Group items tagged

People in the West tend to think about oil shocks from the perspective of the consumer. They notice when prices go up. The price spikes in 1973 and 1979 triggered by boycotts by oil producers are etched in their collective consciousness, as price controls left Americans lining up for gas and European governments imposed weekend driving bans. This was more than an economic shock. The balance of power in the world economy seemed to be shifting from the developed to the developing world.

If a surge in fossil fuel prices rearranges the world economy, the effect also operates in reverse. For the vast majority of countries in the world, the decline in oil prices is a boon. Among emerging markets, Indonesia, Philippines, India, Argentina, Turkey, and South Africa all benefit, as imported fuel is a big part of their import bill. Cheaper energy will cushion the pain of the COVID-19 recession. But at the same time, and by the same token, plunging oil prices deliver a concentrated and devastating shock to the producers. By comparison with the diffuse benefit enjoyed by consumers, the producers suffer immediate immiseration.

In inflation-adjusted terms, oil prices are similar to those last seen in the 1950s, when the Persian Gulf states were little more than clients of the oil majors, the United States and the British Empire

Russia and Ukraine supply almost a third of the world’s wheat exports and since the Russian assault on its neighbour, ports on the Black Sea have come to a virtual standstill. As a result, wheat prices have soared to record highs, overtaking levels seen during the food crisis of 2007-08.

agricultural experts and policymakers have warned of the impact of delayed shipments on countries reliant on the region for wheat, grain, sunflower oil and barley

The surge in prices will fuel soaring food inflation — already at a seven-year high of 7.8 per cent in January — and the biggest impact will be on the food security of poorer grain importers, warned analysts and food aid organisations

As pressure builds on Egyptian livelihoods following the devaluation of the pound and the slashing of fuel subsidies in November, some analysts are wondering if another uprising is looming on the horizon for Egypt. They warn that a new wave of unrest would be bloodier than the 2011 uprising and could spell disaster for the country, still reeling from the turbulent post-revolution transition.

Prices of basic food items, medicine, transport and housing have soared, prompting Egyptians to cut spending to make ends meet. The prices of some basic food items have shot up by up to 40%, according to CAPMAS, the Central Agency for Public Mobilization and Statistics

protests broke out in at least four Egyptian provinces March 7. The demonstrations were triggered by bread shortages in some bakeries after Supply Minister Aly Moselhy announced a new bread subsidies system that he defended as “necessary to curb waste and corruption.” Hundreds of demonstrators blocked roads and cut railways in Alexandria, Giza, Kafr El Sheikh and Minya in protest at the minister’s abrupt decision to reduce the share of bread allotted to holders of paper ration cards to 500 loaves per bakery a day from the original 1,000 and 4,000 loaves (depending on the number of consumers in the bakery’s vicinity.)

In Sudan, the revolutionaries who overthrew President Omar al-Bashir and who continue to organise are well aware of the threat posed by neighbouring Arab countries. Protesters’ murals show the people rejecting the interfering hands of Saudi Arabia and the United Arab Emirates (UAE). One of the most popular chants is “Victory or Egypt”, voicing activists’ determination not to succumb to a military counter-revolution as happened in their northern neighbour.

many Sudanese believe that the 3 June crackdown in which scores of protesters were killed only came after the green light from Saudi Arabia, the UAE and Egypt

In this struggle between the “Pax Africana” and Arab authoritarians, there’s no doubt that the democrats have the weaker hand. But not everything is going the Arab troika’s way.

Egypt has committed to reducing the military’s role in the economy as part of its $3bn IMF bailout package, as the Arab state grapples with a foreign currency crisis, a weakening pound and rising inflation.

Under the policy, the government would define sectors that are “strategic” while gradually withdrawing the state from “non-strategic sectors”, including through asset sales.

Sisi’s regime has previously pledged to reduce the military’s role in the economy and privatise army-owned companies, but little progress has been made. Businessmen hope the scale of the current crisis will now force the authorities to act.

in 1999, the Commodities Futures Trading Commission deregulated futures markets. All of a sudden, bankers could take as large a position in grains as they liked, an opportunity that had, since the Great Depression, only been available to those who actually had something to do with the production of our food

After World War II, the United States was routinely producing a grain surplus, which became an essential element of its Cold War political, economic, and humanitarian strategies -- not to mention the fact that American grain fed millions of hungry people across the world

Futures markets traditionally included two kinds of players. On one side were the farmers, the millers, and the warehousemen, market players who have a real, physical stake in wheat. This group not only includes corn growers in Iowa or wheat farmers in Nebraska, but major multinational corporations like Pizza Hut, Kraft, Nestlé, Sara Lee, Tyson Foods, and McDonald's -- whose New York Stock Exchange shares rise and fall on their ability to bring food to peoples' car windows, doorsteps, and supermarket shelves at competitive prices. These market participants are called "bona fide" hedgers, because they actually need to buy and sell cereals. On the other side is the speculator. The speculator neither produces nor consumes corn or soy or wheat, and wouldn't have a place to put the 20 tons of cereal he might buy at any given moment if ever it were delivered. Speculators make money through traditional market behavior, the arbitrage of buying low and selling high. And the physical stakeholders in grain futures have as a general rule welcomed traditional speculators to their market, for their endless stream of buy and sell orders gives the market its liquidity and provides bona fide hedgers a way to manage risk by allowing them to sell and buy just as they pleased.

Erdogan’s obsession with low interest rates and an economic policy that depends on credit growth, wage increases, tax forgiveness and free gas partly handed him another term during last month’s elections, despite runaway inflation. Yet it remains problematic. The government used backdoor methods to stabilise the lira ahead of the polls, and burned through all the central bank’s reserves.

Since 2021, Erdogan has also propped up his economic programme through a series of currency swap or deposit deals with regional neighbours such as Qatar, the UAE, Russia and Azerbaijan.

inflation is still near 40 percent as of May and the trade deficit hit $57.8bn in the first five months of 2023, jumping nearly 30 percent year on year

In this context of accelerating ecological breakdown and economic crises, the degrowth movement has steadily been gaining ground. Based on a robust body of scientific literature, degrowth proponents suggest that capitalism’s demand for unlimited growth is destroying the planet. Only degrowth policies can repair this by rapidly scaling back our material and energy use, slowing down production and transitioning to an economy focused around needs, care and the sharing of wealth.

In the 1990s, it was reintroduced as a “missile word” against the then-dominant ideology of sustainable development and green growth: an ideology that was being used by governments and international organisations to greenwash ineffective climate politics, attacks on public services and predatory lending.

Capitalism in the Anthropocene by Kohei Saito, a Japanese Marxist scholar, sold more than half a million copies and became a bestseller in Japan.

Ankara controls large swathes of territory in northern Syria, but its previous attempts at establishing a continuous 30-kilometer-deep safety zone along the entirety of the Turkish-Syrian border have so far failed. Turkish troops and their affiliates still do not control a stretch of around 70 kilometers east and west of the city of Kobani, as well as a larger portion of territory around the city of Qamishli, all the way to the Tigris River in the east

Ankara may be calculating that Russia, otherwise busy with the protracted invasion of Ukraine, may not have the time and resources to prevent a new Turkish incursion, nor the political legitimacy to object to it given its own operations in Donbas

With Erdoğan facing dramatically unfavorable preelection polls and a dire economic situation, including sky-rocketing inflation and declining levels of foreign investment, his temptation to rally voters around the flag and silence criticism from the opposition coalition on a subject of national interest is obvious

To blame the crisis solely on the war in Ukraine would be “barely true,” said Egyptian political economist Wael Gamal. Years of borrowing and investment in megaprojects made Egypt especially vulnerable, he said. Those projects have been championed by President Abdel Fatah El-Sisi, who took power in a military coup in 2013 and has made infrastructure development a hallmark of his presidency.

Egypt’s economic troubles, Gamal said, become “deeper every time they go to the IMF and take more loans and cover older loans with new loans.”

Until recently, Ramadan said, he could buy a ton of rice for around 8,000 Egyptian pounds. Now, he said, it costs 18,000 pounds. The cost of his pasta supply has jumped by 6,000 pounds. Even the plastic containers and bags they use to package the meals are pricier than before.

the United Arab Emirates played a key behind-the-scenes role in facilitating the deal between Ethiopia’s Prime Minister Abiy Ahmed and Eritrea’s President Isaias Afwerki. Both men met with Emirati leaders on several occasions before and during the reconciliation, and they have stayed in regular contact ever since.

After decades of disengagement, countries east of the Red Sea are scrambling to gain a greater footprint along the opposite coast. In response, states on the Horn such as Ethiopia are trying to leverage these rapidly changing geopolitical dynamics to enhance their own influence.

Relations between the Horn of Africa and Arab nations east of the Red Sea date back over millennia. They took a turn for the worse following the 1973 “Oil Crisis”, triggered when oil-producing Arab counties cut down production to punish Western countries that supported Israel in the Yom Kippur War. Horn countries became collateral damage as inflation skyrocketed. To overcome economic devastation and soaring debt, they began to court oil-rich Gulf States, offering political loyalty and natural resources in return for aid. Countries such as Somalia, Djibouti, Egypt, and Sudan invoked their cultural and religious connections with the Gulf in a bid to gain help in dealing with their balance of payment crisis and political instability. Arab nations seized the opportunity, using their wealth and newfound geostrategic importance to expand their influence in the Horn and secure key loyalties.

Like Western investors, the kingdom’s elites are uncertain about what the new order means for the country’s economy. The new Saudi leadership has indeed created new opportunities, but many of the deep structural barriers to diversification remain unchanged. The bulk of the public sector remains bloated by patronage employment, the private sector is still dominated by cheap foreign labor, and private economic activity remains deeply dependent on state spending. Addressing these challenges could take a generation — and it will require patience, creativity, and a clearer sense of priorities.

While a band of Al Saud brothers used to rule collectively with the king as a figurehead, decision-making has now become centralized under one man

ruthlessness and willingness to take risks radically at odds with the cautious and consensual political culture of the Al Saud clan

Turkish President Recep Tayyip Erdogan said he intends to tighten his grip on the economy and take more responsibility for monetary policy if he wins an election next month.

Erdogan told Bloomberg TV in London on Monday that after the vote transforms Turkey into a full presidential system, he expects the central bank will have to heed his calls for lower interest rates. The central bank’s key rate is now 13.5 percent, compared with 10.9 percent consumer-price inflation.

The lira slid to its weakest level ever against the dollar after his remarks were published

Even though the 2011 revolution was motivated in large part by socio-economic concerns, the governments that have held office since then have been unable to improve the situation. Growth has remained low, and unemployment is high: 15 percent of the population is without work, and the rate for those with a university degree is over 30 percent. Inequality between the more prosperous coastal region and the deprived interior of the country remains striking. Around half of all workers are employed in the informal economy. Many young Tunisians lack any prospect of being able to afford a home or a car, or of being secure enough to start a family.

Faced with increasing debt and deficit levels and shrinking foreign currency reserves, Tunisia agreed a loan of $2.9 billion with the International Monetary Fund in 2016. The IMF called on Tunisia to cut public spending, overhaul its collection of taxes to raise government revenue, and allow the currency to depreciate. The IMF argues that it has been fairly flexible so far in enforcing public spending cuts, but it is now stepping up its pressure on the Tunisian authorities.

Wages in the public sector account for 15 percent of GDP (up from 10 percent in 2010), so it is hardly surprising that the government is now trying to limit spending in this area. Yet it is doing this at a time when inflation (worsened by the deflation of the Tunisian dinar that the IMF has promoted) and subsidy cuts have already had a severe impact on people’s purchasing power.

It’s possible that the broader drama about Iran is mostly posturing designed to keep the Saudis, Israelis, Gulf states, and wealthy Republican donors like Sheldon Adelson happy. Maybe Trump, Secretary of State Mike Pompeo, and National Security Advisor John Bolton know deep down that the regime isn’t going to fall and isn’t going to renegotiate a better deal than the Joint Comprehensive Plan of Action (JCPOA). But having criticized former President Barack Obama’s handling of Iran, and under pressure from allies and domestic lobbies alike, it was inevitable that Trump, Pompeo, and Bolton would revert back to coercive pressure, even though that approach never worked in the past (at least, not on its own)

Tighter sanctions on Iran are unlikely to convince it to accept all of America’s demands, especially when the United States no longer has the multilateral backing it enjoyed while negotiating the JCPOA. Even much weaker states don’t like giving in to blackmail, because doing so just invites new demands. External sanctions are painful, but they often strengthen authoritarian regimes in the short to medium term. More than a decade of tough sanctions didn’t convince Tehran to give up all its enrichment capacity before, and it’s not likely to do so now

Instead of a new and better deal, Trump, Pompeo, and Bolton may well be genuinely interested in toppling the clerical regime, and they may have convinced themselves that inflicting ever increasing amounts of pain on the Iranian people will finally lead them to rise up and overthrow the mullahs. Bolton and Pompeo have said as much on various occasions, and Bolton’s close (and reportedly lucrative) association with Iranian exile groups is consistent with that objective as well.

there are several obvious ways in which America’s recent conduct abroad has led to greater insecurity, paranoia, loss of trust, and division within the United States

Whatever Americans’ intentions may have been, U.S. actions have sometimes caused enormous suffering in other countries—through sanctions, covert action, support for thuggish dictators, and a remarkable ability to turn a blind eye to the brutal conduct of close allies—not to mention America’s own far-flung military activities. Given the countries the United States has invaded, the bombs it’s dropped, and the drone strikes it’s conducted, it is any wonder that some people in other places wish Americans ill?

there is a mountain of evidence—including the official 9/11 Commission Report—showing that what drove anti-American extremism was opposition to U.S. policy

Lebanon’s dire financial crisis over the past two years has slipped over three-quarters of the population into poverty. Many Lebanese are struggling to cope with skyrocketing inflation, crippling power cuts, medicine shortages, and an absence of viable social services.

Many Lebanese, Syrian and Palestinian families have resorted to selling everything they own, and trying to migrate by sea to Europe to find job opportunities.

The Ukraine conflict may be a matter of global concern, but states’ responses to it continue to be conditioned by internal political debates and foreign policy priorities.

China has hewed to a non-position on Russian aggression – neither condemning nor supporting the act, and declining to label it as an invasion – while lamenting the current situation as “something we do not want to see”. With an eye to the West, Beijing abstained on rather than vetoing a Security Council resolution calling on Russia to withdraw from Ukraine, and reports indicate that two major Chinese state banks are restricting financing for Russian commodities. Beijing now emphasises the principles of territorial integrity and sovereignty in its statements, a point that had either been absent from earlier statements or more ambiguously discussed as “principles of the UN Charter”.

the worldview that major powers can and do occasionally break the rules