Home' Trinidad and Tobago Guardian : April 16th 2015 Contents BG14 COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt APRIL 2015 • WEEK THREE
Let s define two concepts.
First there is the Law of
This law speaks to outcomes
that were not intended at
the time of a particular
action. It is especially found
when dealing with complex
systems where adjustments to one part of the
system, for a seemingly very good reason, can
lead to unintended changes in other parts of
the system that may not always be seen as
The second concept is that of a stressor. A
stressor is typically some type of condition,
agent or external stimulus that causes stress
to a system. That system can be a biological
organism such as a person or it can be a com-
plex operating system.
A stressor is the ingredient that can move
a seemingly "normal" person to commit violent
and often times illogical actions such as some
of the mass shootings that have taken place
across the United States.
A stressor, according to a 2013 paper by the
Centre for Climate Change and Security, also
had a role to play in the Arab Spring and, by
extension, the continued turmoil in the Middle
The paper does not make the case that the
upheavals in the Middle East are caused by
climate change but what it does argue is that
the consequences of such changes create stres-
sors that have ignited a volatile region where
revolution has not morphed into chaos.
Back on January 29, 2015 I wrote:
"However the biggest issue for me from last
week will most likely have gone under the
radar. The collapse of the government of Yemen
could result in drama that has not been factored
into the equation of many analysts.
"Collapse of the Yemeni Government is sig-
nificant from the perspective that the country
sits right on the border with Saudi Arabia.
With Yemen at the south and Iraq to the north-
east the Kingdom now has two failed states
with the attendant instability on its doorstep.
Add to that the goings on in Syria and the fact
that ISIS sits somewhere in between the melee
and there is the growing risk to the stability
of that region."
Instability and flux
The recent increase in the price of oil into
the US$50 per barrel region came subsequent
to the above being written. The ebb and flow
of oil prices and the displacement of millions
of people will be the story of the next few years
coming out of this region. The impact will
obviously be global in nature.
The situation in Yemen is seeing an Arab
Sunni Muslim coalition with support from the
United States attempting to put down an insur-
gency that has the support of Shia Muslim
Iran. Yemen is of strategic importance because
of its location. Port access and the Strait of
Hormuz where 30 per cent of the world s sea
traded oil pass through makes this a very
Beyond that there is the Sunni/Shia divide.
The economic support that Saudi Arabia pro-
vides for countries such as Egypt and Pakistan
means that they are being dragged into the
mix even if they are unwilling participants and
have their own domestic issues to sort out.
In Iraq the situation is different where the
destabilisation of the country following attempts
at regime change and "nation building" have
created a vacuum that the Islamic State (IS)
has sought to fill. The fight against IS is aligning
the interests of the Shia majority in Iraq with
Iran with this time support from the United
The third party to the Iraq equation are the
Kurds who for all purposes control the oil rich
north and have effectively established a defacto
state. Over time this will create instability in
Turkey as their Kurdish minority begins to
coalesce to their Iraqi counterparts.
To the west of Iraq and the north of Saudi
Arabia is Syria which has been in a civil war
for a number of years. All of the aforementioned
players have either funded or taken a more
direct involvement in the Syrian conflict and
the horse trading is fraught with risk and tur-
Development vs war
Over the past five years, the Middle Eastern
Gulf States including Saudi Arabia have sig-
nificantly increased their defence spending.
The issue of a nuclear armed Iran is relevant
here in terms of a regional arms race. The
alternative with Iran is continued sanctions
which put into context creates another dilemma.
Iran has a significant youth population and as
we have seen before sanctions creates a growing
The Iranian population is young, but their
current birth rate is also low to the extent that
it rivals that of ageing Europe and Japan.
In simple English, if the current generation
of Iranians don t bring about economic pros-
perity for themselves then their society is likely
to be challenged in much the same way as
China has to get rich before it grows old. A
nation that sees itself on the brink will not
always be rational and predictable and any
stressor can create a tipping point. The law
of unintended consequences comes into play.
To understand the role and impact of a
stressor one needs only to look at the upheavals
in North Africa. Entrenched dictatorships in
Tunisia, Libya and Egypt fell in quick succes-
sion and many were quick to attribute this to
the power of the internet and social media.
Step back and ask yourself how pervasive do
you think social media penetration would be
in countries such as these.
Oil for food
The real underlying issue was global in
nature. Wheat production was down signif-
icantly in 2010-11 and prices rose significantly.
The Middle East and North Africa imports
more food per capita than any other region
in the world. By tonnage the region is the
worlds largest importer of cereal. The top 9
wheat importing countries in the world on a
per capita basis are in the Middle East. In July
2010 wheat was US$4 per bushel. Six months
later that price had doubled.
These issues were simmering since 2006
when food riots across North Africa, the Middle
East and South East Asia were common place
due to high commodity prices. In the post
global financial crisis it is not just high prices
but also scarcity due to lower production in
some years but also higher demand in other
Much of Asia and Latin America have grown
wealthier over the past 20 years, China and
India in particular. Both countries are projected
to have the second and third largest economies
in the world in 30 years time. More people in
these areas are able to afford meat and that
has a knock on effect on the availability and
price of agricultural produce such as grains.
The area that is being left behind and least
able to afford is that of the Middle East and
North Africa. The saving grace for some of
these countries have been their vast oil reserves.
This has insulated them to some extent but
as Saudi Arabia is witnessing their borders are
being surrounded by the chaos.
Subsidies to citizens to keep the peace and
"aid" to neighbors to help them to do likewise
can only go so far and is not sustainable. Half
the region is already in chaos and the other
half is creaking. There are no institutions of
note in any of these countries to serve a post
dictatorship /monarchy era. Most of the pop-
ulation is not able to compete globally so their
earning prospects are limited. The vacuum is
being filled by groups such as IS with its prom-
ise of a greater reward in what comes after
Extended low oil prices will impair the ability
of the rich countries to subsidise. It can also
fuel prosperity in other parts of the world,
especially South East Asia which will further
drive up the price of their imported food. Rus-
sia s dispute with the West is pushing one of
the largest wheat producers (Russia) close to
one of the largest consumers in China.
The knock on effects of these subtle shifts
in global geopolitics is far reaching. The same
report by the Center for Climate Change and
Security had this to say:
"With the poorest countries being the most
vulnerable to rising food prices, the World
Bank is concerned about possible unrest in
Central America and the Caribbean; particularly
in El Salvador, Haiti, Grenada and Jamaica.
Other Central Asian and African states are
also mentioned as vulnerable. Venezuela may
also be included here."
Have we in T&T considered these matters
in the context of our neighbors, not least of
which would be our immigration policy. Our
concerns should be greater than the individuals
who are off to fight on behalf of IS.
Ian Narine is a broker registered with the
SEC and can be contacted at
Demographics, wheat and war
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