The Economic Crisis

Blogs

March 16, 2013
Isaac Friesen and Wanda Wall-Bergen |

This post first appeared on Issac and Wanda's blog Life in Egypt. Visit the site for a full archive of their posts.

Egypt usually appears in the news due to political unrest. Protests, trials, elections, and more protests. Observers read about the government and opposition forces, Islamists and liberals, the Army and police. In the ongoing post-revolutionary turmoil, it is natural for these actors to be in the forefront of today's narrative. Yet the media's constant focus on politics in Egypt has left other major issues largely neglected.

Egypt's economy is in a state of crisis. Inflation has shot up in recent months as the Egyptian pound has plummeted from 6.1 to 6.8 to the dollar. At the same time Egypt's foreign reserves have declined sharply from $36 billion to just over $13 billion since the revolution. Even more frightening is the fact that there really is no end in sight to the country's financial shortfalls. The country's tourist industry is a shadow of its former self, and the government food imports show no sign of abating. Add it all up and one sees that Egypt is very much in the red.

Now Egypt must look abroad for aid, much as it has done in past crises. Agreements with the IMF, aid from oil-rich Qatar and Saudi Arabia, and American/European Union support, appear as potential lifelines- though strings will be attached. Egypt's strategic importance to the West (centered on Israel, Suez, and other economic and geopolitical interests) will likely not fade any time soon. So there is a good chance that this crisis can be managed. But managed in whose interests exactly?

Inside Egypt plans are being drawn up to cut the deficit. Namely this means slashing government spending. Subsidies for fuel, energy and food all take sizeable chunks out of the government's budget. Along with a potential tax increase, these subsidies could be lowered significantly. Of course, any such maneuvers would be calamitous for Egypt's millions of destitute poor, as well as its shrinking middle class. But someone has to foot the bill.

Regardless of economic figures, the results of Egypt's economic crisis are plain to see on the streets of Beni Suef. Prices seem to rise by the day. Our students complain vegetables are double the cost they once were. Taxi rides in Beni Suef have risen from a standard price of two Egyptian Pounds to three since we arrived. Yet with the rise in fuel prices, taxi drivers have barely noticed an increase in profits.

Egyptian fresh produce is relatively cheap when it is in season. Last year I was telling my class of mostly-graduated and unemployed young adults that I was amazed by the low price of garlic (roughly 15 cents Canadian per kilo). 'No!' they quickly shouted 'garlic has become so expensive!'

Reminders of my wealth are frequent in Egypt. The grave mix of inflation with low wages creates economic circumstances that most Canadians could never imagine. Last week a friend asked me in all earnestness if one could survive on an average Egyptian salary ($65 a month) in Canada. I could only muster a sad laugh in response.

To make matters worse, my aforementioned friend is one of the millions of Egyptian young men currently saving up for marriage. This entails the expenditure of thousands of pounds on traditional engagement jewelry, as well as a furnished apartment. Inflation is gradually pushing the attainment of land, gold, and consequently marriage, hopelessly out of reach. These are real people, with very real problems. Indeed life is becoming more and more difficult for the average Egyptian.

Now back to the political issue, which I do not mean to minimize. As you would expect the economic and political problems in Egypt are very much intertwined. One could argue that the revolution was motivated by economic factors from the start. People rose up with hopes for a better life. Only the ordinary people it was ostensibly meant to help have yet to feel any benefit. And the resulting political struggle now overshadows an economic situation that borders on catastrophe.

Ultimately the dire political and economic picture in Egypt discourages optimism. Egyptian political actors will continue a selfish struggle for power. And international powers will continue to approach the situation with narrow geopolitical interests in mind. The average Westerner will read about politics and chaos in Egypt. And the concerns and struggles of ordinary Egyptians will be all but lost in the discourse.

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