Bangladesh Minister Demands Compensation For Poor Nations Impacted By Ukraine War And Sanctions

In a sign that the patience of developing countries, severely impacted by the fallout from the war in Ukraine and western sanctions, was wearing thin, Bangladesh's foreign minister demanded that companies "profiting" from conflict should be asked to compensate poor nations impacted by it.

A.K.Abdul Momen told CNBC on the sidelines of the G20 foreign ministers' meeting in New Delhi on Thursday: "We want the end of the war."

He added pointedly: "Next time, when they come up with the sanctions and counter-sanctions they should at least consult people like us — the developing countries — to get some idea as to how much it will hurt them. And should create a mechanism so that the countries that would be hurt — that they should be compensated with."

Momen attended the G20 summit in India, the meeting of the world's largest economies which include the U.S., China, and Russia. India is this year's G20 host and Prime Minister Narendra Modi had invited his Bangladeshi counterpart Sheikh Hasina to attend as a special guest.

"In this war, some companies are making runaway profit ... energy companies and the defense companies," Momen said. "Therefore, we will argue that those companies that are making runaway profit, they should dedicate at least 20% of the profit to those countries that are most affected like us," he added, without naming any company.

The U.S. and the European Union have piled economic sanctions on Russia after the Kremlin sent troops into Ukraine in what Russian President Vladimir Putin calls a "special military operation." But those sanctions have also impacted developing countries already suffering from high food, energy, and fertilizer prices, while laboring under heavy national debt.

The West has denied the sanctions have contributed to the suffering of the poorer countries, instead blaming Russia for the problems, but that argument has few takers in the Global South.

Bangladesh, like many countries, depends on Russia for imports to feed its population, but the disruption in global trade triggered by the war as well as the sanctions, have threatened its food security and created an energy crisis.

"Naturally, we buy energy from abroad. The cost of energy has shot up, resulting in high inflation. We are trying to control the inflation by providing subsidies and it is costing the government," Momen said.

The International Monetary Fund in January approved Bangladesh's request for $4.7 billion in loans. "Bangladesh's robust economic recovery from the pandemic has been interrupted by Russia's war in Ukraine, leading to a sharp widening of Bangladesh's current account deficit, depreciation of the Taka and a decline in foreign exchange reserves," the fund said in a statement.

Selim Raihan, professor of economics at the University of Dhaka in Bangladesh, told International Business Times: "Developing countries like Bangladesh have been struck hard by this war, which is driving up the prices of fuel, food, and fertilizer, and exacerbating food insecurity and poverty in these countries. The pressure of the current price hike is beyond the endurance level of the low-income people in many of these countries. Therefore, the war must be stopped."

The non-availability of fuel had led to a popular revolt against the government in neighboring Sri Lanka last March, making the consequences of economic inflation and indebtedness all too real for leaders in the Global South, and especially South Asia.

Momen urged leaders of G20 countries to make it "mandatory" for companies to compensate nations affected by the war. "This is the G-20 leaders — they're the leaders of the world ... If I ask, they will not give a damn to it," he said, adding, "But G-20 leaders, they can make it mandatory for all those companies to pay a proportion of their runaway profit to the most affected countries."

An IMF report in November last year held out a stark warning: "Nearly an additional one million people could fall into poverty in the coming years. The poorest people in the poorest countries will bear the brunt of the war."

The European Union has mostly shut down Russian oil and gas imports following the war and imposed sanctions. But oil majors have finished 2022 with handsome profits resulting from the surge in energy prices, a report pointed out.

By the end of 2022, ExxonMobil had $56 billion in earnings, beating its own record earnings of $45.2 billion from the year before. Chevron also reportedly saw a $35.5 billion profit.

"While the people of the developing countries are suffering, the war economy, in contrast, is bringing virtues for the companies who are making enormous profits from the high prices of fuel, food, and fertilizers," Raihan, who specializes in international trade and macroeconomics, pointed out. "There must be a global monitoring mechanism to contain the supernormal profit-making process of these companies. The World Trade Organization (WTO) and the United Nations should step in this regard. Countries like Bangladesh should raise a common voice on global platforms."

Many of the world's larger economies have refused to take sides in the conflict, trying to navigate the geopolitical divide and find better deals for their people. India, for example, reportedly increased its purchase of Russian oil 33 times within the span of just one year. India's ministers have repeatedly said the country will continue to look for cheap deals and argued that making energy available to the people who elected them was their "moral duty."

The Joe Biden administration has also been accused by European officials of benefitting from the war while the European Union struggles. "The fact is, if you look at it soberly, the country that is most profiting from this war is the U.S. because they are selling more gas and at higher prices, and because they are selling more weapons," POLITICO quoted a senior official as saying in November.

However, a spokesperson for Biden's National Security Council rejected the claims, saying, "The rise in gas prices in Europe is caused by Putin's invasion of Ukraine and Putin's energy war against Europe, period."