From Morocco to Iran, the countries of the Middle East, one of the world’s most food insecure regions, are finding themselves amongst those in the throes of a global food price crisis that threatens to unleash violence, riots, extremism and unprecedented levels of poverty in the region.
Numerous reasons lie behind the global food price crisis, which has been dubbed by the World Food Program (WFP) the “silent tsunami”. Most notable are the deprecation of the US dollar, the huge increase in the price of fuel, hyperinflation, drought, poor harvests, and other environmental factors. These are collectively assaulting developing and rich countries alike and have the potential to produce the world’s most catastrophic collective disaster in decades.
The International Monetary Fund’s (IMF) 2008 World Economic Outlook stated that the shift in production from food crops to biofuel has led to the price increase of nearly half of the major food crops from 2006 to 2007. The Middle East is particularly vulnerable because as a region, it suffers from the least rainfall and imports more food than anywhere else in the world, making it susceptible to international market price changes. The price of rice, pasta, wheat, flour, corn, and other grains have now become so expensive that the poorest in the Middle East are either finding they have to spend a greater portion of their incomes to buy these staple products or cannot afford to buy them at all. The UN Food and Agricultural Organization (FAO) said food prices around the world had increased about 40% in 2007, with the price of grains increasing by 42% and dairy about 80%. According to Joachim von Braun, head of the International Food Policy Research Institute (IFPRI), “World agriculture has entered a new, unsustainable and politically risky period.”
Arab Reaction Varied
According to the report The Food Price Crisis in the Arab Countries: Short Term Responses to a Lasting Challenge by Ibrahim Saif, Resident Scholar at the Carnegie Endowment for International Peace, the response of Arab countries has been varied. He says the region can be split into two groups, “the Gulf Cooperation Council (GCC) oil producing countries, which have relatively small populations and ample revenue, (and who) thus have room to adjust to the inflation in food prices; and the populous, non-oil-exporting countries in which a significant number of people live below or just at the poverty line.”
GCC countries, comprising Qatar, Bahrain, Saudi Arabia, the United Arab Emirates, Kuwait and Oman, have been able to offset domestic food price increases by the windfall of their increasing oil revenues, ironically one of the factors leading to global price increases. Despite the fact that most of the GCC countries suffer from significant inflation, all have increased the wages of civil servants, food subsidies and public spending, thereby avoiding the violent clashes experienced by their non-oil producing Arab brethren like Egypt, Morocco or Mauritania.
Oil Producing States
Saudi Arabia has been one of the more responsive Arab states to the food price crisis. The Kingdom donated US $500 million in May to the WFP to help the UN body tackle financial deficits in its international food aid services. The WFP helps feed around 73 million people in 79 different countries and had launched an appeal for $775 million. According to a WFP statement, “Donors have been responding overwhelmingly, with 31 countries donating a collective 460 million dollars to date, and now Saudi Arabia closing the gap…The 500 million dollars from Saudi Arabia rounds out the appeal, and leaves an additional 214 million dollars available for other urgent hunger needs.” In addition, the Saudi-based Islamic Development Bank has said it will spend $1.5 billion in Muslim countries to develop food security.
But the world’s biggest oil producer isn’t having an easy time of its own and is looking to use its oil money to secure food. The Saudi government has held talks with countries like Turkey, Pakistan, Ukraine, Sudan and Egypt to secure agricultural land for crops. According to the Saudi-US Relations Information Service (SURIS) Saudi company Savola Group has announced plans to invest over $100 million in agricultural firms in Sudan, Ukraine or Brazil to secure supplies of products like sugar and edible oil. Before hosting an emergency meeting of oil producers and consumers in Jeddah in mid June, King Abdullah said Saudi would raise oil production to 9.7million barrels a day, up an extra half million daily, a measure which should help ease fuel costs in both poor and rich countries. The Kingdom has also announced a series of measures aimed at alleviating the impact of food price increases on its own citizens. The government has raised food subsidies and increased salaries and welfare payments, despite having an inflation rate of 10.6 percent.
Other Gulf states are reacting similarly to the food price crunch. The government of Bahrain, the Gulf’s smallest oil producer, said in early June that it has spent 500 million dinars ($1.33 billion) a year on food and fuel subsidies. The government has looked as far as the Philippines to buy into rice production and is contemplating establishing an import company to stockpile food. Bahraini newspapers have furthermore been carrying the names of citizens eligible for state hand outs. In Kuwait, increasing inflation, estimated at 10 percent, led the kingdom to drop its peg to the dollar. In February, the previous government approved a salary increase for public sector employees and agreed in June to discuss another raise.
Non-oil Producing Countries
In contrast, non-oil producing countries, whose economies are already in disrepair, have been struggling to cope with increasing prices, and despite some food subsidies and wage increases, millions of people are increasingly unable to cope and are in their anger turning against their governments. World Food Program representative Giancarlo Cirri told UN humanitarian news agency IRIN, “This could be the year of all dangers.” Speaking to The Economist, UN World Food Program head Josette Sheeran said even the middle classes, who are usually untouched by famines, are being affected. “For the middle classes it means cutting out medical care. For those on $2 a day, it means cutting out meat and taking the children out of school. For those on $1 a day, it means cutting out meat and vegetables and eating only cereals. And for those on 50 cents a day, it means total disaster.”
Mauritania, Yemen, Egypt, Morocco and Lebanon have all been hit by violent protests over food and fuel increases and poor wages. IRIN reported that Mauritania, which imports 70 percent of all food “may face its highest ever levels of hunger in 2008.” In addition, “the government allocated $3.2 million to build up national food security stocks in 2007,” but “does not have enough substantive reserve stocks to meet a large-scale food security crisis in 2008.” The scale of human suffering in the Northwestern African Arab country is likely to be huge.
Yemen, identified by the WFP as one of 30 countries in the world most affected by price increases, has seen its food price crisis exasperated by severe drought and rebel fighting, which has disrupted agricultural production and led to thousands of people being displaced. 40 percent of the population is malnourished, according to WFP Yemen representative Mohammed el-Kouhene. UNDP Yemen stated that 15.7 per cent of Yemenis live on less than $1 a day, with 45.2 percent living on less than $2 a day. Riots in the South over unemployment and rising costs of living took place in March and April. Meanwhile in Morocco, violent protests took place from the end of May to June. Conflicting reports have emerged over the numbers killed. The Kingdom has decided to spend 2 billion on raising public sector salaries.
In Lebanon, the price of food has jumped by more than 30 percent since the beginning of this year. The price of Arabic flat bread has doubled to LL1,500 ($1) in the last week. Fuel has increased too. The country already has serious fuel shortages which mean regular power cuts, with some villages reporting only three hours of electricity a day. Popular discontent has been aggravated by the country’s myriad political problems. In May, protests demanding the minimum wage be raised were forgotten when Shiite group Hizbullah launched an takeover of West Beirut in response to two government decisions it viewed as being directed against it. The new minimum wage of LL 500,000 (333$) has not been implemented by the government as it has yet to be formed by Prime Minister-designate Fuad Siniora. However, the Ministry of Social Affairs has been reported as saying it will increase the number of people it gives assistance to by eight times.
In Jordan, protests have also taken place. Although Jordanian state news agency Petra quoted Agricultural Minister Muzahim Muhaisin as saying “There is an intention to set up an emergency fund to support Arab countries that suffer from the rise in prices of food products”, no such development has been announced. Many analysts have expressed a fear that the food crisis is drawing new recruits to Islamic political groups, such as the Islamic Action Front, the Jordanian branch of the Muslim Brotherhood, which the government views with suspicion.
Although Egypt joined other Arab countries in March in raising the wages of public sector employees, the raises are still insufficient to meet higher food, fuel, and other living costs for a country with a population of just under 82 million. In addition, any benefit the salary increase had was short-lived as only a few days later, the government of Hosni Mubarak increased the price of subsidized fuel to try and reach the $2.6 billion needed to finance the wage increase. The government recently established the National Food Security Task Force to coordinate policy on the crisis, and has forbidden the export of rice from April to September. It has also added 15 million people to the national ration-card system and raised taxes on things like cigarettes and luxury car duties to cover for 88 percent increase in subsidies.
But according to the UN office for the Coordination of Humanitarian Affairs (OCHA) website Relief Web, “the average household expenditure on food has reportedly increased by almost 50 percent by the end of the year.” Poor people are thus spending more and more of their meager incomes on food and less on education and healthcare. In May four people were killed in fights in bread queues over food prices and in April many were injured in riots over poor wages in the textile city Mahalla al-Kubra. Egypt has reacted with an iron fist to any protests or demonstrations, arresting hundreds. Feeding on such popular discontent, the Muslim Brotherhood, as in Jordan, has been able to step into the void left by the government and has helped feed poor people, thereby securing new support from a critical segment of society.
A UN summit on the international food crisis in Rome, Italy, and attended by 181 world leaders in early June concluded that global food production must double by 2030 in order to meet shortages. Economist Kamal Hamdan said recommendations by major world organizations to lift subsidies in some Arab countries on wheat and oil were partially to blame: “We should admit that some of the recommendations of the IMF and World Bank have led to these problems.” While at the oil crisis meeting in Jeddah, United Nations Secretary General Ban Ki-moon remarked that “Unless we properly manage these issues, this may create a cascade of all other challenges and prices, affecting not only social economic issues but also creating political instability.” As the Middle East has already begun to feel the shockwaves, the question is whether the governments of the most vulnerable countries, the non-oil producing countries, will be able to use anything else but force to end anger about a crisis they so far been able to do little about. The gap of wealth in the Middle East is also likely to increase as the poorer continue to spend more of their income on basic foodstuffs and the rich and oil producing Arab nations simply buy their way out of the crisis.