The deadly rioting that has gripped Algeria and Tunisia in recent days may portend unrest elsewhere in the Middle East and North Africa, amid a potentially combustible combination of rising food prices and the region’s chronically high levels of unemployment, analysts say. At least 14 Algerians were killed in a week of rioting as of Monday while in Tunisia the number of dead reached at least 14 and may be as high as 20. In Tunisia, the unrest was sparked by the suicide of a street merchant December 17 that pointed up the lack of jobs and opportunities. In Algeria the disturbances were sparked by higher prices for basic food items, including milk, oil and sugar, but analysts said joblessness was also a factor.
“These can be contagious and cross borders,” Magda Kandil, executive director of the Egyptian Center for Economic Studies in Cairo, told The Media Line. “The formula that brought about these riots could be in the works in the Egyptian economy. There’s high unemployment, there is a rise of cost of living. People feel government should do more to help them out, especially in getting more jobs.”
Boosted by higher oil prices and government spending, the Middle East is set for another year of strong economic growth in 2011. But the pace isn’t sufficient enough to keep up with the region’s rapidly growing population, leaving unemployment and poverty in its wake.
Thus, when food prices start climbing, the Middle East is especially vulnerable. In the past two decades, the region has been shaken three times by waves of food rioting, most recently in 2008 when prices spiked higher before recession tamped down global demand.
Now, prices are climbing again. The United Nations Food and Agriculture Organization reported January 5 the its global food price index hit a record high last month, exceeding the pre-crash peak of 2008. Its food price index, which takes into account the average prices of staples including meat, dairy, cereals and cooking oil, was up 25% from the same month in 2009.
Even the wealthier oil-exporting countries are nervous about ensuring enough food reaches the dinner table. The Federal National Council of the United Arab Emirates (UAE) is scheduled to meet Tuesday to discuss the rise in food prices. The Gulf News quoted Khalifa Abdullah Bin Howaiden, a member of the council, as saying the prices of certain food items shot up as much as 500%.
The UAE is wealthy, but price hikes of that much will pinch the pocketbooks of lower- and middle-income consumers. The Gulf imports 85% of its basic food requirements and that makes it highly sensitive to fluctuations in the global market. To mitigate this, oil-rich governments have been buying land in Africa and elsewhere to grow crops to feed their populations.
But the non-oil Middle East faces the greatest danger from higher food prices because of higher unemployment and lower incomes.
The average unemployment rate among non-oil countries in the Middle East was 11% in 2008, more than the 9.8% rate in the United States at the height of the last recession. The International Monetary Fund said in an October report that these countries will need to create 18.5 million full-time positions over the next decade if they are to absorb all the unemployed and generate jobs for new graduates.
To do that, their economies will have to grow by a challenging 6.5% annually, the IMF estimated. That’s two percentage points more than they have managed over the past decade.
“Unemployment and especially under-employment among youth – university graduates – is quite high in Tunisia, in Jordan and Egypt,” Ibrahim Saif, secretary-general of the Economic And Social Council of Jordan and an economist at the University of Jordan told The Media Line.
“It’s not just double digit unemployment, but that it’s concentrated among the younger generations, people joining the labor market for the first time.”
Ironically, even though they have been struck by unrest, Tunisia and Algeria are better off than many of their Middle East and North African neighbors.
The World Economic Forum praises Tunisia’s “efficient” government in its latest Global Competitiveness Report as well as the good quality of its education and efficient markets for goods and services. The International Monetary Fund expects the economy is to grow 4.8% this year, but puts the jobless rate is above 13%. Among young people the rate is higher, and many of those with jobs are overqualified.
In Algeria, with 12.2 billion barrels in oil reserves, the IMF expects gross domestic product to grow 4% this year, but unemployment is forecast to rise to 10.8%.
Both Tunisia and Algeria reacted quickly to quell the disturbances. Algeria’s cabinet agreed to increase wheat imports and to suspect customs duties and value-added tax on imports of sugar and cooking oil. The Tunisian government said it would listen to the demands of protesters, without saying what steps it would take.
But Kandil said the governments of the region would have to pull back from price subsidies, which encourage waste and deprive other sectors of the economy, like schools and health, the funds they need. “Everybody enjoys subsidies, whether they need them or not,” she added.
To solve the food crisis, Saif said the governments of the region will have to adjust their sights and focus on agricultural development instead of the more glamorous infrastructure and telecommunications projects. The education systems should turn out high tech farmers while regulations need to change to making farming a profitable business.
“Labor productivity in agricultural sector is the lowest in the world,” Saif told The Media Line.” Only people who fail in school go into farming.”
No comments:
Post a Comment