Food haul: aid trickles into Tigray

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Hello and welcome to the Intelligence from the Economist. In London, I'm Jason Palmer.

And in New York, I'm John Fassman. Every weekday we provide a fresh perspective on the events shaping your world.

Russia's indiscriminate destruction in Ukraine comes at a human cost that cannot be calculated. Estimating damage to the country's infrastructure, housing and economy isn't easy either. We look at the scope of and the need for an international rebuilding plan.

For more than two years, the world has seen pandemic driven shortages of consumer goods. In South Africa, grocery stores are lacking not surgical masks or loo roll, but a dark, viscous, jarred substance that much of the world finds revolting.

First up, though, After 17 months of fighting, Ethiopia's civil war has claimed tens of thousands of lives. As food has become scarce, famine has blighted the northern Tigray region. Medical supplies have become scarce too, and people are dying unnecessarily in Tigray's main hospital. The government had announced an indefinite humanitarian truce on 24 March, and leaders from the Tigrayan People's Liberation Front, or TPLF, accepted the terms of the ceasefire. Now, after much delay, a convoy of trucks loaded with food will soon be on its way. But it's a fragile peace, and worries about renewed fighting have until now kept relief just out of reach for Tigrayans.

The government has allowed shipments of food to travel along just a single road into Tigray.

Tom Gardner is our Addis Ababa correspondent.

But since the middle of December, there have been no convoys of food aid until the beginning of this month, when the first shipment of just 20 trucks arrived in the region. So the famine is getting much worse.

But if the point of this ceasefire was to deal with the humanitarian crisis, why haven't supplies been actually making it there?

So aid workers are waiting for security clearances from the authorities in the Afar region to start moving aid trucks down the road into Tigray. The problem, officially at least, is that locals in Afar who are angry about TPLF attacks in the region, which have left hundreds of thousands homeless and hungry in the last few months. They've started attacking shipments of aid that are traveling down this road. They're demanding that the Afar region receive food aid before Tigray. One of those calling for aid to be delivered to Afar region first is the local opposition leader, Musa Adam, who I spoke to recently.

The federal government mentioned nothing about the Afars humanitarian crisis. We are facing the same problem. Our people are dying out of hunger. So there are huge starvations almost.

But what are the contingencies here? If the ceasefire hinges on these aid packages arriving, why haven't there been more arriving?

So there's currently a standoff which stems, I think, from a lack of agreement about what the ceasefire actually means. The TPLF controls the region of Tigray, or most of the region, but occupies part of the neighbouring region of Afar as well. And they basically indicated they won't withdraw their troops fully from these areas until aid starts flowing properly for a sustained period. It wants humanitarian access to be decoupled from political negotiations. The government seems to want the TPLF to withdraw fully, or at least begin the process of withdrawing back to Tigray before that. So there's a lack of clarity about what exactly the sequencing should be and no real transparent terms. Now, the latest is that the TPLF has announced it will withdraw from one district in Afar. That should, in theory, make it harder for the government to refuse those clearances for aid convoys. And indeed, just in the last few hours, another convoy was given permission to travel, though it's not many trucks. It's worth stressing, though, many people don't believe Aby is genuinely committed to this process, that he's simply buying time in order to stave off the threat of American sanctions. So we're really going to have to wait and see now if this is really a breakthrough or not.

So what to make of this then? If the tide seems to be turning, do you think there's hope for this ceasefire in the long run?

In the last few months, fighting has been much less intense than it was last year. And I think there has been some progress when it comes to these indirect talks mediated by America and the African Union. Military commanders have made contact. Both sides have toned down their rhetoric. Since January, the government has released many Tigrayans from prison, including some TPLF leaders and lifted a three month state of emergency in February. In some respects, yes. There are grounds for thinking that the end of the war is inching closer.

And that's been contingent on the TPLF coming to the negotiating table. Why do you suppose that after all that time, they decided to do so?

Last year it looked like the TPLF was going to storm the capital, Addis Ababa. Their forces came within 160 km of the city and the prospect was of regime change. Since then, it suffered setbacks on the battlefield and has called openly and repeatedly for negotiations. I mean, it's unable to relieve the suffering of civilians in Tigray. Apart from the food shortages, there is barely any medical supplies throughout the region. There is a kind of commercial blockade imposed by the federal government they can't do much about. So no telecoms, no banking services, barely any electricity. Tens of thousands are crossing into the neighboring Amhara region to escape. The US officials I spoke to told me they were seeing around 700 people a day fleeing from Tigrayan to Amhara, perhaps 120,000 in total. Now, all of that highlights the truly desperate condition that Tigrayans now find themselves in.

And that being the case, wouldn't the government think that the TPLF is in some way on the ropes? What's their negotiating position?

That's one of the reasons for skepticism. That's why some people don't believe the government's word when it says it wants peace. That said, the government is in its own tough position. And a senior official from the ruling party told me recently that diplomatic pressure, the economy, war weariness, in that order, were the reasons behind the government's shift. So take diplomatic pressure to start with. The US Special envoy for the Horn of Africa was in Addis Ababa just before the ceasefire was announced. America's already suspended duty free access for Ethiopian goods. There are two more sanctions bills currently before Congress. Then, in addition to that, the economy is in a dire position. Spending on the war over the last year has severely exacerbated a shortage of foreign currency. Banks are running dry, factories are cutting back for want of imported materials. And importance, inflation, which is already topping 34%, is set to rise further thanks to Russia's invasion of Ukraine, which is going to have significant spillovers throughout the region.

So in a sense, we may reach peace in this at last simply because war is too expensive for both sides?

Well, yes, exactly. The cost of war is going up. The chances of a maximalist military solution achieved by either side is looking quite unlikely. However, we're very far off, I would say, from a lasting political negotiated settlement. There are many tripwires yet which may cause this progress to founder. In recent days, lots of buses of Ethiopian troops were seen moving north towards Tigray. There are reasons to believe this is just contingency planning, but there are many in Tigray who are worried about this and may see this as an act of aggression. Similarly, TPLF leaders, for their part, they've warned of launching a new offensive of their own should aid not arrive soon. A Tigrayan diplomat told me people are losing patience and even said that if aid didn't arrive, it would be a matter of days, not weeks, before the two sides went back to war. There is certainly a high risk that the road from afar has a fork that leads straight back to war. There are still some grounds for cautious optimism, but unless aid moves down that road very quickly in large quantities, it seems inevitable that war will return.

Thanks very much for joining us, Tom.

Thank you, Jason.

Day after day, night after night, the toll of Russia's invasion of Ukraine has been mounting.

Residents in the city of Kharkiv cleared.

Debris at a children's school that was hit by a Russian missile over the weekend.

The United nations says at least 1,932 civilians have been killed in the conflict so far, certainly an underestimate of an unknowable number. This wanton destruction of life comes alongside the destruction of Ukraine's cities and towns, its apartment buildings and train stations, its museums and town halls. And with all that comes the destruction of the economy. As Ukraine's president, Volodymyr Zelensky, knows all too well, Economic suppression of Ukraine is one of the war's goals, he says. Save our economy, save our people. How to count the costs of all that's been blown up or brought to a halt that is already on the minds of those thinking about undoing the damage.

Economists and Ukraine's own government put the total cost of rebuilding Ukraine roughly in the range of 200 to 500 billion euros, which is 220 to 450 billion US dollars.

Christian Odendall is our European economics editor.

When you try to come up with a number like this, you can either do it bottom up, which means count the damages, count the economic losses and sum it all up, or you could go top down and think about the entire capital stock, as economists would say, so the stock of all houses and machinery and so forth, and think about what may come out as damaged and needs to be rebuilt, or the third one is you can just look at historical episodes of post war reconstructions and roughly estimate what that will mean for the Ukrainian rebuild.

So what should we read from those estimates that you've got there in the hundreds of billions of euros?

From these numbers, there are two messages for me. The first one is that it's manageable. I know that 200 to 500 billion euros sounds a lot, but if you think about this in comparison to the Marshall Plan, for example, that is often quoted, the Marshall plan was around 5% of US GDP after the war in 1948. Even if you take 500 billion, put that in context, in the US and EU GDP combined, that's just 1.25%. So it's a lot lower than what the Marshall Plan cost the us. And the second message is that while the money is important, the way in which it is spent, the way in which it is allocated to projects and so forth is as important as is the general political offer from the west to integrate the Ukrainian economy into the broader European economy.

And you said that the estimates of costs were about essentially physical stuff. What about the hits to Ukraine's economy?

So working out the hit to the Ukrainian economy at the moment is quite difficult. A research institute in Vienna looked at the GDP of the regions that are affected by the war, and that comes to about a third. Another way is to look at proxies like electricity consumption. And electricity consumption is also down by a third, roughly. And there's another way to look at surveys, for example, by the central bank. They found that 30% of businesses, so again, roughly a third, have stopped working completely. Putting this all together, the World bank recently came to an assessment of a GDP hit this year of 45%. That's a massive hit.

And what about international aid, though? Ukraine is getting some help from outside countries. How does that figure into the arithmetic here?

So aid from the west is trying to compensate for that. The west has already spent 7 billion helping Ukraine's public finances. The Finance Minister said recently that Ukraine urgently needs more money. And we know that Ukrainian debt already is high. So there's little appetite in markets to lend money to a country at war. So the funding will have to come from the West. And Ukraine is using that money in part to keep the parts of the economy that are working going. For example, farmers are given lots of liquidity to make sure that the sowing season can start and that the breakdown of the usual credit channels does not impede the sowing season because the Black Sea is blocked by Russia and most external trade will now have to go via land to the west. And the Ukrainian government is working on making that easier. So they are working on trying to preserve the economy that is still working.

And looking hopefully ahead to the end of the war. What about rebuilding? All the physical stuff?

So the first bit of that rebuild is to clear the country of landmines and leftovers from the war. That costs a lot of money, but it also takes a lot of time. We know that the economic effect is relatively large. So for example, in Mozambique, once heavily mined country, the GDP boost from demining the country was around 20% of GDP then. The bigger cost still will be food and shelter for those who have been displaced. We know that there are 7.1 million currently that have been internally displaced and four and a half million that have fled the country. The Kyiv School of Economics did a damage estimation, not just of infrastructure, but also for housing. And the housing stock that's been destroyed already is worth 29 billion. So rebuilding these houses will take a long time. And then of course, rebuilding infrastructure and factories and so forth, that will add another 50 billion. Just the reconstruction costs, right? And then you have all the economic losses because of loss of human life, because of damages of economic production that is not happening, lack of investment and so forth. If you add all that on top, the loss of infrastructure, physical infrastructure of around US$120 billion is what the Prime Minister of Ukraine recently estimated may not be far off.

So there's some staggeringly large numbers, but also a staggeringly large amount of work to be done. I mean, how to plot a course through all of that?

It's extremely tricky to spend that much money well in such a short period of time that it needs to be spent. Right. So the first one is to have a clear plan of what you want to rebuild and how. And both Western funders and the Ukrainian government are working on devising exactly such a plan. And then the problem is when money is spent quickly, then it's easy that money goes to waste. And so the question is, how does the Ukrainian government structure a process of transparent tenders and at the same time give it to companies that can deliver quickly and at scale?

And you mentioned that one of the big factors in the success of plans like this harking back to the Marshall Plan, was integration more widely. I mean, what needs to be done on that score?

So economic integration not only brings economic benefits, but it's also a very crucial motivator for some of the painful reforms that need to happen inside Ukraine. So if you take Poland as an Example, Poland's rapid growth after the fall of the Soviet Union and after its integration into the EU is precisely because it could trade a lot with the eu, be plugged into those European supply chains, receive quite a bit of investment funds. And this is the offer that the west needs to make Ukraine in order for that to work out again. No amount of money will ever make up for the horrors of war, but with careful planning, it could at least ensure a brighter economic future for Ukraine.

Christian, thanks very much for your time.

Thank you.

Marmite is a glossy black spread, quite salty, made from yeast extract. It was invented in Britain at the start of the 20th century and since then it's kind of developed a cult status. It's something you either love or you hate.

I hate Marmite.

I happen to like it. I first tasted it when I was living in Scotland as an undergrad in the mid-1990s. And it's best eaten quite simply. You take a small amount and you spread it very thinly on toast. Most commonly this is buttered toast, but at the risk of repulsing our British listeners, I really like it spread over peanut butter. The love hate thing extends even to countries. Now here in America, where I live, it's not all that well known and even less well liked. But that is emphatically not the case in South Africa.

South Africans certainly love their Marmite. So right now South Africa is at the center of what can only really be described as Marmageddon.

Dylan Barry writes about South Africa for the Economist.

It's become essentially impossible to find Marmite on shelves in supermarkets and grocery stores. I had a lovely interview with one mother of two who lives in Parkview, which is a suburb in Johannesburg. She told me she was distraught because she was about to finish her last jar. She's not alone. I would estimate that there are several million Marmite deprived South Africans who continue to weather the worst Marmite shortage in the country since the end of apartheid.

So what's behind the shortage? Why is there a Marmite shortage?

So Marmite production is a surprisingly complicated process, but one of the key ingredients it relies on is brewer's yeast, which is a byproduct of beer fermentation. So at the beginning of the pandemic, South Africa somewhat uniquely banned alcohol sales during its deepest COVID lockdowns. The idea of this was to try and open up hospital beds and space in ICUs. South Africa unfortunately has very high rates of alcohol related violence and as a consequence our hospitals are usually filled with alcohol fueled patients. In response to the Sudden demand shock. As a consequence of the bans, South African breweries, which is a big local beer monopoly, cut beer production almost entirely. Unfortunately, when the beer dried up, so did the yeast and that stopped production of Marmite too.

But surely supplies have rebounded since the ban? No.

So you would think.

So.

It's been about nine months since the last ban. There were four bans in total. Stocks should have returned back to pre pandemic levels, but they haven't. I am standing in a large grocery store in eastern Johannesburg. I'm here looking for Marmite. So over the last week, I've scoured around 15 different grocery stores scattered across Johannesburg. In this particular grocery store, there is no marmite. Of those, 12 had no Marmite at all. I'm standing in front of the shelf now. I can attest that there is a lot of Bovrilla, but there is no Marmite. I was in the end able to find only about seven different jars scattered all over the place. And that's kind of an overstatement because I think three of those were only still on shelves because they sort of slipped behind adjacent jars of Bovril, which is a beef based cousin of Marmite. The fact that there is still a shortage appears to be because of a second issue.

And what is that second issue?

The issue is that there's been a shortage of another raw material. It's not really an ingredient in the production of Marmite. It's not on the label or anything like that, but it's quite important in the broader production process. And this is something called soda ash, which is also known by its chemical name, sodium carbonate. That shortage has really dried up production of Marmite. In addition, there appear to have been water supply issues to Marmite. South Africa's big factory just outside Johannesburg. Marmite, South Africa says that production ought to return back to pre pandemic levels in the medium term. But in the short term it's unclear what's going to happen.

And so how is this affecting South Africans?

Well, South Africans love Marmite. Not all South Africans, but a very large number of South Africans love Marmite. And it's one of the few things that can really genuinely be said to transcend the boundaries of race and class in South Africa, which is no mean feat. Most South Africans have a jar of Marmite in their cupboards. Whether rich or poor or black or white, whether in some of the richest areas of Johannesburg or some of the poorest townships, Marmite is all over the place. And as a consequence, South Africans are pretty perturbed. By the disappearance of Marmite from shells.

And so most South Africans love it. Dylan, are you one of those South Africans? And if so, you mentioned earlier in this interview you saw seven jars of Marmite on the shelves in Johannesburg. How many of those do you think are in your cupboard right now?

Ooh, that is a dangerous question. There is a long standing rivalry between lovers of Marmite and lovers of Bovrilla. I won't answer the question directly, but suffice to say that I may have snagged a few of the last remaining jars in South Africa.

All right, Dylan, thanks so much for joining us.

Thank you very much.

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