Time Running Out for Egypt, Iran

Egyptian riot police whale on opponents of Mubarak, as they would later on those of Morsi, and now on opponents of the army generals, temporarily back in charge. The prognosis is not good. (Photo by Oxfamnovib/Flickr)

Egyptian riot police whale on opponents of Mubarak, as they would later on those of Morsi, and now on opponents of the army generals, temporarily back in charge. The prognosis is not good. (Photo by Oxfamnovib/Flickr)

Never forget that where you see rebellion, it arises from terrible privation and loss of hope. Nor forget that where you see privation and despair, you will soon see rebellion. It does not matter whether Egypt is governed by the army or the Muslim Brotherhood, by a dictator or a democrat; what matters is that the Egyptian people cannot get enough food, water or fuel. It does not matter whether Iran is governed by a cleric, a moderate or a Southern Baptist; if the people do not have enough food, water or electricity, the government will fall. And that won’t solve the problems.

It’s hard to even imagine how Egypt could find any relief from its intractable problems. Formerly oil rich, it must now import oil for its people; formerly blessed with abundant grain reserves, it must now buy 70 per cent of the wheat needed to keep its people alive. The loss of the oil income, and the new expenses, mean that the government cannot afford to keep subsidizing bread and fuel, in a country where cheap bread and fuel is the difference between subsistence and privation, between hope and despair.

The finance minister in the interim Egyptian government, Ahmed Galal, can add and subtract. One fifth of the country’s entire budget is being spent on the subsidies. Its balance-of-trade deficit, its operating deficit, and its debts to sellers of grain and oil are all growing exponentially. Its declining oil industry, its drought-plagued agriculture industry, its vanished tourist industry — none of these can offer help. The only help Egypt has received in recent years is a whopping $12 billion from the sheikdoms of Arabia, desperate that Egypt not start a trend of failing, formerly oil-rich states.

Minister Galal knows what has to happen. He is talking, ever so delicately, about reducing the subsidies on bread and petroleum. Mubarak tried it, and Mubarak is gone. Morsi found no alternative, and Morsi is gone. In a recent interview for the eternally gullible USA Today, Minister Galal murmured weasel words about moving toward “more sustainable development down the road,” and about “simultaneously [somehow] creating jobs and improving education and health care” — a very nice trick indeed, if anyone could do it.

Sarah Lynch, the reporter who talked to Galal, demonstrated her grasp of the situation by writing the following:

Egypt’s interim government…inherited economic problems rooted in three years of political unrest that began with the 2011 uprising against longtime dictator Hosni Mubarak.

Get that? Egypt’s economic problems began with the uprising against Mubarak. But wait — what caused that uprising? You think his slashing food and fuel subsidies and imposing rationing had anything to do with it? Or that the fact that his successor Morsi was about to re-impose rationing had anything to do with his downfall?

Iran, like Egypt, has for years bought the acquiescence of its people with cheap fuel, and, like Egypt, can no longer afford to do so. Several times in the past five years, the government has tried to tiptoe away from the subsidies, and the people have been in the streets and on the barricades so fast the ayatollahs fainted. Now, the desperate parliament is going to try again. Last week it voted to cut subsidies on food and fuel, but tried to avert wrath by 1)delaying implementation until June, and 2) handing out food baskets to 15 million of its poorest people.

The governments of Egypt and Iran must, in a very few months, either raise the cost of their citizens’ food and fuel to intolerable levels or go broke and become impotent. Either result will be a disaster, and time is running out.

[See also: Egypt: Apocalypse Now, and The Arab Winter Stalks Egypt. Who’s Next?]

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4 Responses to Time Running Out for Egypt, Iran

  1. Michael says:

    Tom: I agree wholeheartedly with your article. You point out they must either raise costs or go broke. There may be, however, a third option. It may be unlikely but those with the power, the guns, and bullets can–at least for awhile–impose their will. In Cuba, for example, the Castro brothers have managed to keep some semblance of repressed order for decades. Every since the fall of the Soviet Union ended massive Russian subsidies to the island, their misery index has continued to escalate. And yet, the Cuban government has kept the lid on the boiling pot. I may be comparing apples and oranges, but when it comes to regional or country upheavals there seem to be few absolutes, especially in the Middle East. That is, the pressure cooker could steam dangerously for a long time before it actually blows up into uncontrollable chaos.

    I always enjoy your thoughts and perhaps you (or other readers) have more insight about possible outcomes. In any case, thanks for another great piece on the cauldron that, regardless of how it manifests itself, is going to impact energy and our lives halfway around the world.

  2. Tom Lewis says:

    Good point about Cuba, and it’s interesting HOW they kept the lid on. When without Soviet help they could no longer buy enough food from abroad, they launched a massive effort to nurture sustainable agriculture and urban agriculture. The result is that Cubans grow almost all of their own food, almost all of it locally. In 2006 the World Wildlife Fund Sustainability Index proclaimed Cuba the only country in the world that is living sustainably. Put that together with one of the world’s better health-care systems, and you can see the possibility that while there certainly was privation, hope may not have been lost.

    • Michael says:

      Thanks, Tom. That was an aspect of Cuban life of which I was not aware. What press accounts I have read seemed to always talk about shortages, rationing, and people standing in lines for the basics. It sounds like, however, that they were able to make a significant shift towards sustainability. As I said, thanks. It is fascinating stuff.

  3. SomeoneInAsia says:

    Singapore (where I live) currently imports around 90% of all her food. One shudders to think of what shall become of this island nation when ‘the sh*t hits the fan’.