Friday, May 13, 2011

Sharp Rise in Food Prices & the Arab Revolution

Translation of the third installment of an article series by Shalgooni (writer/analyst/activist with Raah-e Kargar). This article focuses on the effects of sharp rise in price of food products in the last few years on initiating the Arab revolts.
[Read the original article, in Persian, here.]

Revolution and Counterrevolution in the Arab World - 3
By: Mohammad-Reza Shalgooni / May 4, 2011

In the past four months, 12 out of the 22 members of the Arab League have witnessed widespread protests and rebellions by the people, but in six countries the protests have been more prolonged and more extensive and have in effect become mass general rebellions, and in two countries they have been able to bring down the dictators.

What are the reasons for the differences in continuity and extent of the mass protests in these countries? There is no doubt that the crackdown against the protests plays an important role, but the differences cannot be explained by reference to level of oppression alone. That is so since, first, dictatorship and oppression/crackdown is the general reality in the Arab world; second, in some countries, intensification of the violent crackdown actually intensified the protests. For example, Ben Ali's regime in Tunisia had a very effective system of control and oppression, but it could not survive in the face of people's movements; or, in Yemen, Libya and Syria, very violent crackdowns are in progress, but so far they have not been able to break people's resistance. Therefore, we must also look for other factors.

The Economic Crisis and the Arab Revolution
Many different factors affect the formation and development of mass rebellions, especially when they become generalized and turn to revolutions. For this reason, it is very difficult, if not impossible, to predict revolutions precisely, and the explanation of the causes of the revolution can take place only after the onset of the revolution, or as they say, "The riddle becomes easy once solved."

Previously (in the second article of the series), I reminded that the Arab countries could be divided into three groups: oil states, non-oil states with strategic importance, and peripheral states. If we go by this grouping, we will find that the most favorable conditions for the spread of the revolution exist in the second group. However, a look at the real arena of protests and rebellions up to now shows that these protests have not been limited to any one group. For example, In Djibouti (which is considered a peripheral state in the Arab public opinion) we have witnessed widespread protests against the dictatorship of Ismail Omar Guelleh; meanwhile, in Palestine (which is the focal point of attention of all Arab masses) there has not been a new uprising against Israel, nor has there been any noticeable protests against the regime of [Palestinian Authority president, Mahmoud] Abbas (in the West Bank) or Hamas (in Gaza). Or, take Bahrain (undoubtedly one of the most affluent Arab countries), in which the people's rebellion lasted longer and had a wider participation than in Morocco.

All that said, a little pause over the countries in which peoples' protests have lasted longer and been more widespread, and in which the protests have turned into mass rebellions, shows us that the capacity for development and deepening of the revolution exist more clearly in the second group. Of the six countries that have witnessed the most confrontations between the political system and the people, Bahrain and Libya belong to the first group of nations [oil states], countries with gross per capita product of over US$13 thousand, meaning regimes with great financial room for maneuver, and states that can bribe a small portion of the population to create a social base, and maintain their rule by mixing/combining bribes and oppression. In Bahrain, the revolution has for the moment been leashed through the foreign counterrevolutionary intervention. In contrast, in Libya, the intervention of the foreign powers in the revolution has turned it into a full-fledged civil war. However, in both cases it can be said that the revolution has been defeated, and in the case of Libya the defeat looks definitely more certain.

The other four countries are Tunisia, Egypt, Yemen and Syria, all of which belong to the second group [non-oil states with strategic importance]. In Egypt and Tunisia, people have been able to bring down the dictators and have thus struck a big blow against the ruling regimes, and in Yemen and Syria the people who have had it are increasing their pressure on their dictatorships. In addition to the reign of long-lived and harsh dictatorships, the common factor among all four is the economic crisis and the intensification of mass abject misery pressing down on the majority of the population. In all these countries the [sharp] increase in price of food products, widespread unemployment (particularly among the youth), severe lack of housing and the intense increase in class inequality have all created an explosive situation and can explain the extent and rage of the people's protests and rebellions. In fact, by analyzing the process of intensification of the economic and social crises, we may not only explain the major axes of the Arab revolution, but even the timing of the start of the revolutionary fires. The increase in cost of living and particularly of food products is a factor that is highlighted and pointed out by all analyses related to the Arab revolution. This issue is a result of the food crisis on a global level.

The price of all food products, including rice, wheat and corn, increased sharply in international markets from 2006 to 2008. In particular, the price of rice rose three-fold in a five-year period, meaning it went from around $600/ton in 2003 to more than $1,800/ton in May 2008. In 2009, the prices for major grains decreased to a degree, but it never went back to its previous years' level, and in the second half of 2010, based on the general food products index of [United Nations] Food and Agricultural Organization (FAO), the price of major grains/cereals increased by 23%, and this organization's combined index for December 2010 surpassed that of June 2008 record, and reached the highest level in the history of this record keeping (which started in 1990). This pooled index is the price of a basket of grains/cereals, grain oils, dairy products, meat and sugar in a six-month continuous period, and the [second half of 2010] price increases were mostly due to the increase in the price of sugar, grain oils and grains/cereals [1].

The defenders of the world capitalist system have portrayed the increase in recent years of the price of food products as a result of the increase in the living standards of people, especially in China and India. [...] However, this claim turns reality upside down for many reasons:

One: the absolute amount of the per capita world grain product has decreased sharply since the 1980s, and this decrease means nothing but a decrease in consumption of grains and increase in world hunger, more so than the leap in the price of food products in 2008. In other words, the past few years' global food crisis did not happen just in the last two years, but started more than two decades ago.

Two: The sudden turn by the U.S. and some other countries to bio-fuels in recent years (which was a reaction to the rise in oil prices) has had an important role in pushing up the price of grains/cereals. It should not be forgotten that the U.S., the largest producer and exporter of grains in the world, has in recent years set aside more than a quarter of its grain production, particularly corn, for bio-fuels production, and this must have pushed grain prices up.

Three: In the past three decades, the price of manufactured goods rose more sharply than food prices, and this factor has sharply reduced the purchasing power of the poor and working classes in the world and especially in the third world. In other words, neo-liberal disastrous policies and the ruination of small farmers, as well as appropriation of monopolies by multi-national companies in food production, have all played key roles in striking a big blow to the purchasing power of workers and the poor, especially in the third world countries.

Four: The sharp and massive spread of credit and speculation in the international food markets (which itself is the result of the uncontrolled globalization of finance capital) has also helped the rise in food product prices, and has had particularly important role in causing sharp fluctuations in those prices in recent years.

Five: Besides all these factors, to connect the rise in price of food products to the increased consumption in China and India, even in the most optimistic scenario, is an exaggeration. As Prabhat Patnaik, the Indian Marxist economist, has shown, "per capita foodgrain absorption" (which is calculated as gross product minus gross exports and minus the net increase in inventoried products) in these countries has not gone up, but has gone down. With liberalization of Indian economy, the decrease in "per capita foodgrain absorption" has accelerated; to the point where this index for 2008 was lower than it was in 1953. In China too, between 1996 and 2003 per capita absorption of grains dropped sharply, and although it rose after 2005, it never regained its 1996 level [2].

Six: Alongside all the mentioned factors, of course, we must not ignore the unfavorable natural conditions for agricultural production in recent years. For example, last summer's drought in Russia and Ukraine, which led to a ban of wheat exports from these two countries, and also the severe floods in Australia, India and Pakistan and the drought in Argentina must have undoubtedly been among the short-term factors pushing up the price of food products.

In light of the points mentioned above, we can better understand how the rising prices of food products influenced the formation of the socio-economic crisis in non-oil Arab countries.

The Nile valley has fed the Egyptian people for the past six thousand years, but today Egypt is the world's biggest importer of wheat, and imports nearly half of the wheat it needs. Why? The answer should be sought in the neo-liberalism that has been ruling the country for the past four decades. As Alex Callinicos says, "Egypt can claim to have pioneered neoliberalism in the Global South." This orientation taken on by Egypt in 1974 with "Infitah", or the open-door economic policy started by Anwar Sadat, which opened the gates of the country to trade and investment by foreign countries. In 1991, Hosni Mubarak completed Sadat's plan by accepting "Structural Adjustment Program" suggested by international financial institutions. Included in the plan was the abolition of Gamal Abdel Nasser era land reforms, which allowed the leaseholders and landowners to get rid of peasants and small farmers on agricultural lands. This policy was carried out, with violent crackdown of peasants in 1997, and was a big blow to the agricultural economy of Egypt; a majority of peasants lost their livelihoods, and in particular the production of grains and food products in Egypt was severely broken up and the country became one of the biggest importers of wheat [3]. Thanks to these policies, today nearly half of Egypt's population lives on less than $2 per day and, "Food comprises almost half the country's consumer price index, and much more than half of spending for the poorer half of the country" [4]. Also, thanks to the same policies, as the world's largest wheat importer, Egypt is always hostage to the wheat price fluctuations in the world markets, and is one of the first countries to get harmed by vertical increases in the price of food products in the world. It is enough to remember that the sharp rise in the price of bread, and also its scarcity, caused the workers' strikes of 2007 and 2008 in Egypt; the strikes that played a very important role in creating the conditions for the ongoing revolution in Egypt right now.

The shaping up of the food crisis in Tunisia also took a similar route as in Egypt. In 1984, Habib Bourguiba, Tunisia's previous president, under pressure from International Monetary Fund accepted their "Structural Adjustment Plan", and, among other things, eliminated food subsidies. As a result of this policy of the regime, the doubling of the price of bread brought about bread riots. Bourguiba's government reacted with violent crackdown, killing more than 50 defenseless people, but at the same time, the government was forced to return the prices to the previous levels and Bourguiba sacked his interior minister. Three years later (in November 1987), Zein al-Abedin Ben-Ali, Bourguiba's prime minister, who had climbed the ranks through the regime's security/intelligence apparatus, declared Bourguiba "unable to run the nation's affairs" and replaced him, and with open arms implemented all of IMF's guidelines. Ben-Ali's violent dictatorship immediately became the darling of IMF and the World Bank, but with the implementation of those neo-liberal policies, Tunisia just like Egypt became trapped in the fluctuations in the world food products' markets. And the interesting point is that even despite the sharp increases in price of food products in the last year, IMF was still asking Ben-Ali to meet all other austerity measures demanded, by eliminating all the remaining subsidies [5]!

The increase in the price of food products also had an important role in creating the conditions for people's rebellion in Syria. Of course it must be noted that Syria, unlike most Arab countries, has great amount of arable land (24.8% of total land), and unlike Egypt and Tunisia, state-controlled economy still plays a determining role, but the country's economy is more corrupt and poorer than to be able to withstand the world price rises in food products. In Syria, it was the sharp rise in prices of cooking oil and rice that had a role in sparking the mass rebellions. Asad's regime, which had been worried about the spread of the mass rebellions to Syria, had tried preemptively to prevent the rise in the price of key food products to "exceed the purchasing power of the consumers." However, the corruption that is ruling the country caused this very plan of the regime to fight against inflation in food products to lead to hoarding of oil and rice, and therefore led to the sharp increase in the price of these goods in the market!

Even in Yemen, which is one of the poorest countries in the Middle East, the increase in the price of food products had an important role in intensifying general poverty and sparking the fires of mass protests. This is so since, even though the livelihood of a majority of the population in Yemen is provided for through agriculture and animal farming, much like most Arab countries, a major portion of food products is imported. And this is one of the most obvious reasons for the bankruptcy of the ruling dictatorship in the country. It must be noted that about 70% of Yemen's population lives in rural areas, yet the share of agriculture and animal farming in the gross domestic product of the country is less than one tenth (8.2%).

However, the catastrophe facing a great majority of the people in countries under discussion is not limited to the rise in prices of food products. A paralyzing mass unemployment and ever-increasing class divide have made the socio-economic crises in these countries even more paralyzing. According to estimates by Ahmad al-Najjar (Egyptian economist) unemployment rate in Egypt in 2009 was about 7.9 million, and the actual number of unemployed was about 26.3% of the labor force, and the rate of unemployment among the youth from 15 to 29 year-olds was three times that figure. [...] In addition to those who are unemployed, even a large segment of the so-called employed suffer through harsh conditions. As stated by Hazem Kandil, an Egyptian sociologist, nearly one fifth of Egyptian population and about one fourth of Cairo's population consist of shantytown dwellers [6].

We know that everywhere in the world "free market" can progress forth through forceful government policies, and that further freeing of markets even in established western democracies can only proceed through hollowing democratic structures of substance and through weakening of people's oversight powers. However, in Egypt and Tunisia this trend has had a more violent form, and the neo-liberal policies were enacted through a combination of generalization of oppression and suffocation of society and an ever-increasing confluence of the political power with the economic sphere. In these countries, "free market" means nothing but the unlimited freedom of action by the ruling dynasties and their cronies and allies to loot the public goods. This freedom of action in Egypt reached its zenith, by bringing in big capitalists and representatives of the World Bank and the IMF directly into the cabinet [...] since 2004, and with the formation of mafia gangs organized by Gamal Mubarak (son of the president) within the National Democratic Party. [...]

However, it was the onset of the global economic crisis that combined the structural weaknesses of these countries that were trapped in neo-liberalism with dictatorships, which brought them to the point of explosion. With the onset of the global economic crisis, first, the income from tourism industry (which in both countries [Egypt and Tunisia] is one of the most important sources of currency earning) dropped sharply; second, the remittances from migrant workers in western countries nearly dried up; third, the income from Suez Canal in Egypt dropped sharply; fourth, the exports from both countries were harmed greatly; and finally, as a result of all these setbacks, unemployment rose even more sharply [7].

In view of all the points mentioned, we can say with conviction that the start of the revolution in Tunisia and Egypt took place as a direct impact of the great crisis of global capitalist system. In the case of Syrian, however, although the global crisis has not had a severe and direct effect, it should not be forgotten that in Syria and Yemen too the rate of unemployment, especially among the youth, is very high and this factor has had a very important role in sparking the fires of the mass rebellions.

[1] Michel Chossudovsky : Tunisia and the IMF's Diktats: How Macro-Economic Policy Triggers Worldwide Poverty and Unemployment; Global Research: January 20, 2011
[2] Prabhat Patnaik : The World Food Crisis; People's Democracy: 27 February 2011
[3] Alex Callinicos : The return of the Arab revolution; International Socialism: No 130 (April 2011 )
[4] Spengler : Food and failed Arab states; Asia Times Online: 2 Feb 2011
[5] see note 1
[6] Hazem Kandil : Revolt in Egypt, New Left Review: March/April 2011
[7] see notes 1 and 3


Renegade Eye said...

This blog was plugged at Louis Proyect's blog. It's one of the best, I've seen in quite awhile.

Overall I like the analysis of the Arab Revolution. It's really still in infancy. There still is a dialectic in Egypt and Tunisia.

The process is slower than most acknowledge. There will be defeats and victories. It's not an isssue of hours or days, we're talking years.

The old man was right. We're facing a crisis of leadership.


RF said...

Renegade Eye,

Many thanks for stopping by! I know this is not the most active blog, but I try to publish good translations of some of the more decent analysis coming out of Iran or produced by Iranians.

Thank you again!

In solidarity,