We owe the Nobel Peace Prize winner and publicist Elie Wiesel a remarkable sentence that is worth remembering this morning: “The opposite of love is not hate, but indifference.”

Against the background of the Holocaust, which Wiesel survived at the age of 16 in Auschwitz and Buchenwald thanks to the US Army, this sentence was meant as a humanistic wake-up call.

But today it also has an economic dimension. The willful indifference to the impact of the Ukraine war, sanctions regime and rate-hike policies on African and Middle Eastern countries is breathtaking – and short-sighted. 

Why it matters: The big powers gamble and the small ones collapse. A perfect storm is brewing over our southern neighboring continent, which can mean new instability for the financial system and will send new flows of migrants to the rich Europeans – above all Germans, Italians and French.

Problem case Ukraine war

One of the most important grain suppliers in the world, Ukraine, is prevented from delivering grain, fertilizer or sunflower oil as a result of the war.

“After the end of the grain agreement, grain prices on the world markets rose by eight percent, most recently by six percent after the Russian attack on the Danube ports,” says Prof. Samuel Ramani, Africa and Russia expert at Oxford University.

nutritional problem

When the prices of staple foods such as rice, potatoes or cooking oil rise, hunger spreads like a plague in Africa. In Niger today, every second person is food insecure – twelve out of 24 million people. A year ago it was eight million.

Already today, almost half of the children under five are malnourished. Also because of the economic hopelessness, a military coup is taking place in Niger at this very moment, plunging the country into even deeper chaos. The federal government has stopped making payments from the development aid budget for the time being.

The largest protests since the beginning of the civil war twelve years ago recently took place in the Syrian capital Damascus. The situation of the Syrian economy is desolate, according to the latest published figures, inflation is 139 percent compared to the previous year. Many families see their food security under acute threat.

Protests also erupted in Kenya over rising food prices. The government is being asked to guarantee fixed food prices – with state money that the government does not have.

Interest rate policy problem

Higher interest rates tend to lead to lower economic growth and, in particular, to a slowdown in investment activity. Borrowing costs reduce the available investment capital and, in turn, increase the return on investment. At the same time, the risk premiums on African government bonds are increasing.

There is a shift in global financial and investment flows in the direction of the industrialized countries, writes the Kreditanstalt für Wiederaufbau (KfW) in a current analysis. In 2022, almost half less foreign investment was made in Africa than in the previous year.

Problem case dollars

If their own currency depreciates against the US dollar, foreign borrowers have to accept that loan repayments become more expensive. And investor confidence in solvency is dwindling.

“For emerging markets, dollar strength and reduced global risk appetite mean the future is more difficult,” said Shoqat Bunlawala, head of multi-asset solutions at Goldman Sachs Asset Management.

Debt problem

In addition, since emerging markets have borrowed much of their money in dollars, a strong dollar makes debt more expensive. The debt sustainability of almost all African countries is weakened by the higher interest rates. “As a result, developing and emerging countries in particular often find themselves in financial difficulties through no fault of their own,” according to the KfW analysis.

Tunisia, for example, has around US$2 billion in foreign debt that is due this year. The rating agency Fitch says: “The default is a real possibility.” Tunisia is currently negotiating a rescue package with the IMF for 1.9 billion US dollars.

inflation problem

Due to the simultaneity of supply bottlenecks in the food sector, the increase in energy prices and the increasing interest burden, the devaluation of money is increasing. Egypt, Zimbabwe, Ghana and Sudan are particularly affected.

In June, the Egyptian government reported record inflation of 36.8 percent. Egypt’s economy has been suffering from high inflation and the devaluation of the Egyptian pound for more than a year.

Countries such as Nigeria, Congo and Ghana – whose raw materials and minerals are indispensable for Europe’s appetite for consumption – have all reported inflation rates of over 20 percent in recent months. 

New migration flows from Africa

Conclusion: The repeated assurances of a new start in West Africa policy have not yet been followed by any action. The recent migration flows are therefore the most predictable in the world. These miserable refugees in turn form the raw material for the ammunition factories of Le Pen, Meloni, AfD and Co.

Or to put it another way: liberal-bourgeois Europe will pay for its passivity – with growing intolerance and possibly also with serious political upheavals. Prof. Stephan Lessenich, Director of the Frankfurt Institute for Social Research, summed up the willful indifference as follows: “The flood of meaning next to us.”