Egyptian president appeals for help with food crisis battering Mideast
Egyptian president appeals for help with food crisis battering Mideast
Tuesday, May 20,2008 18:18

Egypt"s president appealed to the world Sunday to work with poor countries struggling with high food and fuel prices that have battered their economies.

The Mideast, highly dependent on imported food, has been wracked by social unrest as many citizens in the region struggle with stagnant wages and high inflation.

Worldwide food prices have increased at least 40 percent since mid-2007, fueled by a number of factors including climate change, drought, growing demand in countries such as China and India and the planting of crops for biofuel.

"Is it logical or even acceptable that agricultural crops are used to produce ethanol, leading to a worse crisis in food prices?" Egyptian President Hosni Mubarak said Sunday.

Mubarak made the remarks in his opening address at the World Economic Forum on the Middle East, an offshoot of the annual gathering of political and business leaders in Davos, Switzerland.

The price increases "greatly affect poor nations and poor people," said Mubarak at the beginning of the three-day summit at the Red Sea resort of Sharm el-Sheik.

The increases hit poor people hardest. Food represents as much as 60-80 percent of consumer spending in developing nations, compared with about 10-20 percent in industrialized countries, according to the United Nations. Some 20 percent of Egypt"s 76.5 million people live below the poverty line of about US$2 per day.

Mubarak urged a dialogue to find "solutions that guarantee that the world"s need for food and energy is fulfilled."

Violent protests against rising prices in Egypt resulted in three deaths last month. Eleven people have also died over the past few months in the country during fights that broke out in lines to buy subsidized bread.

Those clashes over bread resumed Saturday, with several injuries from fist fights reported across the country, independent newspaper Al Masri Al Yom reported. Bread buyers carrying knives to the lines, the report said.

Mubarak announced a 30 percent salary increase for government employees earlier this month in an attempt to ward off more food unrest. But the government increased fuel prices by more than 40 percent and cigarette prices by 10 percent, raising concerns that the measures would trigger additional inflation and diluting the benefits of the salary increase.

Egypt also got outside help from the United Arab Emirates, which donated a million tons of wheat to the country last week, said the Emirates state-owned news agency WAM.

Egypt is one of the world"s largest importers of wheat, and prices shot up by more than 50 percent over the last year.

The Emirates is also struggling with rising food prices. The government has signed agreements with supermarkets to keep prices on more than 30 basic commodities at last year"s levels.

But importers have demanded subsidies to keep prices level, and the Emirates Society for Consumer Protection estimates basic food prices will still rise 40 percent this year.

Annual inflation in oil-rich countries such as the Emirates and Saudi Arabia is running in the double digits. But at the same time, they are benefiting from record oil revenue, which makes it easier for the governments to subsidize costly goods for their citizens.

Rising food prices have been more difficult for Mideast countries that lack significant natural resources, such as Jordan, which has raised food and fuel prices multiple times since the beginning of the year because the government lacks the cash to continue expensive subsidies.

The price rises sparked sharp criticism from opposition parties, which held several peaceful street protests. The government responded by promising pay raises for civil servants to help them cope.

Adam Leach, Oxfam GB"s regional director for the Middle East, said the price increases are extremely difficult for the estimated 60-70 million people in the region who live in absolute poverty.

"What Oxfam would like to see across the region is more attention to the agricultural sector," said Leach. "There is an old adage in economic development that you won"t develop without a strong agricultural base."

Egyptian officials say increased investment in the country"s agricultural sector is at the top of their agenda. But many countries in the Middle East, especially those in the Gulf, lack the water necessary to grow crops.

Samir Radwan, managing director of the Egypt-based Economic Research Forum, said some Gulf countries experimented with growing crops in the past, but they found it was not cost-effective.

"A ton of wheat in Saudi Arabia was six times the international price," said Radwan.

Leach said Gulf countries should use their booming oil revenue to boost agricultural production in developing countries outside the region, which would improve their food security and help redistribute their natural resource wealth.

"I think that would be extremely smart of the (Gulf) countries because if we"re serious about long-term stability and prosperity, not just in the region but globally, then it is very important that windfall revenue gains are not used for the interests of a few countries," said Leach.

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