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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.

By Randall Parker    2011 February 27 07:11 PM Entry Permalink | Comments (13)
2011 February 06 Sunday
Egyptians Hostile To United States

Years of supporting Israel against the Palestinians have taken their toll on Egyptian views of the United States. We are not popular there. A democratically elected Egyptian government would likely have less friendly relations with both the US and Israel.

For three decades, Mubarak has maintained a steadfast alliance with the United States (lubricated by about $1.5 billion in annual aid) and presided over a cold-but-durable peace with Israel. Yet, Egyptian public opinion is overwhelmingly hostile toward both countries. In Pew’s 2010 global survey, just 17 percent of Egyptians expressed a favorable view of the United States; that tied with Pakistan and Turkey for the lowest rating the U.S. received in any of the 21 countries tested. Nearly three-fourths of Egyptians said they opposed U.S. antiterrorism efforts, and four-fifths wanted the U.S. to withdraw from Afghanistan.

Egyptian attitudes toward Israel are even chillier, despite the landmark 1979 peace treaty. In a 2007 Pew survey, a stunning 80 percent of Egyptians said that the needs of the Palestinian people could never be met as long as Israel exists; just 18 percent said that the two societies could coexist fairly. That was far more pessimistic than the results in Turkey and Lebanon—and essentially no different than the attitude among the Palestinians themselves. “Of all the countries in the Middle East,” Walker says, “the population of Egypt is the most hostile to Israel.”

So, hey, give them the vote. Let them express their hostility thru the ballot box. What could go wrong?

With Egypt's growing population and declining Egyptian oil production the government's continued ability to subsidize food and fuel purchases for its poor seems in doubt. Since half the population lives on under $2 per day or less a failure of the Egyptian government to keep food prices low could easily spark a large scale revolt.

That is Mubarak's Egypt, where about half the population lives on $2 a day or less, and walled compounds with green lawns and swimming pools and names like Swan Lake spring up outside cities. It is a place where those with money have built a parallel world of private schools and exclusive clubs, leaving the rundown cities to the poor.

Egypt's troubles will continue and become more severe regardless of whether a faction of the current elite stays in power or elections sweep an Islamic party into power.

By Randall Parker    2011 February 06 11:27 PM Entry Permalink | Comments (6)
2011 February 01 Tuesday
What Regime Change Will Not Change In Egypt

What regime change in Egypt will not do:

  • The new regime won't be any fairer toward the Coptic Christian minority.
  • The new regime won't grant more freedom to women.
  • The new regime won't be any less corrupt. It will just have different people making the money.
  • The new regime won't manage the Egyptian economy so well that it will usher in a new era of more rapidly rising per capita incomes.
  • The new regime won't be any friendly toward Israel and the opposite could easily be the case.
  • The new regime will not validate the dream of democracy as the solution to all the world's political problems.

If elections are held then will the Muslim Brotherhood sweep to power? Depends on who is allowed to run.

Regime change is unlikely to solve the underlying problems in Egypt. It is hard to look at the demographics of this mostly desert country and see signs for optimism. Mubarak was ineffective in his efforts to address the underlying problem of too many people in too resource poor a country. What will the new regime do about population growth?

Since President Hosni Mubarak took office in 1981, the population has nearly doubled. But most of the country's 82 million people are squashed in urban areas near the Nile, in an area roughly the size of Switzerland, which is home to 7.5 million.

"Before you add another baby, make sure his needs are secured," ran the slogan, adding to a string of campaigns over 30 years to encourage family planning. Mubarak told a government-sponsored population conference that cutting population growth was urgent.

Egypt might fall back into the Malthusian Trap.

The outlook for both Egypt and the region will be grave if the most populous Arab country continues to grow at current rates, Egyptian and UN officials say.

"The consequences are a real deterioration in the quality of life and in agricultural land per person," said Magued Osman, chairman of the cabinet's Information and Decision Support Center. "We are depending heavily on imported food items and this will increase."

In Egypt the government subsidizes food prices to placate the poor. But the political unrest has driven up the prices of food and so the poor are under strain.

“Since Friday everything started to be expensive,” said Om Massad, a door lady handling deliveries in Bab el Louq, who said 5 piester bread is not available anymore and 50 piester bread has jumped in price to 60 piesters. One Egyptian pound is made up of 100 piesters, or about 17 U.S. cents. “Shops are taking advantage of these conditions,” she said.

The revenue earned by oil exporters in the Middle East probably insulates those regimes from the unrest we see in Egypt. By contrast, new regime in Egypt won't have any more money to pay for food subsidies and world food prices might go much higher. It is hard to see how the new regime is going to be able to meet the raised expectations of the street protesters.

Will the Muslim Brotherhood make any effort to slow population growth? Or will it keep women at home and pregnant? Women make up 69% of the illiterates in Egypt.

"Egypt is one of the most challenging countries for any literacy programme," a literacy programme administrator at Catholic relief agency CARITAS told IPS. "You can't afford to step off the pedal for a minute."

One in every four Egyptians is illiterate. Despite free education and long- running literacy programmes, the number of illiterates has changed little in over two decades. Nearly 17 million adult Egyptians can neither read nor write, according to recent government data.

The least educated rural folks make the most babies.

By Randall Parker    2011 February 01 08:29 PM Entry Permalink | Comments (10)
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