by Alex Evans | Mar 3, 2011 | Climate and resource scarcity
The Obama Administration has a respectable story to tell on food security in lots of ways: its Feed the Future initiative, particularly, put it in a genuine leadership position among G8 governments (although there are now lots of question marks over whether Congress will allow the program to go forward).
But on one aspect of US food policy, there’s a deafening silence: the government’s support for corn-based ethanol. Here’s Robert Hormats, Under-Secretary of State for Economic, Energy and Agricultural Affairs, on USAID’s blog:
World food prices have been increasing over the past six months, due to weather-related production losses and strong global demand. The growing demand is fueled by rapid expansion of middle-class households in emerging markets.
Er, hello? Let’s stop by at FAO’s Food Price Index (February data out today – you guessed it, another record high). What do they think is driving cereal prices upwards?
The increase in February mostly reflected further gains in international maize prices, driven by strong demand amid tightening supplies, while prices rose marginally in the case of wheat and fell slightly in the case of rice.
In other words, this is mainly about corn. And who’s the biggest corn exporter in the world? The United States.
And where is 40% of US corn production going this year? Ethanol, for use in US car engines.
And will USAID acknowledge that this has anything at all to do with spiking food prices? Don’t hold your breath.
by Jules Evans | Mar 2, 2011 | Influence and networks
There is a danger that we have become not just trapped in the ‘prison of GDP’, but trapped in the prison of statistics. We have become trapped in the idea that something can only be a serious goal if we can quantify it, measure it, and track our progress towards it on a neat Power Point graph. And we want to use this approach to find well-being. We want a technocratic solution to a spiritual question. (more…)
by Alistair Burnett | Feb 26, 2011 | Conflict and security, Middle East and North Africa
Prime Minister, David Cameron’s tour of the Gulf on a trade promotion mission as the Arab world is rocked by mass protests against long-lasting authoritarian rulers has provoked a debate in Britain about whether the coalition government’s foreign policy is too focussed on trade and not enough on promoting values such as liberal democracy.
Mr Cameron’s visit was scheduled before the current unrest broke out in the region and the former PR executive in him attempted to head off potential criticism by adding a short stop in Egypt at the beginning of the tour to meet protest leaders and the provisional military government that removed Hosni Mubarak from power.
However, this has not been an entirely successful gambit.
The trip has attracted criticism, especially from liberal commentators, because several arms manufacturers are part of the trade delegation with the Prime Minister at the same time that the government had to revoke arms export licenses to Libya and Bahrain when the security forces there used violence against protesters.
The nub of the criticism is that the government is trying to persuade governments in the Arab world to buy British defence equipment at the same time as London talks about the need for those governments in the Arab world to stop repressing the demands of their people for more democracy. Some commentators argue that Mr Cameron is trying to have his cake and eat it, whereas the former Foreign Secretary, David Miliband, recently attacked the coalition’s foreign policy as ‘low-grade mercantilism’. The charge is that it is too focused on trade at the expense of promoting democratic values.
Mr Cameron has defended his approach and insisted in a speech in Kuwait and a town-hall meeting with Qatari students that you can promote trade and democracy at the same time and insisted Britain’s rules governing arms exports are among the toughest in the world.
It looks like the upheaval in the Arab world has brought Mr Cameron’s foreign policy approach, honed in opposition, into contact with the reality of government and he is learning that he has to talk about values as much as the bottom line.
Does this ring any bells?
Ironically, when Tony Blair first came to power, his Foreign Secretary, Robin Cook took the opposite approach to Mr Cameron, but ended up facing not dissimilar criticism. On assuming offce, Mr Cook announced that henceforth Britain would have an ‘ethical foreign policy’, but this soon encountered charges of hypocricy and/or naivety, because of – yes you guessed it – arms sales to authoritarian governments which didn’t square with respect for human rights and democratic values. In Labour’s case it was Indonesia’s violent attempt to suppress East Timor’s desire for independence in 1999 where British-made aircraft were used.
On The World Tonight this week we discussed the conflicting pressures on Mr Cameron, and the former British ambassador to Libya, Oliver Miles, argued that selling arms to foreign governments, under strict conditions that they will not be used for repressing their own people or attacking their neighbours, is not contradictory or hypocritical, it is a matter of judgement (as to whether those government’s will respect the guidelines or not).
But as Mr Cameron and Mr Blair before him have found out, the reality seems to be that once arms are licensed for export, it can become a political headache if that judgement turns out to be wrong.
by Alex Evans | Feb 25, 2011 | Climate and resource scarcity, Economics and development, Middle East and North Africa
Ever heard of spare capacity theory? It’s defined by Gregor Macdonald as:
the assumption among western bankers, policy makers, economists, and stock markets that OPEC producers can lift oil production at will, and, export all of that spare production to world consumers.
(See also this recent post on Global Dashboard, and this one from back in 2008.) There’s a lot of spare capacity theory doing the rounds at the moment, given what’s happening in North Africa and the Middle East. Libya normally produces 1.6 million barrels of oil a day (a little under 2% of global production). It’s estimated that about 350,000 barrels, or 22%, of that is now offline, and depending on how things pan out, it could stay offline for some time.
Now imagine what happens if it all kicks off in Algeria (a larger exporter than Libya of oil plus oil products). Or, for that matter, in Iraq, Iran, or Saudi Arabia – all of which are much more significant again. That’s what has traders and futures markets spooked, and everyone looking to Saudi Arabia: as a source quoted in the FT this morning puts it,
“It is fear of the unknown. The risks are all to the upside. Saudi Arabia needs to respond.”
Saudi Arabia, for its part, insists that it can and will increase production if needed:
“Right now, there are active talks in order to implement what is needed,” the Saudi official said. He stressed that the kingdom retains spare capacity of some 4m barrels a day – more than double Libya’s entire output, which totalled 1.58m b/d in January, according to the International Energy Agency.
Saudi Arabia has not yet decided whether to increase production. If it proved necessary to produce more, “then that will happen, there’s no problem at all”, the official said.
But what if that’s not true? Gregor Macdonald argues that the extent to which markets have climbed over the past week “suggests the market is justifiably concerned about events in Libya, and the risk of more unrest to come in oil producing regions”. His conclusion:
Given the potential magnitude of this situation, I actually think its good that we can still rely on price as a means to ration supply.
True though that may be, a new oil price spike is exactly what we didn’t need on global food prices at this point. Back at the start of the year, the fact that we weren’t in the middle of an oil spike was one of the factors I drew comfort from on the food outlook. Not now…
