By Fred M’membe President of the Socialist Party

At the time the UPND was taking over government the prices of petrol and diesel were K17.62 and K17.82 respectively. Today under the UPND government the prices of petrol and diesel are K21.96 and K21.54 respectively.

Last month there was hope of a reversal of fortunes when the prices of petrol and diesel were reduced by K1.32 and K 3.36 respectively. Today the cumulative increase in the prices of petrol and diesel since the UPND came to power stands at K 4.34 and K3.72 respectively.

In their election campaigns the UPND leadership had promised to reduce fuel prices by K4.02.

As we have stated before, today the UPND government faces a dilemma of how to honour their election promise of cutting fuel prices in the light of the International Monetary Fund (IMF) conditionality with the net effect of increasing fuel prices.
On Tuesday, January 25, 2022, the Energy Regulatory Board announced that they were migrating to a thirty day pricing cycle for petrol, diesel and low sulphur gas oil. And in that regard, fuel prices would now be reviewed every month starting with January, 2022.

We warned that it was highly unlikely that fuel prices will be reduced at these reviews – they will instead be increased. And this may further stoke public outrage over the high living expenses.

In the light of their IMF commitments, we can’t see any sensible measures that they can take to help reduce fuel prices in an effort to honour their campaign promise of affordable fuel and defuse public anger. The price of fuel has a significant weighting in the basket of goods and services that are used to measure inflation in the country. Producers of services and goods are also expected to factor in the higher cost of fuel. This makes fuel prices a key determinant of the rate of inflation.

The economy also uses diesel for transportation, power generation and running of agricultural machinery such as tractors, with a direct impact on the cost of farm produce. At the individual level, higher fuel prices mean that each of us pays more at the filling station, leaving less to spend on other goods and services. But higher fuel prices affect more than just the cost to fill up at the filling station; higher fuel prices have an effect on the broader economy. Inversely, when fuel prices fall, it is cheaper to fill up the tank for both households and businesses, and really eases costs on transportation-focused industries like trucking and buses – but it also puts a damper on the domestic fuel industry.

In general, higher fuel prices are a drag on the economy. When fuel prices rise, it can be a drag on the economy – impacting everything from consumer spending to bus fares to hiring practices. Fuel is an important input for transportation, which directly impacts households as they drive, but also businesses that rely on logistics and transportation chains. If discretionary spending is hampered by higher fuel costs, it can have knock-on effects throughout the broader economy.

A side effect of high fuel prices is that the discretionary spending of consumers drops as they spend a relatively larger portion of their income on fuel. Higher fuel prices also mean that shoppers will tend to drive less – including to places like the mall or shopping centers.

All retailers are further squeezed as they are forced to pass on the higher expenses they also experience, which are associated with increased shipping costs to consumers. Anything that has to be transported could cost more as fuel prices rise. Likewise, many products that contain plastics or synthetic materials are based in part on petroleum. Higher fuel prices mean higher prices for these materials too.

Rising fuel prices will negatively impact efforts at economic recovery in terms of hiring practices. Rising fuel prices will force some businesses to re-evaluate their hiring plans, holding off because they are uncertain about the economy’s health. Less discretionary spending results in decreased sales, both of which can influence a company’s ability to hire.

Many job candidates have to weigh prospective positions against the costs associated with the commute. Some workers who have been offered new jobs have been forced to turn down the position simply because the costs to get to and from work would eat up such a large percentage of the salary. There is an undeniable correlation between consumer confidence, spending habits, and fuel prices. Increases in fuel prices makes people feel more pessimistic about the economy.

By Charles Mwewa

In the game of world wars, there are three players: Those who are serious; those who see war as a means to wealth and influence; and those who are powerless. The first two categories become newsmakers and/or victors, and the last category becomes victims. There are two truisms about war; it is inevitable, and it has casualties, intended or inadvertent. And each declaration of war is pretexted on three grounds: National pride or embarrassment; national expansion/occupation; or reclaiming of past fortunes or glory. Interestingly, both previous two world wars began with the combination of the three grounds, and both totally ignored international law.

On February 21st, 2022, President Vladimir Putin signed decrees to recognize two self-proclaimed separatist republics in eastern Ukraine and vowed to send “peacekeeping forces” to the breakaway regions of Donetsk and Luhansk. Putin claimed that there were already military conflicts going on in the separatist regions; Ukraine denied the claim. Both sides had hidden agendas. If, indeed, Ukraine had been attacking the separatists, then Russia would be justified to support the two regions through military intervention. If, however, Ukraine had to attack the two separatists regions, Russia would portray Ukraine as the aggressor intending to mount an unprovoked assault on areas controlled by the separatists which are backed by Moscow.

The second pretext, and bordering on national defence and protection, is Moscow’s claim that Ukraine has a built up of a 60,000-strong military group with nuclear weapons, heavy armaments, and other multiple-launch systems able to destabilize Russia. Putin would then be justified that he was only “defending” the integrity and safety of his people.

Like the second pretext, the third pretext is a claim by Moscow that the US is building a nuclear base in Ukraine. This would then be seen as a direct targeting of Russia and an advantage in case of US aggression against Russia, now or in future.

The fourth pretext is what Moscow might refer to as de-Nazification of Ukraine. For some times, Russia has been accusing Ukraine of harboring Nazi elements and Nazi-leanings. And Russia sees this as a campaign to persecute Russian speakers and interests in Ukraine. It is ironic that President Zelensky, the President of Ukraine, is a Jewish-born citizen of Ukraine.

The fifth and sixth pretexts are more than just excuses, they have been built-up from past years to the present. For years, Russia had fought wars of acquisition in Chechen such as the First Chechen War of 1994, Second Chechen War of 1999 and the devastating 2010 Chechen Parliament attack. But the December 4th, 2014, Grozny, Chechnya, attack, though instigated by Islamist militants, is seen as the declaration of Putin’s intention for world dominance. The attack coincided with Putin’s state of the nation address.

The final decision to put his long-awaited-for plan, presented itself when Donald Trump was elected President of US in 2016. Putin himself had been in power from as early as 1999, when he was Prime Minister till 2000 and again from 2008 to 2012. He was elected as president for the third term of office from 2012 to 2018, when the constitution was amended to grant Putin a fourth presidential term, and Putin could lead Russia till 2036. He is just one of the fewest former heads of state to accept a vice-presidential position in order to reclaim the presidency and consolidate his power. In one way or the other, Putin has been in power for about 22 years.

President Putin has had the chance many world dictators do not have. He has been in power for a long time, in Europe, and has seen many governments in Western and Eastern Europe come and go. He has also had the rare chance to see the vulnerability of such international and regional organizations as the UN and the EU and, of course, NATO. He has interacted with replacement leaders in each of these organizations, from 1999. He knows and understands their goings and comings, their weaknesses and strengths. In addition, Russia under Putin has, largely, lived under perpetual economic sanctions in one form or the other. When one computes the observations, it makes sense to see how decisive President Putin has gotten.

Moreover, Putin understands one major weakness world powers have, which, in all fairness, provides him with tremendous cover and leverage – that the world is reluctant to trigger World War III. They can condemn the actions, and even call for economic sanctions, but they can’t attack Russia. This is being demonstrated in three actions that President Putin has made. First, he has warned the world that if any nation, or anyone for that matter, intervenes in the Russia-Ukraine War (2022), they will be met with “consequences you have never seen.”

Second, Putin knows that, despite all the economic warnings to the contrary, Russia holds the West hostage in terms of oil and gas – Russia supplies about one-third of Western-Europe’s crude oil. And as a direct consequence of this, President Putin also knows that any action carried out by NATO or the UN, will harm the Western nations with hiking prices at the pump. Then, he also knows that, when he continues his aggressive attack, the markets will tank, and, therefore, bringing collateral damage even to those nations and individuals who are not under economic sanctions. Indeed, any action that may be undertaken by the world will have an undesired impact of affecting the world – it’s like a boomerang. Putin also knows that imposing hefty economic sanctions on Russia, in a world in which nations are just recovering from the vagaries of Covid-19 pandemic on their economies, will send inflation to the roof.

And third, and as alluded to, President Putin studied the reaction of the world to President Trump’s reign. Trump shuddered the world powers and both regional and international bodies. He acted almost unilaterally and arbitrarily and, other than losing his presidential bid for a second term, nothing and no-one stopped him, serve for mere rhetoric. If Trump is the lever through which Putin is measuring his actions, he knows that other than condemning and reporting in press and media, the world bodies and governments are impotent to taking any further actions that can stop him.

On February 23rd, 2022, President Putin attacked Ukraine in multiple cities. And, as expected, the only thing that world leaders could do was condemn, warn of imposing additional economic sanctions and pleading for peace. It is ironic that the UN Secretary General understands the endgame of Putin’s chess game (that of bringing the world to a brink or a world war) and in the words of Antonio Guterres, the entire global economy will be at risk in this war: “In the name of humanity do not allow to start in Europe what could be the worst war since the beginning of the century, with consequences not only devastating for Ukraine, not only tragic for the Russian Federation, but with an impact we cannot even foresee in relation to the consequences for the global economy.” And a worst war it could be – nearly both camps (Russia-China) and UN-NATO) have built up nuclear capabilities since 1946, and any leak could not only damage the world economy but could wipe out the entire human race.

And to rub salt to injury, Ukraine has been left to stand alone. The only response from major democracies is to send in weapon and moral support, but not direct military intervention. Putin has calculated that, by the time major democracies, UN, NATO or EU will be figuring out that economic sanctions are not working, he would have achieved his objective – paralysing Ukraine. By the time everyone will awake, Ukraine may be, again, a buffer of Russia, or worse, a World War III could be festering. God forbid.

But there is only one factor that can stop Russia – it is not Europe or America, unless they engage in war; the only one who can stop Russia peacefully and genuinely is China. Russia can’t survive alone; it needs China. And if China says, no thanks, Putin’s chances of success will be almost zero.

Oh, how powerless, powerless, powerless

Oh, how faithless, faithless, faithless,

How, too, sympathetic

And, not to mention, empathetic

How that world bodies and leaders

Their efforts only end up in news feeders

While to Russia, Ukraine fastly fall

Birds fail to fly, guns chilling dins call!