Pro Farmer Extra
- From the Editors of Pro Farmer newsletter -
March 14, 2014
Today's perspective is provided by Pro Farmer Editorial Director Chip Flory
With the political turmoil boiling to a head in the Crimean region of Ukraine on Sunday as the people of the region vote to potentially leave Ukraine and join Russia, the Pro Farmer editors have been brainstorming potential outcomes... not for the week ahead, but for the years ahead. There is nothing "concrete" in this post. These are just the thoughts and concerns that have emerged as the Ukraine-Russia conflict continues to escalate.
This "thought compilation" was also the base of my closing monolog on Farm Journal Media's new 1-hour daily ag market talk show, Market Rally, which I host.
Here’s the deal... Russia is an invading country. Look at history... they’ve always been an invading country.
Round-two of Putin is even more “old-school Russian” than round-one was.
He’s moving troops and military equipment around... calling it “military exercises” and basically taunting Western Europe and the U.S. into "picking sides."
In reality, Putin may be trying to expose additional "targets" by showing any pockets of citizens in the former Soviet Union -- that might be Russian sympathizers -- that Mother Russia will be there to support them.
You’ve got to admit... this is a part of the world that’s difficult -- for people that don’t live there -- to understand what’s going on. Heck, it’s even difficult for some people that live there to understand what’s going on in this part of the world.
The difference is generational. Younger people in Ukraine look at Western Europe and the United States and they want a piece of that independence... of what they see as freedom and the ability to determine what their future will be.
Older generations in the countries of the former Soviet Union may have liked being a global super power. Some may have liked the connection to Moscow. Some might like an old-school Russia.
It’s the mixing of pro-Russian under-currents and the independent thinking of the younger generation in former Soviet Union countries that’s boiling to the surface now.
Think of the leadership in the former Soviet Union. Many of them grew up in the Soviet Union and they saw what kind of things can originate from Moscow. They remember a Russia that was more concerned about accumulating land – with all the natural resources and all the agricultural resources – than it was concerned about the rights of the people.
Which adds to the intrigue of the current situation in Crimea. Vladimir Putin now says Russia has the right to protect the “Russian people” living in Crimea... and never mind the fact that Crimea is part of Ukraine. In fact, Putin now says Russia reserves the right to invade Ukraine to protect the “Russian people” of Ukraine.
What’s next? What if the independent-minded people of Moldova or Belarus decide that it’s time to get rid of pro-Russian leaders in their countries... or better yet... to get rid of pro-Russian leaders of small regions inside Moldova or Belarus or any of the other countries of the former Soviet Union. Will Putin declare that Russia has a right and a responsibility to protect the “people of Russia,” even if they are living in one of the former Soviet Union countries outside of Russia?
That’s how what’s happening in Ukraine spreads. If pro-Moscow regions in these other countries see Russia basically annex Crimea from Ukraine... what’s to stop them from communicating their desires to Putin to rebuild ties with Moscow.
Now... I’m not saying that Putin is trying to rebuild the old Soviet Union. But he doesn’t have to rebuild the old Soviet Union. What he might be interested in doing, however, is building a new Russian Union by selecting only the areas that “make sense” to bring back into the Russian fold. You know... places like one of Ukraine’s important port regions.
Which – again – brings up the question, “What’s next?” Take a look at how Russia very cheaply exports its natural gas to places like Germany, France and Italy. There is a series of pipelines running from Russia to western Europe and most of those pipelines run through Ukraine ... including the anti-Russian areas of western Ukraine. Might Putin decide those pipelines “deserve the protection of Russia?”
And, of course, there’s the agricultural resources of Ukraine. Ukraine used to be the breadbasket to the world... and farmers in the country were beginning to thrive in post-Soviet independence and in a market-driven environment. Might Putin look at Ukraine’s growing importance in global wheat and corn trade and decide that Ukraine’s farming sector “deserves the protection of Russia?”
Some observers around the world are saying that it looks like Ukraine is just sitting back and “letting it happen.” That’s not what’s happening. The Ukrainian Prime Minister has been in the U.S. trying to line up support and is working to secure support from European leaders, as well. It shouldn’t be too difficult to get support for Ukraine from European Union Members... the last thing they want is a guy like Putin flexing his muscles and running around eastern Europe and gathering up the “selected resources” that he might see as important to Russia.
That’s why this weekend is so important. The people of Crimea apparently will vote to join Russia and Russia will likely attempt to annex Crimea. The results of the votes – this is being done by paper ballot – won’t be official for some time, but don’t expect Putin to wait until the results are official before he stands up and says it’s time for Russia to protect the rights of the Russian people of Crimea.
This is a threat... it’s a real threat. And it’s a threat that will bring sanctions from the rest of the world down on Russia. But don’t expect Putin to back down. He’s feeling pretty cocky right now and he’ll push forward. The threat to the global grain market is that grain flow out of Ukraine and Russia might be disrupted.
And think about this one... what if an importing country says it is still willing to do business with Russia? What’s going to be the reaction of other countries to that importer? And it goes deeper than corn and wheat... Russia exports a lot of energy to Western Europe. What if Western Europe tries to live without Russian energy? If that much crude oil and natural gas is essentially isolated in Russia, that will no doubt have an impact on our fuel prices here in the States.
Bottom line... there’s a lot riding on what happens in Crimea this weekend.
Follow Pro Farmer Editorial Director Chip Flory on Twitter: @ChipFlory
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