Economy

The victory was the union’s first outside Buffalo and appeared to underscore its momentum in organizing company employees across the country.First they won in Buffalo. Now they’ve scored a victory on the other side of the country.On Friday, the National Labor Relations Board announced that workers at a Starbucks in Mesa, Ariz., had voted 25 to 3 to unionize, with three challenged votes. The result brought the number of company-owned stores with a union to three, out of roughly 9,000 nationwide.The victory was the first for the union since two stores voted to unionize in Buffalo in December, but it could mark the beginning of a larger trend. More than 100 Starbucks stores across more than 25 states have filed petitions for union elections, most of them since that first victory. The next tally will probably come from three more stores in the Buffalo area, where votes have already been cast. Starbucks workers in cities including Boston, Chicago and Seattle are scheduled to vote or are likely to vote in the coming months.“This is another historic moment for Starbucks partners and service industry workers across the country,” Michelle Hejduk, a shift supervisor at the store, said in a statement. “This movement started in Buffalo, and we’ve now brought it across the country.”Reggie Borges, a Starbucks spokesman, said in a statement that the company’s position had not changed. “As we have said throughout, we will respect the process and will bargain in good faith guided by our principles,” he said, adding: “We hope that the union does the same.”Lawyers who advise companies on labor relations said Workers United, an affiliate of the Service Employees International Union, appeared to have considerable momentum in organizing Starbucks workers.“Clearly the work force is very sympathetic to what the union is selling,” said Brian West Easley, a management-side lawyer with Jones Day. “Right now, they probably rightfully believe they have the upper hand, given the number of petitions filed each week.”The company has generally sought to challenge the union store by store, contesting the voting pool for each election before the labor board and sending company officials to cities where workers have filed for elections, partly to share its concerns about unionizing. The challenges delayed the counting of votes in Mesa and the second round of Buffalo stores.But Mr. Easley argued that it would become more difficult for Starbucks to sustain that approach if the company continued to suffer defeats, especially as the number of stores filing for elections increases.“The bigger this gets, the more stretched resources become and the more ineffective they become,” he said. “The ability to push back is eroding as the numbers increase.”At least one prominent Starbucks investor echoed that concern, arguing that the company appeared to be wasting money in its efforts to resist the union. “The company is devoting quite a bit of time and money to putting forward these arguments in front of the N.L.R.B.,” said Jonas Kron, the chief advocacy officer of Trillium Asset Management, which makes investments to further environmental, social and governance goals and had a roughly $43 million stake in Starbucks at the end of last year. “It doesn’t feel like they’re using investor resources — stakeholder resources — that well.”Mr. Kron and Trillium have urged the company to take a neutral stand toward the union. Other labor experts suggested it may eventually be forced to do so whether it wants to or not.“I’m sure there will be a tipping point at some point,” said Amy Zdravecky, a management-side lawyer at Barnes & Thornburg. “How many losses do you have before you change strategy?”Ms. Zdravecky added that the union’s ability to win an election in a state not normally sympathetic to organized labor suggested that the campaign had staying power, and that one risk for Starbucks’s approach to opposing the union is that it could begin to alienate the company’s liberal-leaning customer base.“Fighting unions may not align with where they want to be elsewhere,” she said.Many of the issues that workers in Mesa cited in their decision to support the union were similar to those identified by workers in Buffalo, like staffing and Covid-19 safety. Liz Alanna, a shift supervisor at the store, said that customers sometimes waited 45 minutes last fall after submitting a mobile order because there were not enough baristas to handle the volume. “The lobby would be full of people waiting,” Ms. Alanna said. .The Mesa campaign had an additional subplot that raised the stakes for workers. In early October, the store’s manager, Brittany Harrison, was found to have leukemia. The company initially appeared to rally behind her, Ms. Harrison said in an interview, but its posture later changed.“I’d reach out to the district manager and it would go to voice mail or ring forever and she wouldn’t call back,” she said. Ms. Harrison, and other workers like Ms. Alanna, said that she repeatedly sought an assistant manager to help at the store but that none was forthcoming.The situation came to a head on Friday, Nov. 12, when Ms. Harrison became ill at the store, then put in her two-week notice. The workers at the store filed their petition for a union election the following week. “We really had an easy time moving forward,” said Ms. Alanna, citing frustration over how the company had treated Ms. Harrison. Mr. Borges said that the company had offered Ms. Harrison support throughout her time there, and that it had offered to provide an assistant manager if she went on leave, which she had yet to do. Starbucks’s approach to the union election in Mesa resembled its approach in Buffalo. The company sent a variety of officials to the store — including two new managers, at least two new assistant managers, a senior human resources official based in Colorado, a senior manager who had worked in California and a regional vice president based in Colorado.Workers said they felt the managers and other officials were partly there to monitor them. Ms. Hejduk said the new managers appeared to implement a policy in which at least one manager must be in the store at all times to “babysit,” as she put it.Ms. Hejduk said she had been told on a recent weekday morning that the store was closing and that her shift was being canceled because no manager was available to come in, even though she has a key and frequently worked in the store without a manager before the union election filing. She said the policy was relaxed after the union voting ended.In Mesa, as in at least one of the Buffalo stores, Starbucks also brought in several new workers after the election filing, who typically had spent a few weeks training at other stores. The union argued that the offsite training was meant to ensure that workers began their employment with no contact with union supporters and that the workers were brought in to dilute support for the union. The union, which argues that some of the new workers had not worked at the store long enough to be eligible to vote, won a challenge on similar grounds in Buffalo.Mr. Borges said the officials were addressing operational issues like staffing and soliciting input from workers and educating them about the risks of unionizing, though he said Starbucks respected the rights of its employees to unionize. He said that having a separate location focused on instructing new employees allowed the company to train them more efficiently, and that all of the workers who received ballots were eligible under N.L.R.B. rules. He said it was occasionally a policy to have one manager on at all times when there was new leadership in a store.The count in Mesa and at the three additional Buffalo-area stores had been held up by management challenges over a key legal issue: the proper voting pool for the union elections.In a rebuff to Starbucks, the labor relations board ruled Wednesday that stores could vote individually, rather than having to cast ballots with other stores in a geographic area. The board’s detailed ruling makes it more difficult for Starbucks to get its way on the issue elsewhere.Unions typically favor voting on a smaller scale to reduce the number of votes needed to secure a majority in at least some locations, but Starbucks has argued that stores in the same market are akin to a single unit because employees can work at multiple locations and because district managers oversee them as a cohesive group.One option for Starbucks in light of its recent defeats, said Mr. Easley of Jones Day, would be to resign itself to a union presence and position the company to minimize the union’s influence. He suggested, for example, that Starbucks might focus its opposition on cities where the union had already won, to make sure there weren’t several unionized stores that would provide it with greater leverage.“The next phase of this may be divide and conquer,” he said. “Make sure they don’t end up with voting blocks that could shut down business in a market.”He added, referring to the union: “If they can control market in a particular location, they have leverage to get Starbucks to do something.” More

WASHINGTON (Reuters) – The Federal Reserve’s preferred measure of inflation rose again in January and a new report from the central bank warned that price pressures could persist unless a shortage of available workers begins to ease. The new inflation data, alongside the developing sense at the central bank that inflation may prove harder than anticipated to dislodge, will likely firm the central bank’s intent to raise interest rates through the year, beginning with an initial hike in March from the current near zero level.Policymakers will have to weigh one fresh and unanticipated set of risks in their discussion: The Russian military invasion of Ukraine could roil the economic outlook in unpredictable ways, and potentially undermine global growth and financial markets. But Fed officials say that’s unlikely to shift their immediate plans to begin tightening monetary policy in response to inflation that is not only high but continues moving higher. The personal consumption expenditures price index rose at a 6.1% annual rate through January, its highest since 1982 and more than triple the 2% inflation rate the Fed has set as its target for the U.S. economy.That measure of annual inflation, reported monthly by the government, has been as higher or higher than in the prior month for 14 straight months – a run not seen since the 1970s and a blow to arguments commonly heard at the Fed last year https://graphics.reuters.com/USA-FED/INFLATION/zdpxoqkrkvx/index.html that rising prices would prove “transitory” and disappear as the economy reopened. The month-to-month change in the same index, watched by some officials as a signal of moderation, showed no sign of easing. Graphic: The COVID inflation surge The COVID inflation surge – https://graphics.reuters.com/USA-FED/INFLATION/akvezawxopr/chart.png “EXCEEDINGLY HOT?”The Fed is set to raise interest rates when it meets on March 15-16. Officials have been debating whether the initial “liftoff” should be a standard quarter point increase, or a larger half point hike to demonstrate the Fed’s seriousness in controlling prices.On Thursday, Fed Governor Christopher Waller flagged Friday’s PCE inflation report as one to watch, saying if it shows “the economy is still running exceedingly hot, a strong case can be made for a 50-basis-point hike in March.”For now at least the data are not only hot but getting hotter: Since September the PCE index has jumped in steady increments from 4.4% to 6.1%, and has either risen or held level with the prior month in each report since November 2020. In the Fed’s latest monetary policy report to Congress, issued twice a year, central bank officials acknowledged that inflation had not eased as they expected, but in fact had broadened through the economy.The “extraordinary circumstances” which the Fed had said last July were driving higher prices had given way to other dynamics, the report said, particularly a workforce falling far short of the numbers demanded by businesses to fill open positions.”In the period ahead, the large price changes in goods may ease once supply chain disruptions finally resolve,” the Fed report stated. “But, if labor shortages continue and wages rise faster than productivity in a broad-based way, inflation pressures may persist and continue to broaden.”Fed officials have largely downplayed the risk of a durable “wage price spiral.”But they’ve also been surprised by much of what’s happened during the reopening from the pandemic.The rapid spread of the Omicron coronavirus variant was expected to slow hiring and spending through the winter. It didn’t happen. Job growth continued, and new spending data released on Friday showed consumer spending exceeded expectations.Now the virus is fading and Fed officials anticipate a renewed sense of reopening in society and the economy will keep growth strong. Trading in futures contracts based on expectations of Fed policy show investors downplaying the chance now of a half-point increase.But the PCE report is still moving in the wrong direction for Fed officials hoping to avoid the most aggressive measures to control inflation.”Though diminished, the chance of a 50bp move is still intact,” wrote III Capital Chief Economist Karim Basta. Inflation at 6% “would definitely qualify as hot.” The main factor tempering arguments for a faster move by the Fed is the economic fallout from Russia’s invasion of Ukraine. That could for a variety of reasons drive prices higher; it could also pose risks to global economic growth, or rattle financial markets in a way that could make the Fed less inclined to raise rates as fast as it would otherwise.With the incursions less than 48 hours old that analysis was just beginning.”In theory, the war has two contrasting effects on Fed policy: It could stoke inflation…and it could slow economic growth,” wrote Piper Sandler macro analysts Roberto Perli and Benson Durham. “The Fed is likely to be more concerned about the latter than the former…The war will not delay liftoff…But it could well result in fewer rate hikes this year than the market is currently pricing.” More

WASHINGTON (Reuters) -Ukraine has asked the International Monetary Fund for emergency financing, IMF managing director Kristalina Georgieva said on Friday, adding that the IMF was exploring all options to aid the war-torn country, including under its existing IMF loan program. Georgieva said in a statement that she met with the IMF’s executive directors and “assured them that our staff will continue to work closely with the authorities to support Ukraine in every way we can.”That includes exploring options for further financial support, including under the remaining capacity of about $2.2 billion in Ukraine’s existing $5 billion stand-by loan arrangement.Georgieva also said the Fund was assessing potential implications for the functioning of the global financial system, on commodity markets and on countries with economic ties to the region.”We stand ready to support our members as needed, in close coordination with our international partners,” including the World Bank, she said.World Bank President David Malpass said on Thursday the bank also was preparing “fast-disbursing” financing options for Ukraine.Earlier on Friday, Georgieva said that Western sanctions against Russia will add to the economic impacts of the war in Ukraine, which are primarily being transmitted through higher energy and grain prices, adding to inflation.Georgieva, speaking at a Georgetown Law School event on Black History Month, also said that greater financial market uncertainty caused by the conflict may cause capital “outflows from emerging markets, when we need exactly the opposite — more financing going there.”She also said that heightened regional tensions may impact economic activity in countries and regions surrounding Ukraine, such as Moldova and the Caucasus. Russia is among the world’s biggest oil exporters and also is a major wheat exporter along with Ukraine, whose Black Sea ports have been closed to shipping.Georgieva also said that she was concerned about her brother, who is married to a Ukrainian woman and who is currently in Kharkiv, Ukraine’s second-largest city, where heavy fighting is taking place.”When I talked to him, I feel strongly for all — for his family of course, but for everybody there — to wake up to the sounds of bombing and to be unsure about what the next would bring,” said Georgieva, a Bulgarian economist who grew up during the country’s communist era. More

(Reuters) -Brazil’s government cut an industrial tax (IPI) by 25% to fight inflation and help industry recover from a pandemic downturn, the country’s official gazette showed on Friday.The tax cut, with immediate effect, “is a milestone of the beginning of Brazilian reindustrialization after four decades of de-industrialization,” said the Economy Minister Paulo Guedes.It will affect all industrialized products, with the exception of tobacco items. Guedes acknowledged the measure has a short-term impact on inflation, but highlighted it was designed as a policy to increase industrial productivity.Reuters had previously reported that the tax cut was coming.The minister said it will represent a loss of around 20 billion reais ($3.9 billion) in tax revenue, with the federal government giving up 10 billion reais and the rest coming from state and municipal revenue.According to the minister, a 50% reduction in the tax was considered, but was not adopted “out of respect for the industry established in the Amazon (NASDAQ:AMZN).”Companies operating in the Manaus Free Trade Zone are exempt from paying IPI, but can generate credits equivalent to the tax to deduct from the payment of other taxes. The lower the IPI rate, the fewer the credits.A carbon market that is being designed by the government for the coming months is aimed at greatly benefiting the region, defended Guedes, adding that the goal is to promote a transition from IPI credits to carbon credits.The IPI is a regulatory tax, so the rate was changed with only a presidential decree.Earlier on Friday, President Jair Bolsonaro said he would have “good news” for Brazilian business in the afternoon regarding “the industrialization of the country,” without giving any further details.The government has consulted the Superior Electoral Court about the feasibility of the measure, which implies a net loss of revenue in an election year, according to three sources heard by Reuters, who requested anonymity. The court has not provided guidance yet, the sources said, with two of them noting the consultation was made out of caution, since the court’s prior endorsement is not mandatory. Guedes has said that the government could give up the revenue from the tax cut, as a run of record tax revenue has boosted fiscal balance in Latin America’s largest economy.Central bank data on Friday showed that public debt as a share of gross domestic product fell to 79.6% in January from 80.3% in December, as surging tax revenue led to the highest primary surplus for any month on record.($1 = 5.1488 reais) More

The new license represents a shift in U.S. policy that had impeded ordinary commerce with Afghan government agencies headed by U.S. sanctioned Taliban and Haqqani Network leaders since the Islamists seized power in August as U.S.-led forces withdrew.It maintains prohibitions on transactions with sanctioned leaders and other blocked individuals and excludes transfers of luxury items.The license makes clear “that while sanctions on the Taliban remain in place, this action facilitates the private companies and aid organizations working with governing Afghan institutions and paying customs duties, fees and taxes,” a senior administration official told reporters on a conference call.Some experts have questioned whether sanctioned Taliban and Haqqani network leaders can be prevented from benefiting from transactions with the agencies they control without efficient oversight mechanisms.The new license is part of what U.S. officials said are ongoing U.S. efforts to help contain an economic collapse that quickened in August when Washington and other donors cut financial aid underpinning 75 percent of Afghanistan’s public spending.”Our action today recognizes that in light of this dire crisis, it is essential that we address concerns that sanctions inhibit commercial and financial activity,” Deputy Treasury Secretary Wally Adeyemo said in a statement.The financial aid cut and a freeze of some $9 billion in Afghan central bank funds – $7 billion by Washington – have fueled a cash crunch and a humanitarian crisis that the United Nations warns has pushed more than half the population of 39 million toward starvation.U.S. President Joe Biden last week issued an order sequestering half of the $7 billion frozen in the Federal Reserve Bank of New York for possible use to recapitalize the crippled Afghan central bank. More

NEW YORK (Reuters) – Stocks around the world rebounded on Friday, the U.S. dollar fell and oil prices dipped as investors welcomed talk of renewed diplomacy after Russia’s invasion of Ukraine, and as coordinated Western sanctions left Russia’s energy sector largely untouched. On Thursday, worries about the invasion lifted oil prices past $100 a barrel for the first time since 2014. [O/R]Wall Street’s indexes extended the previous session’s rally with Nasdaq and the S&P 500 registering gains for the week. The MSCI World Index closed up 2.43%; for the week it was down 0.7%. Russian President Vladimir Putin urged Ukraine’s military to overthrow its political leaders and negotiate peace. Authorities in Kyiv called on citizens to help defend the capital.EU countries agreed to freeze European assets of Putin and his foreign minister, Sergei Lavrov, and the White House announced plans for U.S. sanctions. Ukrainian President Volodymyr Zelenskiy pleaded for faster and more forceful sanctions. China’s Foreign Minister Wang Yi said China respects Ukraine’s sovereignty and Russia’s security concerns, and it welcomes direct Russia, Ukraine dialogue as soon as possible. [nL1N2V02LS]Russia said it was ready to send a delegation for talks with Ukraine, but U.S. State Department spokesperson Ned Price called this an attempt to conduct diplomacy “at the barrel of a gun,””Markets went through a progression. They heard the word invasion Wednesday night and started selling. Then markets heard the word sanctions Thursday and started buying. Then they heard the word diplomacy on Friday and kept buying,” said John Augustine, chief investment officer at Huntington National Bank in Columbus, Ohio.Some investors remained wary of riskier assets, weeks before the Federal Reserve is expected to raise U.S. interest rates. “The market is purely looking at the short run, saying that what they feared has happened so there’s nothing else to fear on the invasion of Ukraine … that’s being pretty shortsighted,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.Zaccarelli is turning his focus on “what the Federal Reserve is going to do. … raise rates to a higher level than people believe in order to combat inflation.”The Dow Jones Industrial Average finished up 2.51% after closing 0.28% higher on Thursday while the S&P 500 gained 2.24% after rising 1.5% the previous day and the Nasdaq Composite added 1.64% after rallying 3.3% on Thursday. Russia’s main stock index closed up 20% on after Thursday’s record 33% drop. Gains pared somewhat in after-hours trading with the index last up around 15%. Graphic: Russian stock market plunging far more than during other crises-https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoekmepr/Pasted%20image%201645779548050.pngOIL PRICES DROPBrent crude settled at $97.93 per barrel, down 1.16%, while U.S. West Texas Intermediate crude settled down 1.3% at $91.59. Safe haven gold dropped 0.8% to $1,887.24 an ounce. On Thursday it had jumped to $1,973.96, its highest since September 2020. The yield on 10-year U.S. Treasury notes dipped 0.7 basis points to 1.965%. The two-year Treasury yield, which typically moves in step with interest rate expectations, was up 2.2 basis points at 1.568%. “The bond market is trying to guess what Fed Chair Powell is going to say next week in his congressional testimony. The bond market has moved on to the Fed. Global geopolitcal risks in the eyes of the dollar and gold have lowered,” said Huntington’s Augustine. The U.S. dollar dipped a day after notching its biggest daily percentage gain in more than three months. Investors bet sanctions on Russia and U.S. inflation data would probably keep the Fed cautious about hiking rates too quickly.The dollar index fell 0.589%, with the euro up 0.73% to $1.1273.The Russian rouble rose to 83.54 per dollar, clawing back from the previous session’s record low of 89.986.U.S. economic data on Friday showed consumer spending increased more than expected in January even as price pressures mounted, with annual inflation hitting rates last seen four decades ago. More

WASHINGTON (Reuters) – The United States on Thursday imposed sanctions on Russia in retaliation for its invasion of Ukraine, targeting major banks and members of the elite coupled with new export control measures.Washington warned that more action could follow and that all options are on the table.The below are some ways in which the United States could further escalate sanctions on Russia.SANCTIONS ON PUTINThe United States could take the rare but not unprecedented step of imposing sanctions on a head of state and designate Russian President Vladimir Putin.The United States has in the past imposed sanctions on heads of state, including on Venezuela’s Nicolas Maduro and Syria’s Bashar al-Assad.The EU on Friday agreed to freeze any European assets of Putin and Foreign Minister Sergey Lavrov.SWIFTAnother option could be shutting Russia out of SWIFT – the world’s main international payments network – which would hit Russian trade and make it harder for Russian companies to do business.SWIFT is a secure messaging system that facilitates rapid cross-border payments and has become the principal mechanism for financing international trade.In 2020, around 38 million SWIFT ‘FIN messages’ were sent each day over the SWIFT platform, according to its 2020 annual review. Each year, trillions of dollars are transferred using the system.Asked why Washington did not shut Russia out of the payment system in Thursday’s action, U.S. President Joe Biden said the sanctions that were rolled out against Russian banks incurred “equal consequence,” if not more.”It is always an option, but right now that’s not the position that the rest of Europe wishes to take,” Biden said.The EU is looking at what the consequences would be of cutting Russia off from SWIFT, France’s finance minister said on Friday. Some countries are reluctant over concerns about how payments for Russian energy imports would be made and whether EU creditors would get paid.OLIGARCHSThe Treasury this week imposed sanctions on what it said were Russian “elites,” including on some with ties to Sberbank, VTB, Rosneft and the Federal Security Service (FSB).Brian O’Toole, a former U.S. Treasury Department official now with the Atlantic Council, said the United States could also impose sanctions on more significant Russian oligarchs.O’Toole said those listed in Thursday’s action were not “the major tycoons.”TIGHTENED SANCTIONS ON BANKS, FIRMSAnother option could include tightening sanctions on banks and firms the United States targeted in Thursday’s action but did not designate using its most powerful sanctioning tool, the Specially Designated Nationals (SDN) list.Washington said U.S. banks must sever their correspondent banking ties – which allow banks to make payments between one another and move money around the globe – with Russia’s largest lender, Sberbank, but did not freeze its assets.It also expanded the scope of existing curbs on U.S. persons dealing in the debt and equity of Russian state-owned enterprises. The restrictions apply to 13 firms, including Gazprombank, the Russian Agricultural Bank, and Gazprom (MCX:GAZP).Washington could tighten the restrictions on those entities and add them to the SDN list, a move that effectively kicks them out of the U.S. financial system, bans their trade with Americans and freezes their U.S. assets.”We still have all options on the table. We have room to further escalate as Russia’s aggression escalates,” a senior U.S. administration official said.OIL COMPANIESWashington could decide to go after Russian oil companies, which it has so far largely held back from doing.The Biden administration has seemed concerned that its sanctions could trigger higher energy prices and has taken steps to mitigate those effects, including by issuing a general license on Thursday authorizing energy-related transactions involving certain banks until June 24.The official on Thursday said: “We know there are going to be some costs that we have to bear, but our goal is to mitigate those and that’s why we stayed away from targeting energy.” More

Egypt imports most of its wheat from Russia and Ukraine, and is looking for alternative suppliers. And Tunisia was struggling to pay for grain imports even before the conflict.CAIRO — On the way to the bakery, Mona Mohammed realized Russia’s war on Ukraine might have something to do with her.Ms. Mohammed, 43, said she rarely pays attention to the news, but as she walked through her working-class Cairo neighborhood of Sayyida Zeinab on Friday morning, she overheard a few people fretting about the fact that Egypt imports most of its wheat from Russia and Ukraine.War meant less wheat; war meant more expensive wheat. War meant that Egyptians whose budgets were already crimped from months of rising prices might soon have to pay more for the round loaves of aish baladi, or country bread, that contribute more calories and protein to the Egyptian diet than anything else.“How much more expensive can things get?” Ms. Mohammed said as she waited to collect her government-subsidized loaves from the bakeryRussia’s invasion of Ukraine this week threatens to further strain economies across the Middle East already burdened by the pandemic, drought and conflict. As usual, the poorest have had it the worst, reckoning with inflated food costs and scarcer jobs — a state of affairs that recalled the lead-up to 2011, when soaring bread prices helped propel anti-government protesters into the streets in what came to be known as the Arab Spring.In a region where bread keeps hundreds of millions of people from hunger, anxiety at the bakeries spells trouble.In Egypt, the world’s top importer of wheat, the government was moving in the wake of the Russian invasion to find alternative grain suppliers. In Morocco, where the worst drought in three decades was pushing up food prices, the Ukraine crisis was set to exacerbate the inflation that has caused protests to break out. Tunisia was already struggling to pay for grain shipments before the conflict broke out; the war seemed likely to complicate the cash-strapped government’s efforts to avert a looming economic collapse.Harvesting wheat in Luxor, Egypt.Khaled Elfiqi/EPA, via ShutterstockBetween April 2020 and December 2021, the price of wheat increased 80 percent, according to data from the International Monetary Fund. North Africa and the Middle East, the largest buyers of Russian and Ukrainian wheat, were experiencing their worst droughts in over 20 years, said Sara Menker, the chief executive of Gro Intelligence, an artificial intelligence platform that analyzes global climate and crops.“This has the potential to upend global trade flows, further fuel inflation, and create even more geopolitical tensions around the world,” she said.After years of mismanaging their water supplies and agricultural industries, countries like Egypt, Algeria, Tunisia and Morocco cannot afford to feed their own populations without importing food — and heavily subsidizing it. In recent years, the number of undernourished people in the Arab world has increased because of the overreliance on food imports, as well as a scarcity of arable land and rapid population growth.Beyond its effect on the price of bread, the uncertainty and turmoil brought on by the war will push up interest rates and lower access to credit, which, in turn, would quickly force governments to spend more to service their high debts and squeeze essential spending on health care, education, wages and public investments, said Ishac Diwan, an economist specializing in the Arab world at Paris Sciences et Lettres university.He predicted a rise in economic pressure on Egypt, Tunisia, Jordan and Morocco, warning that Egypt and Tunisia in particular could see peril to their banking sectors, which hold a large share of the public debt.Egypt is also heavily dependent on tourism from Russia, which has helped its tourism industry recover from the Covid-19 pandemic, giving the country extra cause for alarm.Global inflation and supply chain issues stemming from the pandemic have also raised the price of pasta in Egypt by a third over the last month. Cooking oil was up. Meat was up. Nearly everything was up.But most important, bread, the cost of which had already risen by about 50 percent at non-subsidized bakeries over the last four months; a five-pound note (about 30 cents) now buys only about seven loaves of bread, down from 10, bakery employees said.Egyptians, about a third of whom live on less than $1.50 a day, rely on bread for a third of their calories and 45 percent of their protein, according to the Food and Agriculture Organization, a United Nations agency.Mona Fathy, 36, serving food to her children in her home, in the impoverished neighborhood of El-Ayyat in Giza, Egypt.Mohamed Abd El Ghany/ReutersGovernment officials said on Thursday that Egypt had enough grain reserves and domestically produced wheat to last the country until November. But because of rising import prices President Abdel Fatteh el-Sisi last year announced that Egypt would raise subsidized bread prices this year, risking public fury.“Of course I’m worried,” said Karim Khalaf, 23, who was collecting and stacking baladi loaves as they slipped out of the oven, steaming slightly, in a bakery in Sayyida Zeinab on Friday morning. “My salary hasn’t changed, but now I’m spending more than I’m making.”Morocco, where the all-important agriculture sector employs about 45 percent of the work force, is facing an economic crisis precipitated by global inflation, a surge of food and oil prices, and the worst drought in three decades.Anti-government protests that erupted on Sunday suggested that many Moroccans have lost patience with their six-month-old government as they struggle to make ends meet two years into a pandemic that annihilated the once-lucrative tourism industry.Understand Russia’s Attack on UkraineCard 1 of 7What is at the root of this invasion? More