World prices are on the up and leaders are worried.
G20 Ministers are regularly talking to see how food inflation, boosted by a bad harvest in the United States, can be controlled to prevent greater social instability at a time when global markets are moving from crisis to another.
However, one of the key reasons this problem must be tackled is to ensure the nascent democratic trends in the Middle East – following the Arab Spring – are embedded.
For, in many respects, it was the rising cost of food that was the final catalyst to the despair and revolt in Tunisia and across the Middle East. However, if food prices start to rocket again, the nascent democratic changes that have occurred since the start of the Arab Spring may be reversed with the rising cost of living leaving people lost and looking towards extreme ideologies instead.
That is why this is the moment for Labour to urge the government not just to deal with the immediate crisis but to also plan for the aftermath of the Arab revolutions. For the message of 1991 – after the collapse of the Soviet Union – was that a laid back approach to global change that ignores local economic needs will usher in nationalist sentiments that are harmful to our own security. Instead, we need to heed the earlier lesson of 1945 – and get together a Marshall Plan for the Middle East.
This may seem an odd thing to say. After all, much of the Middle East affected by uprisings, with the odd exception such as Yemen, are oil rich and the resources these governments have to hand can do so much to help with jobs and a social security safety net for families. No wonder King Abdullah of Saudi Arabia hurriedly announced $36 billion of help for Saudi citizens to head off anti-regime demonstrations.
While investing in the Arab world in the same way as occurred in Europe after the Second World War may not be the priority, a Marshall-style Plan is still required to embed Arab democratic trends. This includes the urgent issue of stabilising food prices.
It has been bad luck that one of the reasons for high food prices over recent years has been bad weather – from floods in Australia and China to a snowstorm in the United States. But the volatility of world food prices has been accentuated by speculators focusing on agricultural prices as a financial safe haven after the banking collapse. As Harvard’s Prof. Peter Timms has said:
“There’s real scarcity there. We need to deal with that. But we don’t need to exacerbate the scarcity with all this hot money”.
Even former centre right French President, Nicolas Sarkozy argued for proper regulation when it came to food price speculation. This is a wise course to take as even as far back as 2005 economists recognised North Africa as a region that relies on imports of subsidised grains and oilseeds which is prone to price speculation. The British Government should not be defensive about this because of the interests of the City of London, as suitable regulation will have its place in providing stability in the Arab world – and for democracy to prosper.
The other strand of the Marshall Plan for the Middle East should be for world trade talks to focus on the need for a mechanism to avoid wild swings in food prices. This would make sense as last winter food prices increased by 15%. Nobel Prize winning economist Joseph Stiglitz has proposed that:
“a middle income country like Egypt would receive free market access to countries like the United States but would be required to give free market access to a country like Uganda”.
A reduction in agricultural tariffs from developed countries would also help reduce food prices. The liberalisation of markets should be sensitive to the needs of the emerging democracies and the old “one size fits all” approach of the World Bank should remain part of the past, when right wing dogma inhibited the growth of various countries.
With Europe bordering North Africa, Britain needs to play its role within the European Union to ensure there is a collective approach to assisting the emerging democracies – which would also address security issues and the immigration concerns of several European nations.
With the passion for democracy alive in the Middle East now is the moment for the Government to help to lower food prices and ensure there is a trade system fit for purpose.
Then, just maybe, David Cameron’s rhetoric of a Big Society could have some meaning after all.
James Watkins is a member of the Unite the Union National Political Committee. This article is written in a personal capacity.