The Peanut Gallery

My view of life from the cheap seats… Art Chartier

Egypt Update: “Eat less.” – David Goldman Re-Blog

Peanut Gallery: Egypt has a huge food shortage problem – it imports about half its food and is rapidly running out of money.

breadline in Egypt

TO HAVE IT IS TO LIVE: The Government sent shockwaves across the nation when a Cabinet minister disclosed a plan to offer every Egyptian just three loaves of the baladi (round) bread every day at the state-subsidised price.

A state that can’t feed its people is a failed state, and that’s why the Egyptian state is at the brink of collapse, as Egypt’s defense minister warned last week.

The Islamists didn’t cause the problem… it’s been coming on for years (as David Goldman has documented). But now they own it because they’re in charge.  And it’s not going away any time in the forseeable future.

Goldman’s latest article brings us up to date. It’s a sad state of affairs for the 40+ million Egyptians living on less than $2 a day.
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“Eat Less, Egypt’s Government Tells Its People” by David P. Goldman

“Even Islamists have to eat,” I wrote under the headline “Food and Failed Arab States” in February 2011. Egypt’s Muslim Brotherhood government takes a different view, the Washington Post reported yesterday. The trouble, the government says, is that Egyptians are eating too much. In a separate report, the government proposed to cut back its bread subsidy to three hand-sized loaves of pita bread per person per day, about 400 calories’ worth. A state that can’t feed its people is a failed state, and that’s why the Egyptian state is at the brink of collapse, as Egypt’s defense minister warned last week.

According to the Post report, the government is telling Egyptians (almost half of whom live on less than $2 a day) to eat less. You can’t make this sort of thing up. Egypt lost another $1.4 billion in foreign exchange reserves in January, and probably is flat broke after figuring in arrears to oil and food suppliers, and it imports half its food, so something had to give. In response, Egypt’s Islamist government is emulating North Korea’s approach to food shortages:

Egypt’s government is recommending that Egyptians avoid overeating in order to cope with rising food prices and chronic household shortages, according to local media reports.

“The government has acknowledged across-the-board food price inflation on a range of commodities in a new report. … In the report, the government also advises citizens not to over-eat,” Egyptian journalist Issandr el Amrani writes in the Cairo-based Arabist blog, citing local media.

According to our translation, the story from Elwatan News says: “The report also gave dietary instructions to citizens, including…that it’s up to the individual to learn what to eat and why malnutrition can develop from a lack of food or overeating, and why a balanced diet is commensurate with the real needs of people, depending on their age, weight, and level of physical activity.”

Amid reports of Egypt’s ongoing political violence, it’s a reminder that the country is also dealing with an incredibly weak economy that its new leaders have struggled to rehabilitate.

Tourism, once a pillar of Egypt’s GDP, has dried up, and there is little foreign investment. Egypt’s unemployment rate is projected to hit 14 percent this year, up from about 9 percent in 2010, and the United States is questioning whether to cut the $1.5 billion in aid it sends to Egypt each year.

“The [Egyptian] government subsidizes fuel and foodstuffs — things it can’t afford — but it also can’t afford to unwind those subsidies politically, so it is really in a very serious situation,” Middle East expert Steven A. Cook told the Council on Foreign Relations recently.

The economic struggles mean most Egyptian households don’t have enough money to buy clothing, food and shelter, according to a fall 2012 survey by the Egyptian Food Observatory. As the site Rebel Economy reported:

“Of the 1680 households surveyed in September 2012, 86 percent said their income was insufficient for covering total monthly needs including for food, clothes and shelter, up from 74 percent in June 2012.”

To cope, Egyptians are reportedly buying cheaper food items, reducing their food intake and buying food on credit.

The Egyptian government has tried to subsidize certain staples, such as everyday bread loves. But accounting mechanisms are shoddy, Rebel Economy writes, so people end up stocking up on the subsidized bread, leading to further shortages.

Reports like this highlight the reality of most Egyptians’ shoestring existence, especially as the Egyptian government is trying to find ways to end subsidies to save money.

“The subsidy issue has to be tackled in this fiscal year,” Amr Adly, Economic and Social Justice director at the Egyptian Initiative for Personal Rights, said in November, according to the Egypt Independent. “The government is facing this paradox, even though the poor [are] not benefiting the most from the subsidies, but it’s them who will be hurt with their removal.”

The Egyptian Gazette reported February 5:

Significantly, the 2011 uprising was underpinned by the purely Egyptian slogan: “Bread, Freedom and Social Justice.” In short, ‘bread’ means a lot for the majority of Egyptians. To have it is to live.

Therefore, the Government sent shockwaves across the nation when, days before the second anniversary of the revolt, one of the Cabinet ministers disclosed a plan to offer every Egyptian just three loaves of the baladi (round) bread every day at the state-subsidised price.

The people who want to get more bread will have to buy the staple commodity at the market value, which is five times higher than the subsidised price per loaf.

The controversial rationing is part of an ambitious plan to phase out state subsidies on certain commodities, so as to reduce an unsustainable budget deficit. It is also believed to be part of a package of austerity measures that Egypt has to adopt before getting a $ 4.8 billion loan from the International Monetary Fund.

The bloody civil disturbances that rocked Egypt during the past ten days were food riots as much as anything else.

Egyptian president Mohammed Mursi today welcomed his Iranian counterpart Mahmoud Ahmadinejad in Cairo, the first visit of an Iranian leader to the country since Iran’s 1979 revolution. Mursi’s solidarity with Iran undermines American and allied efforts to suppress Iran’s nuclear ambitions. The Obama administration is proceeding with the sale of 20 updated F-16s and 100 Abrams tanks to Egypt.

The numbers simply don’t add up. To maintain its present, minimal consumption levels Egypt will require at least $22 billion in aid in 2013 (Bloomberg News’ estimate). In a recent essay for JINSA (“Failure IS an Option in Egypt“) I crunch the numbers, and show that they don’t add up. Nonetheless, the International Monetary Fund’s analysts go through the motions of instructing the Egyptians on the need to reduce the budget deficit, now at 15% of GDP, which means reducing food and fuel subsidies, which keep alive the more than 40% of Egyptians who are unemployment and underemployed.

We are watching something unique and terrible in modern history, namely the disintegration of a society of 80 million people, with the prospect of real hunger–a self-made famine brought about by social and political disaster rather than crop failure or war. It is horrific and dangerous. Those (like the Council on Foreign Relations’ Steven Cook) who maliciously accuse me of wanting Egypt to fail might as well accuse oncologists of wanting their patients to die of cancer. No-one proposes to cough up $20 to $30 billion a year to bail out Egypt — the taxpayers have enough troubles of their own. Instead, the establishment goes through the motions of prescribing macroeconomic measures to the Egyptian government which imply starvation at the micro level — and wonders why all the parties in Egyptian politics won’t play together nicely.

Don’t shoot the messenger. In my September 2011 book How Civilizations Die (and Why Islam is Dying, Too), I predicted the disaster in the context of a broader analysis of the decline of Islamic civilization.

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