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Thursday, July 11, 2013

Egypt's Spiral Toward Mass Hunger Under Morsi

Most people have really no idea how close the Egyptian state is to completely failing and collapsing into chaos. Egypt is not itself a rich country and survives by outside money, primarily in the forms of tourism and foreign aid.

Tourism has probably declined by around 2.5 billion dollars [citation below] following the instability that eventually brought about Mubarak's fall. Morsi's preoccupation with enshrining himself and the Muslim Brotherhood as the new ultimate powers in Egypt resulted in the coming crisis. The protests that recently flooded the streets of Cairo were not not just about political opposition to Morsi's attempts at dictatorship, but also because of the steep downward spiral of Egypt's economy.

In various ways, the Egyptian government essentially feeds the poor of Egypt-- of which there are millions. In 2011 it was reported "Nearly half of all Egyptians live under or just above the poverty line, which the World Bank sets at $2 a day." An oft sited statistic is that more than 15 million Egyptians live on less than $1 a day.

Morsi chose to attempt to consolidate power rather and enshrine the Muslim Brotherhood as a permanent, and likely ultimate, power in Egypt, rather than to maintain or to even seriously address the Egyptian's teetering economy.

From an article in Ablawaba's Business section:

Egypt's economy was a key casualty for the one-year rule of former Islamist president Mohammad Mursi, according to economic experts. 
As the military toppled Mursi on July 3 following three days of mass street protests against him, economic figures available show that Mursi has deepened the populous country's economic woes. 
When Mursi took office on June 30, 2012, Egypt had foreign currency holdings of $16 billion compared to $36 billion when his predecessor Hosni Mubarak was forced to step down in February 2011. The reserves, necessary to cover Egypt's food and fuel imports, dropped to $14.9 billion at the end of May, according to the Central Bank of Egypt. The figure includes $11.5 billion in grants and loans from Qatar, Libya, Turkey and Saudi Arabia. 
"Mursi and his Muslim Brotherhood, in economic terms, were worse than Mubarak," said Rashad Abdu, the head of Cairo-based Egyptian Economic Forum. "The Brotherhood members are mainly merchants with no clear economic vision or managerial skills. So, Egypt's economic problems have gone from bad to worse at their hands," Abdu told Gulf News. 
"Nor did Mursi and his group show any interest in depending on competent specialists in all fields. Their sole obsession was to tighten their hold on all state institutions by employing people, whom they trust, not efficient experts." 
Abdu gave the example of Mursi's prime minister, Hesham Qandil, who is an expert on irrigation and water resources. "He had no idea about how to fix the economy," said Abdou, adding that Mursi's insistence on keeping Qandil in the post was a potent message that his administration was not serious about revitalizing the economy.  
According to official figures, unemployment rates in the final year of Mubarak stood at 3.9 per cent of Egypt's workforce. They rose under the generals who took over after him and ruled for 16 months to reach 10.5 per cent. At the end of Mursi's first year in office, unemployment hit 13.3 per cent, reported the state-run Central Agency for Public Mobilisation and Statistics. 
"When Mursi became president, the budgetary deficit was estimated at 170 billion Egyptian pounds (around Dh100bn). On leaving, the figure soared to 220 billion pounds," said Abdou. 
"While around 300 million-dollar-worth new investments entered Egypt under Mursi, 14 billion left during his first year in power because of his failure to end political and street turbulence in the country." 
The tourism, a key earner for Egypt, failed to achieve a complete recovery due to security breakdown and frequent clashes between Mursi's backers and supporters.
Around 11.5 million tourists visited Egypt in 2012, generating revenue of around 10 billion dollars, compared to 14.7 million tourists in the pre-revolution peak 2010 when the industry earned 12.5 billion dollars. 
Mursi's rule was marred by daily problems in petrol, electricity and water supplies, fuelling public discontent.
I would take the official figures of unemployment with a grain of salt. However what they do reflect, no matter the likely low-balling of at least the 3.9% unemployment number under Mubarak, is the steady increase in unemployment and the declining businesses that this reflects.

And now this is being reported by Reuters:

Egypt has less than two months' supply of imported wheat left in its stocks, ousted President Mohamed Mursi's minister of supplies said, revealing a shortage more acute than previously disclosed.  
Speaking to Reuters near midnight in a tent at a vigil where thousands of Mursi supporters are protesting against the Islamist president's removal, former Minister of Supplies Bassem Ouda said the state had just 500,000 metric tons of imported wheat left. Egypt usually imports about 10 million metric tons a year. 
Two and a half years of political turmoil have caused a deep economic crisis in Egypt, scaring away investors and tourists, draining foreign currency reserves and making it difficult to maintain imports of food and fuel. 
Egypt is the world's largest importer of wheat, half of which it distributes to its 84 million people in the form of heavily subsidized saucer-sized flat loaves of bread, which sell for less than 1 U.S. cent.
While not completely begun under Morsi, his rule has presided over a dangerous dropping of Egypt's basic economic needs, among them food supplies. Whether by Morsi's incompetence or by design, this failing economy is what mainly what drove the millions of Egyptians into the streets. Should a prolonged civil war in Egypt follow its current violence, a terrible humanitarian crisis will result.

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