Equilibrium/Sustainability — Stocks shaky amid Russia-Ukraine unrest

Today is Monday. Welcome to Equilibrium, a newsletter that tracks the growing global battle over the future of sustainability. Subscribe here: thehill.com/newsletter-signup.   

U.S. stock prices vacillated on Monday while European markets plummeted early in the day, amid ongoing uncertainty about a Russia-Ukraine conflict, The Wall Street Journal reported.  

Europe’s pan-continental exchange Stoxx Europe 600 closed down 1.8 percent — marking the third consecutive day of losses — although the index was able to recoup some of its initial drop after Russian Foreign Minister Sergei Lavrov advised President Vladimir Putin to continue talks with the U.S. and its allies, according to the Journal.   

Oil prices rose on Monday due to concerns that a war would curb supplies of Russian crude, while natural gas prices surged on both sides of the Atlantic, the Journal reported.   

Investors are facing difficulties forecasting what financial impacts a Russian invasion of Ukraine could bring, according to the Journal. If the U.S. and its allies were to impose sanctions, the consequences for the global economy and markets remain unpredictable, although higher energy prices would almost certainly ensue, the Journal reported.  

Today we take a look at Afghanistan, where citizens are demanding the U.S. release critical financial reserves amid a looming threat of mass starvation. Then we’ll travel across the world to the North American Southwest, where scientists have identified the worst “megadrought” in 1,200 years. 

For Equilibrium, we are Saul Elbein and Sharon Udasin. Please send tips or comments to Saul at selbein@thehill.com or Sharon at sudasin@thehill.com. Follow us on Twitter: @saul_elbein and @sharonudasin.  

Let’s get to it. 

Afghans decry ‘theft’ of government reserves  

As Afghanistan edges closer to mass starvation and financial collapse, citizens across the country’s political divide — from the Taliban to the government they defeated — are outraged by a Biden administration plan to essentially expropriate the country’s currency reserves, which are held at the Federal Reserve Bank of New York.  

With two thirds of the country’s population at risk of extreme hunger, experts, locals and foreign observers say this move risks pushing the country’s battered economy toward collapse — creating a sustainability and migration crisis that could spread across the region. 

First words: “The latest decision of [the] USA on blocking foreign exchange reserves and allocating them to irrelevant purposes [is an] injustice to the people of Afghanistan,” representatives of Da Afghanistan Bank, the country’s central bank, wrote in a statement, according to Reuters.  

Behind the lines: The “irrelevant purposes” in question are twofold: the $7 billion in Afghan currency reserves would be split between legal claims by 9/11 victim groups and a separate fund “to meet the needs of the Afghan people,” a statement from the Biden administration revealed on Friday. This division would aim to keep the funds “out of the hands of the Taliban,” the statement said.   

A rare political consensus to call out seizure: With this move, the Biden administration has managed to bring that rarest of things to Afghanistan: consensus between the Taliban and its opponents.   

“Stealing and disposing of the Afghani people’s money that was frozen by the United States shows the highest level of human and moral decadence of the country and the people,” said Taliban spokesman Mohammad Naeem, according to the conservative CNSNews. 

Meanwhile, former president Hamid Karzai called the move “unfair and an atrocity,” according to Al Jazeera, and Ali Maisam Nazary — spokesman for the militant anti-Taliban National Resistance Front —  tweeted that “the funds must be safely kept until a [government] that represents all citizens of [Afghanistan] is formed.”   

“The Taliban’s sponsors must pay reparations,” not Afghanistan, Nazary added. 

WHY IS THE UNITED STATES ASSUMING CONTROL OVER THIS MONEY?

The “highly unusual” process of seizing Afghanistan’s currency reserves began in August, when the U.S. froze the accounts following the Taliban’s conquest of Kabul, The New York Times reported. 

Then in September 2021, New York District Judge George B. Daniels gave his imprimatur for the Federal Reserve to hand over the money to settle a $7 billion “default judgment” from 2011 — because neither the Taliban nor Osama bin Laden showed up in court to contest it.  

In that judgment, the district court had assigned funds to the families of 9/11 victims, according to nonprofit news service The Florida Bulldog.  

Biden splits the difference: On Friday, the Biden administration announced that half of the money — $3.5 billion — would be held for the 9/11 plaintiffs, while half would be distributed to humanitarian causes in Afghanistan, provided that the money didn’t ultimately reach the Taliban, The Wall Street Journal reported. 

But that original ruling concealed a Catch-22. The district court ruled that since the Taliban “claims ownership of, and control over, all property” of the former Afghan government, including the cash reserves, it was theirs, and could therefore be taken from them to satisfy claims against their government, according to the Bulldog. On the other hand, however, the U.S. has refused to honor that Taliban claim of ownership over the central bank reserves in any other way, the Bulldog reported. 

“There’s a legitimate question to be asked as to how a country’s sovereign wealth can be used to satisfy the debt of an entity that is not recognized as the sovereign government,” John Sifton of Human Rights Watch told Al Jazeera. 

“The funds at issue belong to the people of Afghanistan, not any government or entity, past or present – that is not a policy position, it is a fact,” Afghan-American Foundation said in a statement.  

Ordinary Afghans call this unfair. “It is a cruel act and a betrayal of the rights of the Afghan people,” Kabul shopkeeper Fazl Ahmad told the Times this weekend.  

“It is clear that the poor economic situation right now is due to the U.S. economic constraints on Afghanistan,” Fazl added — contradicting the Biden press statement, which blames the damage of the Taliban takeover. 

Last words: “This is essentially like saying the Federal Reserve can no longer function, but we’re going to set up some soup kitchens,” Halema Wali of Afghans for a Better Tomorrow told Al Jazeera. 

Megadrought worst in 1,200 years: study

The extreme weather conditions that have desiccated North America’s Southwest over the past 22 years have now become the region’s driest “megadrought” since the year 800, a new study has found.   

The ongoing megadrought has supplanted the previous record-holder: a late-16th century dry spell previously considered the worst such drought in the past 1,200 years, according to the study, published on Monday in Nature Climate Change.   

And the study’s authors largely attributed the severity of the current megadrought — defined as a drought lasting two decades or more — to human-induced climate change.  

First words: “Without climate change, the past 22 years would have probably still been the driest period in 300 years,” Park Williams, lead author and a geographer at University of California Los Angeles, said in a statement.   

“But it wouldn’t be holding a candle to the megadroughts of the 1500s, 1200s or 1100s,” he added. 

Which parts of the Southwest are so dry, and how far back did they look? The scientists focused on the area from southern Montana to northern Mexico, from the Pacific Ocean to the Rocky Mountains — finding repeat megadrought periods from 800 through 1600 that exceeded any subsequent event in severity through the 1900s.  

How did the authors identify severe stretches of drought? They analyzed tree ring patterns — which reveal critical information about annual soil moisture — and cross-checked their results with historical climate data.   

Ultimately, they found that such dry conditions coincided with high degrees of “soil moisture deficit,” a metric that compares soil moisture with normal saturation levels.  

Driest period in 1,200 years: The scientists found that since the year 2000, the average soil moisture deficit was twice as severe as the deficit in any 20th century drought — surpassing the driest periods of all the most severe megadroughts in the past 1,200 years.   

Soil moisture plays a critical role in drought — impacting runoff levels, streamflow, agricultural productivity, ecosystem health and wildlife activity, according to the study.   

Some of this drought would be happening anyway: The authors acknowledged that some dramatic shifts in dryness and water availability occurred in the Southwest before human-induced climate change became a factor in the 20th century.   

Well before humans began inflicting their carbon footprint upon the Southwest, the region was experiencing “infamous megadroughts that occurred repeatedly from 800-1600,” the study said. 

HUMAN-INDUCED CLIMATE CHANGE MAKES DRY CONDITIONS EVEN DRIER

While today’s conditions would likely have been dry even without climate change, it would have been much less so, the scientists contended. Human-caused climate change, they explained, has been responsible for about 42 percent of the soil moisture deficit in the region since 2000, according to their study.   

Climate change is making droughts in general more severe as warming temperatures cause increased evaporation — drying out soil and vegetation, the authors said. From 2000 to 2021, for example, temperatures in the region of study were 0.91 degrees Celsius (1.64 degrees Fahrenheit) higher than average temperatures from 1950 to 1999, the study found.   

As of just last week, the U.S. Drought Monitor indicated that 95 percent of the Western U.S. was experiencing drought conditions, while in the summer of 2021, the Colorado River’s two main reservoirs — Lake Mead and Lake Powell — had plummeted to their lowest levels since record-tracking began in 1906, the authors noted.   

It will take a great deal to reverse the damage: With dry conditions likely to persist in the region, the scientists estimated that it would take multiple wet years to remediate the damage. 

The authors credited some recent efforts — such as federal cuts this past summer to Colorado River water allocations, as well as California Gov. Gavin Newsom’s (D) drought emergency declaration — as important steps toward ensuring short-term recovery.   

Last words: But Williams, the study’s lead author, stressed that long-term water conservation efforts must expand beyond periods of acute drought.   

“It’s extremely unlikely that this drought can be ended in one wet year,” he said. 

Money Monday

Cannabis gives Israeli communes a new lease on life, teens delay first cars and the world’s leading seed bank takes deposits. 

Cannabis a salve for capitalism on Israel’s collective farms 

• Israel’s medical marijuana industry — which now has 100,000 registered users — have provided an agriculture boom that is leading to a renaissance in the country’s once moribund collective farms, The Washington Post reported. 

American teens forced to postpone first-car purchases   

• Soaring prices and scant supplies of preowned vehicles have led many American teenagers to delay first-car purchases, The Wall Street Journal reported. Prices have surged so much in the past two years that the number of 16-to-25-year-olds buying used cars dropped 35 percent between 2019 and the end of 2021, according to the Journal. 

Deposits to post-apocalyptic seed bank 

• In less fiscal banking news, the Svalbard Global Seed Vault — a facility in the Norwegian permafrost that preserves the world’s agricultural heritage  — received deposits Sunday from gene banks around the world, Reuters reported. 

 

Please visit The Hill’s sustainability section online for the web version of this newsletter and more stories. We’ll see you on Tuesday.