World Bank President: How we can ease food shortages

CNN, CNNBUSINESS

By Julia Chatterley

Russia’s invasion of Ukraine has the world heading toward a global food crisis that could impact millions of people.

But things are particularly dire in Ukraine. According to the World Food Programme, almost half of all Ukrainians are concerned about having enough food to eat.

Among the many organizations that have offered aid to the besieged nation is the World Bank, which has pledged more than $925 million in financial support to Ukraine since the war began. That’s part of a larger $3 billion package that the group is preparing for the country over the coming months.

CNN’s Julia Chatterley spoke with World Bank Group President David Malpass on Wednesday about how the organization has managed to quickly deliver aid to Ukraine, and what else can be done to address global hunger.

Chatterley: We’ll talk about Ukraine first. Pledges are one thing, but actually getting cash into the hands of those that need it is the real test. And whether it’s the World Bank or donations to the trust or officials in Ukraine, you’ve managed to do this incredibly quickly, and I think that emphasizes the need, too.

Malpass: It certainly does. The needs are massive [for] the people of Ukraine. For example, the recent money that we put out was able to help pay hospital workers and the pensions for the elderly … We were able to do it very quickly, which I was happy with, in part, because we’ve had an ongoing relationship with Ukraine, and we were able to add on — it was supplemental. That’s not always available around the world. But it was available in this case and it could be enlarged, and other donors made that possible as well. So I’m happy with that as a starting point. But the needs are massive.

Chatterley: Yeah I know you were there in 2019. So in many ways, you had a long run-in, or at least some time into this, to understand the situation and the requirements. Do you have any sense of timing on [getting] … more cash to them?

Malpass: We’re doing two things on that: one is an assessment of Ukraine’s needs, but also the regional needs. And that’s useful, because there needs to be a process where donors understand what they’re putting money into.

Some of it will be structural — reconstruction of infrastructure, for example. And then in the near term, meaning over the next one, two, three, four weeks, we can continue the current process as donors. This would be up in Western European [countries], the US, Japan and advanced economies … [The money is] able to [be dispersed] relatively quickly [and] directly to the government of Ukraine. So we envision both a near-term process that helps with the cash, and then as the months go by, we hope to get into a reconstruction process, and we’re beginning the preparation for that.

Chatterley: We spoke to the finance minister of Ukraine this week, and they are incredibly grateful for all the financial support and aid that they’re getting. But they’re also having to issue war bonds, very short-term debt, very high interest rate debt, in order to meet things like pensions, in addition to the money that they’re being given. It just seems incredibly unfair at this moment in addition to, as you said, the rebuilding costs that they have to face and the displacement costs of people, too. It’s a lot.

Malpass: Yes, and in addition, they’ve been making some payments on their debt. Markets have been somewhat surprised by that. You know the price of the debt has fallen a lot on the view that there would be interruptions. But so far, those payments are made, along with the very heavy social burden payments. And so Ukraine is looking for ways to raise funds, and some are more expensive than others. We have been happy — a chunk of ours is [in] grants, and the trust funds are particularly valuable from that standpoint. They can put grant aid in, which is the most useful kind.

Chatterley: There are [significant impacts on food supply as a result of this war] … David, to cereals, agriculture, in particular given the importance of this region. Not just Ukraine, of course, but Russia, too. And we’ve been hearing that this challenge is for Ukrainian farmers — the fear is that even if they can harvest the crops and actually get the harvest that they anticipate … that [they might be] … prevented from doing so by Russian troops. Have you heard similar?

Malpass: Yes, logistics is a big problem. It’s always been a problem for Ukraine because of the muddy season and the insufficiency of the infrastructure. World Bank has worked with them on that in terms of roads and railroads, but, of course, now many of those are impassable. So that will reduce their access to markets.

Another factor is the Black Sea itself. The shipping has been greatly reduced, both Russian shipping and Ukrainian shipping. So that’s one of the factors in the reduction in the output of wheat and the grains that you mentioned. One thing I’ll note, Julia, is markets adjust and the global economy adjusts … World GDP goes up and down year by year based on rainfall in other parts of the world.

I am just back from West Africa and there has been a severe drought. One thing that would help them a lot is rainfall, because then they would be able to produce [their] normal wheat amounts … and other grains, rice and a variety of crops … Markets look ahead and economies adjust, and they’re pretty good at adjusting.

One of the things that the world I think should do, and I call for them to do, is to reduce the trade barriers that are blocking trade, and allow more market access. This is particularly important for the advanced economies to allow more market access for the agricultural products from the poorer economies.

I was in Senegal. They produce a lot of peanuts. The US has major obstacles to peanuts, to peanut imports. And that drives up the price in the US and it doesn’t allow the crop in. And that’s true around the world. Another one I’ll mention is Nigeria. It’s blocking rice from Benin. It blocks the mint from Ghana. And these are really costly barriers that hurt the people of both countries.

We know that trade is beneficial to two sides. And one of the things I hope the world can do now is find a balance between the desire for independence, in terms of markets. For example, the US wants independent peanut markets, but also the balance of the benefits that come from trade and from diversified trade.

Chatterley: It’s such an important point and I think it’s a lesson that I hope we’ve learned following the 2007-2008 crisis, in particular. You can exacerbate a problem dramatically by export restrictions and by hoarding wherever are you are in the world. You are concerned about food security for your people. But you can make the situation far worse with those actions, so we pray countries don’t follow that route, to your bigger point.

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