ missile defense shield.

It is believed that Russia first used the hypersonic weapon in support of Bashar Assad during the Syrian civil war in 2016, although it has not been confirmed if it was the exact Kinzhal model.

The missile, designed to be launched from a MiG fighter jet, can fly at 10 times the speed of sound, and unlike other missiles can change course during its flight, making it impossible for air-defense systems to shoot it down. The Kinzhal missile can also be used to deliver nuclear weapons.

In comparison, while the U.S. Tomahawk cruise missile can travel as fast as 550 mph, the Kinzhal can travel at 7,672 mph. The French Navy and the U.K.’s Royal Navy have since 2011 been jointly developing their own hypersonic missile, which is expected to be completed in 2030.

Ukrainian officials have confirmed Russia’s attacks over the weekend but said the type of missile used was not confirmed.

Unconfirmed reports

According to reports, doubts have swirled over Russia’s use of the ballistic missile. One report suggested that the lack of secondary explosions from the attack at an ammunition warehouse in western Ukraine is suspicious. “There’s also a distinct lack of secondary explosions as one would expect when rocket fuel and explosives cook-off,” the online magazine the War Zone noted on Saturday.

The magazine also questioned how an Orlan-10 — an unmanned aerial vehicle, commonly known as a drone — was able to fly over the targeted area to film the strike. If a maneuverable hypersonic missile was needed for the attack due to Ukraine’s air-defense systems, then how could a drone manage to film the strike and get away safely?

Russian analyst Pavel Felgenhauer said the missile would change little on the ground in Ukraine beyond “giving a certain psychological and propaganda effect.” He added that its use may suggest that the Russian military’s weapons are drying up. Defense strategy researcher Joseph Henrotin reiterated Felgenhauer’s point, suggesting on Twitter that Russia could be running out of weaponry. Henrotin also claimed that Putin might have used the nuclear-capable missile in a bid to raise the stakes of the war.

On Saturday, the U.N.’s human rights office said at least 847 civilians had been killed since Feb. 24, including 155 men, 119 women, 21 boys and seven girls, but said it’s believed the actual figures are “considerably higher.”

Business Insider

Ukraine captured a batch of Russia’s missiles and fired them back at its troops, report says

Sophia Ankel – March 21, 2022

• Ukrainian forces are capturing Russian military equipment and using it against Russian troops.
• On Sunday, Ukraine seized intact Russian missiles and fired them back, an official told CNN.
• President Zelenskyy last week joked that captured gear made Russia a top arms supplier to Ukraine.

Ukrainian forces captured a batch of intact Russian missiles and fired them back at Russian troops, CNN reported on Monday.

Russian troops trying to invade Kyiv from the northwestern city of Hostomel on Sunday were attacked with their own weapons, Yuri Golodov, the deputy commander of one of Ukraine’s territorial forces, told CNN.

“Last night we sent the Ukrainian armed forces 24 Uragan missiles that were on their way here to fly over our cities,” Golodov told CNN on Monday.

“We captured them intact, gave them to the armed forces of Ukraine at night, and now the Ukrainian army has fired missiles back at them,” he added.

Golodov leads a team working to repair and repaint Russian military equipment that has been captured or abandoned, CNN reported.

The team works on different types of military vehicles at a junkyard in Kyiv, fixing broken parts, removing communications systems, and painting over any Russian military symbols, the report said.

“It looks like old weaponry, but actually if you use it correctly it will serve us for a long time,” Golodov said, adding, “Everything that we take away from the Russian army, we transfer to the armed forces of Ukraine.”

Last week, Ukrainian President Volodymyr Zelenskyy joked that Russia had become a major arms supplier to Ukraine because so much of its equipment had been captured by Ukrainian forces.

“We take trophies and use them to protect Ukraine,” Zelenskyy said in a video address. “Today, Russian troops are, in fact, one of the suppliers of equipment to our army.”

Ukraine’s armed forces said on Monday that Russian troops had lost 498 tanks, 121 helicopters, and 1,535 armored personnel carriers since the start of the conflict on February 24. The figures have not been verified.

Reuters

Russia may not stop with Ukraine – NATO looks to its weakest link

Sabine Siebold and Robin Emmott – March 21, 2022

ON BOARD THE SUPPLY SHIP ELBE, Latvia (Reuters) – Hours after Russian missiles first struck Ukrainian cities on Feb. 24, German naval commander Terje Schmitt-Eliassen received notice to sail five warships under his command to the former Soviet Republic of Latvia to help protect the most vulnerable part of NATO’s eastern flank.

The hasty dispatch was part of Germany’s scramble to send “everything that can swim out to sea,” as the navy’s top boss phrased it, to defend an area military strategists have long deemed the weakest point for the alliance. The vessels’ sudden departure demonstrated how NATO, and Germany, were propelled by Russia’s invasion into a new reality and face what officials, diplomats, intelligence officials and security sources agree is the most serious threat to the alliance’s collective security since the Cold War.

Schmitt-Eliassen, who is based in the German Baltic port of Kiel, spoke to Reuters on the flight deck of the supply ship Elbe. Moored next to it, within sight of the church towers of the Latvian capital Riga, were a Latvian and a Lithuanian ship, and vessels and sailors from nations including Denmark, Belgium and Estonia were due to join the group later.

A total of 12 NATO warships with some 600 sailors on board are due to start a mine-clearing operation in the coming days.

Video: NATO says conflict must not spread beyond Ukraine

STORY: “That would be even more dangerous, destructive and even more deadly. The situation could spiral out of control,” Stoltenberg warned.Speaking alongside Latvia’s President Egils Levits, Stoltenberg said Russia’s invasion was causing horrific suffering and that the humanitarian impact was devastating.“We will protect and defend every inch of Latvia and we will protect and defend every inch of all allied territory,” he added.The United Nations said the number of refugees who have fled Ukraine had surged past 2 million, describing the flight as one of the fastest exoduses in modern times.Moscow describes its actions in Ukraine as a “special operation” to disarm its neighbor and unseat leaders it calls neo-Nazis. Ukraine and its Western allies call this a baseless pretext for an invasion to conquer a country of 44 million people.

On Feb. 16, when intelligence showed an invasion was imminent, NATO Secretary General Jens Stoltenberg called the current era a “new normal.”

It looks a lot like a return to the past. Founded in 1949 to defend against the Soviet threat, the NATO alliance is facing a return to mechanised warfare, a huge increase in defence spending, and potentially a new Iron Curtain falling across Europe. After struggling to find a new post-Cold War role, countering terrorism following the Sept. 11 attacks on the United States in 2001 and a humiliating withdrawal from Afghanistan in 2021, NATO is back defending against its original nemesis.

But there’s a difference. China, which split with the Soviet Union during the Cold War, has refused to condemn the Russian invasion of Ukraine, which Moscow calls a “special military operation.” And the old Cold War blueprints no longer work, as NATO has expanded east since the 1990s, bringing in former Soviet states – including the Baltic states of Latvia, Lithuania and Estonia in 2004.

In early February, China and Russia issued a powerful joint statement rejecting NATO’s expansion in Europe and challenging the Western-led international order.

Direct confrontation between NATO and Russia could touch off a global conflict.

“We have reached a turning point,” said retired German general Hans-Lothar Domroese, who led one of the highest NATO commands in the Dutch town of Brunssum until 2016.

“We have China and Russia acting in concert now, boldly challenging the United States for global leadership … In the past, we have been saying deterrence works. Now we have to ask ourselves: Is deterrence enough?”

This is underscored by Schmitt-Eliassen’s mission – a regular exercise that was brought forward by Russia’s invasion.

The issue is access. Before the Soviet Union was dissolved, NATO could have moved to contain the Soviet Union by blocking the western entrance of the Baltic Sea. That would seal in the Soviet Union’s Baltic Fleet to prevent it from reaching the North Sea where its warships could attack U.S. supply convoys.

Today, NATO’s and Russia’s roles have been reversed: An emboldened Moscow could encircle NATO’s new Baltic members, and cut them off from the alliance. If a new Iron Curtain is to fall, NATO needs to ensure its members are not behind it (see map https://tmsnrt.rs/3tnekaO).

The three tiny countries, with a combined population of some six million people, have a single overland link to the alliance’s main territory. A corridor of some 65 km (40 miles) is squeezed between the heavily armed Russian exclave of Kaliningrad on the west and Belarus on the east.

So Schmitt-Eliassen’s goal is to keep the waterway open, as a supply line also for non-NATO states Finland and Sweden. Millions of tons of old mines, ammunition and chemical weapons are believed to lie on the bed of the shallow Baltic Sea, a legacy of two World Wars.

Mines – whether old and unexploded or freshly laid – can have an impact beyond destruction, Schmitt-Eliassen said. A mine sighting, or rumoured sighting, can close harbours for days while the area is swept. If that happens in the Baltic, there’s a risk “the supermarket shelves will remain empty.”

Even commercial ships can become a military factor in the narrow western entrance to the Baltic, he said, referring to scenarios such as the March 2021 incident when the Ever Given container ship blocked traffic through the Suez Canal for days.

“You cannot blame anybody for this (kind of incident), it is not attributable,” the chief of the German navy, vice-admiral Jan Christian Kaack, told Reuters.

NEXT TARGET?

Crucial for the Baltics is the land link between Kaliningrad and Belarus. Called the Suwalki Gap, its seizure would cut the Baltic states off.

“Putin could quickly seize the Suwalki Gap,” said Domroese, the retired German general, adding this will not happen today or tomorrow, “but it could happen in a few years.”

Putin’s recent actions have not all been predictable. He put Russia’s nuclear forces on high alert on Feb. 28, with rhetoric that Stoltenberg told Reuters is “dangerous, it’s reckless.”

The Kremlin did not respond to a request for comment. Putin says Russia’s concerns expressed over three decades about NATO’s expansion were dismissed by the West, and post-Soviet Russia was humiliated after the 1991 fall of the Soviet Union.

He says NATO, as an instrument of the United States, was building up its military on Ukraine’s territory in a way that threatened Russia.

On March 11, Russia’s Defence Minister Sergei Shoigu told Putin the West was beefing up military forces close to Russia’s Western borders. Putin asked Shoigu to prepare a report on how to respond.

Ukraine’s President Volodymyr Zelinskiy has warned that the Baltic states will be Russia’s next target. The Baltic Sea is a large and busy shipping market for containers and other cargo, connecting Sweden, Finland, Estonia, Latvia, Lithuania and Russia with the rest of the world.

It “has gone from being a normal peaceful area, to an area where you tread carefully,” said Peter Sand, chief analyst at the air and ocean freight rate benchmarking platform Xeneta. With demand and logistics disrupted, the fees shippers pay to move cargoes from Hamburg to Saint Petersburg and Kaliningrad are down 15% since the invasion, according to Xeneta data.

For almost 25 years, the West believed Russia could be tamed by diplomacy and trade to maintain stability and security in Europe. In 1997, NATO and Russia signed a “founding act” that was designed to build trust and limit both sides’ force presence in eastern Europe.

The alliance also sought to build a partnership with Russia, which took part in NATO exercises in the Baltic as recently as 2012, according to retired U.S. Admiral James Foggo, who commanded U.S. and NATO fleets in Europe for almost a decade until 2020.

After Russia annexed Crimea in 2014, NATO created small, multinational combat units in Poland and the three Baltic states, which serve as a forward presence to deter Moscow. But the force numbers are designed not to violate the “founding act,” which has hindered NATO’s ability to move troops into the Baltics and Poland on a permanent basis.

“We all thought that there wouldn’t be an enemy anymore,” Admiral Rob Bauer, the chairman of NATO’s military committee, told Reuters. “We now are confronted with a nation that is showing that it is aggressive, that it has forces that we thought were not going to be used anymore.”

While the numbers are changing all the time, the number of troops under the command of NATO Supreme Allied Commander in Europe (SACEUR) Tod Wolters has more than doubled since Russia’s invasion, to around 40,000, according to NATO diplomats and officials.

NATO allies have also moved five aircraft carriers into European waters, in Norway and the Mediterranean, increased the number of warplanes in the air in NATO airspace and more than doubled the size of the combat units in the Baltics and Poland. Host nation forces number some 290,000 in the region, but mainly under national control.

GERMANY’S MOMENT

The biggest shift in NATO’s “new normal,” diplomats, former officials and experts say, is Germany’s reversal of a decades-long policy of low defence spending. Held back by guilt over its wartime past and resulting pacifism among its population, Germany resisted pressure from the United States to increase this to a NATO target of 2% of economic output. France and Britain both meet the goal, but Germany’s defence spending was only 1.5% in 2021.

With ageing equipment and personnel shortages, Berlin had been seen for decades as a weak partner because of its reluctance to send troops to combat operations.

But on Feb. 27, Chancellor Olaf Scholz said Berlin would now meet the 2% target – and promised a 100 billion euros ($110 billion) injection into the military.

Germany has been concerned by Moscow’s presence in the Baltic Sea for a while. After Russia’s annexation of Crimea, Berlin forged an alliance of the western navies on the Baltic Sea.

“We simply had to take note of the fact that – whether we like it or not – we are the 900 pound gorilla in the ring,” said navy chief Kaack. “The way we look up to the United States as a smaller partner, that’s how our partners here look at us.”

Soon after Russia’s invasion, Berlin announced it would buy 35 Lockheed Martin F-35 fighter jets from the United States to replace its ageing Tornado fleet.

NO MORE CONSTRAINTS

The United States is also moving more military equipment into Europe, including vehicles and weapons to Belgium, the Netherlands, Germany and Poland that could be used immediately by newly arriving U.S. troops, rather than waiting weeks for tanks and trucks to be shipped from U.S. bases.

Douglas Lute, a former U.S. ambassador to NATO, told Reuters that NATO’s “new normal” should be a step up from what the alliance agreed after Crimea. It is likely to be set down in writing in NATO’s official master strategy document, known as its “Strategic Concept,” which will be agreed at the next NATO summit in Madrid in June.

“You’ll see a push forward of combat capability to both reassure eastern allies and to make an even more prominent deterrence message to Russia,” Lute said.

He said NATO’s existing multinational combat units in the Baltics and Poland – originally some 5,000 troops in total – should be significantly increased in size. He said he expected “more sophisticated air defence systems postured forward,” including Patriot and other systems in the Baltics and Poland.

And he expects more U.S. weapons and military equipment to be pre-positioned in Europe. More NATO troops could be stationed in Romania, Bulgaria, Slovakia and Hungary.

The U.S. delegation to NATO declined to comment. Its envoy, Julianne Smith, said on March 15 the alliance was making commitments to “have more force posture in Central and Eastern Europe and develop new policy tools.”

But – just as in the Cold War – NATO will need to keep communicating with Russia to avoid risking accidents with potentially devastating consequences.

“NATO has some responsibility to do more than just trying to keep Russia out,” said Adam Thomson, a former British ambassador to NATO and now director of the European Leadership Network think tank in London. “It’s about the management of an unavoidable strategic instability.”

($1 = 0.9044 euros)

(Additional reporting by Jonathan Saul and Guy Faulconbridge in London; edited by Sara Ledwith)

The New York Times

Ukraine War Threatens to Cause a Global Food Crisis

Jack Nicas – March 21, 2022

The war in Ukraine has delivered a shock to global energy markets. Now the planet is facing a deeper crisis: a shortage of food.

A crucial portion of the world’s wheat, corn and barley is trapped in Russia and Ukraine because of the war, while an even larger portion of the world’s fertilizers is stuck in Russia and Belarus. The result is that global food and fertilizer prices are soaring. Since the invasion last month, wheat prices have increased by 21%, barley by 33% and some fertilizers by 40%.

The upheaval is compounded by major challenges that were already increasing prices and squeezing supplies, including the pandemic, shipping constraints, high energy costs and recent droughts, floods and fires.

Now economists, aid organizations and government officials are warning of the repercussions: an increase in world hunger.

The looming disaster is laying bare the consequences of a major war in the modern era of globalization. Prices for food, fertilizer, oil, gas and even metals like aluminum, nickel and palladium are all rising fast — and experts expect worse as the effects cascade.

“Ukraine has only compounded a catastrophe on top of a catastrophe,” said David M. Beasley, executive director of the World Food Program, the U.N. agency that feeds 125 million people a day. “There is no precedent even close to this since World War II.”

Ukrainian farms are about to miss critical planting and harvesting seasons. European fertilizer plants are significantly cutting production because of high energy prices. Farmers from Brazil to Texas are cutting back on fertilizer, threatening the size of the next harvests.

China, facing its worst wheat crop in decades after severe flooding, is planning to buy much more of the world’s dwindling supply. And India, which ordinarily exports a small amount of wheat, has already seen foreign demand more than triple compared with last year.

Around the world, the result will be even-higher grocery bills. In February, U.S. grocery prices were already up 8.6% over a year prior, the largest increase in 40 years, according to government data. Economists expect the war to further inflate those prices.

For those living on the brink of food insecurity, the latest surge in prices could push many over the edge. After remaining mostly flat for five years, hunger rose by about 18% during the pandemic to between 720 million and 811 million people. Earlier this month, the United Nations said that the war’s impact on the global food market alone could cause an additional 7.6 million to 13.1 million people to go hungry.

The World Food Program’s costs have already increased by $71 million a month, enough to cut daily rations for 3.8 million people.

“We’ll be taking food from the hungry to give to the starving,” Beasley said.

Rising prices and hunger also present a potential new dimension to the world’s view of the war. Could they further fuel anger at Russia and calls for intervention? Or would frustration be targeted at the Western sanctions that are helping to trap food and fertilizer?

While virtually every country will face higher prices, some places could struggle to find enough food at all.

Armenia, Mongolia, Kazakhstan and Eritrea have imported virtually all of their wheat from Russia and Ukraine and must find new sources. But they are competing against much larger buyers, including Turkey, Egypt, Bangladesh and Iran, which have obtained more than 60% of their wheat from the two warring countries.

And all of them will be bidding on an even smaller supply because China, the world’s biggest producer and consumer of wheat, is expected to buy much more than usual on world markets this year. March 5, China revealed that severe flooding last year had delayed the planting of a third of the country’s wheat crop, and now the upcoming harvest looks bleak.

“This year’s seedling situation can be said to be the worst in history,” said China’s agriculture minister, Tang Renjian.

Rising food prices have long been a catalyst for social and political upheavals in poor African and Arab countries, and many subsidize staples like bread in efforts to avoid such problems. But their economies and budgets — already strained by the pandemic and high energy costs — are now at risk of buckling under the cost of food, economists said.

Tunisia struggled to pay for some food imports before the war and now is trying to prevent an economic collapse. Inflation has already set off protests in Morocco and is helping stir renewed unrest and violent crackdowns in Sudan.

“A lot of people think that this is just going to mean that their bagels are going to become more expensive. And that’s absolutely true, but that’s not what this is about,” said Ben Isaacson, a longtime agriculture analyst with Scotiabank.

Since the 1970s, North Africa and the Middle East have grappled with repeated uprisings.

“What actually led to people going into the streets and protesting?” he said. “It starts from food shortages and from food price inflation.”

Countries afflicted by protracted conflict, including Yemen, Syria, South Sudan and Ethiopia, are already facing severe hunger emergencies that experts fear could quickly worsen.

In Afghanistan, aid workers warn that the humanitarian crisis has already been exacerbated by the war in Ukraine, making it more difficult to feed the roughly 23 million Afghans — more than half the population — who do not have enough to eat.

Nooruddin Zaker Ahmadi, director of Bashir Navid Complex, an Afghan imports company, said that prices were rising across the board. It took him five days in Russia this month to find cooking oil. He bought 15-liter cartons for $30 each and will sell them at the Afghan market for $35. Before the war, he sold them for $23.

“The United States thinks it has only sanctioned Russia and its banks,” he said. “But the United States has sanctioned the whole world.”

For the global food market, there are few worse countries to be in conflict than Russia and Ukraine. Over the past five years, they have together accounted for nearly 30% of the exports of the world’s wheat; 17% of corn; 32% of barley, a crucial source of animal feed; and 75% of sunflower seed oil, an important cooking oil in some parts of the world.

Russia has largely been unable to export food because of sanctions that have effectively cut it off financially. Ukraine, meanwhile, has been cut off physically. Russia has blocked the Black Sea for exports, and Ukraine lacks enough rail cars to transport food over land.

What is now becoming more worrisome is the next harvest, particularly in Ukraine. On March 11, Ukraine’s agriculture minister begged allies for 1,900 rail cars of fuel, saying that the country’s farms had run out after supplies were diverted to the military. Without that fuel, he said, Ukrainian farmers would be unable to plant or harvest.

There are other hurdles. The United Nations estimated that up to 30% of Ukrainian farmland could become a war zone. And with millions of Ukrainians fleeing the country or joining the front lines, far fewer can work the fields.

Russian and Ukrainian wheat is not easily replaced. Inventories are already tight in the United States and Canada, according to the United Nations, while Argentina is limiting exports, and Australia is already at full shipping capacity. Over the past year, wheat prices are up 69%. Among other major food exports of Russia and Ukraine, corn prices are up 36% and barley 82%.

The war also threatens another longer-term shock to the food markets: a shortage of fertilizer.

Matt Huie, a farmer near Corpus Christi, Texas, said that skyrocketing prices had already forced him to stop applying fertilizer to the grazing fields that nourish his hundreds of cows, assuring that they will be skinnier come slaughter. Now he is worried he will have to also reduce fertilizer for his next corn crop, which would slash its yield.

“We’ve gotten into uncharted territory,” he said.

Russia is the world’s largest fertilizer exporter, providing about 15% of the world supply. This month, just as farmers around the world prepared for planting, Russia told its fertilizer producers to halt exports. Sanctions already were making such transactions difficult.

Sanctions also have hit Russia’s closest ally, Belarus, a leading producer of potash-based fertilizer, critical for many major crops, including soybeans and corn. But even before the Ukraine war, Belarus’ fertilizer exports were blocked because of sanctions over its seizure of an expatriate dissident who had been a passenger in a Ryanair jetliner forced to land in the country.

In another ominous signal to fertilizer customers, earlier this month European fertilizer producers said they were slowing or halting production because of soaring energy prices. Many fertilizers are made with natural gas.

The world’s major fertilizers have now more than doubled or tripled in price over the past year.

Brazil, the world’s largest producer of soybeans, purchases nearly half its potash fertilizer from Russia and Belarus. It now has just three months of stockpiles left. The national soybean farmers association has instructed members to use less fertilizer, if any, this season. Brazil’s soybean crop, already diminished by a severe drought, is now likely to be even smaller.

“They’re preventing fertilizers from getting to producing countries,” said Antonio Galvan, the soybean association’s president, criticizing international sanctions. “How many millions are going starve to death because of the lack of these fertilizers?”

Brazil sells most of its soybeans to China, which uses much of the crop to feed livestock. Fewer, more expensive soybeans could force ranchers to cut back on such animal feed, meaning smaller cows, pigs and chickens — and higher prices for meat.

Jon Bakehouse, a corn and soybean farmer in Hastings, Iowa, said he prepaid for fertilizer late last year because he worried about a looming shortage.His fertilizer still has not arrived, and he now has less than a month to apply it to his corn crop. Without it, he said, his yields would be halved.

“You know when they show the cars jumping in slow motion and the passengers inside are up in the air? That’s what it feels like,” he said. “We’re all just kind of suspended in the air, waiting for the car to land. Who knows if it’s going to be a nice, gentle landing or if it’s going to be a nosedive into the ditch.”

Yahoo! News

Ukraine releases powerful video showing devastation of Russian invasion

Kate Buck – March 21, 2022

The Ukrainian government has released a new video encapsulating what it says is the scale of destruction caused by Russia’s invasion.

The country has come under Russian fire for 26 days, with the heavy bombardment of major cities becoming increasingly intense in recent days.

The UN estimates around 1,000 civilians have been killed (though Ukraine claims it is double the amount) while more than 3.2 million people have been forced to flee in what has become a major humanitarian crisis. A further 6.5 million people inside Ukraine have been displaced, the UN estimates.

In a video shared on the Ukrainian Armed Forces Twitter page on Sunday, President Zelenskyy laments what has been lost in less than a month of war.

“‘Was’ – a simple verb. Merely a part of speech used in every day life,” he says.

“But it’s not that simple for us. Because now the everyday Ukrainian simply cannot say “was” without bursting into tears.

Read more: 6.5 million people displaced inside Ukraine due to war

“This was my home. This was my friend. This was my dog. This was my car. This was my job. And this was my father. And this was my daughter.

“The millions and millions of Russian wounds are bleeding.

“Russia has drowned Ukraine in tears and blood and children’s corpses.”

But Zelenskyy also looks to the future, telling citizens they will rebuild and start anew.

He says: “But there is one thing Russia doesn’t get. ‘Was’ is the word that describes its life. And we Ukrainians already know what will come next.

“We will win.

“And there will be new houses. There will be new cities. There will be new dreams.

“There will be a new story. Those we’ve lost will be remembered.

“And we will sing again, and we will celebrate anew.

“Ukraine was beautiful but now it will become great.”

It is widely believed Putin’s invasion has not gone as expected. Western officials say a combination of poor leadership and strategy plus fierce resistance has meant slower than expected progress.

As a result, Russia appears to have embarked on a deadly war of attrition. Britain’s chief of defence intelligence Lieutenant General Sir Jim Hockenhull said the Kremlin has been forced to switch tactics, turning to the “reckless and indiscriminate” use of firepower which will inevitably lead to more civilian casualties.

The Russians have “enormous” stocks of artillery ammunition and could maintain their bombardment for weeks in an attempt to force Ukraine into submission, Western officials say.

The capital of Kyiv has been a key target for Putin’s forces, with British military intelligence suggesting Russian forces still remain more than 25km outside of the city centre and are likely to try to encircle the city over the coming weeks.

Watch: Russian shelling flattens Kyiv shopping centre

Russian shelling flattens Kyiv shopping center

Shelling by the Russian military destroyed a shopping center near the center of Kyiv, Ukraine on Sunday night. The attack left at least six dead, according to Associated Press journalists at the scene. (March 21)

Overnight, four people died after a shopping mall in Kyiv was bombed, authorities said.

And in the northern Ukrainian town of Novoselytsya, people were told to seek shelter after a fertiliser plant was shelled in the early hours of Monday morning.

Sumy regional governor, Dmytro Zhyvytskyiy, said one of the ammonia tanks was damaged, spilling chemicals into the air.

“As a result of Russian enemy shelling, a tank with ammonia with a capacity of 50 tonnes was damaged,” Zhyvytskyiy said, adding that there was no threat to the nearby population of the city of Sumy.

Zhyvytskyiy added the area within a 2.5km of the plant was dangerous, advising people should shelter in shelters and basements, describing ammonia as a “colourless gas with a pungent suffocating odour”.

“Ammonia is lighter than air, therefore shelters, basements and lower floors should be used for protection,” he said in a Telegram message.

Insider – Military and Defense

The latest US weapon heading to Ukraine: a 2-foot long, 5-pound drone designed for one-way missions

Stavros Atlamazoglou – March 21, 2022

• The US is sending billions of dollars’ worth of security assistance to Ukraine.
• The latest aid package includes more US-made Stinger anti-aircraft and Javelin anti-tank missiles.
• It also includes 100 Switchblade drones, designed for one-way missions against enemy targets.

The latest package of US security assistance to Ukraine, worth $800 million, is packed with weapons that can take a toll on invading Russian forces.

FGM-148 Javelin anti-tank weapons, FIM-92 Stinger anti-aircraft missiles, and AT-4 anti-tank unguided missiles, as well as grenade launchers, body armor, and tens of millions of bullets are just some of the security aid the US is sending Kyiv.

The latest package also includes 100 Switchblade tactical unmanned systems — also known as “kamikaze drones” — that could make life for Russian troops that much harder.

The Switchblade

First developed to counter insurgents in Afghanistan, the Switchblade has become a staple of the US military’s conventional and special-operations arsenals.

There are two versions of the Switchblade drone, Switchblade 300 and Switchblade 600. What differentiates them is the size of the munition they carry.

The Switchblade 300 carries an explosive charge the size of a Claymore mine — an anti-personnel mine made out of C-4 explosive and hundreds of small metal ball bearings — and is designed to take out infantry and artillery targets.

At 2 feet and slightly over 5 pounds, the Switchblade 300 can be launched from a small tube akin to a mortar. It has a speed of 100 mph but a very short operational range of only 15 minutes (or 6 miles), thus making it truly tactical.

The Switchblade 600 packs a larger explosive charge. It has a bigger operational range of 40 minutes (or 24 miles) and a cruising speed of 70 mph, but it’s also heavier, at 120 pounds. With an explosive charge similar to that of the Javelin anti-tank missile, the Switchblade 600 is designed to take out tanks and armored targets.

Both loitering munitions have an onboard sensor with GPS to guide them to the target, and they can strike both mobile and stationary objects. They also include a “wave off” function that allows the operator to abort a strike if the circumstances on the ground change — for example, if civilians approach the target.

US Special Operations Command has been using the Switchblade 300 since the early 2010s, and in September it awarded AeroVironment a $20 million contract for the Switchblade 600.

“We’ve been using Switchblades for some time now. They are really effective downrange because they put distance between the operator and his target. It was really effective in Syria and Iraq against ISIS,” a Green Beret assigned to a National Guard unit told Insider.

ISIS fighters often attempted to take out special-operations teams or their forward-operating bases with car bombs. “On some rare occasions we would use Switchblades to take them out en route. It’s also a good option for urban warfare because you can be very precise and avoid collateral damage,” added the Green Beret, who was not authorized to speak to the media.

In addition to carrying out strikes, Switchblades can gather tactical intelligence, conduct surveillance, do target acquisition, and provide reconnaissance for operators and help commanders develop better situational awareness on the battlefield.

Switchblade 600 can “track and engage non-line-of-sight targets and light armored vehicles with precision lethal effects,” Brett Hush, vice president and product line general manager for TMS at AeroVironment, said after the company received the SOCOM contract.

The -600 model can also be easily transported and deployed from fixed and mobile platforms, allowing operators to overwhelm targets while minimizing their exposure to enemy fire, Hush said.

Loitering munitions vs. drones

The difference between loitering munitions and large drones is simple: the former are designed to be expendable and the latter are designed to provide cheap and sustained intelligence-gathering and strike options to commanders.

Once fired, there is no coming back for loitering munitions. They are tactical in nature and meant to solve problems a small unit would face on the ground. For instance, a platoon of Army Rangers or Navy SEALs in Afghanistan would use a Switchblade 300 to take out Taliban fighters who are escaping a compound on a motorbike.

Larger drones, such as the MQ-9 Reaper or RQ-4 Global Hawk, are designed to provide near-constant coverage of the battlefield to allow commanders on the ground and back in headquarters to make more-informed decisions. Armed drones like the Reaper can also provide close air support or conduct precision strikes.

Loitering munitions are also cheaper. An MQ-9 costs $56 million, and one of the AGM-114 Hellfire missiles that it fires costs over $100,000. A Switchblade 300 costs about $6,000.

Both are designated “unmanned aerial systems,” and despite their different roles, both are cost-effective ways to track and attack opposing forces while reducing the risk to their operators.

Stavros Atlamazoglou is a defense journalist specializing in special operations, a Hellenic Army veteran (national service with the 575th Marine Battalion and Army HQ), and a Johns Hopkins University graduate.

Business Insider

The top Russian naval commander died near Mariupol, Russia said, the latest senior officer killed in Ukraine

Tom Porter – March 21, 2022

• The deputy commander of Russia’s Black Sea fleet was killed near the besieged city of Mariupol, Russian officials said.
• Andrei Paly is the latest senior Russian official to be killed in the war with Ukraine.
• US officials said Russian military setbacks had caused top officials to take unusually advanced positions, leaving them vulnerable to attack.

The deputy commander of Russia’s Black Sea fleet was killed in combat near the besieged Ukrainian city of Mariupol, Russian officials said.

Captain 1st rank Andrei Paly is the latest senior Russian officer to be killed in the war with Ukraine.

His death was announced Sunday by Mikhail Razvozhayev, the pro-Russian governor of the Ukrainian city of Sevastopol, on Telegram.

“Andrei Nikolaevich chose as the mission of his life to defend the Motherland and died for our peaceful future,” Razvozhayev wrote, according to the Russian news outlet MKRU.

Russia annexed the Crimean peninsula city of Sevastopol from Ukraine in 2014, and bases its Black Sea fleet there.

Ekaterina Altabaeva, a senator in Sevastopol, also announced Paly’s death on Russia’s VK social-media network.

“Sevastopol has suffered a heavy, irreparable loss … Paly died in the battles for the liberation of Mariupol from the Nazis,” wrote Altabaeva, referring to Russian propaganda’s attempt to portray its invasion as a mission to “denazify” Ukraine.

Paly’s death was also confirmed by the secretary of the Nakhimov naval college, Konstantin Tsarenko, on VK, BBC Monitoring reported.

The Russian defense ministry has not confirmed Paly’s death, however.

An unusually high number of senior Russian officials have been killed in Ukraine.

US officials told The New York Times last week that four Russian generals had been killed in stalled invasion so far, with military setbacks leading them to take unusually advanced positions to personally direct operations, leaving them vulnerable to attack.

Over the weekend, Ukraine said its forces had killed a fifth Russian general, Lieutenant-General Andrei Mordvichev, near Kyiv.

Russian forces have for weeks been besieging Mariupol, where around 30,000 civilians remain trapped with no electricity or running water, and limited food supplies. Ukrainian forces rejected a Russian offer to relinquish control of the city on Sunday.

According to Russian media outlet Kommersant, Paly, 51, was born in Kyiv and defected to the Russian navy in 1993. He was appointed deputy commander of the Black Sea fleet in 2019, the report said.

Reuters

U.S. fighters say they felt calling to join Ukraine’s cause

Abdelaziz Boumzar and Marko Djurica – March 20, 2022

• 
• 

BROVARY, Ukraine (Reuters) – Three U.S. volunteer fighters who have risked their lives alongside Ukrainian soldiers said they had joined the struggle against Russian forces to stop civilians suffering and in the name of freedom.

The group, including a female college student from New York who works at JFK airport, spoke of their narrow escape after they said the vehicle they were travelling in hit a land mine on Sunday on the frontline near the capital Kyiv.

Reuters could not independently verify the identity of the three foreign fighters nor their description of the incident.

A Ukrainian combatant who was with the three at the time was being treated at Brovary Hospital on the outskirts of the capital after suffering serious injuries.

“We thought he was dead, he was slumped over and unresponsive,” Alexis Antilla, who was acting as a combat medic for the team of fighters and was herself injured in the explosion, told Reuters at the hospital.

“When the fire started to consume him, he started to wake up and we were able to get him out,” she said.

Speaking a couple of hours after the incident, Antilla said a second landmine exploded shortly after the first, sending rounds of ammunition that the group was carrying flying past their heads.

Despite the close encounter with death, she said she wanted to return to the frontline as soon as her injuries healed.

“I felt a calling to come here, I felt like it was the right thing to do, I feel like what’s happening here, what Putin is doing, is evil,” she said.

“There is no need to put millions and millions of people through the suffering and torment that they are going through, and I felt I had to be here to help in any way that I could.”

Red Taylor, from Tennessee, said that the Ukrainian with them spoke good English and spotted the landmine but that the group “could not even count a second between the time he said there are landmines everywhere and the ‘boom'”.

Their commander, who only gave his name as Rob and said he was from Connecticut, has been fighting in Ukraine for three weeks.

“I don’t like what they are doing to the civilians and what they are doing to all these people. My boys and me feel the same. There has to be justice in this world for people that want to live free, and that’s what we fight for,” he said.

Russia launched its invasion of Ukraine on Feb. 24, calling it a “special operation” to demilitarize Ukraine and capture nationalists. While Ukraine’s armed forces are heavily outnumbered, they have mounted significant resistance.

Ukraine has also established an international legion for people from abroad, and President Volodymyr Zelenskiy has publicly urged foreigners to come and fight side-by-side with Ukrainians against the Russians, whom he describes as “war criminals”.

Zelenskiy has said that more than 16,000 foreigners have volunteered, without specifying how many had arrived.

(Reporting by Abdelaziz Boumzar and Marko Djurica; Writing by Silvia Aloisi; Editing by Hugh Lawson)

Business Insider

S&P slashed Russia’s debt to junk and says there are already 30 corporate ‘fallen angels’ as a result of the war. Here are 5 charts that show the hit to ‘Russia Inc’s’ creditworthiness

Hamza Fareed Malik – March 20, 2022

• Ratings agency S&P Global has downgraded a slew of companies since the start of the war in Ukraine.
• This week, the agency cut Russia’s sovereign rating deep into junk as sanctions have slammed its economy.
• The agency said there are already 30 corporates that have tumbled into junk territory as a direct result of the war.

Russia’s invasion of Ukraine has come with a heavy price for the government. Western sanctions have isolated it from the international financial system and choked off demand for many of its key exports.

Sanctions have cut off Russia’s access to much of its foreign reserves, threatening to plunge the country into default as it could struggle to meet its foreign debt payments. The ruble has plummeted to record lows and the country’s stock market has been paralyzed for weeks.

S&P Global this week cut Russia’s credit rating to “CC”, which it defines as “default imminent with little prospect for recovery.” Four years ago, almost to the day, the agency awarded Russia an investment-grade “BBB-” rating.

It’s not just the government that will struggle to raise capital on the global market. Sanctions have thrown the future of many of its biggest companies into doubt. S&P Global said this week it had made 121 changes to the ratings of companies that cited the Russia-Ukraine war, rising energy prices, or both as reasons. Of that total, 77 were Russian.

“In terms of creditworthiness, the Russian-Ukraine conflict has had the largest impact on banks, with 28% of total related rating actions,” the agency said.

And investors are taking no chances. S&P Global Ratings noted the risk premium on European emerging-market corporate debt is now almost double its five-year average, compared to a roughly in-line reading at the start of the year. Formerly lucrative firms, such as banks, energy producers and mining companies, have been reduced to junk status. Commodity traders are deliberately shunning Russian shipments of key raw materials and countries are scrambling to wean themselves off Russian energy supplies.

The agency said there are already 30 “fallen angels” as a direct result of the Russia-Ukraine conflict. The term refers to an issuer whose credit rating has been cut from investment grade to speculative grade, also known as junk.

Shares in some of the country’s biggest corporates no longer trade in New York or London, where stock in the likes of Sberbank, oil and gas producers Gazprom and Rosneft, and metal producers Norilsk and Rusal, plunged to almost $0 a couple of weeks ago.

And it won’t end there. S&P Global said there was huge uncertainty around the extent, the outcome and the consequences of Russia’s war in Ukraine.

“Irrespective of the duration of military hostilities, sanctions and related political risks are likely to remain in place for some time,” S&P said. “Potential effects could include dislocated commodities markets–notably for oil and gas–supply chain disruptions, inflationary pressures, weaker growth, and capital market volatility.”

S&P shared several charts that show the extent of the impact to the creditworthiness of Russian companies:

Distribution of ratings action related to the Russia-Ukraine conflict and energy prices

Rating action breakdown by sector

Rating action breakdown by rating category

Breakdown of rating action by domicile

Secondary market credit spreads