A Monetary History of Poverty and Insecurity in the Southern Red Sea World
Dr. Steven Serels
This project examines the role that instability in currency markets has played in propelling the current crisis in the Southern Red Sea Region (SRSR). This unstable region, comprised of modern day Sudan, Eritrea, Ethiopia, Djibouti, Somalia, Saudi Arabia and Yemen, is one of the poorest in the world. Poverty in the SRSR has been identified as a leading contributing factor to international instability. Many development experts and scholars believe that widespread use of modern currencies is the first step to bringing prosperity and stability to impoverished parts of the Global South such as the SRSR. However, there has not previously been an empirical study of this claim for the SRSR. Further, this conventional understanding is contradicted by my preliminary research findings. In the SRSR, the substitution of modern currencies, i.e. government issued banknotes whose value is determined by currency exchange markets, for traditional currencies occurred between 1884 and 1940. Since these new currencies were often pegged to European currencies, this substitution tied the currency market of the SRSR to that of Europe. At the time of this substitution, political instability was causing high rates of inflation in Europe. As a result, inflation spread to the SRSR. Simultaneously, declining conditions in the SRSR compelled local communities to adopt new economic strategies designed to earn currencies. Scholars previously have focused on just two of these strategies, i.e. cash crop cultivation and wage labor, and have ignored another key one, i.e. enlistment in the armed services. In the 1930s and 1940s, many men enlisted in order to earn the income necessary to support themselves and their families. After the Second World War, decommissioned men throughout the region increasingly used violence, either through banditry or armed confrontations with the state, to seize the resources that they could not otherwise purchase.