EDITORIAL
WHEN THE GOING GETS TOUGH
Dear Reader, A s a resolution of the crisis in the Gulf region remains a distant prospect, the consequences for the global economy are likely to be felt for a long time. Developing countries are hit especially hard with highly volatile prices for crucial commodities, severe trade disruptions and direct impact on local supplies. In this issue of the OPEC Fund Quarterly, we take a detailed look at these questions, but also at short-term responses and long- term lessons to be learned. An expert analysis of the global fertilizer market by researchers from the International Food Policy Research Institute (IFPRI), an affiliate of the OPEC Fund partner organization CGIAR, reveals structural conditions that result in an imbalanced dependence on a handful of producers: Gulf countries account for roughly 40 percent of global urea and 23 percent of global diammonium phosphate exports, the two most widely traded fertilizer ingredients. (see p. 7) In an interview, the IFPRI’s Ruth Hill is crystal clear: “Global food production will remain vulnerable to shocks as long as it is dependent on a handful of inputs from a few countries.” Changing this global vulnerability will take time and cost money: “Truly alternative solutions are in the works but require further development, testing and scaling.” (see p. 10) In the meantime, however, quick responses are critical to prevent the crisis from spreading. The OPEC Fund is leading the way with its new E-STAR facility, a US$1.5 billion initiative to help developing countries weather the current disruptions. Designed as a countercyclical instrument, E-STAR is
providing support to stabilize budgets, trade finance to keep goods moving and investments to shore up supply chains. (see p.14) As OPEC Fund Principal Economist Angus Downie finds, small island developing states are among the countries most seriously exposed to external shocks (see p. 12). In line with his analysis, Danilo Spinola, Senior Lecturer in Economics at Birmingham City University, tells us: “The first priority should be countries which have structural external vulnerabilities.” (see p. 15) Taking the OPEC Fund’s engagement to the next level, the institution launched the Vulnerability to Viability (V2V) Compact at the 2026 OPEC Fund Development Forum (see p. 33) together with the Government of Barbados and the V20, a group of developing economies that are disproportionally affected by climate change. The pact will improve access to finance and attract new investment, especially in climate resilience. We looked at the underlying causes for the uneven progress in global development in a conversation with Annina Kaltenbrunner, Professor of Global Economics at Leeds University Business School (see p. 18). She is a leading Post-Keynesian scholar of financial subordination, a concept that emerged from observing structural asymmetries in the international economy that disadvantage and penalize developing countries. Her research and practical engagement signal a special role for institutions such as the OPEC Fund: “Multilateral development banks are extremely important because they can work
against these structures, thanks to their countercyclical mandate,” she said. The high expectations of development finance institutions among partner countries and businesses have been explored in detail by the ODI Global think tank in a comprehensive new study. Our Strategic Planning Director, Adebayo Babalola, examines the findings for the OPEC Fund. His conclusion: “The future landscape will not be defined by scale alone. It will also depend on the ability to connect partners, mobilize resources, prepare projects and deliver effectively.” (see p. 29) This approach is delivered through the OPEC Fund’s operations. Our new Vice President, Private Sector, Khalid Khadduri sets out his approach and priorities in an interview (see p. 22): “I feel a strong sense of stewardship to build on what has been established and deliver further.” Based on the strong foundations Vice President Khadduri has inherited, he will focus on agility, innovation and mobilization as the way forward for the Private Sector Department. What mobilization can deliver is best demonstrated on the ground. During a recent mission to Côte d’Ivoire, OPEC Fund Africa Director Mahmoud Khene and Country Manager Tarik Ladjouzi witnessed the rehabilitation of Cocody Bay, a once heavily polluted lagoon, which has improved health and living conditions for almost two million people. One resident reports: “It is a joy to see the progress.” We wish you an inspiring read and an enjoyable summer.
Axel Reiserer, Editor
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