Reflections from the World Economic Forum

Mahmoud Mohieldin
Tuesday 31 May 2022

World energy, food, and economic crises dominated discussions at this year’s World Economic Forum in the Swiss ski resort of Davos, along with the repercussions of the war in Ukraine, writes Mahmoud Mohieldin


Participants at the World Economic Forum in Davos last week would have found many differences from previous meetings. To start with, the forum was held in May instead of January as has been customary at the Swiss mountain ski resort that has been hosting its meetings for decades.

But as one of the younger participants at this year’s forum wryly remarked, it will not be long before global warming makes January in Davos as warm and snowless as May. 

According to the most-often cited scientific reports, we are not on track to keeping the Earth’s temperature below 1.5°C above its average before the Industrial Revolution. Scientists maintain that this is the maximum amount of warming tolerable if we are to sustain life and our livelihoods as we know them. Already at 1.1°C above the average, we are staring at such dangers as massive floods, widespread droughts, forest fires, desertification, and coastline erosion. 

Other differences at the forum this year were reflected on the covers of the magazines displayed in conference halls and hotel lobbies, most with headlines about geopolitical tensions and crises. There was “The World after the War” on the cover of the US journal Foreign Affairs beneath a picture of the Ukrainian flag covering most of the planet to illustrate the war’s universal impacts, and there was “The Contest of the Century” on the cover of Foreign Policy above an image of US President Joe Biden superimposed on one of Chinese President Xi Jinping in a reference to the former’s forthcoming visit to Asia. 

But the most alarming headline was that on the cover of the UK Economist magazine, which featured a few stalks of wheat and the headline “The Coming Food Catastrophe.” By contrast, the covers of the Asian and African publications available at the forum were by and large more pragmatic and focused on how to emerge from the crises.

The forum’s sessions were primarily concerned with the energy, food, and economic crises that the world is now facing, especially the problems of inflation, mounting national debt, and the spectre of stagnation. But the repercussions of the geopolitical crises and the war in Ukraine overshadowed all the discussions. In my opinion, international leaders and working groups in the G7 and G20 groups of nations have performed better and worked together more effectively on these crises than was the case at the time of the 2008 financial crisis and the food and energy crises it precipitated.

On the current food crisis, with its attendant soaring commodity prices, rising transport and freight costs, scarcity of supplies to drought-stricken areas in particular, and other such problems, we should not underestimate the extent to which the war in Ukraine has contributed to these difficulties. 

We cannot shrug it off on the grounds that the Russian and Ukrainian economies account for only four per cent of global production, given their huge contributions to the energy and food sectors. Ukraine alone exports 17 million tons of wheat a year, or nine per cent of the world’s total wheat exports, and its markets are concentrated in certain countries. The question is how the obstruction to the export of less than 10 per cent of the global market in this commodity helps cause the current international crisis. 

For an answer to this question, we need to look at the more combative than cooperative nature of the global economy that prevailed before the Ukraine war. The economic climate was highly charged due to the restrictions that former US president Donald Trump had imposed on Chinese goods, restrictions that were tougher than any introduced by his predecessors and that remain in force. Not only did this tie the hands of the World Trade Organisation, but their detrimental effects on the movement of trade were aggravated by tit-for-tat protectionist measures introduced by various governments without regard for international commitments on the pretext of the existence of the Trump rules. 

Before long, such violations began to encroach on the very principles of free trade that the Western powers have long championed as the key to making higher-quality goods more widely available at cheaper prices. One is reminded of the saying attributed to the Irish writer Oscar Wilde that “circumstances should never alter principles,” although some have suggested that the famous satirist was speaking sarcastically. Who should we believe, Wilde the wise man or Wilde the cynic?

Rules-based economic transactions are always based on rules set by the stronger party and couched in a framework that aims to convince others that it is fair even though it is effectively lopsided. It lets others score just enough to keep the game going. If the weaker party begins to master the game and perform better, the stronger party will initially forgive it as a show of faith in the rules and pride in the spirit of fairness and good sportsmanship. 

But if the weaker party’s winning streak continues, then it should beware. This is not a game of football played by children in the streets. Instead, in this case the owner of the ball picks the teams, appoints himself captain of the better one, chooses the best side of the field, and maybe even appoints himself referee. If his team wins, he is thrilled. If it starts to lose, he takes his ball and leaves. 

The current food crisis exemplifies such sinister aspects of the current framework. With the interruption of supply lines from Ukraine, 26 governments threw the rules of freedom of trade out the window and restricted or banned wheat exports to ensure they have sufficient supplies for their own citizens, according to Kaushik Basu, who has served as chief economic adviser to the Indian government and as chief economist of the World Bank from 2012 to 2016. 

This has caused wheat prices to rise precipitously. In an article that appeared on the Project Syndicate website, Basu attributes the problem to the hoarding instinct, a behavioural response among national governments, municipalities, and individuals at times of food and other shortages. This is the natural reaction to news of shortages at times when global policy coordination is poor, he writes, adding that “we know this from studies such as [Nobel Prize-winning Indian economist] Amartya Sen’s classic work on the 1943 Bengal Famine, and we see it happening now.”

Basu discusses how India attempted to address this phenomenon through legislation designed to alter harmful behaviours such as hoarding, which can in fact precipitate shortages where they do not exist. India’s 2013 National Food Security Act was the culmination of a series of efforts that put in place a “sophisticated system of minimal food guarantees for three decades” and “diminished the need to hoard” (Basu’s italics).

He believes that the international community could benefit from the Indian experience in order to devise a system for international cooperation anchored in binding legal procedures and economic mechanisms so as to ensure uninterrupted food supplies and prevent famines. “The fact that a successful global or regional buffer system or surplus-sharing agreement has never existed is not a reason to give up hope,” Basu concludes. 

Unfortunately, I do not believe that the international community currently has the political will to put such impressive and practical ideas into practice. What currently exists is a bare minimum of measures, which is all that could be produced given the tenuousness of international cooperation, and these are designed to forestall further deterioration that might impact on those that have so far felt immune to the repercussions of the crisis.

However, we can find the needed support for a more optimistic outlook in the 2015 Paris Accord on Climate Change. The binding commitments undertaken by its signatories are reinforced by the younger generations of environmental activists, civil-society organisations and other non-state actors, including the private sector, business and financial institutions.

Food and nutrition are among the main issues of concern within the adaptation priorities at the forthcoming UN COP27 climate conference in Sharm El-Sheikh in November. Around 800 million people in the world today face hunger, which is inconsistent with the second UN Sustainable Development Goal of ending hunger, food insecurity and all forms of malnutrition by 2030. Seventy six per cent of the world’s population depends for its food on crops whose quantities and quality are jeopardised by climate change and rising carbon emissions. All this necessitates joint projects in agriculture, nutrition, energy and water management capable of turning valuable ideas like those of Sen and Basu into viable investments and effective frameworks for action. 

Such matters will be explored in detail in the preparatory sessions for the Sharm El-Sheikh climate conference, whose slogan, “together towards implementation,” has been informed by years of unfulfilled pledges and promises and by the urgency of fulfilling them for the sake of the planet and its peoples.

* An Arabic version of this article appeared on Wednesday in Asharq Al-Awsat

*A version of this article appears in print in the 2 June, 2022 edition of Al-Ahram Weekly.

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