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Gulf Food Supply Vulnerable Amid Instability, Chatham House Says

Instability in the Middle East is the biggest threat to food security in the Arab states of the Persian Gulf, because most of their imports must pass through maritime choke points, Chatham House said.

The United Arab Emirates, Bahrain, Qatar and Kuwait are the most vulnerable, the London-based think tank wrote in a report today. A worst-case scenario would be a conflict in the wider Middle East region that would close multiple points for a sustained period, said Rob Bailey, the report’s author.

The Gulf Cooperation Council countries import 80 percent to 90 percent of their food, almost all of which must move through the Suez Canal, Bab al Mandab or the Strait of Hormuz, according to Chatham House. Most vital is the Suez Canal, through which 81 percent of wheat and coarse grains pass, while 81 percent of rice imports go through the Strait of Hormuz, based on 2010 trade data, the report said.

“Were regional conflict to close both Suez and the Strait of Hormuz, then Gulf governments would face real difficulties getting enough food into their countries,” Bailey said.

All Gulf food imports from North America, South America, Europe and the Black Sea pass through the Suez Canal, which militants have tried to close recently by firing rocket-propelled grenades at a container ship, according to Bailey. A closing of Suez would mean imports would have to be rerouted around the Cape of Good Hope, he said.

The 2011 Arab uprisings, continued instability in Egypt and Syria, Iran’s threats to close the Strait of Hormuz and spiking international food prices have “sharpened” risk to food security for the Gulf states, according to the report.

Water Scarcity

“Acute” water scarcity means food self-sufficiency for the Gulf countries is unattainable in practice, and holding strategic grain stocks is cheaper and more environmentally sustainable, Chatham House wrote. Linking ports on the Red Sea and Indian Ocean by rail could diversify import routes.

Land investments in food-insecure countries with “weak governance and poor rural infrastructure” do little to manage price or supply risk, and Gulf country governments would do better to target overseas investment at existing farm operations in key trading partners, according to the report.

The resource wealth of the Gulf Cooperation Council countries means price risk is a “minimal threat” to food security, as populations are generally wealthy and governments have the means to ensure that everyone can afford enough food at all times, Chatham House said.

Recent rates of public-spending increase to mitigate inflation are unsustainable, leaving Gulf countries vulnerable to falling oil prices, according to Chatham House.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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