Saturday, 6 July 2013

Egypt's Intractable Crisis-'A Perfect Storm'.

The longer term economic trends in Egypt driving the unrest are not going to be solved very easily no matter who comes to power after the interim regime of President Mansour is replaced by another elected head of state as the Egyptian army has promised.

In January 2013, the Guardian reported on the role of worsening food shortages in prolonging instability,
Levels of food insecurity in Egypt have risen significantly over the past three years, according to a report by the World Food Programme (WFP) and Egypt's official statistical agency, Capmas. In 2011, about 13.7 million Egyptians – 17% of the population – experienced food insecurity, compared with 14% in 2009.
Although findings are based on 2011 statistics, the report's authors say the picture is increasingly desperate for the most vulnerable households, many of which spend more than half of their income on food.

Inflated food prices are not a new phenomenon in a country where population growth has long outstripped production. However, as Egypt faces its worst economic crisis since the 1930s, the rate of inflation has risen sharply, with serious implications for consumers.

The price of many items has doubled since last autumn. Vegetables, along with bread and cereals, are subject to the highest increases, rising by 3.4% and 2.3% respectively between February and March, driven by a 5.5% increase in the price of wheat flour and 4.3% rise in the cost of rice.
Nafeez Ahmed has alo emhasised 'Egypt's entrenched social, economic and political problems'.

'Indeed, Egyptian unrest is the consequence of a fatal cocktail of structural failures rooted in an unsustainable global model of industrial civilisation - addicted to fossil fuels, wedded fanatically to casino capitalism, and convinced, ostrich-like, that somehow technology alone will save us.

It remains to be seen how Adly's 'technocratic government' is going to remedy these deep seated problems at all. Ahmed writes in a fact packed analysis,
'Egypt's oil production peaked in 1996, and since then has declined by around 26%. Having moved from complete food self-sufficiency since the 1960s, to excessive dependence on imports subsidised by oil revenues (now importing 75% of its wheat), declining oil revenues have increasingly impacted food and fuel subsidies. 
 As high food prices are generally underpinned by high oil prices - because energy accounts for over a third of the costs of grain production - this has further contributed to surging global food prices.
Food price hikes have coincided with devastating climate change impacts in the form of extreme weather in key food-basket regions. 

Since 2010, we have seen droughts and heat-waves in the US, Russia, and China, leading to a dramatic fall in wheat yields, on which Egypt is heavily dependent. The subsequent doubling of global wheat prices - from $157/metric tonne in June 2010 to $326/metric tonne in February 2011 - directly affected millions of Egyptians, who already spend about 40% of their income on food. 

That helped trigger the events that led to the fall of Hosni Mubarak in 2011 - but the same configuration of factors is worsening.

Egypt has suffered from horrendous debt levels at about 80.5% of its GDP, far higher than most other countries in the region. Inequality is also high, widening over the last decade in the wake of neoliberal 'structural adjustment' reforms implemented throughout the region since the 1980s with debilitating effects, including contraction of social welfare, reduction of wages, and lack of infrastructure investment. 

Not learning the lesson of history, Morsi's economic plan was to ingratiate himself as much as possible with the very institution, the International Monetary Fund (IMF), that had already played a central role in escalating the country's economic woes.
Egypt could well spin dangerously out of control in a 'perfect storm' of intractable problems that offers a portent of the sort of civilisational collapse that awaits states across the globe created by overpopulation, the impact of global heating in causing crop failures or their destruction through firestorms and peak oil.

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