Companies should compensate poor countries affected by fallout from war

Bangladesh’s foreign minister has said companies making “skyrocketing profits” from the war in Ukraine should compensate less-developed countries affected.

“In this war, some companies are making skyrocketing profits… energy companies and defense companies,” AK Abdul Momen told CNBC’s Tanvir Gill on the sidelines of the G-20 foreign ministers’ summit in New Delhi.

“Therefore, we will argue that companies that are making skyrocketing profits should dedicate at least 20% of their profits to the most affected countries like us,” he added, without naming specific companies.

His comments come just over a year after Russia invaded Ukraine. The World Bank estimated that Ukraine’s economy has shrunk by 35% over the past year.

The war also had major global economic ramifications, especially for countries like Bangladesh, which imports most of its energy. The foreign minister said about 95% of the country’s energy is imported.

“Naturally, we buy energy from abroad. The cost of energy has skyrocketed leading to high inflation. Momen said.

“Therefore, we want an end to war. We believe in peaceful negotiations.”

The Foreign Secretary further noted that G-20 countries should make such compensation “compulsory”.

“It’s the leaders of the G-20 – it’s the leaders of the world… If I ask, they won’t care,” Momen said. “But the G-20 leaders, they can force all of these companies to donate some of their skyrocketing profits to the countries most affected.”

Last year, a United Nations report pointed out that the fallout from the war in Ukraine could significantly worsen the economic prospects of developing countries already struggling with debt financing linked to the Covid-19 pandemic.

“Rising commodity prices and trade disruptions are exacerbating inflationary pressures and lower growth expectations are weighing on recovery from Covid-19, with serious implications for some of the poorest and most vulnerable countries,” says The report.

“For many developing countries already at high risk of debt distress, the fallout from war could further deepen debt vulnerabilities due to rising balance of payments and fiscal pressures,” the report said. UN.

In late January, Bangladesh secured $4.7 billion in loans from the International Monetary Fund to help cushion the blow of a looming financial crisis.

It will receive $3.3 billion under the IMF’s Extended Credit Facility and related arrangements, with an immediate disbursement of about $476 million. The IMF’s Executive Board has also approved $1.4 billion under its new Resilience and Sustainability Facility for Climate Investments for Bangladesh, making it the first Asian country to access it.

“Bangladesh’s strong economic recovery from the pandemic was interrupted by Russia’s war in Ukraine, leading to a sharp rise in Bangladesh’s current account deficit, a depreciation of the taka and a decline in foreign exchange reserves,” the official said. IMF in a statement.

Bangladesh’s foreign minister also said food security is another issue facing the country that G-20 leaders need to address. He also criticized Western sanctions imposed on Russia, saying these measures hurt developing countries the most.

“We’re really upset also because this war…has broken the supply chain as well as the financial transition mechanism. And it’s hurting us, it’s hurting poor developing countries a lot,” Momen said. .

“Next time, when they come up with sanctions and counter-sanctions, they should at least consult with people like us – the developing countries – to get an idea of ​​how much it will hurt them. And should create a mechanism to that the countries that would be hurt – that they should be compensated.”