The other Global Crisis
| DOI | 10.1177/002070200906400210 |
| Published date | 01 June 2009 |
| Date | 01 June 2009 |
| Author | Shalendra D. Sharma |
| Subject Matter | Over the Transom |
Shalendra D. Sharma
The other global crisis
Combating the food and humanitarian crisis
| International Journal | Spring 2009 | 501 |
Nations around the world are currently confronting an unprecedented
financial crisis triggered by the collapse of the US subprime mortgage
market. Despite extensive support from governments and monetary
authorities, the financial meltdown has already taken a heavy toll on the
world economy, with more economic hardship predicted for the immediate
future. The crisis came at a time when the leading G7 economies were
already slowing due to skyrocketing energy and commodity prices.
Developing countries, and in particular the least developed, already reeling
under sharp hikes in food and fuel prices, now face the daunting prospect of
losing hard- won gains in e conomic development, po verty alleviation, and
political stability.
In fact, before the financial crisis hit, many developing countries were in
the midst of a wrenching food and fuel crisis. Overall, global food prices had
increased by a whopping 83 percent over the 36 months leading up to
Shalendra D. Sharma is professor of political science at the University of San Francisco. He
is the author of five books, including Achieving Economic Development in the Era of
Globalization (Routl edge, 2007), and the forthcoming India and Chi na in the A ge of
Globalization (Cambridge University Press, 2009).
| Shalendra D. Sharma |
| 502 | Spring 2009 | International Journal |
February 2008. The current financial crisis has only exacerbated the
problem. To sound the alarm, the World Bank issued an unprecedented
“urgent warning” in April 2008 to the internal community that skyrocketing
food prices were threatening recent gains against global hunger and poverty.
More ominously, the bank warned of political instability and violence if the
problems were not immediately addressed. Indeed, throughout the first six
months of 2008, mass rioting over food sh ortages and spiralling costs
occurred regularly in many countries, including Bangladesh, Mexico,
Zimbabwe, Egypt, Haiti, Indonesia, Camero on, Peru, Pakist an, Somalia,
Brazil, Guinea, Mauritania, Morocco, Senegal, Uzbekistan, Yemen, and
Argentina, among others. In the halls of national governments and
organizations like the United Nations and the World Bank, there was
palpable concern that the dramatic rise in inflation (driven by high food
prices) not only has the potential to dramatically reverse the gains in global
poverty reduction, but also to lead to political instability—a recruiting ground
for terrorism and criminality. This is because food price inflation is the most
regressive of all taxes as it hurts vast sections of the populace, especially the
teeming urban poor. Crowded in slums, the urban poor are forced to spend
a high proportion of their incomes (anywhere from 70 to 80 percent) on
food. This means that sharp price hikes cut viciously into what little they
have left for other necessary expenses like healthcare, education for their
children, and shelter.
Like the financial crisis, the severity of the food crisis caught
governments around the world by surprise. This confusion and
unpreparedness was vividly reflected by the former leader of the world’s
richest and most powerful nation, US President George W. Bush, whose
initial reaction was to blame developing countries implicitly for the crisis by
noting that when poor countries like India and China prosper, they “start
demanding better nutrition and better food…and when demand is high, that
causes the price to go up.” Of course Bush was hardly alone in holding this
view, yet it is deeply flawed and carries serious negative policy implications.
A more nuanced understanding of the roots of the global food crisis, its
broader socioeconomic and political implications—including its linkages
with the global financial crisis—and what individual countries and the
international community can do to mitigate this serious threat to human
security is urgent. The following pages attempt to do just that.
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