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The economic consequences of the coronavirus epidemic will put Arab countries at risk of famine.
The Kingdom of Saudi Arabia imports 75-80% of all its food needs, Kuwait, Qatar, United Arab Emirates and Yemen 90%, Bahrain and Lebanon 85%, Egypt 65%, Iraq over 60%, Jordan 60%, Amman 60%, Tunisia more than 50%, Morocco 50%, Algeria 40%, Palestine 65%.
The Arab region is the world’s largest food importer, with most Arab countries highly dependent on food imports from abroad. Therefore, as soon as the importation of food ceases, the Gulf countries will face the challenge of hunger and the threat of a major humanitarian disaster.
Here’s two news: The Volkswagen Group has shut down its plant in Russia because some auto components have stopped arriving from Europe. Kazakhstan (one of the world’s largest grain exporters) has banned most food exports outside the country.
These two news stories represent two interconnected crises that will threaten the existence of Arab countries in their current form. The Covid-19 virus epidemic and the associated quarantine are halting the production process around the world. Indeed, I think that agriculture will be less affected than industry, but it also depends on the availability of equipment, transport, workers’ health and the functioning of the banking system. How long does the current quarantine last? No one knows, but it has become clear that a rapid return to normal economic performance is not expected. Global supply chains are disintegrating, while suppliers in many countries go bankrupt. Even if the United States of America, for example, subsidizes the American auto industry, the bankruptcy of a Turkish windshield factory used in these cars will stop the production of the American factory, it can produce cars.
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The largest US banks, Goldman Sachs and Morgan Stanley, have announced that forecasts for US GDP have dropped from growth to a fall of 30%. In addition, the chairman of the Federal Reserve Bank of the United States in St. Louis, James Bullard, has said that the US economy will decline by 50%, which is indeed an integrated economic disaster, and that cannot does not affect food production.
But that’s not all..
Central banks in the United States of America, the European Union and other major economies have launched large-scale programs to release uncovered money in order to save stock exchanges, banks and national economies. The US Federal Reserve even announced the start of unlimited “quantitative easing”, meaning unlimited money printing. The global economy has never known such madness before. Or more accurately, such madness was only seen in Zimbabwe, Venezuela, the Weimar Republic and other countries that later suffered from hyperinflation. But no one has seen this madness in the world yet.
Of course, it is understood that this means linking an economy with a dead brain to an artificial heart, an artificial lung, an artificial kidney and other artificial parts of the body. It is just a matter of buying time, of delaying the collapse of the world economy until later. Now, the collapse of the global financial system is no longer a question of whether it “will happen” or “not”, but the only question is “when will it happen”.
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As a result, it is clear that we are on the cusp of an imbalance in global economies, escalating waves of bankruptcy, the closure of factories and businesses, and the declaration of bankruptcy of entire countries. . The highlight of all this hyperinflation will be in the currencies that are now in print, without borders, including the dollar, euro and yen. No one can answer the question of how close we are to this point, but I’m guessing it might be a few months, maybe years.
Global hyperinflation would mean a halt in international trade for a period of time, including food trade.
With regard to the example you gave on Kazakhstan, this proves that before the collapse of the global financial system, food exporters had already started to stop exporting food abroad. So the food crisis could be weeks, maybe months away, and all before the dollar even collapses.
In these circumstances, I hope that Arab governments will realize the importance of taking urgent action to increase countries’ strategic food reserves. I advise every family in the Arab region, especially in the Gulf region, to store food and water for at least several months.
Political analyst / Alexander Nazarov
The article expresses only the opinion of the newspaper or the writer
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