The Week in Egypt [July 14, 2014]

Catch up on the latest out of Egypt every week, with analysis, news updates, photos, videos, and more.

Quote of the Week

“We had to take these decisions, they are like a bitter medicine.” President Abdel Fattah al-Sisi in a speech defending the government’s recent decision to cut fuel subsidies.

Egypt in the News

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In-depth

Unsustainable Solutions to Unsustainability | Basil El-Dabh, DNE

The “social contract” between the government and its people has clearly become unsustainable as deficits increased, especially over the past three years. Many of the subsidies, including some of those on fuel, were not helping the Egyptians who needed it.

However what did the price hikes mean for the Egyptians who did need those subsidies? After all, fuel subsidies don’t only have an effect on the price of transportation. And as an economist pointed out, many will be negatively affected by the lack of a “basic level of protection.”

And this is where we find the problem. The price increases came without warning, without public deliberation, and without properly implemented measures to ensure that Egypt’s poverty issue was not exacerbated. While all prices of all grades of fuel were raised, the highest percentage increases were inflicted upon diesel and lower grades, something that will not only affect those owning vehicles, but consumers to whom the expenses will be carried over.

The Egyptian economy cannot be run like a business. No matter how necessary subsidy reform is needed, price changes need to come with protections, warnings, and set plans in the context of a very precarious consumer economy. A policy that does not tailor to the needs of the poor, especially in a country like Egypt, will not succeed, especially when lower income Egyptians are victim to a government framework that provides them with very little (if any) effective services or safety nets.

On Twitter

As the conflict continues to escalate between Israel and Hamas, the death toll in the Gaza Strip surpassed 100 over the weekend. The view of the violence from Egypt has been primarily focused on the opening of the Rafah border crossing, and on Egypt’s lack of a significant role in mediating a ceasefire, as it did in the past under former Brotherhood president, Mohamed Morsi.  

Video of the Week

BBC reporter Shaimaa Khalil speaks as part of the TEDxHousesofParliament series, asking the question, is Egypt back where it started in 2011 before a popular uprising toppled the thirty-year dictatorship of Hosni Mubarak:

This Week’s Interviews

Hieroglyphics That Won’t Be Silenced
Egyptian artist Ganzeer was denounced by television broadcaster, Osama Kamal on the private satellite channel, Tahrir, last May. Kamal broadcast his photo, real name, and claimed he was a member of the Muslim Brotherhood, an accusation that can carry with it dire consequences in Egypt since the government labeled the group a terrorist organization. Two days later, Ganzeer left for the United States. Barbara Pollack interviews him for The New York Times in Brooklyn.

Shoukry: Egypt’s image has been tarnished
In his first international news interview, Egyptian Foreign Minister Sameh Shoukry discusses international perceptions of recent events in Egypt, specifically the sentencing of three Al Jazeera journalists. He also discusses Egypt’s relationship with Qatar and the country’s response to the civil war in Syria and the crisis in Iraq. Finally, he asserts that Egypt’s image has been tarnished by disingenuous characterizations of the country’s regime.

Reports

Subsidies Reforms in the Middle East and North Africa: Recent Progress and Challenges Ahead | The International Monetary Fund

Subsidies entail high fiscal or quasi-fiscal costs and crowd out budgetary space for productive spending. In about half of MENA countries, total pretax energy subsidies were higher than capital spending in 2011. In all oil exporters, total pretax energy subsidies exceeded spending on education and on health, while in Egypt, Jordan, and Lebanon spending on total pretax energy subsidies was higher than spending on capital, health, or education.  Moreover, when subsidies are provided through fixed prices, they can lead to substantial budgetary uncertainty, as fiscal costs will fluctuate with global commodity prices.

Economic distortions created by subsidies are not confined to energy products. Subsidizing food staples can also lead to waste: an often-quoted example is the use of subsidized bread as animal feed. In Egypt, the leakage of subsidized food items (i.e., the difference between quantities of subsidized food products supplied by government agencies and the quantities consumed by households) has been estimated at 28 percent on average, which means that it costs the Egyptian government $1.39 to deliver $1 in food subsidies to end-consumers.

On EgyptSource

North Africa

Image: Photo of the Week: Egyptian photojournalists hold up placards as they take part in a silent protest against the detention of fellow photojournalist Abou Zeid, also known professionally as "Shawkan", in front of the Press Syndicate in Cairo, July 12, 2014. Shawkan, working for London-based photographic agency Demotix, has been held in an Egyptian prison without charge for more than 10 months after being detained in August 2013. (Reuters/Amr Abdallah Dalsh)