Security fears over food and fuel crisis
By Carola Hoyos and Javier Blas in London
Published: June 20 2008 22:02 | Last updated: June 20 2008 22:02
Western countries have upgraded the food and fuel crisis into a national security concern as they fear record high energy and agriculture commodity costs are destabilising key developing regions of the world.
The concerns come as the world suffers for the first time since 1973 from the confluence of record oil and food prices. Corn, soyabean and meat prices jumped this week to all-time highs, while oil prices hit a record of almost $140 a barrel.
This shift toward a national security concern will become apparent at Sundays oil meeting in Jeddah, Saudi Arabia, where ministers are expected to warn that developing countries are cracking under the burden of record oil and food costs.
Saudi Arabia, the worlds largest oil producer and the only country able to raise output, has recognised the danger after developing countries, including US-ally Pakistan, pleaded for a reprieve from oil payments.
Morocco was forced last month to ask for an $800m loan from Saudi Arabia and United Arab Emirates to cushion the impact of oil and cereal imports.
One Washington official said: What we have been watching is behaviour [that indicates] China, India, Indonesia, Vietnam [and] Malaysia simply cant bare the burden on the central budget and that the medium to long-term confluence of oil and food prices is just too much. He added: It is leading to a real security issue where the streets are talking to the president.
Martin Bartenstein, Austrias economics minister who is travelling to Jeddah, said on Friday that the risk of social tension caused by high oil prices driving inflation to double digits will be a main tenet of his argument.
It is very high on our agenda, said a senior diplomat from a larger European nation.
Senior active and former US, European and United Nations officials said they had met US White House staff on the issue for briefings having been prompted in part by the unrest that toppled Haitis government and more recently after several Asian countries risked popular anger by cutting fuel subsidies.
Additional reporting by Daniel Dombey in Washington
EDITORS CHOICE
In depth: Oil – Sep-04
Lex: Chinese fuel demand – Jun-20
Editorial Comment: Cut oil subsidies – Jun-20
West rethinks strategic threats– Jun-20
In depth: food prices – Oct-08
What to watch for at Jeddahs oil summt – Jun-20
Copyright The Financial Times Limited 2008