One of the top, if not the most disruptive event of the second decade of the 21st Century was the “Arab Spring.” Remember how that started?
The first major warning of what came to be a food crisis appeared in the form of a briefing paper on the website of the UN’s Food and Agriculture Organisation in December 2010 with the headline “Recent bouts of extreme price volatility in global agricultural markets” it said, “portend rising and more frequent threats to world food security. There is an emerging understanding that the global food system is becoming more vulnerable and susceptible to episodes of extreme price volatility. As markets are increasingly integrated in the world economy, shocks in the international arena can now transpire and propagate to domestic markets much quicker than before.”
The “shocks” occurred a long way from Cairo and Damascus.
When trying to understand where the next spark will come from, what friction will heat up the international stage, it is easy to look for complicated reasons of three-dimensional chess and complicated conspiracies, but often things are much simpler.
One of the most dangerous developments of 2021 that we are bringing in to 2022 is an almost cavalier attitude to the global inflation spike that is only now starting to spread to every corner.
Maslow’s hierarchy of needs explains a lot in this world. Before anything else, people need to be able to feed themselves, have adequate shelter, and be able to get to work and live their life with some hope of at least not falling backwards.
Food inflation and rising energy costs hits everyone directly and indirectly. You can’t hide from its impact because you have to eat, you have to stay warm, and you have to be able to get to work. When you get that, you get instability. Internal instability often bleeds over in to international instability.
Just look at what is happening to basic staples.
How much can global populations soak up this cost without it reaching the streets? It is not sustainable and is only one or two bad harvests away from spiking even higher.
Some of this is demand driven – we don’t need supply issues as well. How much of this is from China’s hoarding?
Less than 20% of the world’s population has managed to stockpile more than half of the globe’s maize and other grains, leading to steep price increases across the planet and dropping more countries into famine.
The hoarding is taking place in China.
COFCO Group, a major Chinese state-owned food processor, runs one of China’s largest food stockpiling bases, at the port of Dalian, in the northeastern part of the country. It stores beans and grains gathered from home and abroad in 310 huge silos. From there, the calories make their way throughout China via rail and sea.
China is maintaining its food stockpiles at a “historically high level,” Qin Yuyun, head of grain reserves at the National Food and Strategic Reserves Administration, told reporters in November. “Our wheat stockpiles can meet demand for one and a half years. There is no problem whatsoever about the supply of food.”
Why do they feel the need to do that? Good question.
While we worry about what secondary effects are going to come from food inflation, what is happening in Kazakhstan should get everyone’s attention.
Violent protests broke out in Kazakhstan’s most populated city on Wednesday over fuel prices that resulted in President Kassym-Jomart Tokayev declaring a state of emergency as government buildings were attacked across Almaty.
Reuters reported that up to 100 security officers were injured in clashes that involved authorities using stun grenades and tear gas to break up about 1,000 or so demonstrators.
Beginning in the new year, the price of liquefied gas, which is widely used for cooking and heating, doubled to 120 tenge ($0.27) per liter, a significant increase in the country where the minimum wage is 42,500 tenge ($98) a month. Tokayev accepted the government’s resignation, but the move seemed to do little to calm the crowds.
As of earlier today, the Kazak government that has not already resigned is calling on the Russian led Collective Security Treaty Organization to intervene. Yes, the Kazakh government is asking for foreign forces to control its own people.
News out of Kazakhstan is moving too fast to effectively cover here. On top of calling in foreign forces, there are indications that Kazakh police have either refused to engage protesters, or in some reports, have joined them. The main government building has been set aflame, the airport taken by protesters, and weapons caches distributed to the civilian population.
Economics matter in national security – more than just how it supports defense spending. Keep an eye on it.
Odds are, Kazakhstan isn’t the only fragile government that is right on the edge and only needs a slight push in to anarchy.
