Attempts to solve the global debt crisis have sent food prices soaring, driving impoverished masses onto the streets throughout the Middle East. Now a wave of political revolutions dashes remaining but false hopes of economic “recovery”.
Oil prices are rising sharply as the upheaval that began in Tunisia and now grips Egypt threatens to spread to major producers Algeria, Libya and even Saudi Arabia. Stock markets are jittery as they take in the consequences, including any threat to oil tankers which use the Suez Canal.
In Egypt, workers, the unemployed, young and old, artists and athletes, Christians and Muslims have united in their determination to bring the 30-year old autocratic regime of Hosni Mubarak to an end. His determination to hang on until September pleases neither the Egyptian people nor the White House, which fears the consequences of an unstoppable revolutionary process the longer Mubarak’s regime clings to power.
This fact is recognised by the International Monetary Fund too, which helped impose harsh market “reforms” on Egypt in the 1990s, which have only deepened inequality. IMF chief Dominique Strauss-Kahn warned governments to tackle economic strains or risk instability and even war.
“This protest won’t end in North Africa; it will spread in many countries because of high unemployment and increasing food prices,” Hamza Alkholi, chairman and chief executive of Saudi Alkholi Group, a holding company investing in industrials and real estate, said in an interview in Davos, Switzerland.
As Nouriel Roubini, the leading economics analyst who forecast the global financial crash, notes: "What has happened in Tunisia, is happening right now in Egypt, but also riots in Morocco, Algeria and Pakistan, are related not only to high unemployment rates and to income and wealth inequality, but also to this very sharp rise in food and commodity prices."
In Egypt, 40% of the 80 million people live on less than $2 a day. Prices of basic foodstuffs have soared by over 17%, putting basic necessities beyond the reach of many. The average Egyptian now spends 40% of his or her income on food while economists put the unofficial jobless rate at about 25%.
The worldwide surge in commodity prices is being driven by stock markets and investment banks desperate to find new areas for profit-taking. With the 2008 financial meltdown still unravelling, speculators have turned to basic commodities. They have used funds pumped into the system by the US Treasury and the Bank of England, also known as QE or “quantitative easing”.
QE was designed to boost economic growth. Instead, it has helped to create a 32% increase in the average cost of food in the second half of 2010, according to the UN Food and Agriculture Organisation (FAO). Wheat prices alone jumped 70% between June and December.
Despite Mubarak’s televised claim that the protests had been manipulated by political forces this is a completely Egyptian, largely secular, wholly grass roots movement. With its roots in a strike by textile workers in April, 2008, a popular revolution is under way. The country is at a standstill as events unfold. The economy is paralysed. People’s committees have taken charge of the security of their streets and neighbourhood.
Even when Mubarak shut down the internet and mobile phone networks last week the 70,000 strong April 6th Facebook group of mostly young people continued to organise the protest, calling for the “million man march” that brought more than two million Egyptians onto the streets of Cairo, Alexandria, Suez, Sinai and Upper Egypt demanding that the president should leave.
People on the street demand change to “every element of the system” but lack a developed leadership that can transform the Egyptian capitalist state. As soaring prices and unemployment make clear, revolutionary social and economic change is required along with the end of the Mubarak dictatorship.