FarmLink Welcomes Jacob Shapiro to our guest blogger series
This week, Jacob Shapiro, geopolitical analyst and owner of Perch Perspectives, is answering our questions about geopolitics in relation to the Coronavirus (COVID-19). We sincerely thank him for his time and incredible insights.
You might remember Jacob Shapiro’s geopolitical presentation from Grain World 2019. The world he described then has become somewhat a reality now. At the time of Grain World, no one had heard about COVID-19 or knew the impact it would have on the economy. We’re living in a different world and who better to shed some light on what is going on than Jacob Shapiro.
Mr. Shapiro, a lot is going on in the world besides COVID-19. Do you have an update on the future of Russia, India, and Saudi Arabia based on recent events?
Honestly, the most interesting thing happening in the world right now is how the European Union is coping with this crisis. As I type, it appears that EU finance ministers have agreed to a compromise deal on 500 billion euro emergency rescue plan to deal with the economic fall-out of COVID-19 – but that compromise is far short of what the European Central Bank thinks is needed and is also far short of a truly united and strong response. Italy, Spain, France, and other major EU countries want the EU to issue debt as a bloc – which the Netherlands and Germany continue to reject. I don’t think it is hyperbole to say that the future of the European Union is going to be decided in the weeks and months ahead. If the EU does not come together now, I don’t think the EU will last. If, on the other hand, the EU does eventually come together, I could see it being a far more unified, powerful entity in the future.
As for the other countries you mention here: at any other time in the last decade, if Russia and Saudi Arabia had gotten into an oil price war, it would have dominated front-page news for weeks. The depth of the COVID-19 crisis has relegated those developments to the back page, but they are extremely important. I have been very impressed with how Russia has been handling itself in general. Russia obviously decided to start the price war before COVID-19, and now it is looking for a temporary ceasefire – but it is a big deal that Russia felt confident enough to compete with the Saudis at this level. It means Russia has a high degree of confidence in its financial reserves and its overall political stability.
COVID-19 has demonstrated how far India has to go before it can be counted among the world’s strongest powers. The government has implemented fairly strict lockdown measures, but it has had trouble enforcing those measures throughout the country. In some areas, implementation has been too lax – and in some areas, implementation has been too strong, which has caused massive disruptions in food and pharma supply chains. Because the Indian agricultural system is still based on small farmers from whom the Indian government purchases at a guaranteed price, the disruptions in the food supply chain have become particularly apparent. If Prime Minister Modi needed a better impetus for urging reform of the system to consolidate farm size, establish market-based trading, and export Indian products abroad, he could not have asked for one, but whether he can keep his country together and capitalize on the crisis to institute direly needed reforms will be an open question to watch going forward.
As for Saudi Arabia, the country is dealing with a locust invasion in addition to an oil price war and COVID-19. (Someone should really tell the Guy upstairs he is getting the 10 plagues all out of order.) The situation has gotten so bad that Saudi Arabia declared a unilateral ceasefire in its long-running war in Yemen, which underscores just how much pressure the Saudi government is facing on all fronts. Not much has changed in my view on Saudi Arabia’s long-term trajectory: I remain very pessimistic that the current regime is going to be able to navigate the coming political, social, and economic disruptions to daily Saudi life with a high degree of success. The best thing Saudi Arabia has going for it is that its primary rivals in the region, Iran and Turkey, are both also being hammered by COVID-19, especially Iran. Ironically that might mean a more aggressive Saudi Arabian foreign policy once COVID-19 is under control.
Mr. Shapiro has been busy since Grain World. He recently launched a new business and political consulting firm called Perch Perspectives. You can contact Mr. Shapiro directly via e-mail ([email protected]) or on Twitter or LinkedIn.
FarmLink clients heard this first! Get impactful grain marketing advice you can trust. Try our recommendations for one month on us. Sign up below.