Javier Blas and Jack Farchy, The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources (Oxford: Oxford University Press). 416 pp., $29.95.

WHEN I was an undergraduate studying at Georgetown University, I used to listen to Al Jazeera English’s (AJE) coverage of global events—the Arab Spring was still in full swing at the time, and AJE’s reporting was second to none. On a May afternoon in 2011, one particular segment on Kamahl Santamaria’s show, Counting the Cost, stood out. Kamahl introduced a company that I had never heard of before: Glencore.

The company is a commodity trader—a business that focuses on the buying and selling of physical commodities, like grain, oil, copper, and so on. Most would dismiss this as relatively inconsequential; buying and selling commodities is one of the oldest kinds of trade in the world. What made Glencore stand out, Kamahl emphasized, was that “when one company has this much influence, through its size, and some say even its practices, then there is a concern.” He laid out the numbers: at the time, Glencore controlled 3 percent of the world’s oil market, 50 percent of the global copper market, 60 percent of zinc, and 9 percent of the world’s grain. “Think about the effect that would have on food prices,” Kamahl cautions, “the absolute basics for so many people around the world.” If controlling the food supply of entire nations isn’t a significant form of power, then what is?

Glencore, and other commodity traders like it, are the focus of The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources, a recent and rather instructional book by journalists Javier Blas and Jack Farchy. Blas and Farchy’s thesis is straightforward: far from being ordinary merchants, commodity traders are key players in the contemporary international economy—actors whose “control over the flow of the world’s strategic resources has also made them powerful political actors.” Yet despite wielding this immense wealth, influence, and structural power, this industry remains a relatively unknown force to most people—even fewer know its history, evolution, adaption to changing markets and technology, and modus operandi.

Drawing on over a hundred interviews with current and retired commodity traders, Blas and Farchy deliver an informed and eye-opening dive into the field of commodity trading—a world of swashbuckling merchant-adventurers, African dictators, Swiss bankers, and the suave yet ruthless empire-builders who may yet hold the future of global geopolitics in their hands. 

THE WORLD for Sale opens up at the twilight of the Second World War, when an age of peace, combined with ruined cities and nations needing rebuilding, opened the door to a hitherto unprecedented bonanza for raw materials. The reader is introduced to the pioneers of the modern commodity trading business: the Hamburg-born Theodor Weisser, who crossed the Soviet border (despite having been a former Soviet war prisoner) seeking a deal to export Communist diesel and oil to the West; American John H. MacMillan, who went from learning the family grain business (Cargill) on the floor of the Minneapolis Chamber of Commerce to unleashing America’s grain upon the world, including to the Communist Bloc; and Ludwig Jesselson, who fled to America from Nazi Germany’s genocidal campaign against Jews and went from trading scrap in New York to being the veritable founding father of a dynasty of commodity trading companies—including Glencore—that exists to this day. These three men created the business model and professional culture that has guided the commodity traders over the past eighty-plus years.

The reader is taken on a whirlwind tour of significant events in the industry. For instance, the Great Grain Robbery—probably the first time that both governments and the public at large were exposed to the importance of the commodity trading business—is retold in delicious detail. Suffering from crop shortfalls in 1971–2, the USSR dispatched Nikolai Belousov—the head of the Soviet grain trading agency—to the West with a single mission: secure a food supply. Belousov met with John MacMillan’s successor at Cargill and negotiated an agreement to buy 2 million tons of grain over the next year. Blas and Farchy succinctly summarize the mood: “It seemed, at the time, like a good deal all round.”

Not quite. What Cargill didn’t know was that Belousov had already met with Continental Grain Company—completing a deal for $460 million in wheat and staple foods, a record for the time period—and would subsequently conclude similar trades with commodity traders Louis Dreyfus, Bunge Corporation, Cook Industries, and André & Cie. By quietly negotiating separate deals with the commodity traders, Belousov created a perfect storm for the markets:

Each trading house thought it was alone in cutting a big deal with the Russians, largely unaware of how much others had sold. When it became clear how much Belousov had bought, traders realized there wouldn’t be enough American grain to go around. In total, Belousov … bought almost 20 million tonnes of grains and oilseeds from the grain traders. The size of the wheat purchases was extraordinary: 11.8 million tonnes – equal to almost 30% of the US wheat harvest. … it was clear the US wouldn’t have enough grain to meet the combination of its own domestic consumption, the demand from traditional importers, and the extra purchases from the Soviet Union.

With contracts to fill, the commodity traders began buying, setting off a storm in food prices: over the next year, wheat prices tripled (which triggered a corresponding rise in meat prices) while corn and soybean prices also spiked. The public furor only worsened as more details came to be known: the U.S. government had little knowledge about such trading deals until after the fact, even less ability at the time to regulate such deals, and, to top it all off, the Soviet purchases had effectively been subsidized thanks to lavish U.S. export credits. The American taxpayer had lost $300 million due to the whole affair, without counting how much was spent by consumers on inflated food prices.

By the time he was finished, the communist Belousov had effectively pulled a fast one on the rapacious capitalists. Or did he? The commodity traders, taking advantage of their superior information network, placed significant wagers on rising food prices. Cargill, for example, “made millions through speculative bets on the market.” Despite losing $661,000 on the deal with Belousov, the company “reported net income of $107.8 million in its 1972–73 fiscal year, up nearly 107% from the previous year.”

Still, the episode was instructive: massive deals that could influence the price of crucial commodities, especially food, were being conducted by relatively unknown companies, and there was little that even the mighty U.S. government could do about it. The U.S. Department of Agriculture and the International Energy Agency began publishing regular supply and demand estimates for global markets as a result—these estimates are essential to any market participant today. Nonetheless, the small world of commodity trading attracted attention. That attention would only grow, especially over the next decade, thanks to the antics of one individual: Marc Rich.

BORN TO a Jewish family in Belgium circa 1934, Marcell David Rich—like many traders in Lugwig Jesselson’s company, Phillip Brothers—fled Europe when the Nazis began their march to continental domination. By the age of nineteen, he began to work in Phillip Brothers’ mailroom. His hard work ethic got him noticed: he was “always arriving first in the morning, greeting the other juniors with a sarcastic ‘good afternoon’ as they tramped in at 8:30 a.m.” After successfully predicting in 1954 that the price of mercury would rise due to demand—mercury was being used as a key component in batteries, particularly in military gear—Rich’s career took off. He became a modern-day swashbuckling merchant-adventurer, flying to Cuba to negotiate with the then newly formed Castro government; jaunting off to India, the Netherlands, and South Africa to secure more deals; and by 1964 was promoted to be the company’s office manager in Madrid.

It was in 1970 though that he began going down the path that would earn him his claim to fame: the oil trading business. As Rich himself recounted to his biographer, Daniel Ammann:

...the oligopoly of the [then-major transnational oil companies] Seven Sisters was coming to a halt. Suddenly, the world needed a new system of bringing the oil from the producing countries to the consuming countries, so that’s exactly what I did. I just thought it should be possible to trade oil despite the Seven Sisters.

Rich succeeded spectacularly, quietly taking advantage of the Eilat-Ashkelon Pipe (created to move Iranian oil to Israel after the 1967 Six-Day War) to sell Iranian crude to Europe. His appetite for high-return risk, a novelty in conservative Phillip Brothers, was so great that he was dressed down by Lugwig Jesselson himself. This, as it turned out, was an error that cost the firm a potential $50 million in profits from a single deal—more than the company “had ever earned in a year.” Rich wasn’t happy being constrained. By 1974, he and a number of other senior traders departed to start their own shop, Marc Rich + Co AG. Coincidentally, this may have been the height of Phillip Brothers. Later years would not be as kind, as it was renamed Phibro and has spent the past two decades or so being traded back and forth by larger companies—a shell of its former self.

Marc Rich, by contrast, surpassed his former employer in profitably within a few years. His future (mis)adventures, through his firm, would become legendary. He saved Jamaica’s government from assured collapse by serving as a bank of last resort and one time delivering 300,000 barrels of oil within twenty-four hours, generating “goodwill” that translated into lucrative deals. This included a ten-year contract for the island’s alumina (an intermediary step from transforming bauxite into commercial aluminum) at an effective 25 percent below typical contract terms, just as his firm effectively cornered the market, delivering fantastical returns. (Rich + Co’s successor, Glencore, found similar success in Jamaica in later years via clever contract dealing: between 2004 and 2006, Kingston “would have received $370 million in additional revenue if it had been selling its alumina on the spot market and not to Glencore.”) He supplied South Africa’s apartheid government with oil, at one point indirectly instructing the captain of an oil tanker to simply erase the name of the vessel so it could bypass an embargo. Rich even bribed a number of officials from the African nation of Burundi so he could set up one of his most profitable ventures: the Compagnie Burundaise de Commerce, or Cobuco for short.

The plot surrounding the compagnie was classic Rich. Cobuco was nominally a trading company based in Brussels with a single mission: keeping Burundi supplied with oil. If one looked into the company, everything seemed above board: it was a 50-50 joint venture between Marc Rich + Co and the Burundian government, with the company’s constitution having been approved by the country’s parliament. If you called its offices, a “Monsieur Ndolo” would answer the phone. All this seems clean, except for a small detail: why would a small, dirt-poor, landlocked country—only slightly larger than the state of Maryland, with so little oil consumption that “even one tanker of crude would be enough to meet its needs for more than six years”—need a wholly dedicated oil trading company to begin with?

As Blas and Farchy detail, after securing the real story from “Ndolo” himself, the entire venture was essentially a money-printing scheme for the benefit of Marc Rich and Co. Cobuco, nominally representing Burundi, secured a contract for crude OPEC oil (around $27 to $28 a barrel, well below the market price of between $30 to $35) from Iran, with payment deferred for two years (essentially amounting to an interest-free loan). Officially, the oil would be delivered by Marc Rich + Co tankers to Mombasa, Kenya, where it would be refined and then trucked into Burundi. In practice, the oil was diverted to the international market and sold at a markup, securing Marc Rich + Co somewhere between $40 to $70 million in profits (“Monsieur Ndolo” isn’t as sure of the figure any more), with the deferred payment (i.e., the interest-free two-year loan) being invested in the money market for interest rates close to 20 percent, netting an additional $42 million (“Monsieur Ndolo” was very sure about this figure). As for Burundi? They were paid only twenty cents per barrel for their service, though “Ndolo” won’t disclose whether this money went to the state treasury or, more likely, into the pockets of various officials. Stoked by this success, Rich doubled down; by the end of the 1980s, his company had another four or five similar ventures across the African continent.

Eventually though, Rich’s luck ran out. The U.S. government came at him with a vengeance—the consequence for defying oil embargos, not to mention engaging in tax evasion, wire fraud, racketeering, etc.—prompting him to flee to Switzerland. With his partners retired, Rich ended up firmly in charge of his firm. He was subsequently remiss in his management and—irony of ironies, given the context for his original departure from Phillip Brothers—the compensation of his subordinates. By 1993, the situation became untenable. The company’s former head of oil trading, a Frenchman by the name of Claude Dauphin, executed a rather Rich-like move, leading a number of traders into exile. The group would form a new commodity trading company called Trafigura, which exists to this day (and has developed a reputation as colorful as Rich’s). For those who remained, another few months of office politics yielded fruit: by 1994, Marc Rich was overthrown and ejected, forced into a relatively quiet retirement save for his shocking pardon by President Bill Clinton on the latter’s last day in office.

As for Rich’s former trading house, its members sought a new name. An unnamed consultant eventually proposed one: a contraction of the word global, energy, commodities, and resources. And so, Marc Rich + Co became Glencore International. A new generation of commodity traders had come to power, and their timing could not have possibly been better.

THE SECOND half of The World for Sale covers events from Marc Rich’s downfall to roughly around 2021. There are plenty of tales of the exploits of traders, Glencore in particular, that make for interesting, compelling, and one could even say scandalous reading. The insights provided are informative to all who hold any level of interest in contemporary geopolitics, economic developments, the use of power, and so forth.

The backdrop upon which all these take place, however, is arguably the more interesting story—and is more relevant for ongoing events. Two momentous changes in international affairs dominate the rest of the book.

The first is the fall of the USSR, described by Blas and Farchy as “the biggest closing-down sale in history,” with lasting consequences that matter now, at this very moment, more than ever before. After all, it is the connections made between Russian oligarchs—and later on, the highest reaches of the Russian government—and the commodity traders that keeps Russia in business. Behind the scenes of the ongoing Russo-Ukrainian War, at least at the time of this writing, commodity traders are dealing with the Kremlin and providing Moscow with an invaluable economic lifeline.

The collapse of the centralized Soviet system meant that commodity producers and refiners were left without orders from Moscow: how much of so-and-so material should be extracted or produced, where should it be shipped, for how much money, etc. Some individuals though, taking advantage of Mikhail Gorbachev’s perestroika reforms—primarily, the Law on Socialist Enterprises of 1987—had already built the foundations for future success: they had created “cooperatives” (essentially, small businesses) that could buy and sell goods without going through the Soviet state. Commodity traders leaped at this chance to bypass Moscow. Consider David Reuben, co-founder of commodity trader Trans-World: in May 1992, acting on the word of a visitor to his office, he would fly to distant Krasnoyarsk in Siberia to visit the largest aluminum smelter on Earth. There, he found that the plant’s manager “was worried because he didn’t have enough money to pay for the town’s food supply. On the spot, Reuben agreed to advance him money, to be repaid in aluminum.” Within a short time, Trans-World would take full advantage of the Russian government’s privatization, buying stakes in the country’s three largest aluminum smelters, becoming a “dominant player” in the country’s aluminum industry. By the end of their adventures in Russia, the Reuben brothers would become filthy rich; as of 2021, they are, separately, among the top-five richest individuals in the UK.

As Blas and Farchy note, the lessons imparted by commodity traders (to say nothing of the profits made possible via the trading they enabled) gave rise to the Russian oligarchs.

The partnering-up of the commodity traders and the men who would become Russia’s new elite had wide-ranging consequences. The commodity traders were on hand to show the early oligarchs how to export their goods, helping them earn seed capital that allowed them to buy up large swathes of the Russian economy as it was privatised. They linked the Russians to the world of Western finance, helping in some cases teach them the tricks of the tax havens and offshore shells that commodity traders had been employing for decades.

These ties are enduring. For example, Oleg Deripaska, an aluminum tycoon who started off working with Trans-World, teamed up with Glencore—the latter provided $100 million in financing and resources for Deripaska to put together his aluminum empire (and eventually, monopoly), Rusal. Glencore’s CEO, Ivan Glasenberg, courted Deripaska as a personal friend, going to football matches with him at Stamford Bridge (in London) along with fellow oligarch Roman Abramovich. These connections paid off in 2012 when Igor Sechin, one of Russian president Vladimir Putin’s closest confidants, pushed for the consolidation of Russian oil assets under the control of Rosneft, the state oil giant. Sechin gave Glasenberg and Ian Taylor of Vitol a call, and the two of them put together a whopping $10 billion in financing in exchange for future oil supplies. Since then, Glencore has constantly come to the rescue of Putin’s government, most notably in 2016, when the company convinced Qatar’s sovereign wealth fund to partake in an $11 billion deal to acquire part of the Russian government’s stake in Rosneft. For his service, Glasenberg, along with six others, was awarded Russia’s Order of Friendship by Putin himself.

THE OTHER momentous change in the international order that has rocked the commodities world has been the rise of the People’s Republic of China.

China’s raw and relentless hunger for commodities to feed its specular growth from around the mid-2000s unleashed what is known in the industry as a supercycle—“decades long, above trend movements in a wide range of base material prices.” In other words, China was consuming so much so fast that supply barely kept up with demand, sending prices—and profits—to the sky, with substantial and grave implications for both the commodity trading business and global geopolitics. Even now, to this day, China’s demand is jaw-dropping. A recent February 2022 report by the bank JP Morgan—which came out before Russia’s invasion of Ukraine—is blunt on the matter:

While tradable commodity stocks are critically low, it is important to acknowledge the abundance of available inventories in leading commodity consumer and importer China, to draw upon as required, which can influence import demand. China currently holds an estimated 84% of global copper, 70% of corn, 51% of wheat, 40% of soybeans, 26% of crude oil, and 22% of aluminum inventories, according to our sources.

For commodity traders, this surge in prices made them filthy stinking rich. Glencore, for example, correctly anticipated growing energy demand and acquired numerous coal mines. By the end of the 1990s, the company was “the world’s largest shipper of thermal coal, trading 48.5 million tonnes in 2000 – one in every six traded on the seaborne market.” The bet paid off immediately; by the middle of 2001, prices had risen 35 percent. The value of the coal assets acquired, put in a separate company called Xstrata, grew from being worth $450 million in 2001 to a high of $84.2 billion in 2008. Glencore’s income went from $1 billion in 2003 to $6.1 billion in 2007.

Glencore wasn’t alone. Andy Hall from Phibro placed an enormous (and correct) bet on the future of oil demand. Metal traders Michael Farmer and David Lilley, creating a new trading shop called Red Kite, made a fortune on rising copper prices. The list goes on for entire pages; dozens of billionaires were created from China’s sheer demand, and many still are even as these words are being written.

THOUGH THE World for Sale is masterful in its story-telling, there are a few bits worth grumbling over.

In writing the book, Blas and Farchy seem to center their narrative on Lugwig Jesselson’s corporate dynasty: from Phillip Brothers to Marc Rich to Glencore. That is not to say that other traders aren’t mentioned; the book is replete with accounts of many commodity traders’ activities, including (and especially) John H. MacMillan’s Cargill. However, these more often than not play second fiddle to the Jesselson dynasty’s first fiddle, at least in Blas and Farchy’s account. This can be forgiven though for two reasons. First, the continuity provided by the Jesselson line makes for better and more straightforward storytelling to the benefit of both the authors and the reader—heaven forbid a play have far too many protagonists. Second, while there are books that regale on specific business segments or individuals involved in the commodity trading business—Dan Morgan’s magisterial account of the grain traders in Merchants of Grain, for example, or Daniel Ammann’s authoritative biography of Marc Rich, The King of Oil—seemingly none up until now have tackled the industry as a whole. The World for Sale, despite its aforementioned inclination, accomplishes this rather well.

That said, in some parts of the book the authors are just a tad overly charitable to the commodity traders. Though much of the tome is written in a professional journalist’s manner—neutral, focused on the facts, stating what was said by whom without taking sides—there are one or two spots where eyebrow-raising is warranted. For instance, consider the “young Soviet citizens” who took advantage of Gorbachev’s economic reforms. Blas and Farchy characterize these individuals as “young entrepreneurs” who “cater[ed] to needs unmet by the organs of the Soviet government” via “exploiting[ing] the inefficiencies of the Soviet system, buying surplus materials on the cheap or offering services to bureaucrats who needed to find a way to spend their budgets.” This sounds rather kind, with the youth descriptor evocative of American Silicon Valley tech startup types: just a few college-aged lads who notice an inefficiency in the market and build a successful, honest (enough) business by addressing it. Alternatively, were these “young entrepreneurs” actually glorified thieves? As Vladislav M. Zubok notes in his recent book, Collapse: The Fall of the Soviet Union, they essentially sold state assets (including commodities) to themselves at fixed, artificially low prices and then passed these off to foreign parties, ultimately stashing away their profits—which should have been reinvested at home to help Gorbachev’s well-intentioned (if flawed) reforms, the Soviet economy, and their fellow Soviet citizens—in Swiss banks, London properties, and so on. Depending on how one considers the matter, the commodity traders were either brave enablers of early Russian capitalism or collaborators in a large-scale geopolitical heist.

The above critiques though are mere nitpicking compared to the authors’ gravely erroneous decision to condense the growing influence of Chinese companies in the commodities trade into little more than a page at the book’s conclusion.

Blas and Farchy correctly point out that China has noticed the commodity trading industry’s enormous potential to secure profits. This, combined with the country’s enormous demand, has driven Beijing to build its own commodity trading capacity. This important matter, however, is reduced to a handful of examples in just about two paragraphs—one of which is about a single trading house, Zhuhai Zhenrong, which has made itself into the largest trader of Iranian crude oil. Other traders in oil, such as Unipec and ChinaOil, are mentioned once with no further details provided.

Similar for agriculture, where China’s state agricultural trading agency, the China Oil & Foodstuffs Corporation (COFCO), is mentioned in passing. All that Blas and Farchy have to say about it is that it “has spent $4 billion since 2014 to establish an international food trading arm.”

This line, while providing a rather excitable figure, vastly understates COFCO’s reach, influence, and significance. With around 18.5 percent of the world’s population but only 10 percent of global arable land, China must import massive amounts of food to feed its people. COFCO exists to address this dilemma, and it is essentially China’s food supply chain. It is a massive enterprise, with multiple listed subsidiaries specializing in everything from tea to e-commerce. Its own website boasts that its “annual sugar imports account for about 50% of China’s total imports.” It has a cargo fleet with over 200 ships, which is more than even the East India Trading Company had at sea at any given time. A single contract farming operation in South Africa it runs is just a tad smaller than the entire city of Detroit. The examples go on. And COFCO only keeps on growing; by late last year, its “trade group clinched agri-products purchase deals worth more than $10 billion, representing nearly 100% increase from last year.” And all this is without diving into its other interests; its ownership of foreign companies; its subsidiaries that are legally based in the British Virgin Island, the Caymans, and Bermuda, thereby enabling COFCO and China to disguise ultimate ownership of various assets; and so on.

This is all important information about just one facet of China’s direct participation in the commodities trade that probably deserved more than a few paragraphs in the book’s conclusion.

THE WORLD for Sale indirectly raises a number of uncomfortable but important questions that policymakers, subject matter experts, and the broader public should consider carefully. Foremost among them is this: in an age of multipolar geoeconomic competition, where the strength of great powers is directly tied to maintaining ongoing access to key materials, should it be private companies or state-controlled entities that are in charge of the supply of said materials?

Most modern multinational corporations, including commodity traders, strive to avoid any ideological or political entanglements—profitability is a better lodestar. There is no equivalent to the British banking firm Baring Brothers—at one point described by Cardinal Richelieu as “one of the six great powers of Europe”—a firm both at once independent yet fiercely loyal to its mother country’s national interest. The closest contemporaries to such instruments of national foreign policy are the Japanese sogo sashi firms and Chinese state-owned enterprises, the latter of which aren’t independent by definition. Corporate entities not bound to any one flag may make sense in a world of free trade with international security guaranteed by a military hegemon. However, as America’s power wanes relative to China and other rising state actors, and it is becoming ever clearer that—in myriad cases—supply chain security is worth more than straightforward profitability; a great rethinking of this topic is warranted.

Signs of a rethink appear to be already underway. U.S. president Joe Biden, for example, has signed an executive order on America’s supply chains, specifying how a variety of possible disruptions “can reduce critical manufacturing capacity and the availability and integrity of critical goods, products, and services.” Notably, the order calls for “a report identifying risks in the supply chain for critical minerals and other identified strategic materials.”

In the medium term, Washington is likely to support, fund, and back initiatives to develop both domestic and some foreign (in nearby friendly countries) mining operations. “Investment and development of traditional mining opportunities is a necessary strategy to employ if the U.S. wants to, at the very least, keep up with overseas rivals,” says Nicholas Beardsley from the Silk Bridges Group, a mining company.

Where there’s really an opportunity to build supply quickly and effectively is in recycling scrap [metal] and reprocessing minerals that come about as byproducts from mineral processing. After all, there’s an abundance of both globally. With the available supply and recent advancements in reprocessing methods and technology, this can be both more time- and cost-effective—and in an environmentally-friendly manner—than traditional mining and ore processing. This is being done in Kazakhstan and Turkey via my employer. There’s no reason it couldn't be done in the United States.

A second question is what happens when commodity traders assume the same importance as major banks—systemically important financial institutions (i.e., “too big to fail”)—but without the same regulatory oversight? Blas and Farchy note near the end of their book that the traders are increasingly “acting as links to international financial markets, channeling dollars from pension funds and other investors into far-flung countries,” ultimately resulting in “the ability to finance entire nations – and to help others into being.” Chad, for example, turned to Glencore in 2013 as a lender of last resort, in exchange for future oil supplies. When Chad couldn’t pay back the loans (due to falling oil prices) in 2016, Glencore was able to push for “punishing austerity” in the country. Even now, “when the [International Monetary Fund] publishes reviews of the country’s economy, [Glencore] merits its own mention in the analysis of the African government’s finances.” Similarly, in Kazakhstan, the government (also suffering from a lack of revenue due to falling oil prices) turned to Vitol, which, starting in 2016, “channeled a total more than $6 billion in loans to [state oil company] KMG in exchange for future oil supplies.”

This sheer amount of power and influence means that if some commodity traders were to go down, entire countries might very well go down with them. Just this past March, the European Federation of Energy Traders—essentially, the lobby for energy trading houses—put out a four-page letter calling on central banks to provide emergency financial liquidity to support commodity markets, which are in trouble due to the Russo-Ukrainian War. As the Financial Times explains using the gas markets as an example,

Big commodity traders use derivatives to hedge contracts against price swings and lock-in margins. … As gas prices in Europe and Asia have soared, the losses on these contracts have increased, requiring … traders to make margin payments to brokers and exchanges. These losses from profitable positions will be offset once the commodities are sold, but in the intervening period margin calls can place strain on commodity traders, which are dependent on short-term credit lines from banks to fund their activities. “This cash flow mismatch can cause major liquidity problems,” said Craig Pirrong, a finance professor at the University of Houston. “And banks, for various reasons … may not be willing to extend credit sufficient to meet these liquidity needs…”

In short, major commodity traders are currently short on cash due to massive financial market requirements. If one or more firms suffer a 2008 Lehman Brothers-like moment—the bank failed due to lacking enough liquidity to meet its operating costs—the results could be catastrophic. Blas himself, in a Bloomberg column, is skeptical but notes that significant caution is warranted:

I have long argued that commodity traders don’t matter to the global economy in the same way that Lehman Brothers did: the collapse of one won’t trigger a global recession. And yet, they remain too big to be ignored — and a possible source of big trouble if left unattended.

It is evident that major structural reform by governments may be needed to curtail the risks posed by commodity traders’ sheer financial heft. After all, the last time national central banks were called on to provide a safety net for financial firms engaging in highly-speculative and overleveraged activity was in 2008. No one wants a repeat of that, both in terms of the crisis and the aftermath—political, geopolitical, social, economic, etc.—that followed.

Finally, The World for Sale poses a third and rather uncomfortable question: can geographic and resource inequalities really ever be overcome?

The answer, which appears to be a heavy “no,” carries broad implications for the international order. While the United States occupied its place in the sun, and the globalized economic system worked fine, this could be ignored. But with the Russo-Ukrainian War, reality is revealing that the West has fallen into a state of wohlstandsverwahrlosung—affluent neglect from having it too easy for far too long—opening the door for dramatic political reactions to changing material circumstances. Coming months will likely show the consequences of this. After all, Russia alone supplies around one-sixth of global commodities. It produces around 40 percent of the world’s palladium and is a top exporter of coal, steel, aluminum, nickel, and so forth. Can entire economies, including and especially nearby European economies, continue functioning as normal without these necessary inputs? It is a doubtful prospect.

And then there is the food issue: Russia and Ukraine—the former sanctioned, the latter now a war zone—together account for nearly 30 percent of world wheat exports, 15 percent of world trade in rapeseed oil, and 75 percent of all sunflower oil exports. Ukraine alone ships 15 percent of all exported corn. Compounding the situation is the fact that Russia, Ukraine, and Belarus make up a significant share of fertilizer production and export. All three countries account for 36.7 percent of global production and 39.6 percent of global exports of potash. Likewise, all three make up 22.9 percent of global ammonia exports. These are all essential for modern agriculture, and a cut in supply—with a corresponding spike in prices—has farmers around the world worried.

Over the next year, food prices everywhere will probably shoot up, setting the stage for a repeat of what happened after the Great Grain Robbery. Experts whisper about a repeat of the Arab Spring, which was partially set off due to high food prices. Elections between now and 2024 could potentially bring down sitting governments, including the Biden administration in the United States, should conditions deteriorate significantly. What happens “elsewhere” will once again show that not all countries are created equal, and the result may very well be a populist political push—improbable as it may be—towards a state thought long vanquished from the dictionary of polite, cosmopolitan, and globalized society: autarky.

ULTIMATELY, THE World for Sale is, in its own way, an open invitation to discuss these issues. It is essential reading for all participants in contemporary global affairs and geopolitics.

As for the commodity traders themselves, as Blas and Farchy assert, the world’s natural resources “still need to be bought and sold. And commodities are still a sure-fire path to money and power.” Even now, commodity prices are spiking from the Russo-Ukrainian War, creating unique opportunities for the adventurous and bold. Russian oil is being sold at a discount of 20 percent or more, while exploding grain prices will mean a mad rush to secure supplies in the Middle East and further abroad. Despite liquidity risks, fortunes are being made overnight, only further empowering the invisible kingmakers who can affect the fates of nations and entire populations. It may be winter for the markets, governments, and ordinary people, but as far as the commodity traders are concerned, they, like snow, always land on top.

Carlos Roa is the Managing Editor of The National Interest.

Image: Reuters.