Published Aug 22, 2022 – Dr. Tom O’Donnell, GlobalBarrel.com
In our Asharq interview on 21 August, a Jordanian expert and I discussed Middle East and North African (MENA) states’ food shortages, inflation, and the risk of recession and political unrest as a consequence of Russia’s war on Ukraine.
I especially commented on the troubled domestic policy responses in Egypt (and also in Turkey, which is not a “MENA” state; but deeply involved in Libya, Syria, and etc.).
Beyond the region’s domestic monetary and social policies, I stressed that in external policy, the region should collectively condemn Russia for its Ukrainian war, holding Moscow responsible for driving these crises in MENA. (Unfortunately, there was no time for me to elaborate on this latter point. Hence, I will write more in it, further below here.)
I was also asked to compare the present situation to that which led to the Arab Spring uprisings of 2010-11. (During that period, I taught a post-graduate seminar at The New School, NYC, and spoke at public events on the uprisings). Many of the same precursors exist now as then; however, at what point might this lead to protests or uprisings is not possible to say.
The further reality is that any successes by the EU and other developed states in acquiring scarce food, minerals and energy equates to more difficulty for developing states – especially Pakistan, Bangladesh, Africa and poorer states of the MENA Region – to acquire these necessities.
We both noted, however, that, at the same time, the oil-exporting and LNG-producing states of MENA are now enjoying a revenue windfall, and it is of course their responsibility along with the developed world to aid their poorer neighbors during this crisis.
Note too, that the OPEC states of MENA have reportedly earned a windfall of $1.3 trillion so far this year from high oil and gas prices.
Given the global competition for expensive and temporarily scarce food and energy commodities, poorer MENA states have little recourse. Lebanon, in particular, is in dire circumstances – much of which is the responsibility of corrupt internal political elites and Iranian-backed Hezbollah.
The IMF of course is playing a crucial role now in assisting MENA states.
(I note that the USA this week, according to the UN, purchased 150,000 metric tons of grain from Ukraine to distribute to developing states.)
Meanwhile, Russia is continuing to steal and/or destroy large quantities of Ukrainian grain which would otherwise be exported to MENA states.
My first answer in the interview was rather generic; about the World Bank’s recent report on the Region,
Turkey
Later, elaborating on the attempt of the region’s central banks to fight inflation with higher interest rates, and the risks of recession this is unavoidably causing, I emphasized that Turkey, at the direction of President Erdogan, is following a highly unorthodox policy (read: monetarily incorrect, and rather corrupt) of lowering interest rates to address inflation. This counter-intuitive decision is known to be a pet theory of the Turkish president. I explained how this dangerous policy caused a spurt of inflation during the latter part of 2021, the first time the central bank implemented lower rates to “fight inflation.” It was widely assumed that would be the end of this experiment. Nevertheless, the Turkish central bank once again cut rates earlier this week. And, again, Turkish lira inflation has begun to soar. This is clearly unsustainable.
I pointed out this policy is exacerbating the crisis for Turkish business and for the Turkish people who are increasingly unable to afford food and other necessities when they are actually available. Further, the central bank is running out of foreign exchange to support the lira.
Egypt
So too, I discussed the crisis in Egypt, the most populous MENA Arab state. 80% of its flour imports, as I understand (FT), are normally imported from Ukraine and Russia, explaining why the Egyptian wheat crisis is particularly severe. Its central bank head resigned just this week, reflecting the depth of its financial and monetary crisis.
Russia’s contradictory propaganda, and MENA’s response
One point I very much wanted to elaborate, but lacked the time, was the rediculous situation where, in many developing states there are significant sections of the political and business elites who believe – or decided to ‘believe’ – that Moscow”s claim it is fighing in Ukraine to defeat “nazis” and to “preempt” supposed Ukranian and/or NATO plans to atttack Russia. In tandem with this false propaganda, Putin, Lavrov and other Russian leaders are actively offering to aid them with wheat and other aid.
This is all rather absurd in that it is Russia which is exacerbating the global post-COVID food and commodities shortages and high prices by its war, and especially by its systematic stealing and/or destruction of Ukrainian grain. It is the mark of corruption that various business and political elites of developing states are willing to pretend, along with the Putin regime, that Russia is a poor victim of Ukraine and that NATO and the USA had supposedly been positioning themselves for launching future aggression against Russia.
However, what brings this Russian narrative to the level of absurdity is that these same elites in various developing states (along with Hungary’s Victor Orban and some others inside the EU) further accept Russian claims that it is the savior of the Ukraine war’s attendant food and commodities crises. At minimum, what I can say is that this is certainly quite consistent with the tradition of the “Big Lie” pioneered by the Hitler regime in Berlin in the 1930-40’s. In fact, one should not underestimate how this narrative has found resonance among naive and also especially those who – often quite legitimately – feel lingering indignation at historical mistreatment or hypocritical policies of the USA and European powers. This indignation is being manipulated and cynically appropriated both by the Russian leadership and allied local business and political elites in various developing states, including the MENA region. This dangerous fake news (no quotation marks on this expression in this case) must be more actively combated with patient explanations and impactful refutations.
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