SERVICES

Ukraine, “Chinese Could Serve As Mediators”

Kiev - Grain, gold, gas, and oil.These puzzle pieces have become crucial variables in the equation that is the Crimean crisis. The prices of raw materials, and especially foodstuffs, have begun to rise in the last few weeks after a winter characterized by steady prices

Kiev - Grain, gold, gas, and oil. These puzzle pieces have become crucial variables in the equation that is the Crimean crisis. The prices of raw materials, and especially foodstuffs, have begun to rise in the last few weeks after a winter characterized by steady prices. In February, the FAO food price index experienced the most sudden increase since mid-2012. We spoke to Maurizio Mazziero, of Mazziero Research, about the issue. Mazziero is a commodities and raw materials analyst.

What is going on in the Ukraine?

”It all starts with grain. The Ukraine is called the granary of Europe, but actually the whole region has a high concentration of grain producers, including Russia and Kazakhstan. Prices are now rising after a winter of lower price levels. The tension in Ukraine has become an emotional trigger and launched these price increases. We believe that we are in a hot period because it is the time of year when farmers make their decisions about seeding.”

Have other commodities been influenced by the rise in grain prices?

“Yes, sugar has, for example. And gold, as well, although that is a more complex case. There always tends to be a psychological chain reaction.”

And what about gas?

“Gas is clearly the other important element here. But I should say that the data we monitor is not entirely trustworthy, because the prices we see are prices in New York. We think it is very unlikely that the Ukraine can turn off the taps to Europe , because Kiev needs us both financially and diplomatically. It is more likely that Russia will shut us out, and in that case the effects will certainly be felt here in Italy”.

Could China play a role in the region?

“Yes, and I’ll tell you why. China is acquiring and leasing considerable amounts of land in the Ukraine for agricultural use, the same strategy they used in Africa. The area in which the Chinese are working is the eastern part of Ukraine, adjacent to the Crimean peninsula. To some extent China could play the role of a mediator in the confrontation with Russia, which certainly won’t give up Crimea, but might be persuaded not to extend its influence into Eastern Ukraine”.

You mentioned gold earlier...

“Yes, it’s a complicated situation. Last week Putin’s State Counsellor said that if the United States overplays its hand, Russia might abandon the dollar as its reserve currency. This is a similar strategy to that which China has adopted in recent years: Beijing has bought lots of gold in order that the Yuan, in the long term, could be used as the world’s reserve currency”.

Pressed for time?

Get the best news of the week in your inbox

Subscribe ››