Volodymyr Zelensky, Ukraine President, said that Russia could take over Ukraine’s eastern Donbas region. The proviso is Nato protection. It is unlikely that Vladimir Putin will agree to NATO’s intervention, but he might accept a UN force in a buffer zone.
Bottom line peace is a likely prospect after three years of bloody war. Negotiations may well begin after the inauguration of President Trump.
“Any settlement that leaves 20 per cent of Ukraine’s territory in Russia’s hands will be hard for Ukrainians to accept,”, maintains Adrian Karatnycky, author of “Battleground Ukraine: From Independence to the War with Russia.”. But most war-ravaged Ukrainians are likely to accept a deal with security guarantees.
An armistice may have a significant impact on the global commodities markets
Russia is the third biggest crude oil producer after Saudi Arabia and north America. It is a major natural gas producer. President Trump favours fracking. Analysts expect oil and gas prices to weaken when US producers boost output next year.
A slide in oil and gas revenue will pressurise Putin into agreeing a deal, contends US Senator Ted Cruz'. When war began he instigated sanctions against Russia.
Ukraine will be able to boost agricultural production and exports again
Ukraine is "Europe’s bread basket" because of its fertile "black earth". More than half of its land is arable according to the United Nations. Before the 2022 war, Ukraine’s sunflower oil accounted for 50 per cent of world exports. Barley's proportion was 18 per cent; corn 16 per cent and wheat 12 per cent, the UN estimates.
Since the war Ukraine’s corn production has fallen by 29 per cent to 30 million tonnes, calculates the International Grains Council. It estimates that Exports will fall from 27 million tonnes to 19.5 million. Wheat output is forecast to decline from 33 million tonnes to 28.7 million and exports from 18.4 to 14 million. Prices are already weak. (Although supplies are lower renewed flows may weaken prices.)
Russia attacked Ukraine's ports and warehouses in Odessa during October. It also bombed Black Sea vessels that held Ukraine’s grain. These attacks have slashed Ukraine’s wheat, corn, barley, and rapeseed exports.
Ukraine’s agricultural exports are the lowest in a decade, says the US Department of Agriculture.
Peace’s impact on global markets may take time. Damages to Ukraine's agriculture amounted to $80 billion in 2023, according to a European Parliament study . Those damages are likely to be even higher now. The paper estimated that rebuilding Ukraine's agriculture will cost $56 billion. Mines are also on the land and it will cost an extra $32 billion to get rid of them.
The European Union has agreed to allot Ukraine membership. But the European Union would have to give Ukraine $101 billion in subsidies over seven years.
EU farmers fret competition from cheaper Ukraine produce. There has already been protests.
Reconstruction of Ukraine could raise demand and prices for steel, copper and other metals.
Competition for these raw materials will be intense,. Gaza, Lebanon and Syria will also clear away the rubble and rebuild their cities.
Some US$300 billion of Russian and Oligarch money is in Western and central banks. The US, Britain and the European Union are likely to propose that the sanctioned assets finance reconstruction of Ukraine, contends Adrian Karatnycky, author of “Battleground Ukraine: From Independence to the War with Russia.”. Much will depend on legal hurdles. The World Bank has estimated that the cost will be at least $486 billion in the next few years.
Despite hopes that the war will end soon, uncertainty will continue.
“Stopping the war is not straightforward,” said Fredrik Wesslau from the Stockholm Centre for Eastern European Studies. Even if Trump manages to reach a deal with Putin, Ukraine and Europe need to be on board, he says.
© Copyright Neil Behrmann—All Rights Reserved
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