While Russia Burns, Putin Ignites Global Economic Nervousness

The rise in wheat prices on global exchanges, analysts believe, is merely a reflexive reaction to bad news from Russia and Canada, where excessive rains have reduced yields, and does not reflect the true state of the market. The price surge is nonetheless exaggerated and stabilization can be expected. However, even when the fires are extinguished, it could burn again – but under the feet of the Russian president.

writes Kristina Kardum
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With masks on their faces and thick layers of smog, Muscovites are currently facing the consequences of the hottest summer in the last 130 years and forest fires raging around the city. Ecologists, the global wheat market, and the state leadership are confronted with a desperate situation, in which Prime Minister Vladimir Putin once again demonstrated his dominant role in the unequal team with President Dmitry Medvedev. The sky over Moscow is dark. City authorities are warning citizens not to stay outside and have ordered 3.5 million face masks, without which it is impossible to breathe in the city. The number of emergency interventions has increased by a quarter, primarily due to heart and respiratory problems. Smoke is everywhere, in shopping malls, in the subway, and in homes, and visibility has been reduced to just a few meters. Toxic gases and temperatures of 40 degrees have doubled the mortality rate of the population, rapidly exhausting the capacities not only of hospitals but also of the city morgue. It is not just about the city – in more than 600 forest fires that rage daily, which have devastated several villages, more than 50 people have died. Religious customs dictate that the dead be buried after three days of mourning; however, authorities are anxiously urging citizens to expedite the ‘process’.

The tragedy goes deeper beneath the surface. In the last two months, more than 2,000 people have drowned while trying to escape the heat by swimming in rivers and lakes. As many as 90 percent were drunk men. Alcohol and sorrow are not a good combination, and given that the financial cost of the fires will first be evident on domestic territory, winter could be long and hard. The fire has so far devastated fields the size of Portugal, and more than 2,000 homes have been destroyed. Numerous flights to Moscow’s airports have been delayed, and tourists and foreign citizens have left the city. The State Historical Museum on Red Square had to close because the administration could not turn off the smoke detectors. Moreover, daily work in extreme conditions is extremely difficult, and productivity is low. – Work is impossible – said Moscow resident Mikhail Borodin to foreign media after removing his mask to light a cigarette. – I don’t know what the government is doing, but they should simply abolish working hours.

Wheat Goes to the Sky
In the shadow of human tragedies, the world watches with concern how the dramatic events in Russia will reflect on the global economy. Temperatures and drought have destroyed 30 percent of grain fields, prompting Prime Minister Vladimir Putin to ban exports. The consequence of this is a spike in wheat prices on the Chicago exchange for September delivery to the highest level in the last two months. As the Russian meteorological center has not announced any temperature relief for the seventh consecutive week, some analysts predict that the rise in wheat prices on the global market will continue. When it is added that the price has jumped by more than 75 percent since June, nervousness is inevitable. This was further ignited by Putin himself when he stated that some key agricultural regions would not be able to start winter sowing and that the export ban could last even after December. It has been announced that it will be lifted then. – The decision will be made only when the sowing results are known – announced Putin.

However, many believe that the rise in wheat prices is merely a reflexive market reaction to bad news from Russia and Canada, where excessive rains have reduced yields, and does not reflect the true state of the market. Thus, the price surge is somewhat exaggerated, and stabilization can be expected. Signs that the worst is over could be seen at the beginning of the week when the price fell by 1.8 percent to $7.125 per bushel. The fires in Russia have alarmed ecologists and the scientific community, which is closely monitoring global climate change. Activists are concerned because it seems that very little is being done to stabilize the situation globally.

– Russia is burning, while Pakistan is drowning. However, the international community behaves as if it has all the time in the world to act – said Wendel Trio, director at Greenpeace, at an international climate change meeting recently held in Bonn. Major climate oscillations most affect places where high values are rare. While resilience to winter is a matter of national pride, temperatures that would go unnoticed in some parts of the world are risky in Russia. Few apartments in Moscow have air conditioning, and the ventilation in the overloaded subway system is poor. A new priority for most residents is to get some sleep. The challenge is greater than it seems. If the windows are open, it is impossible to breathe due to the smog, and if they are closed, the heat is unbearable.

President Ficus
And while panic pleas are sent from the country to extinguish the fires, Russian President Medvedev seems to be oblivious to the flames. While Putin, with rolled-up sleeves, tours the fire sites, talks to the families of victims, and issues orders, Medvedev seems to shyly wait on the other end of the phone for his partner to call and tell him what the situation is and what to do. Given that Medvedev’s image as a human rights advocate was tarnished this spring, it could soon burn a little more fiercely under his feet. The first blow was when his chief human rights advisor, Ella Pamfilova, resigned due to a new wave of hatred and threats from the Kremlin towards anyone critical of the ruling policy. While members of the pro-Putin youth organization Nashi paraded through Moscow adorned with Nazi symbols allegedly without any consequences, police have repeatedly detained activists in Moscow and St. Petersburg who protested against the demolition of public city parks. Additionally, Medvedev allowed a controversial law to pass that grants new and greater powers to the Russian security agency FSB to detain citizens who disrupt the agency’s work, even if they have not committed any crime. Pamfilova described Medvedev as a man who does not approve of all this but lacks the power to stop it. – No one listens to the president’s orders – she said.

For example, an investigation into compensation for the families of war victims in Georgia has never been conducted, although Medvedev ordered it. On the other hand, the prime minister seems to firmly hold the reins, and he knows how to show it. Recently, national television accidentally caught Putin calling Medvedev from the fire site and explaining that the number of firefighters needs to be increased.