In Geopolitics Today - Wednesday, March 30th
Germany Issues Gas Shortage Warning, Egypt Explores Wheat Imports from India, US Seeking Domestic Supply Chains for Critical Minerals
Germany Issues Gas Shortage Warning
The German government has issued a nationwide warning in line with its plan to manage gas supplies at a time of crisis. German Economy Minister Robert Habeck announced a three-stage alert system for gas rationing that prioritizes households and hospitals industrial firms, and stated that Germany is currently under the first stage of alert. Under the plan, at higher levels of alertness regulators will be able to ration gas in order to maintain supplies to households and hospitals ahead of industrial needs.
The country has enough gas for now, but Habeck urged all consumers to immediately reduce gas use as far as possible. While Habeck stressed that there are “currently no supply shortages," he urged for further precautionary measures to be prepared in the event of an “escalation by Russia.” Business leaders and unions have expressed concern at the plan, and have emphasized that disruptions to industry would devastate Europe's largest economy. The chemical sector, for instance, is a critical part of Germany's export-oriented economy, and most industries cannot do without chemical products. Germany’s car manufacturers, pharmaceutical producers and construction firms all rely on a multitude of various different chemical products.
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Egypt Explores Wheat Imports from India
Egypt is seeking alternative sources of wheat after its supplies of the commodity have been severely threatened by the ongoing armed conflict between Russia and Ukraine. In 2020, Egypt imported wheat worth $1.8 billion from Russia and $600 million from Ukraine, considerable amounts of food which now have trouble reaching Egyptian ports. To remedy the growing threat of major food shortages in Egypt, leadership in Cairo has pursued talks with Argentina, India, France and the United States to secure wheat imports.
According to Egyptian officials, Egypt's strategic food reserves and estimated imports of wheat are said to be enough to last until the end of the year. However, a search for new sources of wheat is underway in Cairo. India is particularly attractive as an alternative source of wheat for Egypt as both countries share positive trade relations. Officials from New Delhi and Cairo are said to be currently conducting final talks over exporting wheat from India to Egypt. Today, India is Egypt's third largest trading partner, with Indian investments in Egypt estimated to be roughly $3 billion. Moreover, when compared to Argentina and the US, importing wheat from India would prove considerably cheaper due to lower shipping costs. At the same time, the move makes sense for India as leaders in New Delhi are looking to increase the country’s wheat exports to the Middle East.
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US Seeking Domestic Supply Chains for Critical Minerals
Efforts are underway by US government officials and agencies to established US-based supply chains for ‘critical minerals’ that synergize with US allies. The global demand for mineral commodities is at an all-time high, and is expected to continue to increase in the months ahead. The development of new technologies and products has led to the widespread use of a number of unique mineral commodities in increasing quantities.
Many of these minerals are required in the production and assembly of defence equipment. This leads to a dependence on supply chains for key minerals which may become unreliable due to the outbreak of war or be used as leverage by another power to achieve some desired outcome. To any state’s security establishment, this presents a vulnerability that hinders a state’s freedom of action both domestically and beyond its borders. For some of the minerals which make up the US supply of critical minerals, production is limited to only one or a few supplies, and serve as examples where the supply of certain critical minerals in the future may be under threat. While the Biden administration has outlined a plan for adjusting critical minerals supply chains to account for perceived national security vulnerabilities, bringing the projects into production could take a decade or even longer.
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