Rising food and fuel prices are destabilizing countries on the brink of

Now, more than ten years after the Arab Spring, world food prices take off again. Earlier this year, they already reached an all-time high as the pandemic, bad weather and the climate crisis upended agriculture and threatened the food security of millions of people. Then came the Russian war in Ukraine, which worsened the situation significantly and also caused a sharp increase in the cost of another daily necessities – fuel.

This combination could create a wave of political instability as people who were already frustrated by the government’s actions are pushed to their limits by rising costs.

“This is extremely worrying,” said Rabah Arezki, a senior fellow at the Harvard Harvard School of Government. Kennedy and former chief economist at the African Development Bank.

“I don’t think people have already felt the full impact of price increases,” said Hamish Kinnear, Middle East and North Africa analyst at Verisk Maplecroft, a global risk advisory firm.

Lessons from the Arab Spring

In the run-up to anti-government protests that became known as the “Arab Spring”. — which began in Tunisia in late 2010 and spread to the Middle East and North Africa in 2011 — food prices have skyrocketed. The food price index from the Food and Agriculture Organization of the United Nations reached 106.7 in 2010. jumped to 131.9 in 2011then the record.
“Mohamed Bouazizi didn’t set himself on fire because he couldn’t blog or vote,” Emirati columnist. wrote in January 2011referring to the street vendor whose protest helped spark a revolution in Tunisia and eventually the entire Arab world. “People set themselves on fire because they can’t watch their family slowly wither away, not from grief, but from hunger.”

Circumstances varied from country to country, but the overall picture was clear. Rising wheat prices were a major part of the problem.

Now the situation is even worse what it was then. World food prices have just reached a new record high. The FAO Food Price Index, released on Friday, hit 159.3 in March, up nearly 13% from February. A war in Ukraine, the largest exporter of wheat, corn and vegetable oils, and tough sanctions on Russia, a key wheat and fertilizer producer, are expected to push prices further up in the coming months.

“Forty percent of Ukraine’s wheat and corn exports go to the Middle East and Africa, which are already struggling with hunger and where further food shortages or rising prices could trigger social unrest,” said Gilbert Hungbo, head of the International Agriculture Fund. Development, said last month.

Added to the pain is a surge in energy prices. World oil prices are almost 60% higher than a year ago. The cost of coal and natural gas has also risen sharply.

Many governments struggle to protect their citizens, but fragile economies that borrowed heavily to weather the 2008 financial crisis and pandemic are the most vulnerable. As growth slows, hurting their currencies and making debt repayments harder, sustaining food and fuel subsidies will be difficult, especially if prices continue to rise.

“Now we are in a situation where countries are in debt,” Arezki said. “As a result, they don’t have buffers to try and contain the tensions that such high prices will create.”

According to the World Bank, about 60% of the poorest countries on the eve of the invasion of Ukraine were “already in a debt crisis or at high risk of one.”

Where the tension builds

Asia: In Sri Lanka, an island nation of 22 million people, the economic and political crisis is already simmering, with protesters taking to the streets despite a curfew and mass resignations of ministers.

Faced with high levels of debt and a weak economy dependent on tourism, Sri Lanka has been forced to reduce its foreign exchange reserves. This prevented the government from making payments on key imports such as energy, creating devastating shortages and forcing people to queue for hours for fuel.

Sri Lanka is going through an economic and political crisis.  Here's what you need to know

Its leaders also devalued their currency, the Sri Lankan rupee, in an attempt to secure financial assistance from the International Monetary Fund. But this only increased inflation at home. In January, it reached 14%, which is almost twice the rate of price growth in the US.

On Sunday, Pakistan’s parliament passed a vote of no confidence in Khan, removing him from power and toppling his government. While his political problems date back many years, claims of economic mismanagement due to soaring food and fuel prices and depletion of foreign exchange reserves have exacerbated the situation.

“The scale of the economic chaos has united opposition to Imran Khan,” said Kinnear of Verisk Maplecroft.

Middle East and Africa: Experts are also watching for signs of political crisis in other Middle Eastern countries that are heavily dependent on food imports from the Black Sea region and often provide generous subsidies to the population.

In Lebanon, where nearly three-quarters of the population lives lived in poverty last year as a result of political and economic collapse, between 70% and 80% imported wheat originally from Russia and Ukraine. Key grain silos were also destroyed in the 2020 explosion in the port of Beirut.
And Egypt, the world’s largest buyer of wheat, is already under enormous pressure on its massive bread subsidy program. Country lately set a fixed price for unsubsidized bread after a price spike and trying to secure wheat imports from countries such as India and Argentina, not.

With about 70% of the world’s poor living in Africa, Arezka estimates, the continent will also be “highly exposed” to rising food and energy prices.

Droughts and conflicts in countries such as Ethiopia, Somalia, South Sudan and Burkina Faso have left more than a quarter of the continent’s population in food insecurity, the International Committee of the Red Cross said this week. The situation risks worsening in the coming months, he continued.

Political instability is already on the rise in parts of the continent. Since the beginning of 2021, a series of upheavals have taken place in West and Central Africa.

Europe: Even the more advanced economies, which have large reserves to protect citizens from painful price hikes, will not have the tools to fully cushion the blow.

Thousands of protesters have gathered in cities across Greece this week to demand higher wages to fight inflation as the French presidential election narrows due to far-right candidate Marine Le Pen. plays up its plans to lower the cost of living. President Emmanuel Macron’s government said last month thatreviewing the issue of food stamps so that middle- and low-income families can afford to eat.

– Jessie Yeung, Rhea Mogul and Sophia Saifi provided reporting.

Leave a Reply

Your email address will not be published. Required fields are marked *