2011 February 27 Sunday
Egypt Faces Deeper Poverty?

How is Egypt going to do post-Mubarak? My guess: Not good. As Jeff Rubin points out, Egypt's regime and people can not afford the high priced food that comes with a rising world population and Peak Oil:

Yet the population of Egypt has tripled to 80 million today from 27 million in the early 1960s. While the birth rate for an average Egyptian woman has fallen from six children to just over three, it still fuels more than 2 per cent annual growth in the population. At this pace, Egypt’s population will double to 160 million by 2050.

Aside, I recommend Rubin's book Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization. The title's claim exceeds what I expect will happen. Peak Oil will reduce world trade. But many goods (e.g. semiconductors, medicines) are high value, low weight and therefore not so vulnerable to rising shipping costs. But Rubin is correct in pointing to other goods (e.g. steel, furniture) that will get made much closer to customers as a result of Peak Oil.

With 80 million people Egypt is already importing 60% of its grain.

But the country is already importing 40 per cent of its food supply and 60% of its grain. Even a brutally repressive regime like Hosni Mubarak’s still spent 7% of the country’s GDP on food and energy subsidies. Can a replacement regime afford to spend more?

Um, no, it can not afford to spend more. Why? Egypt is in the process of transitioning from an oil-exporting to an oil-importing nation. So where it used to earn money from oil exports to spend on food imports for now on it will have to spend to import oil and food without sufficient export revenues needed to pay for them.

Based on the ELM, we have concluded that given a production decline in an oil-exporting country, the Net Export Decline (NED) rate will exceed the production-decline rate and the NED rate will accelerate with time - unless the exporting country cuts its oil consumption at the same rate as, or at a faster rate than, the rate of decline in production. Furthermore, the bulk of post-peak Cumulative Net Exports (CNE) tends to be shipped early in the NED period.

After hitting a production peak in 1995, Egypt became a classic case of a rapid NED, as its NED rate exceeded its production-decline rate and accelerated with time. Furthermore, only four years into this NED, Egypt had shipped more than 50 percent of its post-peak CNE.

The political instability in Egypt was helped along by the food and oil picture. Hungry poor people are not happy citizens. See more on what happens when oil production peaks in an oil exporting nation. In a nutshell: exports drop much more rapidly than production due to rising internal consumption.

Then there are food prices. People in poor nations are being hard hit by record high (at least in recent decades) grain prices.

In January, global food prices hit their highest point in the 20 years since the United Nations first started tracking the cost of food. The spike in prices has pushed about 44 million people into extreme poverty since June, said Zoellick, speaking prior to a meeting of G-20 finance ministers in Paris Feb. 18-19.

"It is poor people who are now facing incredible pressure to feed themselves and their families -- as more than half of a poor family's income goes just to buy basic foodstuffs," he said Tuesday. "Global food prices are now at dangerous levels."

The U.N.'s Food and Agriculture Organization estimated that the cost of food -- captured by its food price index -- went up 3.4 percent in January compared to December 2010, and is almost 30 percent higher than it was a year ago.

A grain price spike preceded the North African revolutions. Coincidence?

This month, the U.N. Food and Agricultural Organization (FAO) reported that its food price index jumped 32 percent in the second half of 2010 -- surpassing the previous record, set in the early summer of 2008, when deadly clashes over food broke out around the world, from Haiti to Somalia.

An FAO report noted that "recent bouts of extreme price volatility in global agricultural markets portend rising and more frequent threats to world food security."

Food price rises do not seem steep to Westerners because raw materials make up a small percentage of your cost of a loaf or bread or box of cereal. But for extremely poor people cooking from raw materials a 30% rise in the prices for some grain is a disaster. How poor are Egyptians? I find one source says half the Egyptian population lives on $2 or less per dayThough another source says only 18% of Egyptians live on $2 per day. Even at 18% that's a huge number of people who can not handle large food price spikes. If a future Egyptian government can not afford to subsidize food imports (faced with high fuel bills and an even larger population to feed) then another revolution and even more extreme poverty seem a real possibility.

Share |      By Randall Parker at 2011 February 27 07:11 PM  Mideast Poverty


Comments
Mercer said at February 28, 2011 10:19 AM:

There is an easy way for Egypt's rulers to solve their economic problems. Take over the country on Egypt's western border. It would be easy to run Libya better then it has been by its current leader. The populations of both countries would benefit.

bbartlog said at February 28, 2011 11:09 AM:

Stealing Libya's oil might work, but I think someone else is beating the Egyptians to the punch. Looks like we're going to militarily intervene in Libya. We'll see who ends up with the oil. Nice scheme. The uprising in Libya seemed staged from the first.
Oh, and there's a difference between gains from stealing natural resources and gains from improved economic management. It wouldn't matter how well you ran Libya, it could never provide some a surplus sufficient to help the Egyptians with their problems (absent the oil, of course).
BTW Egypt to date has been more badly managed than Libya. Khaddafi appears to be a goofball (to the extent media accounts can be trusted) but his self-image apparently requires him to act for what he thinks is the good of the country, rather than just steal every dollar he can lay his hands on (like Mubarak).

bbartlog said at February 28, 2011 11:29 AM:

Here's a take on the Libyan situation which gives a better idea of what is actually going on: http://nocheinparteibuch.wordpress.com/2011/02/26/washingtonian-attempt-to-stage-a-monarchist-counter-revolution-in-libya/ . Mind you I thought it was a setup even before reading some of this backstory, for various reasons:
- the speed of western reaction bespeaks a plot which was hatched in advance. Since when does the UN Security Council announce sanctions in a little more than a week after events transpire?
- some of the news accounts appear to have been planted, most notably the one about Khaddafi fleeing to Venezuela, but almost certainly also the one about pilots crashing their planes and ejecting rather than bombing protesters.
- other regimes (Burma, Zimbabwe) routinely oppress people on a scale similar to what Khaddafi is accused of, but no one cares or does anything.

As usual, US political interest in the regime is highly correlated with oil reserves. Iran, Venezuela, and Libya... what is the common thread? Oppressive dictators? Hardly, those are a dime a dozen.

Mercer said at February 28, 2011 1:17 PM:

"Looks like we're going to militarily intervene in Libya. We'll see who ends up with the oil. Nice scheme. The uprising in Libya seemed staged from the first."

The US is not going to run Libya or end up with its oil. Unlike Egypt the US has a different language and religion from Libya. Western colonialism is dead. Your conspiracy theories have no basis in fact. Do you think the CIA was also responsible for the Egypt and Tunisia revolts?

Check It Out said at February 28, 2011 4:44 PM:

Again into Lybia? Let's hope not. Last time we invaded Lybia and broke into Khaddafi's palace, he wasn't to be found anywhere. That was back in the eighties though.

Maybe this time the Marines will really train before going. First task when they land in Lybia will be to knock and ask "Excuse me, is Mr. Khaddafi home?"

bbartlog said at February 28, 2011 5:34 PM:

'The US is not going to run Libya or end up with its oil.'
I didn't say it would. And to be fair, oil may not be the main motivation, though it may well help motivate some of the actors. There are other reasons that people in the US or elsewhere want Khaddafi gone.
'Unlike Egypt the US has a different language and religion from Libya.'
What of it? As long as we're talking colonialism, this is hardly much of an objection - the British ruled India for quite some time, and they didn't speak English until after the Brits taught it to them. But in the modern context, we can also point to our protectorate Iraq as a place with a different language and religion that we nonetheless are deeply involved with. Lest you further leap to misinterpret me, I am not saying that Libya would end up like either of these examples.
'Western colonialism is dead.'
True enough. Not worth the hassle. Did I say otherwise? On the other hand, ensuring that profits from oil flow to the right people doesn't require full-blown colonialism.
'Your conspiracy theories have no basis in fact.'
That the 'Khaddafi has fled to Venezuela' story was planted by parties who wanted to encourage the revolt, I am quite sure of. The rest is conjecture, which is not to say that you've offered any evidence or argument to actually make me less inclined to my views. In particular, even if you proved conclusively that western motives are pure as the driven snow (no one wants the oil, etc.), this does nothing to disprove the existence of a Western conspiracy to remove Khaddafi.
'Do you think the CIA was also responsible for the Egypt and Tunisia revolts?'
No. US confusion and vacillation in the former case, and inaction in the latter, do not point to the existence of any such schemes. Further the motives of the existing forces in Egypt explained events quite well.

Randall Parker said at February 28, 2011 8:00 PM:

bbartlog,

That link is naive. Gabriele Riedle goes to pre-revolt Libya and can't find anyone to say a bad word against Muammar. That means they were happy with his rule? Or does it mean they were petrified of getting hauled off and killed for the slightest criticism? That getting hauled off and killed did happen for regime criticism. So it is not surprising so many Libyans are now out on the streets of Eastern Libya celebrating their freedom from Gaddafi's police state.

It is ridiculous to suppose the CIA could engineer a mass uprising without a lot of existing suppressed anger. The CIA can do regime change with top figures knocking off each other. But bottom-up revolts really do require popular anger.

The speed of the Western reaction: I saw Obama's team trying to stay mum in the early days (and getting criticized for it) for fear the revolt would get quashed and then the Western oil companies would get their assets seized if the Western countries had voiced support for the revolt. Western countries did not take a strong stand until it was clear that Muammar's days were numbered.

bbartlog said at March 1, 2011 11:04 AM:

On the contrary, Riedle listed a number of grievances. She mentions an imprisoned human rights lawyer and so on. It doesn't sound like a North Korean style experience where no on spoke honestly to her. But in any case, the question is not whether some people had legitimate grievances against Khaddafi. People all across Africa, from Zimbabwe to Nigeria to Sudan to Congo, have very good reason to hate the people in charge in their countries. And they get brutally repressed. And in general, we do nothing.
'It is ridiculous to suppose the CIA could engineer a mass uprising without a lot of existing suppressed anger.'
How 'mass' is the uprising? How would we know? The CIA may be trying a modern re-run of Guatemala 1954, where media reports of an advancing rebel force made their coup a fait accompli even as they were really outnumbered about 10:1 by the Guatemalan military. That coup, by the way, had very little popular support, so your claims about the CIA's limitations in this regard seem spurious. Lenin's coup is also instructive. You don't need an actual mass uprising if you can create the perception of one.
'Western countries did not take a strong stand until it was clear that Muammar's days were numbered.'
But they must have laid quite some contingency plans if they already are talking about no-fly zones and military intervention. Further, the previous history of US/CIA actions aimed at his removal make this a case where I would operate on a presumption of guilt. In any case, I am not so sure that Khaddafi is done for; I suppose if the western powers start bombing critical infrastructure like they did in Yugoslavia, that may force his removal. Or they may try to assassinate him via guided munitions. But I doubt that he will just flee because news reports tell him he's losing, and I don't know that even a no-fly zone is sufficient to tilt the balance in favor of the rebel forces.
As a final note, people legitimately decry the use of force against peaceful civilian protests. But this is an armed insurrection. What atrocities, exactly, can we prove were committed against peaceful protesters, before they took up arms and started hanging policemen? And what interest of ours is served by taking sides in such a fight? It's not even as if the rebels are some sort of pro-democracy force. I don't share the fetish for democracy some people have (see: Hamas) but here even that paltry excuse for taking sides is missing.

Check It Out said at March 1, 2011 2:17 PM:

"half the Egyptian population lives on $2 or less per day"

Well, that really is a reminder of how much junk we supposedly need to live.

Living on $2 per day!! Boy, that's efficiency and optimizing resources. Only parasites need thousands of dollars to live each month.

What amazes me is not that millions of people all over the world live on $2 or less, what really amazes me is that so few need millions and even billions to live.

Lou Pagnucco said at March 1, 2011 6:33 PM:

Hunger for freedom, rather than hunger for unaffordable food, is driving these revolutions, no doubt.

Also, note that Russia is trying to discredit American Media reports on Libya -

"Airstrikes in Libya did not take place - Russian military"
http://www.youtube.com/watch?v=TncgsS0FDWg&feature=player_embedded

I doubt American Media disseminates disinfo.


bbartlog said at March 2, 2011 6:14 AM:

'I doubt American Media disseminates disinfo.'
How would they obtain accurate information in a case like this? Even if the media orgs themselves are trustworthy, they can be fed false information (see for example the Pat Tillman case.

Lou Pagnucco said at March 2, 2011 9:45 AM:

bbartlog,

Quite right, esp. if incentivized to trust official $ource$ - Operation Mockingbird

Unofficial sources are seldom available.

Randall Parker said at March 4, 2011 9:56 PM:

bbartlog,

Again, there is nothing speedy about the US response to Libya. It is quite easy a few weeks after a crisis begins in the Med for the US to talk about No Fly Zones. Really, the US has military bases in Italy. This is no big stretch of American air power.

Riedle: My objections stand. People who are scared into accepting a regime do not reveal the depth of their fear and inhibition. A reporter can not find what people really think. That takes months or years.


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