Last month, the UN’s Food and Agriculture Organisation issued an interesting warning. The FAO director general, Jacques Diouf, publicly commented that surging global prices of basic foods like wheat, corn and milk had the ‘potential for social tension, leading to social reactions and eventually even political problems.’ In an interview with the UK’s Financial Times newspaper, Diouf predicted that global food prices would continue to increase because of a mix of strong demand from developing countries; a rising global population, more frequent floods and droughts caused by climate change; and (interestingly) the biofuel industry’s appetite for grains. The warning came against the backdrop of soaring international wheat prices that are compelling countries like India and Bangladesh to pay record prices for their food imports, fuelling high inflation in the domestic economy. One of the most pointed remarks that Diouf made was that ‘the biofuel industry is a new factor creating demand for food for a non-food use.’
   Two months later, the situation has worsened to the point that the FAO is predicting food riots in heavily import dependent countries, pointing out that they have already witnessed such unrest in Mexico, Burkina Fasso and Yemen. The FAO’s food price index has hit its highest levels ever, since the index was created in 1990. Whilst wheat and milk prices are clocking record highs, agricultural commodities such as corn and meat are trading well above their 1990’s price averages. Russia has just announced food-price controls to limit the political damage that high market prices of food are causing the Putin administration ahead of the December elections. ‘The country’s biggest food retailers and producers reached an agreement to freeze prices at October 15 levels on selected types of bread, cheese, milk, eggs and vegetable oil until the end of the year,’ the FT reports. In Bangladesh, the prices of certain essential foods have gone up over 100 per cent in the past year alone. Food price inflation in developing countries has rapidly risen in the past year to a rate of about 11 per cent while non-food inflation runs at a rate of about 7 per cent, according to International Monetary Fund estimates.
   It is predicted that low-income, food-importing countries will spend about $28.1 billion between July 2007 and June 2008 importing staples such as wheat, rice and corn, up almost 15 per cent from a year earlier and double of what it cost in 2000. ‘The problem right now is that domestic and short-term considerations are driving agriculture policy,’ Diouf told the FT.
   These are the obscene facts of the biofuels story.
   Last week, the Swaziland government announced that it was allocating thousands of hectares of land to the company, US Distilleries, to cultivate cassava, which will be transformed into the export-oriented biofuel – ethanol. Over 40 per cent of Swaziland’s one million people are currently faced with starvation or chronic hunger caused by a series of droughts over the past decade. The planned biofuel-cassava project will require a massive irrigation effort in Swaziland’s water-starved southern region of Lavumisa, where agriculture has been devastated by droughts for the past 15 years. The government of Swaziland is justifying the project with claims that the project will create jobs and a source of income for local people, which they can then use to buy food. But can the starving population of Swaziland really buy more food with the money that US Distilleries will invest and pay at the plant? In the poorest parts of sub-Saharan Africa, Asia, and Latin America, where cassava is a staple, its price is expected to increase by 33 percent by 2010 and 135 percent by 2020, once again as a result of heavy demand for ethanol derived from Cassava. In the May/June 2007 issue of the US-based Foreign Affair’s magazine, professors C. Ford Runge and Benjamin Senauer make some disquieting observations. ‘The production of cassava-based ethanol may pose an especially grave threat to the food security of the world’s poor,’ they have warned in an article titled How Biofuels could starve the poor. ‘Cassava, a tropical potato-like tuber also known as manioc, provides one-third of the caloric needs of the population in sub-Saharan Africa and is the primary staple for over 200 million of Africa’s poorest people. In many tropical countries, it is the food people turn to when they cannot afford anything else. It also serves as an important reserve when other crops fail because it can grow in poor soils and dry conditions and can be left in the ground to be harvested as needed.’
   This week a top UN official has warned that using food to produce energy is having a disastrous impact on the 854 million people across the world who are starving or suffering from chronic hunger, and has asked for a 5-year moratorium on the production of bio-fuels.
   But across the world, high oil prices and insidious legislation (backed by heavy subsidies and tax credits) in the US and the EU, more and more countries are devoting agricultural land and other resources to produce biofuels. China is planning to step up its maize output by 26 per cent by 2020, to be entirely devoted to its projected biofuel production target of 15 billion litres a year. In the US, the Bush government is pouring 200 million dollars into research into biofuels and has announced hefty subsidies for corn — used to produce corn ethanol — spurring growers to plant the largest crop since World War II. In 2005, US oil subsidies to corn growers amounted to $8.9bn. While the biofuels industry uses only a handful of agricultural commodities such as corn, soybeans and sugarcane, its high demand is causing less acreage to be devoted to non-biofuel crops.
   The International Food Policy Research Institute, in the US predicts that, ‘given continued high oil prices, the rapid increase in global biofuel production will push global corn prices up by 20 percent by 2010 and 41 percent by 2020. The prices of oilseeds, including soybeans, rapeseeds, and sunflower seeds, are projected to rise by 26 percent by 2010 and 76 percent by 2020, and wheat prices by 11 percent by 2010 and 30 percent by 2020’. The projections are clear enough to see. Runge and Senauer have pointed out that if the prices of staple foods increase according to the IFPRI projections, the number of food-insecure people in the world will rise by over 16 million for every percentage increase in the real prices of staple foods. ‘That means that 1.2 billion people could be chronically hungry by 2025 — 600 million more than previously predicted’.
   The poorest populations of the world spend between 50 and 80 per cent of their total household incomes on food – and since most of them are also subsistence farmers or sharecroppers – it naturally follows that high prices of staples will mean more malnutrition and hunger. While third world governments and first world investors want people to think that local peasant farmers will benefit from the high prices of the crops being used to produce bio-fuels, experience of corporate presence in the majority world’s agriculture sector tells a different story. A UN report on biofuels published in May this year warns that ‘the benefits to farmers are not assured, and may come with increased costs. [Growing biofuel crops] can be especially harmful to farmers who do not own their own land, and to the rural and urban poor who are net buyers of food, as they could suffer from even greater pressure on already limited financial resources. At their worst, biofuel programmes can also result in a concentration of ownership that could drive the world’s poorest farmers off their land and into deeper poverty.’
   ‘Large investments are already signalling the emergence of a new bio-economy, pointing to the possibility that still larger companies will enter the rural economy, putting the squeeze on farmers by controlling the price paid to producers and owning the rest of the value train,’ the UN report goes on to say.
   In May this year, Cuban president Fidel Castro made a remarkably succinct observation on biofuels, days after the UN report was released. ‘Foodstuffs are transformed into fuels to make viable the irrationality of a civilisation that, to sustain the wealth and privilege of a few, is brutally assaulting the environment and the ecological conditions which made it possible for life to appear on Earth. Transforming food into fuels is a monstrosity,’ he told reporters. Here’s another obscene fact about the biofuels industry: Filling the 25-gallon (about 95 litres) tank of an SUV with pure ethanol requires over 450 pounds (204 kilograms) of corn – which contains enough calories to feed one person for a year.

PRESIDENT Vladimir Putin has replaced even Iran as the dominant western obsession. In the United States, he is close to being demonised. Others seek to solve the puzzle of how he will retain key influence over policymaking after he leaves office next year at the conclusion of his second term, as he has promised to do. Will he take the route of the prime minister’s office, which would be quite a comedown, or will he remain a citizen exercising power through a presidential dummy?
   On this question, the Kremlin and President Putin himself remain opaque. But while the Russian political drama is unfolding slowly, the US seems to have decided to target him in various ways. And what better way to savage him than by condemning his increasingly centralisation and authoritarian tendencies and the receding prospects of western style democracy?
   Here lies the catch. The US tries to conflate the issue of democratic practices and human rights with Russia’s new assertiveness. President Putin has come to the conclusion that firm government and political stability outweigh the demand for greater democracy and autonomy and it is best to keep the country’s prized assets of oil and gas and other strategic resources in the firm grip of the state.
   What the US and many in the West do not like is President Putin’s assertion of his power and influence, thanks to the sky-high oil and gas prices underpinning political stability and the confidence they have engendered. The disintegration of the Soviet Union, when it came, was sudden and tragic leaving the people and leadership disoriented, with Boris Yeltsin seeking American help, which was sparse and came at a heavy political price.
   The Russian Federation, divorced from many of its constituent republics, is a diminished successor state but still covers a vast area rich in natural resources and the fuels that run the world. Having given his country stability after the turmoil of those years, President Putin is seeking to reverse the setbacks that diminished the country’s status by removing it from the perch of a superpower and cast it in the ranks of developing nations, but for its nuclear arsenal.
   This is a legitimate goal for Russia. The US and the West, it must be recalled, have done everything to stymie Russia and bottle it up. In one of the great betrayals of history, the US administration in the person of James Baker and then West Germany under Chancellor Helmut Kohl went back on their solemn commitments to Soviet President Mikhail Gorbachev not to expand NATO, the Cold War organisation, east to Moscow’s disadvantage. An even greater sin, in the Russian textbook, was to take the Baltic states into NATO.
   Given their tragic history, the former East European Communist states were only too happy to join NATO and the European Union to cock a snook at Moscow. Former US defence secretary Donald Rumsfeld publicly exulted over the tribe of pro-American ‘new Europeans’ that joined NATO and the European Union. American analysts today are exulting over Angela Merkel and Nicolas Sarkozy having taken over from Gerhard Schroeder and Jacques Chirac in Germany and France as leaders less allergic, if not always friendly, to America.
   As the recent European Union ministerial meeting revealed, Europeans are not entirely buying the anti-Putin American rhetoric, despite the anti-Moscow tinge given to the organisation by the influx of East European members. The reasons are clear. The EU receives a third of its gas supply from Russia and, unlike the US separated from Europe by an ocean, Russia is a next-door neighbour. The consequences of a strained relationship with Russia are felt immediately in the EU.
   Moscow has legitimate complaints against Washington and the West. What point is there in establishing components of a missile defence shield in Russia’s immediate neighbourhood, in Poland and the Czech Republic? Washington’s explanation, that it is to guard against missiles from US-defined rogue states such as Iran, is unconvincing. At any rate, its potential, as a system aimed at Russia’s heart, is self-evident. President Putin ratcheted up his objections to the proposed shield at the Lisbon Russia-EU meeting several notches by comparing it with the missile crisis of 1962, which brought the world to the edge of a nuclear war.
   There is an element of exaggeration in this comparison, but President Putin was giving a warning to the US how seriously it took the new American scheme. Next only to his February Munich speech, in which he unburdened Russian grievances against the West, he was making a point on the direction the West is taking. Indeed, an element of hypocrisy and double standards is evident in Washington’s policies. It is all very well for the US to cultivate and influence the former Soviet Central Asian republics and plot to build oil pipelines skirting Russia, but when Moscow befriends them, it is reviving the Russian Empire.
   In the American book, it is in order to help, with men and money, dissident campaigns in former Communist countries, ostensibly to spread democracy. Moscow, among other capitals, sees it as an attempt to spread American influence by helping set up anti-Russian regimes in lands bordering it. Elsewhere, for American strategic reasons, dictators are coddled and occupied territories remain occupied because the occupiers are America’s friends. Realpolitik is practised by all states in greater and smaller measure, but the dividing line between idealism and realpolitik is not only very thin but also varies greatly in sync with US interests.
   The great tragedy of the end of the Cold War was that, instead of using it to build a better Europe and world, then President Bill Clinton chose to re-divide the European continent by extending the reach of the Cold War organisation east to Russia’s detriment and contain it by building a web of anti-Russian regimes. As often before, America’s strategic interests aced hopes for a better European future. Russian suspicions grew and sometimes led to such ventures as seeking to curtail the powers and reach of outside observers set to monitor Russia’s season of elections – first to parliament and then for the presidency.
   Meanwhile, the debate on Putin’s future continues to rage. Will he become prime minister? Will he change the constitution for a third term? Or will he remain outside the formal power structure to take the role of a powerful extra-constitutional authority? Watch this space.