Global terrorism and relationships to food and energy
By Mark Edelman and Barry Flinchbaugh
© Copyright Agri-Pulse Communications, Inc.
ME. Well professor, attacks in Paris and other recent terrorist events have caused a pause for serious and critical thinking in the midst of a fall campaign silly season. It raises memories of September 11, 2001 in New York. On another level, it raises questions about the responses by the U.S. and our allies in how to cultivate a safer world. We have had all sorts of reactions ranging from “bomb the hell out of them” to “open the refugee flood gates.” Is there a more reasoned approach to the policy question: “What should be the role of U.S. policy in addressing global terrorism?” Questions also emerge regarding the implications for global peace, the global economy, trade, agriculture and energy.
BF. The global terrorism attacks remind us that we live in an interconnected world where anyone, anywhere can communicate globally to anyone else who will listen. That wasn't the case 50 years ago before advent of personal computers, the internet, and iPhone. While new technologies become an instrument of progress and economic growth, they can also become tools for oppression and criminal activity. Those who would challenge western systems of the rule of law domestically and internationally can now become interconnected by communications. Today there are very few areas of the world that are isolated from the geopolitics in the Middle-East. Furthermore, media reports suggest U.S. officials think ISIS takes in about $1 million a day. Smuggling oil from conquered Syrian and Iraqi oil fields is reportedly the largest source. ISIS has looted banks and kidnapped wealthy people for ransom, but these are not as lucrative as they once were. Fundraisers have also solicited donations globally for the extremists in the past, but are now more limited to a few permissive neighboring states, such as Kuwait and Qatar."
ME. I remember, back in the 1970s when you used to tell the “isolationism is dead” story about the use of a credit card called “Bank Americard” for a variety of purposes in Tokyo, Japan. It was an example of re-making global enemies into allies over time through international trade liberalization, international development, and global economic progress. Following World War II, the U.S., and its Allies lead the world in establishing the United Nations for global policy dialogue, the International Monetary Fund to facilitate currency exchange, the World Bank to facilitate development of low income countries, and the General Agreement on Tariffs and Trade which set forth 8 rounds of trade liberalization that culminated in the World Trade Organization. Ignoring the military sector and the “Cold War” for the moment, the prevailing notion was nations that have opportunity for trade, economic growth, and dialogue for ironing out policy differences become more interdependent and are less prone to make war with each other.
BF. Land grant universities taught the idea that development made food systems more productive and that access to food was a first order condition for developing a civil society. Make two blades of grass grow where one grew before. Gross Domestic Product (GDP) is the broadest measure of a country's economic growth. Economists who model and study the income elasticity for food tell us that when GDP grows by 1 percent, the demand for food grows by 0.2 to 0.6 of one percent while everything else is held constant. So as the economy grows per capita, family incomes are growing and there is a shift in family budgets for better diets. The hierarchy includes moving from lower protein food grains to a mix that includes higher protein diets including fruits, vegetables, meats, and dairy products. As incomes grow, we also see a shift from at home consumption to consumption away from home. As incomes grew we could provide for commercial markets domestically, internationally, and still have plenty left over for humanitarian purposes for those who were less fortunate.
ME. Historically, agriculture and rural interests never paid too much attention to the energy sector as long as there was a cheap and dependable source of energy available. With the advent of biofuels, agriculture now produces food, fiber and energy. Global energy development has become a higher level of interest and energy has an even bigger effect on economic development of nations than does food. Economists who study and model the income elasticity for energy say that as GDP grows by 1 percent, the demand for energy grows by 0.8 to 1.6 percent, while everything else is held constant. As GDP grows, families spend more on energy for cooking, heating, lights, travel, and access to various other household functions. More energy is used producing more goods and services. The income elasticity for energy is double that for food because energy involves all sectors of the economy, whereas each person can only eat so much food.
BF. A measure of peace and security among trading partners is required for international commerce to occur. During war, access to food and energy become strategic supply networks in the theater of military operations. Allies won WWII in part due to strategic access to energy and food. In the case of Syria and Iraq, it is difficult to figure out who is on first. Until ISIS jihadists started executing westerners and Christians, the U.S goal was to exit the region militarily. The local military does not have capacity to fight ISIS alone. There does not appear to be an appetite from any coalition of U.S. friendly Arab nations to fill the vacuum. Russia's Putin has been eager to foster re-alignment of Middle-East relationships which may have long term implications. Since the recent downing of a Russian passenger jet, Putin wants to help in the fight against ISIS. IRAN is fighting ISIS. Putin has developed strategic nuclear working relationships with Iran which also has large oil and gas reserves along with Russia. However, Putin also backs Assad's dictatorship in Syria and would help him re-establish control. The U.S and our allies like Turkey, Jordan, and the Kurds see Assad's killing of Syrians not aligned with his regime as the major cause of refugee exodus from the Syrian War zone.
ME. In the final analysis, Russia, Iran and other Middle-Eastern countries combined represent major oil and natural gas reserves that rival North American reserves. Allied nations looking for inexpensive and stable access for food and energy will increasingly look to the west. Removing the U.S. oil export embargo and adding more alcohol to the fuel mix makes sense for national security, energy independence, and supporting greater economic growth and a strong economy at home and abroad for our global allies.
About the authors: Edelman is a professor of Economics at Iowa State University and Flinchbaugh is emeritus professor of Agricultural Economics at Kansas State University.
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