Last week’s issue of The Economist featured a good article on the measures adopted by Arab governments since the beginning of 2011 to stave off political unrest.
In Algeria, the government cut the tax on sugar. Jordan cut fuel and food taxes. In Kuwait, the government offers free food for up to 14 months. Libya cut taxes and import duties on food. In Morocco, a system of subsidies was put in place for wheat producers. Syria cut taxes on coffee and sugar and reduced import duties on food. And in Tunisia, subsidies were put in place to compensate for rising food prices.
All these measures point to the fact that these governments perceive food prices as a cause of political unrest.
Governments almost always act on the basis of less information than whole markets do, so it is not possible to know with certainty whether discontent is due to rising food prices. In light of the policies enumerated above, however, one simply cannot dismiss the possibility that those Arab governments were acting on the basis of accurate information, and that rising food prices are indeed the root cause of political unrest in the Arab world.