Arab governments tempered public anger at rising food prices by increasing wages and subsidies, but their approach is not sustainable without raising taxes. Instead they should revise agricultural policies, expand social safety nets, and curb excessive energy consumption, argues Carnegie Middle East Center economist Ibrahim Saif.
Examining the response to the crisis by both oil-producing Gulf countries and populous non-oil exporting countries, Saif recommends sustainable alternative policies in his new commentary, The Food Price Crisis in the Arab Countries: Short Term Responses to a Lasting Challenge.
Key Conclusions:
- The ability of governments to raise the salaries of large numbers of public sector employees prevented food protests from worsening but fueled significant inflation, which governments can do little to curb.
- Arab governments should introduce efficient farming techniques and provide incentives such as tax breaks and easy loans to increase domestic production and create jobs in rural areas.
- Developed nations should share agricultural techniques and best practices for public food procurement rather than cash assistance.
He concludes:
“In the short run, there is no quick fix for the crisis created by rising food prices. Particularly in non-oil producing countries, there remains a real danger that people will take to the streets in increasing numbers when they see their livelihoods threatened. And in the Arab countries, the consequences of discontent and anger can easily acquire a geopolitical angle.”