Rising Inflation, Food Riots and Onion Diplomacy

For nerds like me, who spend their time reading Ministry of External Affairs Press Briefings, it is a rare moment of humor when the Indian External Affairs Minister fumbles with a question about onions jutted between Iran gas pipeline and South African role in BRIC. In a country with highest per capita consumption of onions, lack of this essential ingredient for making curry (almost every Indian recipe under the sun) is a touchy issue. And when it is our old rival Pakistan that is remotely involved with its scarcity the situation quickly escalates to crisis levels. The media is already dubbing it the Indo-Pak Onion Wars. Unfortunately for the media, it is a minor issue that will be resolved soon, while the rising food prices are ready to spark a massive global crisis.

The Indo-Pak drama over onions was triggered this week when Pakistan banned onion export to India through land. While the move was done to stop local traders from trucking onions over the border to India where they can get better prices for it, Indian media dutifully created a mini-uproar over the issue (India banned its own onion export last month, but…whatever). After all four hundred trucks of onions were at stake! What they missed was Pakistan government allowing for sea exports only stopping the land export which was creating an artificial local crisis in Pakistani markets. What did you think- some major in ISI decided to hit India where it hurts? Well, it can’t always be ruled out given ISI’s past track-record.

Meanwhile, UN announced that the global food prices have soared record high crossing the 2007-2008 peak, a time when food was so expensive that it led to riots in countries like Bangladesh, Egypt and Haiti. Projections estimate the food price crisis to worsen over coming months due this “damn terrible weather” that we are suffering from. With such a grim outlook we can expect wide-spread violence ahead. Algeria has already given us a preview with the food riots that began in the country on Thursday. 

One note to take home: expensive food (bad news in itself) equals to sporadic violence and food riots (much more worrisome) equals to additional strains on the economy and threat to global stability (not good). A good example of such butterfly effect is Bangladesh, where protests over food in 2008 led government to introduce Dal Bhaat program under which the Bangladesh Rifles (BDR) sold subsidized food. The 2009 BDR Dhaka Mutiny which took more than 50 lives was a direct result of the dispute between BDR officers and soldiers over how to split the corruption money that they had made from the program.

On a related note, check out how Government of India is ending up raising the food prices by their food security policy.