Mediterranean Economies 2023
DOI: 10.1401/9788815411167/c7
– Damage to
infrastructures: Wars and conflicts can significantly damage
transportation infrastructures, such as roads, railways and
ports. One of the major concerns is the damage to transportation
infrastructures in eastern Ukraine. This can make it difficult
and costly to transport goods (e.g. steel and food products),
resulting in longer transit times and higher
¶{p. 245}transportation costs. Damage to
infrastructure can also result in interruptions in the supply
chain, particularly in areas where there are no alternative
routes available. In turn, this could lead to a slowdown in
import and export operations. According to Railtarget (https://www.railtarget.eu/)
since the beginning of the Russia’s military invasion of
Ukraine, up to 30 per cent of transport infrastructure has been
damaged, the extent ranging from complete destruction to
relatively minor repairs. The damage is estimated at US $ 2.9
billion (see fig. 1).
– Increased costs:
Wars and conflicts can also lead to increased transportation
costs. This can be due to a variety of factors, including damage
to infrastructure, higher insurance costs and increased security
measures. For example, insurance premiums for cargo ships may
increase due to the perceived higher risk of piracy or damage
during a conflict. Figure 2 reports the trend in the price of
¶{p. 246}shipping in the period 2021-2022 (Q2).
The data show that, after the rise in shipping prices during the
pandemic, there has been a gradual decline in maritime freight
prices. With the beginning of the war, maritime transport prices
significantly resumed growth.
– Disruption to
supply chains: Wars and conflicts can cause disruptions to
supply chains, particularly in areas where goods need to cross
conflict zones. This can result in delays (and higher costs) for
importers and exporters, as well as increased risk of cargo
theft and damage. Figure 3 provides a visualization of the time
gap between the period a chip is ordered and when it is
delivered (lead time). The impact of war pushed the lead time
upwards to over 25 weeks in the first six months of 2022.
– Political and
economic uncertainty: wars and conflicts can create political
and economic uncertainty, making it difficult for businesses to
plan and make strategic decisions. In some cases, businesses may
choose to relocate to other regions in order to mitigate the
risks associated with conflict. This uncertainty can result in
decreased investment, decreased demand for goods and
¶{p. 247}services, reduced trade flows, input
shortages and price increases [Arvis, Rastogi and Saslavsky
2022]. Figure 4 reports the wheat prices and trade policy
measures. Since the beginning of the war at the end of February
2022, 67 new trade policies have been imposed or announced.
Export restrictions alone have added seven percentage points to
the price of wheat [Ruta 2022].
– Impact on
regional trade: wars and conflicts can have a significant impact
on regional trade, particularly in areas where trade routes pass
through conflict zones [UNCTAD 2022a]. For example, conflicts in
the Middle East have had a significant impact on the flow of
goods through the Suez Canal, which is a key trade route
connecting Europe and Asia. Interruptions to this trade route
can result in higher transportation costs and delays.
In summary, wars
and conflicts can have a significant impact on freight
transport, influencing the movement of goods within affected
countries as well as the flow of goods through regional trade
routes. In addition, the impact of wars may result in increased
logistics costs, disruptions to supply chains and reduced trade
volumes. ¶{p. 248}
¶
3. Russia-Ukraine war and its impact on the agriculture and agrifood supply chains
The Mediterranean
agriculture and agrifood sectors play a key role at the global
economy’s scale. Despite the difficulties associated with the
transformation processes of the economy and the challenge of
climate change, the agricultural and agrifood sector has
experienced renewed consumer interest. In recent years, greater
consumer awareness of the health benefits of food is emerging
[Sgroi, Moscato and Moscato 2022] with the effect of encouraging
food production in this region.
The role that
Mediterranean agriculture and agrifood sectors have taken on a
global scale is certainly due to their geographical location,
which benefits from favourable climatic conditions for crops,
but also on-going waves of restructuring processes related to
neoliberal policies. Since the 1980s, the Mediterranean
agriculture and agrifood industry have experienced multifaceted
changes related to a number of combined factors. Among many
others, we should list the following: (i)
the transformation of the relationship between agriculture, the
food industry, large-scale retailing and the financial sector
occurring at global level and (ii) the
heritage of the distinctive aspects of the agriculture and
agrifood businesses in the region, which are still mainly based
on small-scale, often undercapitalized, family units. These
factors have negatively affected both working conditions [Cillo
and Toffanin 2014; Gertel and Sippel 2014; Avola 2022; Perrotta
and Raeymaekers 2022] and resource availability for research and
innovation [Marzin et al. 2016]. In
addition, climate change has exacerbated existing environmental
problems with the lack of water resources, pollution, declining
biodiversity, urbanization and land abandonment. Current changes
are increasing risks and leading the Mediterranean region
towards severe dependence on key imported inputs such as energy
and additives for animal feed and agricultural fertilisers [EPRS
2022].
The above-mentioned
dilemma of the agriculture and the agrifood systems in the
Mediterranean area prompted us to reflect on the increasing
interdependence between the countries of this area and the
global economy. The COVID-19 outbreak drew attention to the
interdependence of socio-economic processes as well as the
consequences of uncoordinated domestic
¶{p. 250}policies. At the same time, the
pandemic revealed the critical role of supply chains in the
transportation of certain goods, namely medical supplies
[Kahkonen et al. 2021] and food products.
The importance of supply chains was even more critical in
countries with poor, disconnected or deteriorated infrastructure
such as those in the area under consideration.