Ben Joseph, UCAN
Asia is deeply embroiled in the Ukraine crisis with a shortage of wheat, cooking oil and batteries for electric vehicles, with skyrocketing oil prices adding salt to its wound.
Asian nations are putting their interests first when reacting to the Russia’s invasion of Ukraine even if it means dumping vital allies or giving up on long-held policies.
Japan’s former prime minister, Shinzo Abe, has hinted at the country hosting US nuclear weapons despite it having a pacifist constitution.
India sided with Russia and refused to toe the Washington diktat on dumping Russia, its long-time security partner. Despite being a vital member of the four-nation QUAD, also known as the Asian NATO, India abstained from a crucial United Nations vote urging Russia to pull its invading army back from its neighbour.
The Maldives was one of the 141 countries that backed the UN General Assembly resolution condemning the Russian invasion. But the island nation’s pro-Western leanings did not prevent it from welcoming luxury yachts from Russian oligarchs now under the purview of Western sanctions.
Nirvana, the yacht of Russian nickel tycoon, Vladimir Potanin, is among them. His Norilsk Nickel company, also known as Nornickel, is the world’s largest nickel producer with production facilities located in Siberia in Russia. The Maldives does not have an extradition agreement with the US, which means the assets of Russian oligarchs are safe in the archipelago unless the individual is wanted for a criminal investigation.
At the time of the Russian invasion, there were 8,000 Russians and 750 Ukrainians in the country. In one month, the Maldives must have lost at least US$200 million [$1.56 billion], mainly tourism-related revenue
The beaches of the Maldives have always beckoned to Russians. However, with the invasion of Ukraine on February 24, few Russians have set foot there. Russians account for 15.5 per cent of arrivals in the Maldives, while Ukraine is in eighth place with 2.3 per cent.
At the time of the Russian invasion, there were 8,000 Russians and 750 Ukrainians in the country. In one month, the Maldives must have lost at least US$200 million [$1.56 billion], mainly tourism-related revenue.
It was realpolitik that shaped Sri Lanka’s neutrality in the Ukraine crisis. Russia is one of the top importers of Sri Lankan tea, which generated revenues of US$142 million [$1.11 billion] in 2020. With the country facing a severe foreign exchange crisis, the outflows and inflows of each dollar matter. Both Russia and Ukraine are important sources of foreign exchange generation for Sri Lanka.
Bangladesh has embraced unofficial neutrality because it depends on Russia for its energy security and to graduate from its least developed country status.
Taiwan is party to the international campaign to isolate Russia from the global banking system and SWIFT.
Among the 10 members of the Association of Southeast Asian Nations [ASEAN], which Cambodia currently chairs, only Singapore has announced its own sanctions against Russia. Cambodian prime minister, Hun Sen, on March 28 condemned Russia’s invasion of Ukraine.
Indonesia, which holds the G20 presidency this year, has remained neutral. Vietnam joined 34 others in abstaining from a recent UN vote denouncing Russia.
For South Korea, the impact of the Ukrainian crisis is worrying as wheat and corn imports from Ukraine alone make up more than 10 per cent of Asia’s fourth-largest economy. As imports from Russia and Ukraine are difficult to come by due to the blockade of ports on the Black Sea, local food and feed sectors are hit hard and grain prices have become expensive in what is top 10 global economy.
Among the 10 members of the Association of Southeast Asian Nations [ASEAN], which Cambodia currently chairs, only Singapore has announced its own sanctions against Russia. Cambodian prime minister, Hun Sen, on March 28 condemned Russia’s invasion of Ukraine
The Ministry of Agriculture, Food and Rural Affairs is chalking out countermeasures to tide over the Ukraine conflict as South Korea is highly dependent on Russia for its energy needs, including crude oil, and imports metals from Ukraine. Hyundai has already closed its St. Petersburg plant in Russia because of rising raw material costs.
Russian crude oil accounted for 3.6 per cent of Japan’s total imports last year, while liquefied natural gas [LNG] comprised 8.8 per cent. With demand outstripping supply, Japan’s economy is facing inflation from higher oil and LNG prices.
The government of Fumio Kishida launched a subsidy programme for the oil industry in January. Automobile production in Japan has been affected by a shortage of palladium which is used in making exhaust gas less harmful. Japan meets 35 per cent of its domestic demand by importing palladium from Russia.
Moreover, all is not well with the 194-kilometre border between Japan and Russia. Tokyo has hardened its position on the Northern Territories, which Russia seized at the end of World War II, and regards them as Japan’s inherent territories.
After Ukraine, Russia is the next biggest exporter of sunflower oil, with Asia a huge market. India imports 175,000 to 200,000 tonnes of sunflower oil per month from them. Shipments of cooking oil to India have been held up at various ports
Russia is a major producer of primary nickel products. Norilsk Nickel is among the limited number of firms authorised to sell a specialized form of nickel on the London Metal Exchange.
Nickel is popular in the production of electric vehicle [EV] batteries as it allows drivers to travel farther on a single charge. The batteries that Tesla, the world’s biggest EV maker, uses for its Model 3 vehicles are nickel-cobalt-aluminum oxide, which contains 80 per cent nickel by weight and 10-11 per cent lithium.
EV battery costs have increased at a time when global sales of EVs rose 106.8 per cent last year, accounting for close to nine per cent of total sales. Asia reported the largest share of EV sales worldwide last year. Along with Japan and China, South Korea has a strong position in terms of market size and production.
Asia is betting big on EVs and their adoption is a crucial part of the strategy of many Asian governments to go green. Thailand, the region’s fourth-largest auto assembly and export hub catering to companies like Toyota and Honda, is planning to churn out 725,000 EV units a year, or 30 per cent of its total vehicle production, by 2030. With the shortage of nickel and other raw materials, progress will be tardy.
After Ukraine, Russia is the next biggest exporter of sunflower oil, with Asia a huge market. India imports 175,000 to 200,000 tonnes of sunflower oil per month from them. Shipments of cooking oil to India have been held up at various ports.
In Indonesia, the shortage turned fatal and claimed the lives of two people queuing to buy cooking oil in East Kalimantan on the island of Borneo. To address the shortage, Indonesia has asked exporters to set aside 30 per cent of palm oil products for domestic use, up from 20 per cent.
Though Asian nations are looking for alternatives such as linseed oil, rapeseed oil or palm oil to meet the crisis, the transition is not easy as food labelling cannot be changed at short notice.
The views expressed in this article are those of the author and
do not necessarily reflect the official editorial position of UCAN.
