• Home
• /
• Business

Widespread discontent in Middle East as prices soar

CAIRO - A recent extraordinary rise in costs of food and other basic commodities and skyrocketing oil prices are pushing millions of ordinary people across the Middle East towards poverty and setting off strikes and unrest.

Many Arab countries are heavily reliant on food imports, which makes them more vulnerable to global rises in commodity prices.

World food prices fell by around three-quarters in inflation- adjusted terms in the 30 years to 2005, according to the Economist food prices index. Since then, there has been an increase of 75 per cent with much of it in the past year.

"There is a growing Arab awareness of the risks of not giving attention to food production in the Arab region," said Abdel-Aziz al- Ghurir, the speaker of the national assembly of the United Arab Emirates.

"A political decision has been made to promote investment in the farming industry," al-Ghurir said after talks in Egypt where food riots have recently broken out.

Over the last two months, 11 people died in scuffles as they waited in queues to buy subsidized bread, now in short supply. In early April, workers calling for an increase in stagnant wages clashed with police in the industrial town of Mahalla, which left three people dead.

On Tuesday, emotion ran high after parliament approved an increase in fuel and cigarette prices. Bus and taxi drivers protested across the country where 20 per cent of the population of 75 million people earn less than two dollars a day.

"There has been an increase in food prices. Now there is an increase in gasoline prices. We can't afford to eat. We cannot live like this," said an angry taxi driver waiting to tank up at a gas station in Cairo.

"The government thinks it is affecting the rich by increasing gasoline prices but it is actually punishing the miserable poor," the man said.

In Syria, the government fears Egyptian-style bread riots despite a 25-per-cent wage increase for state employees announced on Saturday.

In March, the price of gasoline was raised by 11 per cent as part of a plan to gradually lift government subsidies.

The wage increase is supposed to compensate for a jump in prices of food, including vegetables, meat and milk, which rose by between 30 and 60 per cent, sparking fears that bread will follow suit.

Bread queues are already appearing in Syrian cities despite a warning by the government that bread prices will remain unchanged.

"The queues are caused by people now buying bread subsidized by the government after the increase in prices of non-subsidized bread, Esam Kahwaji, in charge of state-run bakeries, told the official daily al-Thawra.

In oil-rich Gulf Arab countries, a boom driven by oil prices exceeding the 120 dollar a barrel level may be a bonanza for a class of entrepreneurs but it is fuelling inflation. The pinch is felt by the vast majority of state employees and the foreign workforce.

In Saudi Arabia, the world's largest oil exporter, inflation that has been virtually zero for years reached a record 9.6 per cent in March.

Inflation is fed by rising food prices and rents and public spending driven by windfall oil revenues, Saudi Central Bank governor, Hamad Saud al-Sayyari, told a financial conference held in Riyadh.

Food prices rose about 14 per cent while rents increased by 19 per cent.

The simmering economic crisis in the kingdom has alarmed 19 prominent clerics, who issued an unusual warning on the Internet. The crisis will cause "theft, cheating, armed robbery and resentment between rich and poor," the clerics said.

In the booming United Arab Emirates (UAE) and Bahrain, the main victims of spiralling inflation - now in the double digits - are millions of foreign workers, who make up the backbone of the workforce in the tiny, sparsely populated Gulf sheikdoms.

Underpaid workers from the Indian subcontinent went on strike in recent months in the UAE, demanding wage raises as the money they sent home continues to lose its purchasing power.

Foreign workers in the Gulf are paid in dollar-pegged currencies, which means that their salaries converted into the currencies of their home countries drop in value.