World on the brink

RECENT disturbances over increased fuel and food prices in Egypt, Senegal, Cameroon and Cote d’Ivoire are chillingly reminiscent of the late 70s IMF riots that affected approximately 40 countries as inability to afford basic food items pushed the world’s poor to vent anger out in the open. Yet this round threatens to be more severe as it comes not from IFI advocated budget cuts but worldwide economic distortions that, riding on rising fuel prices and increased climate change, are spreading the ‘agflation’ phenomenon. Most at risk are countries that import basic food items as reflected in Egypt, the world’s second-largest wheat importer. Government intervention like tax cuts and subsidies runs contrary to free-market ethos, besides proving difficult to hold, again as recently proved in Egypt. The cutback in purchasing power hits the lower classes the hardest, which have very little cushion in times of food inflation and, driven to desperation, turn to street rioting that spreads like a wildfire, as rightly feared by the World Bank. Governments, especially food importers, are advised to take quick short term actions as imminent protests will not only increase ill-will, retard economic growth in times when expensive food is already redefining government-people relationship. The most harmful short-term phenomenon to look out for is hoarding, when suppliers’ exploitation of supply bottlenecks jacks up prices faster than normal market mechanism.
In the longer term, greater agricultural self-sufficiency will be needed for net importers to address movement away from equilibrium. Global inflation is already a hard reality and with food components outpacing wage increases, governments will need to fill gaps not suitably addressed by the invisible hand of the markets. Worker riots owing to Chinese pork inflation, Italian concern from rising pasta cost and Asian unrest because of unprecedented hike in rice prices are indications of what is to come as the storm swells up. Scenes of security forces battling enraged mobs in Egypt are likely to find parallels across the world as the global order changes in favour of food producers. The World Bank has taken a timely step of doubling agriculture lending in Africa, but will need to revise its heavy interest ridden repayment mechanism if gains are not to be automatically wiped off. Immediately though governments should adopt a two pronged strategy after initial unrest is calmed with sporadic price controls. That agriculture productivity must be enhanced is just as certain as the fact that the poor need greater state protection. Failing this mix, it is difficult to see capitals proving effective as price tags on food items kick the poor in their stomachs, forcing them to vent venom on respective states that could not watch their most basic interests.



Sadr’s gambit

THE surprise offer from Iraqi Shiite cleric Moqtada Sadr to disband the Mehdi Army militia coincides with a hardly less unexpected denunciation. That came from the Iranian government and condemned Mehdi Army attacks on Baghdad’s Green Zone and announced Iran’s approval of Premier Nuri Al-Maliki’s attempted clamp down on the Mehdi Army. Sadr has proposed that his militia disband if that is the decision of the most senior Iraqi Shiite cleric, the widely respected Grand Ayatollah Ali Al-Sistani, if he is backed by other senior Shiite clerics. There is as yet no indication of what will happen to the Mehdi Army’s weaponry if it does dissolve. The Iraqi government has demanded the arsenals be handed over. Nor is it certain that all elements of the Mehdi Army will toe the new party line. It has never been a truly unified organization, rather an alliance of disparate radical Shiite groups who have chosen to work under Sadr’s political leadership. Only in his own heartland, Sadr City, can he claim to have almost total control over the gunmen. For all the doubts, this is a highly significant move, which suggests that Moqtada Sadr recognizes the seriousness of the threat by Al-Maliki that unless he gives up his militias, he will be unable to take part in the political process. Having twice already excluded himself from the National Unity government, Sadr may have come to appreciate, probably with help from his Iranian backers, that he was placing himself out on a dangerous political limb. If he can succeed in rejoining the government, he will be back close to the halls of power. There his radical representation of the very poor Iraqi Shiites will force the government to address the poverty and joblessness that are endemic among them.
This may also be the real reason he has called off tomorrow’s proposed million-marcher demonstration to protest the fifth year of the US occupation of Iraq. Officially he has said that he fears his supporters would be attacked. In condemning the Mehdi Army for lawlessness, Iran also took care to criticize the US military for causing civilian deaths in the recent fighting between the militias and the Iraqi military. Nevertheless, Tehran has said it is considering a proposal from Washington for a new round of talks to be held with Iranians, Iraqis and Americans which would consider improvements to the security situation in Iraq. Having demonstrated how it can oversee militia-powered mayhem, Tehran is probably appreciating being taken seriously at last by the Americans as a key to the peace solution. Though Al-Qaeda continues its campaign of atrocities, it appears to be on a back footing. Its former Sunni allies are no longer fighting an insurgency. The Iraqi police and army, for all their lackluster tactical performance against the militias in Basra, now stand out clearly as the only armed force that most Iraqis really want in their country. After five years of violence and bloodletting, people, including the Shiites of Sadr City, simply want peace.

—Arab News