The combination could create a wave of political instability, as people who were already frustrated with government leaders are pushed to the limit by rising costs. “It’s extremely worrying,” said Rabah Arezki, a senior fellow at Harvard’s Kennedy School of Government and a former chief economist at the African Development Bank. “I do not think people have yet to feel the full impact of rising prices,” said Hamish Kinnear, a Middle East and North Africa analyst at Verisk Maplecroft, a global risk advisory firm.
Lessons from the Arab Spring
Food prices have risen sharply in the wake of anti-government protests known as the Arab Spring – which began in Tunisia in late 2010 and spread to the Middle East and North Africa in 2011. The Food and Agriculture Organization of the United Nations Food Price Index rose to 106.7 in 2010 and jumped to 131.9 in 2011, then a record. from the Emirates The commentator wrote in January 2011, referring to the street vendor whose protest act helped start the revolution in Tunisia and, finally, in the Arab world. “People set themselves on fire because they can not bear to see their family wither slowly, not out of sadness, but out of cold and intense hunger.” Conditions in individual countries differed, but the bigger picture was clear. Rising wheat prices have been a major part of the problem. The situation now is even worse than then. World food prices have just reached a new record high. The FAO Food Price Index, released on Friday, reached 159.3 in March, up nearly 13% from February. The war in Ukraine, a major exporter of wheat, corn and vegetable oils, as well as harsh sanctions on Russia – a major producer of wheat and fertilizers – are expected to spur further price increases in the coming months. “Forty percent of Ukraine’s wheat and corn exports go to the Middle East and Africa, which are already facing hunger problems and where further food shortages or price increases could cause social unrest,” said Gilbert Houngbo, head of the Fund for Georgia. Growth, he said last month. In addition to the pain is the increase in energy prices. World oil prices are almost 60% higher than a year ago. The cost of coal and gas has also risen. Many governments are struggling to protect their citizens, but the fragile economies that borrowed heavily to overcome the 2008 financial crisis and pandemic are more vulnerable. As growth slows, hurting their currencies and making it harder for them to keep up with debt payments, it will be difficult to maintain food and fuel subsidies, especially if prices continue to rise. “We are now in a situation where countries are in debt,” Arezki said. “As a result, they have no reserves to try to contain the tensions that will result from such high prices.” According to the World Bank, almost 60% of the poorest countries were “already in debt trouble or at high risk” on the eve of the invasion of Ukraine.
Where tensions simmer
Asia: In Sri Lanka, an island nation of 22 million, an economic and political crisis is already brewing, with protesters taking to the streets in defiance of curfews and government ministers resigning en masse. Faced with high debt levels and a weak tourism-based economy, Sri Lanka has been forced to reduce its foreign exchange reserves. This has prevented the government from making payments for key imports such as energy, creating catastrophic shortages and forcing people to spend hours in line for fuel. Its leaders have also devalued its currency, the Sri Lankan rupee, as they try to secure a bailout from the International Monetary Fund. But that only made domestic inflation worse. It reached 14% in January, almost double the rate of price increase in the United States. Pakistan’s Khan, meanwhile, faces a no-confidence vote in the country’s parliament on Saturday. While its political problems date back years, it now struggles with claims of financial mismanagement as food and fuel costs soar and the government runs out of foreign exchange reserves. “The scale of the economic chaos has united opposition to Imran Khan,” said Kinear of Verisk Maplecroft. Middle East and Africa: Experts are also watching for signs of political unrest in other Middle Eastern countries that are heavily dependent on food imports from the Black Sea region and often provide generous subsidies to the public. In Lebanon, where nearly three-quarters of the population lived in poverty last year as a result of a political and economic collapse, between 70% and 80% of imported wheat comes from Russia and Ukraine. Basic grain silos were also destroyed during the 2020 explosion in the port of Beirut. And Egypt, the world ‘s largest buyer of wheat, is already under enormous pressure on its huge bread subsidy program. The country recently set a fixed price for non-subsidized bread after the price spike and is trying to secure wheat imports from countries such as India and Argentina. As it is estimated that 70% of the world’s poor live in Africa, the continent will also be “very exposed” to rising food and energy prices, Arezki said. Droughts and conflict in countries such as Ethiopia, Somalia, South Sudan and Burkina Faso have created a food security crisis for more than a quarter of the continent’s population, the International Committee of the Red Cross said this week. The situation is likely to worsen in the coming months, he continued. Political instability has already been created in parts of the continent. A series of coups have taken place in West and Central Africa since early 2021. Europe: Even countries with more developed economies, which have greater security reserves to protect citizens from painful price increases, will not have the tools to fully mitigate the blow. Thousands of protesters gathered in cities across Greece this week to demand higher wages to tackle inflation as French presidential election narrowed as far-right candidate Marine Le Pen played down her plans to cut costs. The government of President Emanuel Macron said last month that it was considering issuing food stamps so that middle- and low-income families could afford to eat. – Jessie Yeung, Rhea Mogul and Sophia Saifi contributed to the petition.
