Statements by the CEO of BASF, the largest chemical company in Europe and the world, made the rounds of the main financial media yesterday. Shutting off Russian gas, according to the manager, would jeopardize the survival of small and mediumsized companies and probably bring Germany the “worst economic crisis since the end of World War II; a crisis that would “destroy our prosperity”.
It’s not common for a CEO to make such statements publicly, let alone when he’s at the helm of a chemical giant. Perhaps the vantage point of a sector that is the basis of our industrial civilization, the chemistry of hydrocarbons, allows us to fully understand the magnitude of the crisis: which goes far beyond both the “heating” and electricity bills, considering that it gas and oil are made from plastics, fertilizers and a host of other commodities that end up in the products we use every day. Green chemistry is currently little more than a dream. Speaking of gas insulation, India’s finance minister said yesterday: “I would put the interests of my country and its energy security first. If oil is available at a discount, why shouldn’t I buy it?.
This is the gas chapter, but there are other chapters that open up. In fact, Russia seems poised to extend the rublebuying obligation to both oil and, most importantly, wheat. Russia is the world’s largest exporter of wheat, Ukraine, especially in the southeastern part, is the fifth, and Kazakhstan is the ninth. The game at stake is complicated, because Europe should rid itself of Russian gas, it is not clear how, and perhaps if relations deteriorate, even Russian oil and wheat. It should look for alternatives in a world that is looking for alternatives in a phase that is putting economies and, above all, societies under pressure.
Russia occupies one sixth of the emerging lands and in the denominator there are also lands that have no energy resources or are not buildable. If Russia and its partners were suddenly cut off from international trade, or if a large number of states decided to end trade relations, an insoluble problem would arise, unless we assume colonies on Mars. In reality, when Europe says it wants to look for alternatives, what is said should be contextualized because someone is bound to be left without a chair. Europe can indeed recover resources from the peak of its gross domestic product and its ratios, but in a game in which in the end someone is left out anyway because in a short to mediumterm time horizon the resources are “exhausted” , not infinitely; we suspect that the equation does not change in the long run.
Yesterday Bayer, which is one of the world leaders in agricultural products, especially after the acquisition of Monsanto (but not only seeds), sponsored a “content” published in the Financial Times. In this “content” we read that “after the invasion, more than 500 million people could face food shortages (“acute hunger” in the original is more impressive). In a zerosum game and in a world of “finite resources,” if Europe can solve its problem, these 500 million people live mostly in Mediterranean Africa, which depends on Russia for wheat, and subSaharan Africa. We wonder how Europe intends to solve its energy problem by knocking on the doors of countries with workers with empty bellies. We also wonder what intransigence these countries might have towards the bread sellers.
The only possible outcome, the only bet that reasonably seems to be taking place, in a situation where Russia obviously cannot be replaced, is a “regime change that reintroduces Russia and its resources into the international circuit. If the “regime change” doesn’t happen, then either part of the world is starving blackly, with all the social and political consequences, or we try to reintroduce those countries into the “international” cycle with arms. With the small detail of the 6,000 atomic bombs.
The will to unite should be unshakable and, it is assumed, the wishes of all should be taken into account. Including those who hypocritically or not wish to starve.
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