MARK DURIE: LEAN YEARS AHEAD IN THE MIDDLE EAST

Posted By on May 14th, 2011

http://www.markdurie.com/
What is going on in the Middle East involves a tangled mess of intersecting factors.  There is no single explanation for the unrest.

Factors include demographics, failing economic policies, oppressive regimes, radical religion, and food.  David Goldman (who writes in the Asia Times under the name of Spengler) first drew my attention to the food issue.  His latest writing on this, The Hunger to Come in Egypt makes very sobering reading indeed.

The problem of food is not only in Egypt – it will ‘bite’ elsewhere in the Middle East where there are not huge oil revenues.

Why is there a food issue?  To put it in a nutshell, the rise and rise of the Asian middle classe has put dramatic upward pressure on global food prices, especially during times of shortage.  Greater competition for the available grain resources, combined with growing meat consumption (animals eat the grain which otherwise might be destined for human consumption) as well as grain for ethanol exchange is causing widely global fluctuating grain prices.  Poor people simply cannot afford the price of grain when the prices spike.  I have collected here some statistics which provide something of the background to this.

First, we can note that the Middle East is in the peak of a population boom, with vast numbers of mouths to feed, especially among the cohort of young adults.  At the same time, in the Middle East, youth unemployment is the worst in the world:

Unemployment rates for youth International Labour Organization (ILO),
Global Employment Trends for Youth (Geneva: ILO, 2006): Annex 1.
(MENA = “Middle East and North Africa”)

The next graphic shows how, over 50 years, North Africa and the Middle East have taken up a steadily increasing share of world wheat imports, until over the the past decade their share has hovered around one third of the global total.  The other big block of wheat importing nations — and the Middle East’s main competitor for grain supplies – is South, East and South East Asia, where vast wealth has been accumulating during the Asian economic boom.

This next table shows the changes from 2004 to 2009 in the ranking of top wheat importers.  Middle Eastern countries went from being 2 of the top ten importers to 5 of the top ten.  Notice the top wheat importer in 2009 was Egypt!  Where does the money come from to pay for all that wheat?  Since January 2011, not from tourism revenues.
2004
2009
1. China
1. Egypt
2. Japan
2. Iran
3. Italy
3. Brazil
4. Algeria
4. Algeria
5. Brazil
5. Japan
6. Indonesia
6. Indonesia
7. Spain
7. Morocco
8. Egypt
8. Iraq
9. Mexico
9. Nigeria
10. South Korea
10. Turkey
This next chart shows the price of wheat in recent years.  We are just now in another spike in prices.
What happens if you live on under $2 a day, the global price of grain more than doubles, your national currency collapses, tourism revenues dry up and the local economy fails?  People starve.  A lot of people get badly hurt in the scramble for food, and the inevitable recrimminations as desperate people and political opportunists look for scapegoats.  You also could see a lot of starving people trying to make their way across the Mediterranean in leaky boats.
Goldman writes:
“Revolutions don’t only kill their children. They kill a great many ordinary people. The 1921 famine after the Russian civil war killed an estimated five million people, and casualties on the same scale are quite possible in Egypt as well. Half of Egyptians live on $2 a day, and that $2 is about to collapse along with the national currency, and the result will be a catastrophe of, well, biblical proportions.”
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