Vulnerability of global economic integration exposed

While the disruption, and frustration for thousands of travellers worldwide, due to the shutdown of airports across Europe has been dominating news surrounding the eruption of the Icelandic volcano Eyjafjallajökull, there is a much more important, less immediately obvious and lasting implication of this spectacular natural event: It is exposing the vulnerability of a highly integrated global economy. In fact, for some sectors and/or regions, it still may have cataclysmic and long lasting implications.

Over the last number of decades, the lifestyle of millions across the globe in many ways has become dependent on economic activities and production processes sometimes thousands of kilometres away from where they live. Likewise, far-flung economic activities and production processes often have become dependent on one another.

Farmers across the region where the volcano erupted, under the Eyjafjallajökull glacier, have been scrambling to protect their herds from inhaling or ingesting the ash, which can cause internal bleeding, long-term bone damage and loss of teeth. Lava also destroys and burns crops, plants and trees. This event is surely a major disaster for farmers.

But the impact on agriculture is – thanks to globalisation – much wider than is anticipated generally. One of the side reports on eruption informs us that while it has brought European aviation to a near standstill in the worst disruption since 9/11, and airlines are haemorrhaging money and tens of thousands of passengers are stranded, it is not only the airline industry that is under threat. Farmers in Kenya are facing ruin as they are forced to dump tonnes of vegetables and flowers that were destined for the United Kingdom.

Kenyan farms already have laid off 5 000 staff, and growers have warned that thousands more workers could be told to stay at home if flights did not resume by today (20 April), which would deal a serious blow to the country's economy.

"We usually ship 10-15 tonnes of produce every day to different parts of the world, and that's come to a complete halt," said Ariff Shamji, managing director of AAA Growers in Nairobi.

Kenya's flower council said the country is haemorrhaging $1.3 million a day in lost shipments to Europe. Kenya normally exports up to 500 tonnes of flowers daily – 97% of which is delivered to Europe. Horticulture is the country's top foreign exchange earner.

The disruption of air travel and cargo transport further has serious implications for international sporting events. The Formula One rhythm already has been disturbed seriously after this last weekend’s Chinese Grand Prix. More than 1 000 team members, drivers, officials and media could not depart for their home base at the start of a mini break, with three weeks until the Spanish Grand Prix, but airlines already are warning teams that they could be stranded in Shanghai until the first week of May – potentially catastrophic for the race in Barcelona on 9 May.

In the meantime, the shutdown threatens to disrupt a growing list of sporting fixtures, from Europa League football to England’s departure for cricket’s Twenty20 World Cup in the Caribbean. Depending on how long the disruption lasts, and how long it takes for the industry to get back to business as usual, it may even impact the Fifa Soccer World Cup that begins in South Africa in early June.

A Texas University researcher, who has explored Icelandic volcanoes for the past 25 years, said that if history is any indication, the erupting volcano and its immense ash plume could intensify.

According to European aviation officials, flights to and from northern and central Europe, the majority of which have been cancelled since 15 April, may not resume until the volcanic eruption stops. At this stage, no one can predict when that will occur, and some experts say the volcano could continue to erupt like this for several days, possibly even for a few weeks.

Obviously, the airline industry and its huge satellite sectors – including airport retail outlets – are being worst hit by the direct impact of the disruptions in air travel and transport. Airlines could lose as much as $1 billion because of the closed airports in the UK and northern Europe. Some six million passengers already have been affected.

However, it is not only passengers who are affected by the grounding of aircraft. Cargo flights are disrupted as well, and that means everything from car parts to medicines may simply not arrive for the foreseeable future.