The MENA region needs the Gulf states to avoid food-led insecurities
Several vulnerabilities in global supply chains, such as commodity shortages and increased food prices, were exposed in the wake of the Russian invasion of Ukraine.
Accounting for 25% of the world’s wheat supply, Russia and Ukraine are the world's largest exporters of wheat, and major exporters of other food supplies, such as corn, barley and fertilizer.
Their conflict, coupled with Western sanctions on Russia and suspensions of shipping at Ukrainian ports, caused a global commodities shortage, and food prices to skyrocket.
Food prices and shortages have hit the Middle East and North Africa particularly hard.
For instance, inflation in Egypt recently hit 13.1%, while Lebanese inflation skyrocketed to 215% in February. Both countries have recently sought aid from the IMF to support their fledgling economies.
Gulf states, like other countries in the MENA region, are still heavily involved in the global commodities trade. Qatar and the UAE import around 50% of their wheat from Russia and Ukraine. Saudi Arabia imports 50% of its wheat from Russia and Ukraine, and is also the world’s largest importer of barley; of which 33% combined comes from Russia and Ukraine.
While the Gulf states rely on food imports, their wealth, agriculture policies and investments have made them less vulnerable to rising food prices as opposed to poorer countries in the Middle East.
Gulf states’ oil wealth has allowed them to withstand higher commodity prices. Unlike MENA states that do not have access to vast oil reserves, the ability of oil producing Gulf states to capitalize on oil exports and subsequent revenues have allowed them to amass immense wealth and financial security.
For example, in 2021, Saudi Arabia reportedly exported 7.3 million barrels of oil a day, resulting in 360 billion dollars in revenue.
The financial security instigated by their place in the global energy market allowed Gulf states to subsidize food stockpiles without putting their wealth reserves at risk.
Diversified agricultural investments
Gulf states have long diversified their agricultural investments domestically and internationally. Realizing this vulnerability during the 2008 financial crisis, some Gulf states decided to increase their food reserves through enhanced storage capacities, and increasing government financial assistance to domestic agricultural production.
They have also diversified their food suppliers, and expanded agricultural investment in regions with significant arable land. GCC members’ states set their sights on sub-Saharan Africa, which accounts for 60% of the world’s arable land.
In the UAE, food imports from Africa have totaled 21 billion; they spent 11 billion on capital investments in 2017.
Rising food prices could create political instability and further destabilization in the MENA.
Historically, increased food prices have led to protests and instability in the MENA, such as the 1977 riots in Egypt and 1983 riots in Tunisia.
In early March of this year, there were widespread protests in Iraq over rising food prices. Similarly, protests and sit-ins have spread across Lebanon in response to their weakened economy and food shortages.
Spiking food prices is considered to be a contributing factor in the 2011 Arab spring that spread across the MENA. Human Rights Watch has warned that current food prices could heighten instability in the MENA region and that governments across the world should be wary of implications from current spiking food prices.
Why should this concern the Gulf states?
Because instability in the MENA does not happen in a vacuum, it has a domino effect. During the Arab spring, protests in Egypt were inspired by demonstrations in Tunisia, both of which toppled long-standing governments. Similarly, during the Arab spring, protests spread across the MENA region: from Jordan, to Lebanon, to Kuwait, to Oman and even Saudi Arabia.
While these governments survived the Arab spring, regional instability and changes in the MENA created new geopolitical challenges and dynamics, which in turn posed enormous security challenges for the Gulf.
At a time when wealthy Gulf countries are looking to diversify their economies, and establish lasting trade partnerships internationally, regional instability could pose a major dilemma for their economic growth.
What should wealthy Gulf states do?
Gulf states should replicate their recent aid and investments to Egypt into other struggling economies in the MENA that are especially vulnerable to spiking food prices.
Investments in these weakened countries could play a pivotal role in gearing their economy towards prosperity and quelling political instability.
Recently, Gulf states have stepped up in aiding the Egyptian economy as they struggle with food shortages. Egypt is the world’s largest importer of wheat from Russia and Ukraine and relies heavily on subsidized imports.
Since Russia’s invasion of Ukraine, Saudi Arabia, the UAE, and Qatar have pledged billions in investment and aid to support the Egyptian economy.
Saudi Arabia deposited $5 billion into Egypt’s central bank and promised $10 billion in future investments from the Public Investment Fund.
Qatar signed $5 billion in investment deals, while Abu Dhabi approved $2 billion of investments. Similarly, Saudi Arabia sent $50 million in aid to Jordan in April.
Resource rich Gulf states can and should use their wealth and influence to aid their neighboring MENA countries turning the tide of the commodity shortages and price hikes. If they act now, they could stave off potential protests and political instability in the MENA states that could further destabilize the whole region.
• Adam Karadsheh is a Geoeconomics Fellow at the Cambridge Middle East and North Africa Forum, a think tank based in the UK researching the politics and international relations of the Middle East and North Africa.