Question for Americans cheering on the Egyptian protesters:
Are you prepared to renew US food aid to Egypt?
The US ended food aid in 1992. Most of the $1.3 billion Egypt receives from America is offered in the form of credits to buy military equipment.
But Egypt still needs food. Egypt was a country of 10 million in 1900, 20 million in 1950, 40 million in 1980, and is 80 million today. Egyptian agricultural production has not remotely kept pace with this population surge. Result: Once the breadbasket of the Mediterranean, Egypt today is reputed to be the world’s largest food importer.
Over the past few years, the life of food importers has grown uncomfortable. Food prices have risen, including the conversion of much US agricultural land to corn for ethanol production.
For Egypt, the rise in food prices has a direct impact on state finances. Egypt subsidizes the price of bread for its urban poor. Yes, subsidization is a crazy policy. Subsidization invites black-marketeering. It invites theft. It invites waste. Which may help explain why poor Egypt uses almost twice as much wheat per capita as rich Germany.
Yet the fact is: cheap bread is about the only assistance that Egypt provides its poor. Withdraw cheap bread, and you get revolutions – as nearly happened when Anwar Sadat tried to end the policy in 1977.
Mubarak did not end the bread giveaway. But as the price of wheat surged after 2005, Egypt struggled to afford the policy. Subsidies for food and fuel (energy is also subsidized) cost the state 18 million Egyptian pounds in 2001, almost 25 million Egyptian pounds in 2003, almost 30 million in 2004, and almost 69 million in 2005.
2005 was the year that Egypt launched a new round of economic “reforms.” One of those reforms was to cut subsidies. Which in turn put pressure on supplies of cheap bread.
Here’s a vivid report on what happened next from the Washington Post:
CAIRO — The line started forming before dawn, as soon as the day’s first call to prayer had faded from the trash-strewn streets of the Egyptian capital’s Zelzal neighborhood. Men began pounding on the green metal shutters of the district’s sole bakery.
“Aish! Aish!” — Bread! Bread! — the stubble-faced men yelled, shouting through the grillwork at bakers laboring over a dented, gas-fired oven. Cursing and pushing, the men thrust crumpled currency through the spaces in the grille.
“Have mercy! Have mercy on us!” a woman in a dusty black head scarf and abaya yelled.
Across Egypt this year, people have waited in line for hours at bakeries that sell government-subsidized bread, sign of a growing crisis over the primary foodstuff in the Arab world’s most populous country. President Hosni Mubarak has ordered Egypt’s army to bake bread for the public, following the deaths of at least six people since March 17 — some succumbing to exhaustion during the long waits, others stabbed in vicious struggles for places in line.
Economists and analysts say the crisis exposes the government’s inability to fulfill the decades-old pact between ruler and ruled here: As long as the country’s authoritarian system has supplied cheap bread, its people have put up with the squelching of political rights and economic opportunity. For Egypt’s more than 30 million poor, subsidized bread means survival.
In Zelzal, a grid of raw concrete tenements built by the government for people displaced by a 1992 earthquake, Hikmat Mustafa Ibrahim, a 62-year-old widow, emerged from the crush of men, women and children besieging the bakery. After a 3 1/2 -hour wait, Ibrahim had 30 round pockets of bread, about 25 cents’ worth. It would form the bulk of the day’s food for her family of six. Ibrahim sat down hard on a flat stone. “Finally!” she gasped.
That was April 2008. Since then, the bread situation has only got more dire, as Egypt’s budgets have tightened.
Egypt’s main export earners include (1) tourism (2) oil revenues from the Sinai fields (3) Suez canal tolls and (4) remittances from Egyptians working abroad.
But tourism has been badly damaged by a series of terror attacks directly targeting foreign visitors, most spectacularly the July 2005 bombings of the resort of Sharm el Sheikh that killed 88 and wounded 200.
Oil revenues have almost vanished as production in the Sinai dwindles and domestic demand rises.
Canal tolls have declined with the post-2008 decline in world trade. Ditto for remittances.
At first Egypt borrowed more, pushing the national debt up to 80% of GDP. A poor country can only borrow so much however, especially when so many richer countries are borrowing at the same time.
So the government did what it felt it must. It cut back subsidies. (We don’t know how much; the Egyptian state is not very transparent about its finances.) The bread lines lengthened. Discontent boiled. And eventually the protests erupted.
The outcome of the power struggle in Egypt remains uncertain. But the outcome of the economic struggle is easy to foresee: whoever emerges with power – including Mubarak himself should he survive – will want to resume food subsidies to allay public discontent. Yet Egypt’s economy will be in even worse shape post-protests than before. No democracy in Egypt can survive without an early improvement in the bread situation. So how to pay? International help seems the obvious answer. Yes, reform will be needed in time. Bread is needed now. Which leads back to the first question for those Americans who urge democracy upon a food-short Egypt: How much would you be willing to see America contribute?
It’s no good wishing for a new form of government if you then deny that government the means of survival.