From The New York Times
The current global energy-food crisis is, understandably, a pocketbook issue in America. But when you come to Egypt, you see how, in a society where so many more people live close to the edge, food and fuel prices could become enormously destabilizing. If these prices keep soaring, food and fuel could reshape politics around the developing world as much as nationalism or Communism did in their days.
A few years ago, Egypt’s president, Hosni Mubarak, belatedly but clearly embarked on an economic reform path that has produced 7 percent annual growth in the last three years — and now all that growth is being devoured by food and fuel price increases, like a plague of locusts eating through the Nile Delta.
Let’s start the day here at Hussein el-Ashri’s poultry shop — in the lower-middle-class district of Shubra — a shop that gives new meaning to the term “fresh chicken.”
Customers arrive, select a live chicken out of a coop. It’s slaughtered and de-feathered while you wait and handed to you in a bag with all the parts. Business had grown steadily over the years at Ashri’s shop, as Egypt’s lower-middle classes could afford more meat. But in the past six months, the price of chicken has doubled. Ashri explained: “Everything has gone up — electricity, the price of feed, gasoline, labor, the price of medicine for the chickens. Everything.”
For Egypt’s poor, who make up 40 percent of the population, food makes up 60 percent of their household budget. When wheat prices double, because more U.S. farmers plant corn for biofuels, it is devastating for Egyptians, who depend on imported American wheat for their pita bread. Bread riots are now a daily occurrence here. As for chicken, all Ashri knows is that “there are fewer customers and less traffic now.” You need to give your kids meat, complains a lady in a veil, “but now you give them a little smaller piece.”
Next to Ashri, though, the man selling potatoes from a wooden cart is doing a brisk business. “We can’t go out anymore for entertainment,” says one lady, whose husband is on an army pension, as she flips through the potatoes. “But there are people a lot worse off. Some can’t afford food at all.”
Around the corner, at a state bakery selling subsidized bread, a small crowd has gathered, waiting for their daily ration. Someone else has collected a donkey cart full of pita scraps to be sold for animal feed. Nothing wasted.
A discussion breaks out between the potato man and his customers about who has “less of a conscience” — schoolteachers in the state school system who have to be paid to give after-school lessons because they have 80 kids in their classes and no one can learn there, or doctors in the state system who have to be bribed for decent care. It is not that they’re evil; they’re all being squeezed.
What’s happening is that the basic bargain between the Egyptian regime and its people — which said, “We will guarantee you cheap food, a job, education and health care, and you will stay out of politics” — is fraying. Even with the growth of the last three years, government subsidies and wages can’t keep up with today’s food and fuel price rises. The only part of the bargain that’s left is: “and you will stay out of politics.”
From Shubra we drive into the desert toward Alexandria. The highway is full of cars. How can all these Egyptians afford to be driving, I wonder? Answer: The government will spend almost $11 billion this year to subsidize gasoline and cooking fuel; gas here is only about $1.30 a gallon. Sounds like a good deal for the poor — only the poor have no cars, and the fuel subsidies mean less money for mass transit.
Think about these numbers: This year Egypt will spend $6 billion on education and $3 billion on health care, far less than the subsidies for fuel. This is a terrible trap. The subsidies should have been phased out when food and fuel prices were lower. Now that they have soared, the pain of removing the subsidies would be politically suicidal. So education and health care get killed instead.
But Egypt today is one country with two systems. Along the Alexandria highway, we pass one gated community filled with McMansions — with names like “Moon Valley,” “Hyde Park” and “Beverly Hills.” One has a 99-hole golf complex. They are populated by Egyptians who have worked hard and made money in the gulf or who are part of the globalized business class here. They are entitled to their McMansions as much as Americans. But the energy and water implications of all these new gated communities is also fueling the soaring global demand.
The good news: More Egyptians today can afford to live like Americans. The bad news: Even more Egyptians can’t even afford to live like Egyptians anymore. This is not good — not for them, not for us.