Caymans Post

A world within. A state apart.
Friday, Mar 29, 2024

Soaring food and fuel prices are destabilizing countries on the brink

Soaring food and fuel prices are destabilizing countries on the brink

When people took to the streets in Egypt in 2011, protesters chanted about freedom and social justice — but also bread. The cost of pantry staples had jumped because of the skyrocketing price of goods like wheat, stoking fury with President Hosni Mubarak.

Now, more than a decade after the Arab Spring, global food prices are soaring again. They had already reached their highest level on record earlier this year as the pandemic, poor weather and the climate crisis upended agriculture and threatened food security for millions of people. Then came Russia's war in
Ukraine, making the situation much worse — while also triggering a spike in the cost of the other daily essential, fuel.

The combination could generate a wave of political instability, as people who were already frustrated with government leaders are pushed over the edge by rising costs.

"It is extremely worrisome," said Rabah Arezki, a senior fellow at Harvard's Kennedy School of Government and former chief economist at the African Development Bank.

Unrest in Sri Lanka, Pakistan and Peru over the past week highlights the risks. In Sri Lanka, protests have erupted over shortages of gas and other basic goods. Double-digit inflation in Pakistan has eroded support for Prime Minister Imran Khan, forcing him from office. At least six people have died in recent anti-government protests in Peru sparked by rising fuel prices. But political conflict isn't expected to be limited to these countries.

"I don't think people have felt the full impact of rising prices just yet," said Hamish Kinnear, a Middle East and North Africa analyst at Verisk Maplecroft, a global risk consultancy.

Lessons from the Arab Spring


In the run-up to the anti-government protests that became known as the Arab Spring — which began in Tunisia in late 2010 and spread through the Middle East and North Africa in 2011 — food prices were climbing sharply. The Food Price Index from the United Nations' Food and Agriculture Organization reached 106.7 in 2010 and jumped to 131.9 in 2011, then a record.

"Mohamed Bouazizi didn't set himself on fire because he couldn't blog or vote," an Emirati commentator wrote in January 2011, referring to the street vendor whose protest act helped launch the revolution in Tunisia and, ultimately, the Arab world. "People set themselves on fire because they can't stand seeing their family wither away slowly, not of sorrow, but of cold stark hunger."

Circumstances in individual countries differed, but the bigger picture was clear. Surging wheat prices were a major part of the problem.

The situation now is even worse than it was then. Global food prices have just hit a new record high. The FAO Food Price Index published Friday hit 159.3 in March, up almost 13% from February. The war in Ukraine, a major exporter of wheat, corn and vegetable oils, as well as harsh sanctions on Russia — a key producer of wheat and fertilizer — is expected to spur further price increases in the coming months.

"Forty percent of wheat and corn exports from Ukraine go to the Middle East and Africa, which are already grappling with hunger issues, and where further food shortages or price increases could stoke social unrest," Gilbert Houngbo, head of the International Fund for Agricultural Development, said last month.

Adding to the pain is the surge in energy prices. Global oil prices are almost 60% higher than they were a year ago. The cost of coal and natural gas has spiked, too.

Many governments are struggling to protect their citizens, but fragile economies that borrowed heavily to make it through the 2008 financial crisis and the pandemic are most vulnerable. As growth slows, hurting their currencies and making it harder to keep up with debt payments, maintaining subsidies for food and fuel will be difficult, especially if prices keep climbing.

"We are now in a situation where countries are indebted," Arezki said. "As a result, they have no buffers to try to contain the tensions that will emerge from such high prices."

According to the World Bank, close to 60% of the poorest countries were "already in debt distress or at high risk of it" on the eve of the invasion of Ukraine.

Where tensions are simmering


Asia: In Sri Lanka, an island nation of 22 million, an economic and political crisis is already boiling over, with protesters taking to the streets in defiance of curfews and government ministers stepping down en masse.

Grappling with high debt levels and a weak economy reliant on tourism, Sri Lanka was forced to run down its reserves of foreign currency. That prevented the government from making payments for key imports such as energy, creating devastating shortages and forcing people to spend hours lining up 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 just made inflation worse at home. In January, it reached 14%, almost double the rate of price increases in the United States.

Pakistan's parliament issued a vote of no confidence in Khan on Sunday, ousting him from power and upending his government. While his political problems date back years, claims of economic mismanagement as the cost of food and fuel leaped, as well as the depletion of foreign exchange reserves, made matters worse.

"The extent of economic chaos has united opposition to Imran Khan," Kinnear of Verisk Maplecroft said.

Middle East and Africa: Experts are also watching for signs of political distress in other countries in the Middle East 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 was living in poverty last year as the result of a political and economic collapse, between 70% and 80% of imported wheat comes from Russia and Ukraine. Key grain silos were also destroyed during the 2020 explosion at the Beirut port.

And Egypt, the world's largest buyer of wheat, is already seeing enormous pressure on its huge subsidy program for bread. The country recently set a fixed price for unsubsidized bread after prices spiked, and is trying to secure wheat imports from countries like India and Argentina instead.

With an estimated 70% of the world's poor living in Africa, the continent will also be "very exposed" to rising food and energy prices, Arezki said.

Droughts and conflict in countries like 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 risks getting worse in the coming months, it continued.

Political instability has already been building in parts of the continent. A series of coups have taken place in West and Central Africa since the start of 2021.

Europe: Even countries with more developed economies, which have greater buffers to shield citizens from painful price increases, won't have the tools to fully cushion the blow.

Thousands of protesters gathered in cities across Greece this week to demand higher wages to counter inflation, while France's presidential election is narrowing as far-right candidate Marine Le Pen plays up her plans to reduce the cost of living. President Emmanuel Macron's government said last month it was considering issuing food vouchers so that middle and low-income families could afford to eat.

Newsletter

Related Articles

Caymans Post
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×