Source: Mufakiru Alemarat
Dr.. Ali Mohamed Al Khouri
The Russian-Ukrainian war made the world on a hot plate politically, militarily and socially, and the economic sector was the most affected. Almost a year after the start of this war; According to the Organization for Economic Cooperation and Development; The costs of the economic war may exceed three trillion dollars by the end of this year.
Among the causes caused by the simultaneous and successive global events is the collapse of the production sector, food shortages, high inflation rates and prices of commodities and basic materials, in addition to raising fears of local and regional political unrest that may fuel the severity of the current situation, lead to more shocks, and lead to a more like scenario. Falling dominoes lined up one after the other.
And in light of the increasing degree of tension between the American-European camp, the Russian camp and their respective allies, in an arena that seems to embrace the world to witness a competition in the game of “pulling the rope”; The Middle East region was not immune from the repercussions of the crisis, and was exposed to harsh waves of severe economic turmoil, just like the rest of the world. It is fortunate for oil-producing countries that the remarkable rises in energy prices have contributed to achieving large trade surpluses. However, the development challenges still place a heavy burden on it, in light of the high levels of unemployment, high prices and living conditions, the decline in foreign investments, the escalation of trade tensions, the disruption of production and supply chains in international trade, in addition to the increase in tension rates in the surrounding geography.
Oil exporters are benefiting from the war and the huge rise in energy prices
The ongoing war in Ukraine led to a very large rise in the prices of energy sources with its various derivatives, whether natural gas or various oil derivatives. This contributed to a limited group of countries benefiting from high energy prices, including oil and natural gas exporting countries such as the Arab Gulf states, Libya, Algeria, Russia, Venezuela, and Iran, in addition to natural gas producing and exporting countries such as Qatar, Egypt, Algeria, and Nigeria. Russia, Israel, and Greece. It is expected that the financial reserves in some of these countries will witness a significant rise in foreign currencies, as they achieve gains and surpluses in their budgets, especially in the Arab Gulf states and Algeria.
A report by the International Monetary Fund, issued in 2022, stated that oil-exporting countries, especially in the Middle East, will achieve annual revenues of up to $300 billion, with a total of $1.3 trillion until 2026, which will represent in their entirety the revenues from exporting energy materials from oil and gas.
However, on the other hand, many countries were affected by the record rises in fuel and energy prices, including the European Union countries, which witnessed the disruption of many factories. As a result of the significant rise in energy prices, and the cessation of cheap Russian gas exports to it. Major economies such as the United States of America, China, India, and other large industrial energy-importing countries, which witnessed a contraction in their economies with an imbalance of supply and demand, and high interest rates and inflation, also joined the ranks of those affected.
Under the agreements concluded between gas and oil exporters with countries such as the United States, China, India and European countries; It is certain that the financial centers of gravity will shift to the Middle East region, specifically the Gulf countries, which have become a major source of energy resources for Beijing, the countries of Southeast Asia, and the European continent and its factories.
A global food crisis may exacerbate tensions in poor countries
The war hit the countries of the world – especially the poor countries and those with weak economies – with great tension. Many developing and poor countries in the Middle East, Africa and South America were also hit by a very large earthquake. due to the lack of food supplies, and the high prices of it globally; As a result of the suspension of supplies from Russia and Ukraine of various agricultural crops, and some exporting countries taking conservative measures, such as India imposing a ban on exports of some of its agricultural crops to the world. Not only that; This crisis caused global inflation and a rise in the prices of goods and products. This led to major imbalances in the trade balance of those countries, the decline in the value of their currencies, and the inability to provide hard currencies to meet their import needs.
It is also after some major climatic changes that swept the world – such as massive floods in Pakistan and India, droughts in the countries of the Horn of Africa, West Africa, China and a number of European countries, and hurricane waves in America, Canada and a number of North American countries; This threatens to exacerbate the crisis of food sources in the world, with an increasing number of countries banning the export and re-export of agricultural crops. In order to manage its food security and provide the needs of its people; This may lead to new hikes in food prices, and put the whole world in front of a bleaker future.
These crises greatly threaten the idea of globalization – and the principle that the whole world manufactures and supplies each other, which failed to stand firm in the face of crises, especially “Covid-19”, which led to putting countries and production sectors on the brink of collapse – and returns countries to more self-reliance. , and reduce the need for the outside world as much as possible; In order to mitigate the effects of supply crises and disruptions to global supply chains.
Complex solution paths
It is clear that there are no clear or quick solutions to get out of the grinding and successive global crises that are burning everything green and dry as they continue. The next stage may be filled with a variety of events and political, economic and social turmoil, amidst the great powers’ efforts to maintain their current privileges and increase their influence in light of the changing geopolitical map, the rise in intensity of international conflicts and competitiveness in the global system. It is certain that these changes in the centers of power in the world will have negative repercussions on the complex and growing challenges faced by developing and poor countries, especially represented by the exacerbation of inflation and unemployment rates, and poverty rates in their societies.
It seems that the world is heading towards new levels of crisis in the global food security sector, with rising food prices, shortages of domestic and foreign supplies, and many countries imposing a ban on food exports. According to the Food and Agriculture Organization and the World Food Program; These data warn of a severe global crisis that may throw more than 222 million people in 53 countries and territories into the cycle of hunger.
And from here; Policy makers and decision makers in the Arab region are facing the thresholds of new changes that necessarily require finding practical solutions to respond to the next food crisis.
And based on the great environmental diversity in the Arab region, and the availability of rain-fed and irrigated agricultural areas in countries only; The goal of food and trade integration among the Arab countries emerges with urgency once again, and its great importance emerges as a result of this crisis. These data prompt the rebuilding of productive and commercial strategies and economic alliances, which will also restore the compass of political alliances.
Among the solutions that may be useful in this path include financing efforts to develop food production in the region, expanding investments in cultivating agricultural crops necessary to provide an adequate national and Arab food basket, and increasing the degree of coordination and commercial export between Arab and regional countries. There is no doubt that expanding the employment of advanced technologies in the cultivation of agricultural crops – in order to double productivity and raise levels of efficiency and quality – is one of the most important ingredients for achieving the desired goals.
Also, the Arab strategic bloc must be restored again. So that economic integration is achieved, for which various Arab agreements were signed under the auspices of the League of Arab States – throughout its history – but it did not find its sufficient chance of activation and revitalization. In fact, we do not need new agreements; Rather, we need to use and revitalize our economic agreements and treaties, on top of which is the Arab Free Trade Agreement.
What we referred to, we must pay attention to its premises as well, especially in the part of economic integration. The Arab world possesses all the elements of integration that would enhance the security and competitiveness of Arab countries, and support political relations among them. Sudan – for example – has agricultural and animal production capacities sufficient to bridge the food gap in the Arab world, estimated at more than $30 billion. However, this depends on the factor of political stability, and then the extent of the seriousness and effectiveness of Arab investments aimed at developing infrastructure and agricultural areas, enabling productive capacities, and improving agricultural products, their quality and quantity.
This is an example only to demonstrate the need for the duality of stability and responsible production as the beginning of achieving what we hope for next, which is trade exchange sufficient to meet our food needs, secure the entire region, and not expose it to new shocks whose aftermath or consequences we do not know.
The issue of food security may be the first link in the chain of risks that must be paid attention to and objective solutions must be found. All episodes of sustainable development will remain a threat to the pillars of security and development in the Arab region, which will not recede or be balanced unless the investments of economic reforms achieve the goals of development plans, and the Arab citizen’s sense of its results at the individual and societal levels.