Global hunger linked to speculations in the international food market

See related piece from Julian Cribb, "The Coming Famine" published in NYTimes. Raj Patel's book "Stuffed and Starved" is also an excellent read on the topic.

The original report on which the below article is based.

How Goldman Sachs gambled on starving the world's poor - and won
Johann Hari, July 2, 2010
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Excerpt

"At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 percent, maize by 90 percent, and rice by 320 percent. In a global jolt of hunger, 200 million people - mostly children - couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in over 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, called it "a silent mass murder", entirely due to "man-made actions."

Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis like they were hit by a tsunami. "It was very painful," a woman my age called Abeba Getaneh, told me. "My children stopped growing. I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died."

Most of the explanations we were given at the time have turned out to be false. It didn't happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn't because demand grew either. We were told the swelling Chinese and Indian middle classes were pushing it up, but as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand from those countries for them actually fell by 3 percent over this period.

There are some smaller explanations that account for some of the price rise, but not all. It's true the growing demand for biofuels was gobbling up much-needed agricultural land - but that was a gradual process that wouldn't explain a violent spike. It's true that oil prices increased, driving up the cost of growing and distributing food - but the evidence increasingly shows that wasn't the biggest factor.

To understand the biggest cause, you have to plough through some concepts that will make your head ache - but not half as much as they made the poor world's stomachs ache.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer and the global price is high, he'll lose some cash, but if there's a lousy summer or the price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked well.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into 'derivatives' that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born.

So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to financial speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutschebank, who sell it on for £30,000 to Merryl Lynch - and on, and on, provided they think the price can be jacked up, until it seems to bear almost no relationship to Farmer Giles' crop at all.

If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, 'Whoops! Why Everybody Owes Everyone and No One Can Pay', explains: "Finance, like other forms of human behaviour, underwent a change in the twentieth century, a shift equivalent to the emergence of modernism in the arts - a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn't be explained in workaday English."

Poetry found its break broke with straightforward representation of reality when T.S. Eliot wrote 'The Wasteland.' Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn't fully understand. As Lanchester puts it: "With derivatives... there is a profound break between the language of finance and that of common sense."

So what has this got to do with the bread on Abiba's plate? How could this parallel universe of speculation affect her? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was itself deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in contracts that were speculating on theoretical food that would be grown in the future - and the speculators drove the price through the roof.

Here's how it happened. In 2006, financial speculators like Goldman's pulled out of the collapsing US real estate market, and they were looking for somewhere else to make their stash of cash swell. They started to buy massive amounts of derivatives based on food: they reckoned that food prices would stay steady or rise while the rest of the economy tanked. Suddenly, the world's frightened investors stampeded onto this ground and decided to buy, buy, buy.

So while the supply and demand of food stayed pretty much the same, the supply and demand for contracts based on food massively rose - which meant the all-rolled-into-one price for food on people's plates massively rose. The starvation began.

The food price was now being set by speculation, rather than by real food. The hedge fund manager Michael Masters estimated that even on the regulated exchanges in the US - which take up a small part of the business - 64 percent of all wheat contracts were held by speculators with no interest whatever in real wheat. They owned it solely to inflate the price and sell it on. Even George Soros said this was "just like secretly hoarding food during a hunger crisis in order to make profits from increasing prices." The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home."

...

"How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period - but only a fraction as much as the ones affected by speculation. Her research shows this speculation was "the main cause" of the rise.

So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. This is what happens when you follow the claim that unregulated markets know best to the end of the line. The finance sector's Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict such misery, and barely even notice?"

The Saudi Shias: Struggling for their Rights

The Saudi Shias are engaged in a struggle for their basic human and civil rights. They confront some of the same dilemmas that Shias in other parts of the world are facing. Those in power like to portray their struggle as a "sectarian conflict" or as an "Iranian provocation" to distract attention from their genuine grievances. At times the "sectarian" skirmishes are also artificially provoked by the security agencies to fan sectarianism. Unfortunately, some news media have also contributed to this mis-reading of the issue by over-emphasizing religious factors (doctrinal or cultural differences) at the expense of political causes (social and political injustice). The conflict, as argued previously, is actually about power and powerlessness.



(Above: NPR reports on Saudi Shias' recent struggles)

Also see, The Shi‘a of Saudi Arabia at a Crossroads By Toby Matthiesen, MERIP, May 6, 2009: Here

Saudi Shiites' One-Word Demand
By Rannie Amiri, Counter Punch, March 27-29
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“Our dignity is more valuable than the unity of this land … If we don’t get our dignity, then we will have to consider seceding from this country.”

– Sheikh Nimr Baqir Al-Nimr, Saudi Shia religious leader from Al-Awamiya, currently in hiding after having delivered a speech demanding an end to the oppression of Saudi Shiites.

In 2005, the International Crisis Group (ICG) issued a report entitled “The Shiite Question in Saudi Arabia.” The Executive Summary recounted that since the establishment of Saudi Arabia in 1932, “… its minority Shiite population has been subject to discrimination and sectarian incitement.” It detailed how Shiites, the majority in the country’s oil-rich Eastern Province (EP) and accounting for approximately 15-20 percent of the overall population, remained strikingly underrepresented throughout all segments of civil society, including government (in which they essentially have no representation), the public sector, schools, the judiciary, the military and police.

The expression of anti-Shia sentiment in the educational system and limits placed on religious practices were specifically highlighted as problem areas (Shia Islam is not allowed to be taught in schools, only Wahhabism; thus Shiite students must officially identify themselves as ‘heretics’ and ‘infidels’ in order to pass exams).

The ICG made several recommendations in their report including:

• expanding Shiite presence in government institutions
  
• lifting remaining restrictions on Shiite religious rituals and practices
• encouraging tolerance, eliminating anti-Shiism in mosques and schools, and curbing statements that incite anti-Shiite violence

There was relative calm between the Saudi government and the Shia after King Fahd in 1993 made token promises of easing political restrictions in exchange for the community building closer ties with the regime instead of looking abroad for support and assistance.

The ICG warned though that “King Abdullah needs to act resolutely to improve the lot of the two-million strong Shiite community and rein in domestic expressions of anti-Shiite hostility” or it will be “… a quiet that, without further concrete progress, risks exhausting itself.”

And exhausted itself it has.

With little improvement made, and after the recent violent clashes in the holy city of Medina this past February between Shia pilgrims and the Religious Police (who were found filming female pilgrims), that quiet has officially ended.

Although you would not know it by reading or listening to any of the mainstream Arab media outlets, a violent crackdown is underway in the cities of Al-Awamiya and Qatif in the EP.

On March 13, Sheikh Nimr Baqir Al-Nimr, a leading Shiite cleric from Awamiya, said during Friday prayers that unless the systemic discrimination and oppression of Saudi Shiites at the hands of the political and religious establishments ends, they would consider seceding from the Kingdom. In a subsequent internet posting he is reported to have said, “Our dignity is being held, and if it's not let free, we will examine other options, and any legitimate option will be examined. We saw with our own eyes how the dissension forces beat up women [in Medina]. Where's the dignity? Where's the justice?” (Press TV, 22 March 2009).

Saudi Interior Minister Nayyef Ibn Abdul Aziz, visiting the ailing Crown Prince and Defense Minister, Prince Sultan in New York, immediately ordered his arrest.

Since then, events have turned ugly in both Awamiya and Qatif (where most of the pilgrims involved in the Medina skirmish came from). Despite the Arab media blackout, Saudi dissident and opposition websites such as Rasid.com and Moltaqaa.com, as well as the Saudi Information Agency, have reported on the ensuing clampdown in the hunt for Al-Nimr. By report, the cities’ residents have conducted only peaceful protests and vigils.

Multiple arrests have been made, including juveniles and an American citizen, Nuh Abdul-Jabber, 28. Saudi security forces stormed Awamiya again on March 25, cutting off power to the town of 45,000 for the third time in 10 days. The US State Dept., apparently in deference to the monarchy, has yet to comment on these developments.

Not so Amnesty International, who deplored the detention of men and teenagers by the Saudi authorities whom they believe are at grave risk for torture. Held incommunicado, they called for their immediate and unconditional release.

But why should anyone outside the Middle East be concerned about these events?

Awamiya is located just five miles from Ras Tanurah, the world’s largest offshore oil facility and home to Saudi Aramco, the world’s largest oil company (any talk of unrest, yet alone secession, is therefore quickly silenced).

Beyond that, according basic political, socioeconomic, cultural and religious rights to all citizens of Saudi Arabia, free from discrimination and oppression, should be everyone’s concern on a purely humanitarian level. Indeed, while the entire Kingdom was silent during Israel’s attack on Gaza, it was only the people of Al-Qatif—clearly recognizing and identifying with another people subjected to injustice and humiliation—who held demonstrations in support of the besieged Palestinians.

Their demand and those of Shiites in other towns and cities in Saudi Arabia is a most basic and simple one. It is a demand the government can easily grant and one they should hasten to accept. It was written on the signs of those protesting in Awamiya, was encapsulated in a single word in Sheikh Al-Nimr’s speech, and has become the newfound rallying cry of the Shia-minority in Saudi Arabia: Dignity.

Rannie Amiri is an independent Middle East commentator. He may be reached at: rbamiri at yahoo dot com.

Irene Khan: Where are the disappeared?

Where are the disappeared?
By Irene Khan, DAWN, Aug 30, 2008

Source

PAKISTAN’S new ruling coalition may have successfully forced Pervez Musharraf to resign but it still has not done much to reverse his administration’s abusive human rights legacy.

Twenty-five years since the International Day of the Disappeared was launched on Aug 30, Pakistan has joined the list of nations practising enforced disappearances as a direct consequence of its alliance with the US-led ‘war on terror.’

This particularly painful legacy of the Musharraf era has subjected hundreds, if not thousands, to enforced disappearances — the practice under which people are kidnapped, held in secret locations outside any judicial or legal system, and often tortured, sometimes to the point of death.

Pakistan not only shamefully helped fill the wire cages at Guantanamo Bay’s Camp X-Ray and the secret prisons of the CIA by handing some of the detainees to the US authorities but also incarcerated many secretly in Pakistan itself. Held out of sight and without charge, with no word to their families and loved ones (much less lawyers), the fate of many of them remains unknown to this day.

In Sept 2006, after Amnesty International published its first report on the disappeared in Pakistan, I wrote to President Musharraf and in January 2007 met the then Prime Minister Shaukat Aziz to urge the government to investigate and end the appalling practice of abduction and secret detention. I never received a satisfactory response.

If the leaders of the ruling coalition want to demonstrate they are serious about changing Musharraf’s policies, they should immediately reveal details of where the hundreds of disappeared are being held. And then they must begin the process of establishing some control and accountability over the country’s notorious security agencies, chief among them the Inter Services Intelligence (ISI), which, allegedly, carried out these enforced disappearances.

Amnesty International’s recent report Denying the Undeniable: Enforced Disappearances in Pakistan, used official court records and affidavits of victims and witnesses of enforced disappearances to show how government officials, especially from the security and intelligence agencies, obstructed attempts to trace those who had disappeared. The report reveals a pattern of security or other forces arbitrarily detaining people (some of them children, in one case a nine-year-old boy), blindfolding them, and moving them around various detention centres so they become difficult to trace.

Take the case of Dr Imran Munir, a Malaysian citizen of Pakistani origin, who was arrested in July 2006 and whose whereabouts remained unknown until Pakistan’s Supreme Court demanded information from Pakistani authorities. After the Supreme Court took up regular hearings of cases about the disappeared in late 2006, around 100 disappeared persons were traced, having either been released or found in recognised places of detention. Dr Munir was one those lucky ones; during the course of hearings on his case, it became apparent that various security agencies had tried to hide him even after the Supreme Court had ordered his appearance in court.

The Supreme Court under Chief Justice Iftikhar Chaudhry became impatient with such obfuscation and denial and announced in Oct 2007 that it would summon the heads of the intelligence agencies to explain their role in enforced disappearances and would initiate legal action against those found responsible.

Dr Munir was set to record his statement regarding his enforced disappearance, as well as information about others subjected to enforced disappearance, when the hearing was disrupted by Musharraf’s imposition of the state of emergency in November last year and the unlawful deposing of independent-minded judges.

Musharraf’s declaration of emergency expressed his indignation succinctly when it spoke of “judicial interference” in the government’s fight against terrorism. The sacking of the judges, clearly and crucially in anticipation of a negative decision in respect of the eligibility of Musharraf to the office of the presidency, got rid of this irritant.

Not surprisingly, the new judges of the Supreme Court have not found it necessary — or opportune — to resume hearings about the hundreds of petitions relating to disappeared persons. A confrontation with those responsible for enforced disappearances, including Pakistan’s notorious intelligence services, apparently takes more determination, grit and political will than one appears able to muster.

Thus the fate of the disappeared has become closely entwined with that of Pakistan’s higher judiciary. It seems unlikely that the disappeared will receive appropriate judicial scrutiny for the time being, given the controversy over the reinstatement of deposed judges.

But the new government need not await judicial pressure to shed light on the fate of the disappeared. The government can use its executive authority to demand that the ISI and other security agencies provide information about those subjected to enforced disappearance. As a first step, the government should immediately gather and publicise a list of all those in government detention. It’s good record-keeping; it’s basic law enforcement; it’s also the law.

In April 2008, shortly after the elections, Law Minister Farooq Naek stated that the government was collecting details of disappeared persons and pledged that all would be released. Now is the time to go public with that information.

Providing information about the fate of the disappeared would bring some solace to hundreds of families — thousands of people — who continue to fear for the lives of their loved ones, aware that torture and other ill-treatment are routine in Pakistani places of detention.

By abducting and detaining terrorist suspects in secret hiding places, or failing to investigate and reveal the fate of the disappeared the government violates human rights and does little to counter terrorism. By arresting and prosecuting those suspected of terrorism in accordance with the rule of law the government can show its commitment to both human rights and fighting terrorism.

It would also send a clear, immediate signal of a radical break with the Musharraf era, and at very little cost — something very important to the fractious new government as it faces the many woes besetting the country such as a slumping economy, high fuel costs and a growing Taliban insurgency in the areas bordering Afghanistan.

Pakistan’s new government has a clear choice: it can continue the bankrupt and brutal anti-human rights practices of the Musharraf regime or it can counter terror with justice and put the country on the path of the rule of law and human rights.

The writer is secretary general of Amnesty International.

Also see:
Documentary (24 min): Missing in Pakistan by Ziad Zafar