Cairo running out of foreign currency for critical food purchases abroad.
Religious violence against Christians and complaints against the ruling military council make up most headlines one reads about Egypt today. But the Nile state’s biggest, and largely unknown, problem concerns how it is going to feed its millions of desperately poor and hungry people in a time of economic downturn and political turmoil. It is estimated that about 40 million Egyptians among an 82 million population now live below the poverty line.
Egypt is the biggest wheat importer in the world, but, frighteningly, may soon run out of funds to buy on international markets the necessary food to feed its impoverished masses. A story in the Financial Times last week states that the Central Bank of Egypt’s foreign currency reserves have dropped $10 billion, from $29.8 to $19.4, since last February.
“The current reserves are estimated to cover 4.8 months of imports, down from 6.9 in April, 2011,” the story goes on to say.
Which translates into only five months until catastrophe strikes. Egypt consumes 14 million tonnes of wheat annually, half of which it imports. The amount of wheat Egypt currently has in storage combined with planned purchases, primarily from Russia, is expected to last only until March.
While the recent massacre of Christians by the Egyptian army demonstrates that Egypt is disintegrating, the inability of the country’s rulers to feed their country’s millions of poor would lead to a collapse into chaos of monumental and cataclysmic proportions. The Asia Times columnist Spengler (a literary pseudonym), who has written about Egypt’s impending food crisis, believes it will not matter what form of government eventually takes charge in Egypt because the starvation issue will override all other concerns. As Spengler succinctly puts it: “Even Islamists have to eat."
“It [Egypt] will look like the Latin America banana republics, but without the bananas,” Spengler states. “That is not meant in jest: few people actually starved to death in Latin inflations. Egypt, which imports half its wheat and a great deal of the rest of its food, will actually starve.”
Egypt’s food problem has been strongly affected by the continuing steep rise in world food prices. Corn and wheat, for example, have nearly doubled in price in the past year. Overall, food prices rose by 25 percent in 2010. Already last spring, the World Bank estimated that food costs for the world’s poor were reaching a “breaking point.” To make matters worse, prices have increased most dramatically on key commodities, such as rice, bread and cooking oil, the basic staples of people like those who make up Egypt’s huge underclass, rather than on processed foods.
“Food price increases will correspondingly roughly triple the inflationary impact in Egypt compared to Qatar,” reported the Arab paper, the Gulf Times. “In Egypt, the Consumer Price Index increased by 17.2 % in 2010 compared to 3.8 % in Qatar.”
The Arab street in Egypt has exploded twice in the past over food prices. The first time occurred in 1977 when the government of Anwar Sadat ended subsidies on basic commodities. Known as the “Bread Riots,” tens of thousands of people took to the streets in several Egyptian cities in what was called the greatest threat ever to military rule until Hosni Mubarak was deposed earlier this year. Eight hundred people perished in the 1977 disturbances until the subsidies were restored days later.
The second set of food riots in Egypt occurred in 2008. Caused by record commodities prices, riots occurred in several third world countries. Then, however, it was large rice producers like Thailand, India and Vietnam who suspended exports that helped create the unrest. In Egypt, at least ten people died in the 2008 disturbances.
“People are fighting. Killing for bread, some are even pulling out knives. What is happening? What is this? Famine?” said an Egyptian man at the time.
But the situation Egypt faces now is much bleaker. Soon, it may be a question of simply no food available for Egypt’s poor rather than one of prices or subsidies. One can only then imagine the nightmarish violence that will take place as people fight to feed their children and themselves.
Egypt’s options to reverse its slide towards starvation appear limited, to say the least. Tourism, one of Egypt’s biggest earners of foreign currency, fell to almost nothing during the demonstrations last January that deposed Mubarak. While there has been an upturn, tourism still dropped 35 percent in this year’s second business quarter. Another problem is that those tourists who still do travel to Egypt are only visiting certain areas, avoiding places like Luxor and Aswan, due to security concerns. It has also been noted that they are also not as free spending as in pre-Mubarak times.
No solution is also to be found in Egypt’s backward agricultural and education sectors either. An Egyptian wheat field only produces about 18 bushels per acre, while a non-irrigated American field produces almost double. The Egyptian education system is also not one that produces innovative and creative people who could help solve the looming food crisis. One of the Egyptian presidential candidates, Mohamed Elbaradei, indicated as much when he said of the Arab world in general that it is “now a collection of failed states who add nothing to humanity and science,” as “people were taught not to think or act, and were consistently given an inferior education.” And the fact that 91 percent of Egyptian women undergo female genital mutilation, often at the hands of medical doctors, further indicates just how backwards Egyptian culture truly is.
It is thus highly doubtful that Egypt can reverse its appalling record of its treatment of Christians and women and reorient itself toward building the democratic institutions necessary for economic prosperity and cultural advancement that could feed a people. The corruption, the cultural backwardness, the anti-Christian hatred, unemployment, a stagnant economy, a dishonest, inefficient bureaucracy and Muslim religious fanaticism all point in the other direction. The Egyptian army’s killing of 25 Christians last Sunday, for example, cost Egypt substantial stock market losses besides the money from tourists who cancelled their vacations. Significantly, only Egypt’s finance minister resigned over the murderous incident.
Elbaradei also says Egypt will face bankruptcy within months. That deadline may be extended with help from Saudi Arabia and the Gulf states. But even their wealth cannot subsidise 82 million people for a long period of time. As it stands, they already pledged several billion dollars in assistance last July and may not be willing to give much more.
If a collapse does occur in Egypt, southern Europe can expect a massive flight of refugees to cross the Mediterranean in search of food and safety. Israel and the West must also be prepared in such a case to face in Egypt a failed state along the lines of Somalia and Pakistan, in which terrorists will be welcome. In such an anarchic situation, Egyptian Christians would be facing a Rwanda-style bloodbath, which the West should currently be preparing to prevent. In the end, disruption of the food supply will see Egypt plunge into a murderous chaos and become Africa’s latest, largest human tragedy.