The hunger wars in our future and 'Arab Spring' without a bloom....
By Michael T Klare
The Great Drought of 2012 has yet to come to an end, but we already know that its consequences will be severe. With more than one-half of America's counties designated as drought disaster areas, the 2012 harvest of corn, soybeans, and other food staples is guaranteed to fall far short of predictions. This, in turn, will boost food prices domestically and abroad, causing increased misery for farmers and low-income Americans and far greater hardship for poor people in countries that rely on imported US grains.
This, however, is just the beginning of the likely consequences: if history is any guide, rising food prices of this sort will also lead to widespread social unrest and violent conflict.
Food - affordable food - is essential to human survival and well-being. Take that away, and people become anxious, desperate, and angry. In the United States, food represents only about 13% of the average household budget, a relatively small share, so a boost in food prices in 2013 will probably not prove overly taxing for most middle- and upper-income families. It could, however, produce considerable hardship for poor and unemployed Americans with limited resources. "You are talking about a real bite out of family budgets," commented Ernie Gross, an agricultural economist at Omaha's Creighton University. This could add to the discontent already evident in depressed and high-unemployment areas, perhaps prompting an intensified backlash against incumbent politicians and other forms of dissent and unrest.
It is in the international arena, however, that the Great Drought is likely to have its most devastating effects. Because so many nations depend on grain imports from the US to supplement their own harvests, and because intense drought and floods are damaging crops elsewhere as well, food supplies are expected to shrink and prices to rise across the planet.
"What happens to the US supply has immense impact around the world," says Robert Thompson, a food expert at the Chicago Council on Global Affairs. As the crops most affected by the drought, corn and soybeans, disappear from world markets, he noted, the price of all grains, including wheat, is likely to soar, causing immense hardship to those who already have trouble affording enough food to feed their families.
The Hunger Games, 2007-2011
What happens next is, of course, impossible to predict, but if the recent past is any guide, it could turn ugly. In 2007-2008, when rice, corn, and wheat experienced prices hikes of 100% or more, sharply higher prices - especially for bread - sparked "food riots" in more than two dozen countries, including Bangladesh, Cameroon, Egypt, Haiti, Indonesia, Senegal, and Yemen. In Haiti, the rioting became so violent and public confidence in the government's ability to address the problem dropped so precipitously that the Haitian Senate voted to oust the country's prime minister, Jacques-Edouard Alexis. In other countries, angry protestors clashed with army and police forces, leaving scores dead.
Those price increases of 2007-2008 were largely attributed to the soaring cost of oil, which made food production more expensive. (Oil's use is widespread in farming operations, irrigation, food delivery, and pesticide manufacture.) At the same time, increasing amounts of cropland worldwide were being diverted from food crops to the cultivation of plants used in making biofuels.
The next price spike in 2010-11 was, however, closely associated with climate change. An intense drought gripped much of eastern Russia during the summer of 2010, reducing the wheat harvest in that breadbasket region by one-fifth and prompting Moscow to ban all wheat exports. Drought also hurt China's grain harvest, while intense flooding destroyed much of Australia's wheat crop. Together with other extreme-weather-related effects, these disasters sent wheat prices soaring by more than 50% and the price of most food staples by 32%.
Once again, a surge in food prices resulted in widespread social unrest, this time concentrated in North Africa and the Middle East. The earliest protests arose over the cost of staples in Algeria and then Tunisia, where - no coincidence - the precipitating event was a young food vendor, Mohamed Bouazizi, setting himself on fire to protest government harassment. Anger over rising food and fuel prices combined with long-simmering resentments about government repression and corruption sparked what became known as the Arab Spring. The rising cost of basic staples, especially a loaf of bread, was also a cause of unrest in Egypt, Jordan, and Sudan. Other factors, notably anger at entrenched autocratic regimes, may have proved more powerful in those places, but as the author of Tropic of Chaos, Christian Parenti, wrote, "The initial trouble was traceable, at least in part, to the price of that loaf of bread."
As for the current drought, analysts are already warning of instability in Africa, where corn is a major staple, and of increased popular unrest in China, where food prices are expected to rise at a time of growing hardship for that country's vast pool of low-income, migratory workers and poor peasants. Higher food prices in the US and China could also lead to reduced consumer spending on other goods, further contributing to the slowdown in the global economy and producing yet more worldwide misery, with unpredictable social consequences.
The Hunger Games, 2012-??
If this was just one bad harvest, occurring in only one country, the world would undoubtedly absorb the ensuing hardship and expect to bounce back in the years to come. Unfortunately, it's becoming evident that the Great Drought of 2012 is not a one-off event in a single heartland nation, but rather an inevitable consequence of global warming which is only going to intensify. As a result, we can expect not just more bad years of extreme heat, but worse years, hotter and more often, and not just in the United States, but globally for the indefinite future.
Until recently, most scientists were reluctant to blame particular storms or droughts on global warming. Now, however, a growing number of scientists believe that such links can be demonstrated in certain cases. In one recent study focused on extreme weather events in 2011, for instance, climate specialists at the National Oceanic and Atmospheric Administration and Great Britain's National Weather Service concluded that human-induced climate change has made intense heat waves of the kind experienced in Texas in 2011 more likely than ever before. Published in the Bulletin of the American Meteorological Society, it reported that global warming had ensured that the incidence of that Texas heat wave was 20 times more likely than it would have been in 1960; similarly, abnormally warm temperatures like those experienced in Britain last November were said to be 62 times as likely because of global warming.
It is still too early to apply the methodology used by these scientists to calculate the effect of global warming on the heat waves of 2012, which are proving to be far more severe, but we can assume the level of correlation will be high. And what can we expect in the future, as the warming gains momentum?
When we think about climate change (if we think about it at all), we envision rising temperatures, prolonged droughts, freakish storms, hellish wildfires, and rising sea levels. Among other things, this will result in damaged infrastructure and diminished food supplies. These are, of course, manifestations of warming in the physical world, not the social world we all inhabit and rely on for so many aspects of our daily well-being and survival. The purely physical effects of climate change will, no doubt, prove catastrophic. But the social effects including, somewhere down the line, food riots, mass starvation, state collapse, mass migrations, and conflicts of every sort, up to and including full-scale war, could prove even more disruptive and deadly.
In her immensely successful young-adult novel The Hunger Games (and the movie that followed), Suzanne Collins riveted millions with a portrait of a dystopian, resource-scarce, post-apocalyptic future where once-rebellious "districts" in an impoverished North America must supply two teenagers each year for a series of televised gladiatorial games that end in death for all but one of the youthful contestants.
These "hunger games" are intended as recompense for the damage inflicted on the victorious capital of Panem by the rebellious districts during an insurrection. Without specifically mentioning global warming, Collins makes it clear that climate change was significantly responsible for the hunger that shadows the North American continent in this future era. Hence, as the gladiatorial contestants are about to be selected, the mayor of District 12's principal city describes "the disasters, the droughts, the storms, the fires, the encroaching seas that swallowed up so much of the land [and] the brutal war for what little sustenance remained."
In this, Collins was prescient, even if her specific vision of the violence on which such a world might be organized is fantasy. While we may never see her version of those hunger games, do not doubt that some version of them will come into existence - that, in fact, hunger wars of many sorts will fill our future. These could include any combination or permutation of the deadly riots that led to the 2008 collapse of Haiti's government, the pitched battles between massed protesters and security forces that engulfed parts of Cairo as the Arab Spring developed, the ethnic struggles over disputed croplands and water sources that have made Darfur a recurring headline of horror in our world, or the inequitable distribution of agricultural land that continues to fuel the insurgency of the Maoist-inspired Naxalites of India.
Combine such conflicts with another likelihood: that persistent drought and hunger will force millions of people to abandon their traditional lands and flee to the squalor of shantytowns and expanding slums surrounding large cities, sparking hostility from those already living there. One such eruption, with grisly results, occurred in Johannesburg's shantytowns in 2008 when desperately poor and hungry migrants from Malawi and Zimbabwe were set upon, beaten, and in some cases burned to death by poor South Africans. One terrified Zimbabwean, cowering in a police station from the raging mobs, said she fled her country because "there is no work and no food". And count on something else: millions more in the coming decades, pressed by disasters ranging from drought and flood to rising sea levels, will try to migrate to other countries, provoking even greater hostility. And that hardly begins to exhaust the possibilities that lie in our hunger-games future.
At this point, the focus is understandably on the immediate consequences of the still ongoing Great Drought: dying crops, shrunken harvests, and rising food prices. But keep an eye out for the social and political effects that undoubtedly won't begin to show up here or globally until later this year or 2013. Better than any academic study, these will offer us a hint of what we can expect in the coming decades from a hunger-games world of rising temperatures, persistent droughts, recurring food shortages, and billions of famished, desperate people.
Michael T Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author most recently of The Race for What's Left: The Global Scramble for the World's Last Resources (Metropolitan Books).
By Michael T Klare
The Great Drought of 2012 has yet to come to an end, but we already know that its consequences will be severe. With more than one-half of America's counties designated as drought disaster areas, the 2012 harvest of corn, soybeans, and other food staples is guaranteed to fall far short of predictions. This, in turn, will boost food prices domestically and abroad, causing increased misery for farmers and low-income Americans and far greater hardship for poor people in countries that rely on imported US grains.
This, however, is just the beginning of the likely consequences: if history is any guide, rising food prices of this sort will also lead to widespread social unrest and violent conflict.
Food - affordable food - is essential to human survival and well-being. Take that away, and people become anxious, desperate, and angry. In the United States, food represents only about 13% of the average household budget, a relatively small share, so a boost in food prices in 2013 will probably not prove overly taxing for most middle- and upper-income families. It could, however, produce considerable hardship for poor and unemployed Americans with limited resources. "You are talking about a real bite out of family budgets," commented Ernie Gross, an agricultural economist at Omaha's Creighton University. This could add to the discontent already evident in depressed and high-unemployment areas, perhaps prompting an intensified backlash against incumbent politicians and other forms of dissent and unrest.
It is in the international arena, however, that the Great Drought is likely to have its most devastating effects. Because so many nations depend on grain imports from the US to supplement their own harvests, and because intense drought and floods are damaging crops elsewhere as well, food supplies are expected to shrink and prices to rise across the planet.
"What happens to the US supply has immense impact around the world," says Robert Thompson, a food expert at the Chicago Council on Global Affairs. As the crops most affected by the drought, corn and soybeans, disappear from world markets, he noted, the price of all grains, including wheat, is likely to soar, causing immense hardship to those who already have trouble affording enough food to feed their families.
The Hunger Games, 2007-2011
What happens next is, of course, impossible to predict, but if the recent past is any guide, it could turn ugly. In 2007-2008, when rice, corn, and wheat experienced prices hikes of 100% or more, sharply higher prices - especially for bread - sparked "food riots" in more than two dozen countries, including Bangladesh, Cameroon, Egypt, Haiti, Indonesia, Senegal, and Yemen. In Haiti, the rioting became so violent and public confidence in the government's ability to address the problem dropped so precipitously that the Haitian Senate voted to oust the country's prime minister, Jacques-Edouard Alexis. In other countries, angry protestors clashed with army and police forces, leaving scores dead.
Those price increases of 2007-2008 were largely attributed to the soaring cost of oil, which made food production more expensive. (Oil's use is widespread in farming operations, irrigation, food delivery, and pesticide manufacture.) At the same time, increasing amounts of cropland worldwide were being diverted from food crops to the cultivation of plants used in making biofuels.
The next price spike in 2010-11 was, however, closely associated with climate change. An intense drought gripped much of eastern Russia during the summer of 2010, reducing the wheat harvest in that breadbasket region by one-fifth and prompting Moscow to ban all wheat exports. Drought also hurt China's grain harvest, while intense flooding destroyed much of Australia's wheat crop. Together with other extreme-weather-related effects, these disasters sent wheat prices soaring by more than 50% and the price of most food staples by 32%.
Once again, a surge in food prices resulted in widespread social unrest, this time concentrated in North Africa and the Middle East. The earliest protests arose over the cost of staples in Algeria and then Tunisia, where - no coincidence - the precipitating event was a young food vendor, Mohamed Bouazizi, setting himself on fire to protest government harassment. Anger over rising food and fuel prices combined with long-simmering resentments about government repression and corruption sparked what became known as the Arab Spring. The rising cost of basic staples, especially a loaf of bread, was also a cause of unrest in Egypt, Jordan, and Sudan. Other factors, notably anger at entrenched autocratic regimes, may have proved more powerful in those places, but as the author of Tropic of Chaos, Christian Parenti, wrote, "The initial trouble was traceable, at least in part, to the price of that loaf of bread."
As for the current drought, analysts are already warning of instability in Africa, where corn is a major staple, and of increased popular unrest in China, where food prices are expected to rise at a time of growing hardship for that country's vast pool of low-income, migratory workers and poor peasants. Higher food prices in the US and China could also lead to reduced consumer spending on other goods, further contributing to the slowdown in the global economy and producing yet more worldwide misery, with unpredictable social consequences.
The Hunger Games, 2012-??
If this was just one bad harvest, occurring in only one country, the world would undoubtedly absorb the ensuing hardship and expect to bounce back in the years to come. Unfortunately, it's becoming evident that the Great Drought of 2012 is not a one-off event in a single heartland nation, but rather an inevitable consequence of global warming which is only going to intensify. As a result, we can expect not just more bad years of extreme heat, but worse years, hotter and more often, and not just in the United States, but globally for the indefinite future.
Until recently, most scientists were reluctant to blame particular storms or droughts on global warming. Now, however, a growing number of scientists believe that such links can be demonstrated in certain cases. In one recent study focused on extreme weather events in 2011, for instance, climate specialists at the National Oceanic and Atmospheric Administration and Great Britain's National Weather Service concluded that human-induced climate change has made intense heat waves of the kind experienced in Texas in 2011 more likely than ever before. Published in the Bulletin of the American Meteorological Society, it reported that global warming had ensured that the incidence of that Texas heat wave was 20 times more likely than it would have been in 1960; similarly, abnormally warm temperatures like those experienced in Britain last November were said to be 62 times as likely because of global warming.
It is still too early to apply the methodology used by these scientists to calculate the effect of global warming on the heat waves of 2012, which are proving to be far more severe, but we can assume the level of correlation will be high. And what can we expect in the future, as the warming gains momentum?
When we think about climate change (if we think about it at all), we envision rising temperatures, prolonged droughts, freakish storms, hellish wildfires, and rising sea levels. Among other things, this will result in damaged infrastructure and diminished food supplies. These are, of course, manifestations of warming in the physical world, not the social world we all inhabit and rely on for so many aspects of our daily well-being and survival. The purely physical effects of climate change will, no doubt, prove catastrophic. But the social effects including, somewhere down the line, food riots, mass starvation, state collapse, mass migrations, and conflicts of every sort, up to and including full-scale war, could prove even more disruptive and deadly.
In her immensely successful young-adult novel The Hunger Games (and the movie that followed), Suzanne Collins riveted millions with a portrait of a dystopian, resource-scarce, post-apocalyptic future where once-rebellious "districts" in an impoverished North America must supply two teenagers each year for a series of televised gladiatorial games that end in death for all but one of the youthful contestants.
These "hunger games" are intended as recompense for the damage inflicted on the victorious capital of Panem by the rebellious districts during an insurrection. Without specifically mentioning global warming, Collins makes it clear that climate change was significantly responsible for the hunger that shadows the North American continent in this future era. Hence, as the gladiatorial contestants are about to be selected, the mayor of District 12's principal city describes "the disasters, the droughts, the storms, the fires, the encroaching seas that swallowed up so much of the land [and] the brutal war for what little sustenance remained."
In this, Collins was prescient, even if her specific vision of the violence on which such a world might be organized is fantasy. While we may never see her version of those hunger games, do not doubt that some version of them will come into existence - that, in fact, hunger wars of many sorts will fill our future. These could include any combination or permutation of the deadly riots that led to the 2008 collapse of Haiti's government, the pitched battles between massed protesters and security forces that engulfed parts of Cairo as the Arab Spring developed, the ethnic struggles over disputed croplands and water sources that have made Darfur a recurring headline of horror in our world, or the inequitable distribution of agricultural land that continues to fuel the insurgency of the Maoist-inspired Naxalites of India.
Combine such conflicts with another likelihood: that persistent drought and hunger will force millions of people to abandon their traditional lands and flee to the squalor of shantytowns and expanding slums surrounding large cities, sparking hostility from those already living there. One such eruption, with grisly results, occurred in Johannesburg's shantytowns in 2008 when desperately poor and hungry migrants from Malawi and Zimbabwe were set upon, beaten, and in some cases burned to death by poor South Africans. One terrified Zimbabwean, cowering in a police station from the raging mobs, said she fled her country because "there is no work and no food". And count on something else: millions more in the coming decades, pressed by disasters ranging from drought and flood to rising sea levels, will try to migrate to other countries, provoking even greater hostility. And that hardly begins to exhaust the possibilities that lie in our hunger-games future.
At this point, the focus is understandably on the immediate consequences of the still ongoing Great Drought: dying crops, shrunken harvests, and rising food prices. But keep an eye out for the social and political effects that undoubtedly won't begin to show up here or globally until later this year or 2013. Better than any academic study, these will offer us a hint of what we can expect in the coming decades from a hunger-games world of rising temperatures, persistent droughts, recurring food shortages, and billions of famished, desperate people.
Michael T Klare is a professor of peace and world security studies at Hampshire College, a TomDispatch regular, and the author most recently of The Race for What's Left: The Global Scramble for the World's Last Resources (Metropolitan Books).
This article fails to mention how the utterly corrupt BIG Financial Corporations drive up food prices by speculating in the futures market in order to make themselves more money.....
MENA's and South Asia's BLACK TREASUREs, 'Arab Spring' without a bloom....
By Hossein Askari
This is the 12th article in a special series on oil and the Persian Gulf.
Part 1: Riddle of the sands
Part 2: The sweet and sour of oil
Part 3: The driver of oil prices
Part 4: OPEC in the driving seat
Part 5: The OPEC bogeyman
Part 6: OPEC and the sanctions highway
Part 7: Oil-price shocks lie in wait
Part 8: Whose oil is it anyway?
Part 9: The dark side of oil
Part 10: Institutions matter
Part 11: Oil-rich rulers blind to the future
Good institutions and elected accountable governments, as we have repeatedly said in this series of articles, are at the foundation of sustained economic growth and development. But along with good institutions, countries need supportive and stable policies and a good dose of peace and stability.
Here we elaborate a little on institutions, political reform and the role of foreigners, and in the next two articles in this series we look at supportive economic policies followed by the importance of peace and stability.
In the euphoria of the "Arab Spring", observers began predicting the blooming of Arab economies after a temporary slowdown attributed to demonstrations, shortages, bottlenecks and ensuing dislocations. The overthrows of Hosni Mubarak in Egypt and Muammar Gaddafi in Libya were forecast to bring democratic change, with Islamists as the only roadblock to Nirvana.
The move toward democratic governance was assumed to usher in better institutions, stimulate business confidence, jettison the corrupt policies of the past and usher in enlightenment that would lead to higher domestic and foreign (FDI) investment. Higher economic growth and more equitable economic benefits were assumed to follow.
Unlike their brethren in democratic societies, the rulers in the Persian Gulf, Arab and Iranian, are autocratic dictators. They have no interest in establishing and nurturing good institutions (popular constitutions, rule of law, transparent regulations, and so forth). The reason is simple.
A popularly adopted constitution would in all likelihood call for an elected and accountable government, create an independent judiciary and confirm the equitable oil birthrights of every generation of citizens. A popular constitution and good institutions would thus undermine corrupt rule and eventually throw rulers out of office.
The constitutions that have been adopted, for example in Iran, were adopted at a time of turmoil and change and the rulers will not tolerate open discussions and amendments on an ongoing basis. These rulers have a simple goal - to amass fortunes and preserve their dynasty (family or clerical) in any way that they can (such as pampered intelligence and military services, vast military expenditures to secure foreign support and keep citizens in check, a cadre of corrupt cronies, discriminatory governance to divide the citizenry and foreign support).
The result is that these countries have an inhospitable business climate, an underdeveloped private sector and little economic and social progress.
The foreign elite and foreign multinational corporations (oil companies, oil service companies, manufacturers of arms, engineering firms, large financial institutions etc) support these rulers for gain. For the powerful governments of East and West, contrary to their altruistic representations, short-run economic gains and gains for the powerful in their own countries are all that matter.
The United States, Europe, Russia and China meddle in these countries and continue to support their favorite dictators before and after the Arab spring; the US supports the Al-Sauds, Al-Khalifas, Al-Thanis, Al-Sabahs and the Al-Nahyans; Europeans more or less tow the US line; Russia supports the mullahs in Tehran and any of the Arab rulers that are willing to cozy up to them as they incur US displeasure; and China supports any and all dictators, even those favored by the US, until the moment when such support becomes a lost cause.
Influential citizens turned lobbyists (former and current senior government officials, corporations, universities and even charitable organizations - all beneficiaries from the largesse of Mideast dictators and their cronies) lobby these powerful governments into supporting Mideast tyrants.
Favored tyrants who are overthrown get a free passage to a life of luxury, enjoying their ill-gotten wealth; unwanted tyrants are arrested, tried and sentenced at the International Criminal Court (ICC); and aggressors from the powerful countries live where they always have with no worry at all.
There is no such thing as consistent and equal international justice. Dictators are not motivated to respect the human, economic and political rights of their citizens. They only guard their own narrow interests and those of their domestic and foreign supporters. Again, meaningful economic progress will require political reform (popular constitution and good institutions) and an end to foreign meddling.
Where are the international institutions? The United Nations masquerades as the guardian of international peace but in reality supports the interests of the powerful and the rich at the expense of the weak and the poor. The powerful sell lethal arms and invade countries with nothing to keep them in check. The International Monetary Fund (IMF), the guardian of the international payments system and dispenser of good economic and financial policies, says little to criticize Saudi Arabia and fellow Gulf Cooperation Council (GCC) countries about their needed political reform and the management of their oil revenues as they have been big lenders to the IMF.
The World Bank, the institution with all the answers for economic development and growth, does not mention the official plunder of revenues in these countries. The record of the ICC is almost non-existent as it has largely tried a few cases of African tyrants.
In such a setting, the overthrow of a dictator does little to promote fundamental political and economic change. Again, as a dictator is overthrown, another tyrant to be steps up and takes his place. His motivation is simple - follow in the deposed rulers footsteps but learn from his mistakes and hold on to power. Rob the country and amass a fortune.
Similarly, foreigners - governments, individuals and corporations - take up where they had left off with the deposed ruler. It's business as usual.
Just look at Iran. The mullahs and their supporters are robbing their people and amassing their fortunes. They have not been supported by the US but have until recently enjoyed European backing and have the backing of the Chinese and the Russians.
Look at Iraq. Yes, there is more freedom with regime change, but the economy is no tiger. A new group is robbing the country, with no incentive to establish good institutions - corruption and economic mismanagement with widespread foreign acquiescence and support rules the day.
Egypt seems to be going down a similar path. It is the same old story over again in different clothes. Would regime changes in the GCC countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia - yield better results? No. It would be the same story all over the region.
A number of simultaneous initiatives, in addition to regime change, are called for. First and foremost, all Mideast rulers must be reminded and shamed into accepting and acknowledging one simple truth. The oil and gas is not their's to plunder but is the inheritance of all generations, current and future citizens. Rulers must not enjoy any special access to oil revenues. There can be no exception to this simple truth.
Yes, rulers in Abu Dhabi and Qatar have more resources to keep their populace content. But for how long? What about all the generations to come? The acceptance and implementation of this truth would not only remove the biggest impediment to better economic programs and policies in the Middle East but also would reduce resentment and conflict in the region.
All international institutions must support this fact. The IMF must not be allowed to hide behind its economic mandate by labeling this as a political matter. It is in fact the central economic issue in these countries. What economic issue could be more important than the management of oil resources in these countries? And this has to begin by settling the central economic question - whose oil is it?
Oil revenues must not be used to buy citizens, finance consumption, buy weapons, suppress citizens, wage armed-conflict and fill the bank accounts of rulers and their cronies. They must be used in a way to benefit all citizens and all generations equitably.
The recommended policy to achieve this is simple.
(i) Over a period of say 10 years, oil revenues must be taken away from the governments (and immediately from rulers),
(ii) oil revenues should be placed in a fund and invested in a diversified portfolio,
(iii) every citizen should be issued an annual check of equal purchasing power,
(iv) the size of this check (of equal purchasing power) to be the same for all present and future generations of citizens (this calculation is standard and would be updated continuously), and
(v) the government to initiate a process of financing its expenditures from taxation, with all expenditures financed from taxation within 10 years. More on this in a later article.
To encourage a process of economic renaissance in the region, foreigners could be supportive in a number of ways. In the quest to discourage foreign rulers from robbing their own countries and adopting policies that are harmful to business development and growth:They could develop laws that limit and more readily expose lobbying on behalf of foreign rulers and governments. They could adopt laws that expose the wealth of foreign rulers and officials in the same fashion as Americans running for office in the United States. They could pledge that all wealth illegally acquired by rulers and their cronies would be subject to confiscation and return to the country of origin.
The global community has adopted protocols to limit money laundering but has done nothing to reduce the ongoing plunder in these countries, arguably the mother of all money launderings. All of this would signal an important fact to tyrants. They will not get the support of foreign powers, their influential citizens and corporations and of international courts to rob their countries.
The message should be clear. There will be no meaningful economic and political turnaround unless a number of associated policies are adopted and implemented simultaneously. Changing regimes and hoping that it will in time lead to political reform and economic resurgence is but a dream.
NEXT:Bad performance, failed policies....
Hossein Askari is Professor of Business and International Affairs at the George Washington University.
By Hossein Askari
This is the 12th article in a special series on oil and the Persian Gulf.
Part 1: Riddle of the sands
Part 2: The sweet and sour of oil
Part 3: The driver of oil prices
Part 4: OPEC in the driving seat
Part 5: The OPEC bogeyman
Part 6: OPEC and the sanctions highway
Part 7: Oil-price shocks lie in wait
Part 8: Whose oil is it anyway?
Part 9: The dark side of oil
Part 10: Institutions matter
Part 11: Oil-rich rulers blind to the future
Good institutions and elected accountable governments, as we have repeatedly said in this series of articles, are at the foundation of sustained economic growth and development. But along with good institutions, countries need supportive and stable policies and a good dose of peace and stability.
Here we elaborate a little on institutions, political reform and the role of foreigners, and in the next two articles in this series we look at supportive economic policies followed by the importance of peace and stability.
In the euphoria of the "Arab Spring", observers began predicting the blooming of Arab economies after a temporary slowdown attributed to demonstrations, shortages, bottlenecks and ensuing dislocations. The overthrows of Hosni Mubarak in Egypt and Muammar Gaddafi in Libya were forecast to bring democratic change, with Islamists as the only roadblock to Nirvana.
The move toward democratic governance was assumed to usher in better institutions, stimulate business confidence, jettison the corrupt policies of the past and usher in enlightenment that would lead to higher domestic and foreign (FDI) investment. Higher economic growth and more equitable economic benefits were assumed to follow.
Unlike their brethren in democratic societies, the rulers in the Persian Gulf, Arab and Iranian, are autocratic dictators. They have no interest in establishing and nurturing good institutions (popular constitutions, rule of law, transparent regulations, and so forth). The reason is simple.
A popularly adopted constitution would in all likelihood call for an elected and accountable government, create an independent judiciary and confirm the equitable oil birthrights of every generation of citizens. A popular constitution and good institutions would thus undermine corrupt rule and eventually throw rulers out of office.
The constitutions that have been adopted, for example in Iran, were adopted at a time of turmoil and change and the rulers will not tolerate open discussions and amendments on an ongoing basis. These rulers have a simple goal - to amass fortunes and preserve their dynasty (family or clerical) in any way that they can (such as pampered intelligence and military services, vast military expenditures to secure foreign support and keep citizens in check, a cadre of corrupt cronies, discriminatory governance to divide the citizenry and foreign support).
The result is that these countries have an inhospitable business climate, an underdeveloped private sector and little economic and social progress.
The foreign elite and foreign multinational corporations (oil companies, oil service companies, manufacturers of arms, engineering firms, large financial institutions etc) support these rulers for gain. For the powerful governments of East and West, contrary to their altruistic representations, short-run economic gains and gains for the powerful in their own countries are all that matter.
The United States, Europe, Russia and China meddle in these countries and continue to support their favorite dictators before and after the Arab spring; the US supports the Al-Sauds, Al-Khalifas, Al-Thanis, Al-Sabahs and the Al-Nahyans; Europeans more or less tow the US line; Russia supports the mullahs in Tehran and any of the Arab rulers that are willing to cozy up to them as they incur US displeasure; and China supports any and all dictators, even those favored by the US, until the moment when such support becomes a lost cause.
Influential citizens turned lobbyists (former and current senior government officials, corporations, universities and even charitable organizations - all beneficiaries from the largesse of Mideast dictators and their cronies) lobby these powerful governments into supporting Mideast tyrants.
Favored tyrants who are overthrown get a free passage to a life of luxury, enjoying their ill-gotten wealth; unwanted tyrants are arrested, tried and sentenced at the International Criminal Court (ICC); and aggressors from the powerful countries live where they always have with no worry at all.
There is no such thing as consistent and equal international justice. Dictators are not motivated to respect the human, economic and political rights of their citizens. They only guard their own narrow interests and those of their domestic and foreign supporters. Again, meaningful economic progress will require political reform (popular constitution and good institutions) and an end to foreign meddling.
Where are the international institutions? The United Nations masquerades as the guardian of international peace but in reality supports the interests of the powerful and the rich at the expense of the weak and the poor. The powerful sell lethal arms and invade countries with nothing to keep them in check. The International Monetary Fund (IMF), the guardian of the international payments system and dispenser of good economic and financial policies, says little to criticize Saudi Arabia and fellow Gulf Cooperation Council (GCC) countries about their needed political reform and the management of their oil revenues as they have been big lenders to the IMF.
The World Bank, the institution with all the answers for economic development and growth, does not mention the official plunder of revenues in these countries. The record of the ICC is almost non-existent as it has largely tried a few cases of African tyrants.
In such a setting, the overthrow of a dictator does little to promote fundamental political and economic change. Again, as a dictator is overthrown, another tyrant to be steps up and takes his place. His motivation is simple - follow in the deposed rulers footsteps but learn from his mistakes and hold on to power. Rob the country and amass a fortune.
Similarly, foreigners - governments, individuals and corporations - take up where they had left off with the deposed ruler. It's business as usual.
Just look at Iran. The mullahs and their supporters are robbing their people and amassing their fortunes. They have not been supported by the US but have until recently enjoyed European backing and have the backing of the Chinese and the Russians.
Look at Iraq. Yes, there is more freedom with regime change, but the economy is no tiger. A new group is robbing the country, with no incentive to establish good institutions - corruption and economic mismanagement with widespread foreign acquiescence and support rules the day.
Egypt seems to be going down a similar path. It is the same old story over again in different clothes. Would regime changes in the GCC countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia - yield better results? No. It would be the same story all over the region.
A number of simultaneous initiatives, in addition to regime change, are called for. First and foremost, all Mideast rulers must be reminded and shamed into accepting and acknowledging one simple truth. The oil and gas is not their's to plunder but is the inheritance of all generations, current and future citizens. Rulers must not enjoy any special access to oil revenues. There can be no exception to this simple truth.
Yes, rulers in Abu Dhabi and Qatar have more resources to keep their populace content. But for how long? What about all the generations to come? The acceptance and implementation of this truth would not only remove the biggest impediment to better economic programs and policies in the Middle East but also would reduce resentment and conflict in the region.
All international institutions must support this fact. The IMF must not be allowed to hide behind its economic mandate by labeling this as a political matter. It is in fact the central economic issue in these countries. What economic issue could be more important than the management of oil resources in these countries? And this has to begin by settling the central economic question - whose oil is it?
Oil revenues must not be used to buy citizens, finance consumption, buy weapons, suppress citizens, wage armed-conflict and fill the bank accounts of rulers and their cronies. They must be used in a way to benefit all citizens and all generations equitably.
The recommended policy to achieve this is simple.
(i) Over a period of say 10 years, oil revenues must be taken away from the governments (and immediately from rulers),
(ii) oil revenues should be placed in a fund and invested in a diversified portfolio,
(iii) every citizen should be issued an annual check of equal purchasing power,
(iv) the size of this check (of equal purchasing power) to be the same for all present and future generations of citizens (this calculation is standard and would be updated continuously), and
(v) the government to initiate a process of financing its expenditures from taxation, with all expenditures financed from taxation within 10 years. More on this in a later article.
To encourage a process of economic renaissance in the region, foreigners could be supportive in a number of ways. In the quest to discourage foreign rulers from robbing their own countries and adopting policies that are harmful to business development and growth:
The global community has adopted protocols to limit money laundering but has done nothing to reduce the ongoing plunder in these countries, arguably the mother of all money launderings. All of this would signal an important fact to tyrants. They will not get the support of foreign powers, their influential citizens and corporations and of international courts to rob their countries.
The message should be clear. There will be no meaningful economic and political turnaround unless a number of associated policies are adopted and implemented simultaneously. Changing regimes and hoping that it will in time lead to political reform and economic resurgence is but a dream.
NEXT:Bad performance, failed policies....
Hossein Askari is Professor of Business and International Affairs at the George Washington University.
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