The Economist: Changing agricultural production policies is an urgent priority

A wave of unrest is coming... unless the world seeks to mitigate its causes

• High fuel prices in Sri Lanka caused widespread protests.

  archival

• The Arab region is experiencing a bread crisis.

  archival

picture

The scarcity of bread can anger people, and the last time the world struggled with rising food prices, like the one it is happening today, it helped spark a wave of uprisings that toppled four presidents and led to horrific civil wars in Syria and Libya.

Unfortunately, Russia's invasion of Ukraine has again triggered sharp volatility in grain and energy markets, so turmoil is inevitable this year as well.

inflation

Rising food and fuel prices are the most pressing form of inflation. If furniture or smartphone prices go up, people can delay or give up their purchase, but they cannot stop eating. Likewise, transportation costs are included in every physical good, and most people cannot easily go to work. ;

So when food and fuel costs rise, standards of living tend to fall abruptly.

The pain is even more acute for city dwellers in poor countries, who spend a large part of their income on bread and bus fare.

And unlike the rural people - they can't grow their own crops - but they can riot.

Many governments want to ease the pain, but they are burdened with debt and suffer from a lack of liquidity after the pandemic, and the average ratio of the public debt of a poor country to GDP is about 70%, and it is rising, and poor countries pay higher interest rates, which rise from time to time, Some will find this unsustainable, and the International Monetary Fund says 41 poor countries are in "debt distress" or at high risk.

austerity

Sri Lanka has already stumbled and collapsed, angry and hungry people have set cars on fire, raided government buildings and pushed their hated president to fire the prime minister, his brother, and riots have erupted in Peru over the low standard of living, and in India over a plan to cut jobs for the inexperienced in the army Which angers many.

Meanwhile, Pakistan urged its citizens to drink less tea to save hard currency, while Laos is on the verge of default, and anger over the cost of living undoubtedly contributed to the election of a radical and leftist Colombia as president on June 19.

The Economist has built a statistical model to examine the relationship between food and fuel price inflation and political unrest, and reveals that both have historically been a good predictor of mass protests, riots and political violence. This year.

The greatest danger lies in the places that were already at risk, namely those countries that depend on imports of food and fuel, and have dilapidated public finances.

swell

Turkey has seen an acceleration in the destructive inflation caused by unconventional monetary policy, and around the world the pressure of the cost of living is increasing people's grievances and increasing the opportunity for people to take to the streets, and this is likely to turn into violence in places where there are many unemployed young people.

As their purchasing power declines, many will conclude that they will not be able to afford to marry and start a family, and some will feel frustrated and humiliated that they have nothing to lose if they join the riots.

Another way in which inflation destabilizes societies is by promoting graft, and when wages do not keep pace with prices, officials with needy relatives find it more tempting to withdraw money from the weak, and this angers those who are under attack.

It is worth noting that the uprisings in the Arab world were driven by the suicide of a Tunisian street vendor who set himself on fire in protest of persistent demands for cash from bribe policemen.

turbulence

And if unrest spreads this year, it could add to the economic pain.

Investors are averse to riots and revolutions.

One study found that large-scale outbreaks of political violence typically lower GDP by a percentage point after 18 months, and the damage is made worse when protesters are angry with both politics and the economy.

Avoiding the next explosions will be difficult, and it may be a good start to abolish policies that discourage food production, such as price controls and export restrictions.

Farmers in countries like Tunisia leave their fertile lands uncultivated because they have to sell their crops to the state for a pittance, governments must allow farmers to reap the profits of what they grow, and much less crops must be burned as biofuels.

rescue operations

Many countries are calling for bailouts, and international financial institutions must strike a difficult balance. Saying “no” may cause chaos and cause lasting damage, but with unconditional support, miserable governments will be saved by entrenching bad and unsustainable policies. The International Monetary Fund, whose negotiators arrived in Sri Lanka and Tunisia last week, is generous, but insistent on reforms.

You must continue to carefully monitor how the money is spent, and they must act quickly, and the longer that anger festers, the more likely it will erupt.

 70%

It is the average public debt of a poor country.

41

It is one of the poorest countries in "debt distress", or at high risk, according to the International Monetary Fund.

One study found that large-scale outbreaks of political violence typically lower GDP by a percentage point after 18 months.

When food and fuel costs rise, living standards tend to fall abruptly, and the pain is most acute for city dwellers in poor countries, who spend a large portion of their income on bread and bus fare.

Follow our latest local and sports news and the latest political and economic developments via Google news