“Cry ‘Havoc!’, and let slip the dogs of war.”
In William Shakespeare’s play Julius Caesar, Mark Antony utters these words after learning about Caesar’s murder. Simply put: Chaos will ensue, creating the opportunity for violence.
The invasion by Russian armed forces into Ukraine brings these famous words of Shakespeare to mind.
Putin cried “havoc”, and his troops created chaos in Ukraine and released the dogs of war into the rest of the world.
The day after the invasion we felt the bite of the dogs of war in South Africa. The rand weakened against the dollar, oil and gold prices spiked and grain and oilseed prices on commodity markets increased.
This was before sanctions were implemented against Russia, which could be described as a shock reaction due to uncertainty as to how the situation would unfold.
In the days after the market reaction, we saw the markets actually “cool down” a bit, with most initial sharp reactions starting to change back to former positions. This period was, however, short-lived.
The world hit back by closing airspace and borders and suspending trade import and export with Russia.
The sanctions in solidarity with Ukraine are an attempt to bring the Russian economy to its knees and force withdrawal from Ukraine.
Although the sanctions should be successful over the long term, they do not change much in the short term. We will have to deal with the effects of this conflict.
South Africans are especially affected by the increase in the price of crude oil.
Russia is the second-largest producer of crude oil in the world. Should the West ban the import of Russian oil, we will have an international shortage. Although this ban is the right thing to do to support Ukraine, it will have devastating effects on all countries.
The increase in the oil price not only drives up the cost of transportation, but also the cost of manufacturing. Fertiliser prices are correlated with the oil price, driving up the production cost of grain and oilseeds.
Speaking of grain and oilseed prices, the Black Sea region (which includes Russia and Ukraine) is a major exporter of wheat, sunflower seed and oil.
Over the past few weeks, the prices of these commodities have soared in international and South African markets. Although it might seem like good news for our farmers, the increase in prices is offset by high fertiliser prices and the local shortage of fertiliser.
In terms of agricultural commodities, Russia and Ukraine are important importers of South African products – especially citrus, stone fruit and grapes. Alternative markets now need to be found for these products.
The dogs of war have been slipped, and it is clear that nothing good is coming from this situation.) Prof. Frikkie Maré is a lecturer in the University of the Free State’s Department of Agricultural Economics.
