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Belmont Club

Strictly From Hunger

May 21st, 2011 - 3:20 pm

The Wall Street Journal says that many Arabs are going to have a hard time finding enough bread to eat over the coming months. Bad weather and lower-than-average crops — plus climbing fuel costs — have driven up the price of wheat by 91% in less than a year.  Arabs eat a lot of bread; Tunisians, Algerians and Egyptians, for example, consume almost 3 times per capita than Americans. They account of 1/3 of all the world’s traded wheat.

And they can’t afford it any more. In the past the IMF has urged countries to cut back on their food stockpiles as these were non-financially performing assets. Real estate speculation cut back on arable land in many countries. It may have seemed like a good idea at the time, but now people are discovering an old truth. Man does not live by bread alone, but it sure helps to have it.

What changed the equation was Asia. Spengler writes that rising food demand from places like China “priced the Arab out of the grain market”.  The resulting food shortages fueled riots that created the Arab Spring, which was driven not simply by a hunger for democracy, but just plain old hunger. Noting that “even Islamists have to eat”, Spengler notes that controlling food has become a priority activity among Egyptian revolutionaries.

The Ministry of Solidarity and Social Justice is already forming “revolutionary committees” to mete out street justice to bakeries, propane dealers and street vendors who “charge more than the price prescribed by law”, the Federation of Egyptian Radio and Television reported on May 3.

According to the ministry, “Thugs are in control of bread and butane prices” and “people’s committees” are required to stop them. Posters on Egyptian news sites report sharp increases in bread prices, far in excess of the 11.5% inflation reported for April by the country’s central bank. And increases in the price of bottled propane have made the cost of the most widely used cooking fuel prohibitive.

The collapse of Egypt’s credit standing, meanwhile, has shut down trade financing for food imports, according to the chairman of the country’s Food Industry Holding Company, Dr Ahmed al-Rakaibi, chairman of the Holding Company for Food Industries. Rakaibi warned of “an acute shortage in the production of food commodities manufactured locally, as well as a decline in imports of many goods, especially poultry, meats and oils”. According to the country’s statistics agency, only a month’s supply of rice is on hand, and four months’ supply of wheat. …

It will look like the Latin American banana republics, but without the bananas. That is not meant in jest: few people actually starved to death in the Latin inflations. Egypt, which imports half its wheat and a great deal of the rest of its food, will actually starve.

So who’s getting ready to manage the next phase of the Arab Spring?  The President in his recent speech on Middle Eastern initiatives mentioned “aid”. But that is a little likely to be effective as a bucket of sand in four-alarm fire.

When historians look back on the first decades of the 21st century they may conclude that the political and economic crisis that swept over the world was the direct result of decades of resource misallocation driven by political objectives.  They will look back on  the drilling bans, environmental edicts which have shut down agricultural areas, the massive entitlement expansions and quests for carbon sequestration and ask: what were the political leadership thinking?

Maybe those historians will conclude that they weren’t. Because as everybody knows, they think the biggest problem in the Middle East today is Israel’s borders. Never mind that the Arab street has nothing to eat, no employment for its youth. Forget the fact that nearly every country is under the heel of a dictatorship or in transition to another one. That’s secondary. The biggest priority of the age is to tame Israel and build windmills all over the landscape. Do you disagree? Well you don’t count.

Among those that do, it is this single-minded pursuit of the irrelevant by the self-important that constitutes the greatest catastrophe of our time.

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