Trump’s Crisis Nobody Is Talking About Is in Egypt
President-elect Trump and Egyptian strongman Abdel Fattah al-Sisi seem to have good rapport. But will that put food on the table of 20 million hungry Egyptians?
SHEMBAB VILLAGE, Egypt—Every day Gamal, 48, roams his dirt-track village south of Cairo offering to do odd jobs for a pittance. Amid a deepening economic crisis in Egypt, he has been out of work for over a year and has five children to feed. The former construction worker lives off free handouts from charities and discount government food parcels distributed by the army.
Overnight, as Egypt’s central bank made the shock move earlier this month to float the pound and slash energy subsidies, he saw prices doubled, making it all but impossible to survive.
“I woke up to a reality where me and my children cannot afford to eat—how can I keep that up?” he said, breathless by the side of the road here in Shembab.
“Egypt is nose-diving and has been ever since President [Abdel Fattah] Sisi took over. The government doesn’t know what it is doing.
“It is not right, they should give me a way of making my own living, not reduce me to living off gifts.”
Egypt’s 91 million people are bracing themselves for further price hikes and subsidy cuts as the Egyptian government has rolled out a series of austerity measures, including floating the pound, to secure a much-needed $12 billion International Monetary Fund loan.
Exacerbated by chronic shortages, prices of the food staples that the poorest rely on have gone up already. Subsidized sugar doubled from just below four Egyptian pounds a kilo to seven. Cooking oil has gone up from 11 pounds to 17.
This embattled country is one of the most important allies of the United States in the Arab world and a recipient of $1.3 billion of U.S. military assistance every year—America’s second biggest aid handout. But it has struggled to retain foreign investment and its lucrative tourism trade in the aftermath of the 2011 uprising and the military takeover in 2013. When Gen. Sisi then ran for president on promises of peace and prosperity and the end of terrorism and unrest he stormed to power. But, facing a crumbling economy, clamoring dissent and an uptick in terror attacks, Sisi has since had to beseech Egyptians to bear with the difficulties.
Still, it seems there’s something about Sisi that Donald Trump likes. In September he was one of the few international leaders then-Republican nominee Trump deemed important enough to meet before the election. Trump dubbed him a “fantastic guy” and natural ally in the region during the meeting on the sidelines of the United Nations General Assembly. Speaking to Fox News a few days later Trump praised Sisi for the 2013 takeover, which saw the Muslim Brotherhood snuffed out, tens of thousands of people jailed, and hundreds killed, saying Sisi “took control of Egypt… he really took control of it.”
Trump sees the soft-spoken strongman and his self-declared war on jihadism at any cost as aligned with his tough-on-terrorism stance.
“Under a Trump administration,” the then-Republican nominee said, “the United States of America will be a loyal friend, not simply an ally, that Egypt can count on in the days and years ahead.”
Again to Fox he added, “There was a good chemistry there [with Sisi]… There was a good feeling between us.”
As soon as the results came through, President Sisi’s office was eager to point out that Sisi was the first world leader to call and congratulate Trump on his electoral win. Spying a sea-change, Egyptian pro-regime MPs told The Daily Beast that they had secretly held out for a Trump win, feeling betrayed by the Obama administration’s pause on military aid after Sisi’s takeover in 2013.
They said they believed Trump shares their zeal towards cracking down on Islamist groups and that as a businessmen he would “see sense” and invest in Egypt.
Last Saturday, Sisi once again reiterated his praise of Trump in an interview with Portuguese news agency LUSA. He said he expected him to be more “rigorously engaged” with the region and in particular supporting Egypt.
“President-elect Trump has shown deep and great understanding of what is taking place in the region as a whole and what is taking place in Egypt,” he said.
“I am expecting more support and more reinforcement of our bilateral relations.”
But as Egypt plunges further into an economic black hole, and the rumblings of dissent get louder, will this strongman be Trump’s rock in the region? Trump doesn’t like to back losers, and at some point, rightly or wrongly, he might conclude that with Egypt there’s no winning.
Already for several years Egypt has struggled to keep its head above water. In a bid to support the pound, Cairo burned through its foreign reserves, which sank to $19 billion last month, half what it was pre-revolution. That worsened the dollar shortage which forced banks to place crippling restrictions on access to foreign currency, which in turn halted imports of some goods and raw materials, prompting massive shortages and pauses in production.
Amid plunging global oil prices, lucrative gulf handouts all but stopped. An escalating spat with Saudi Arabia over Cairo’s increasing support for Russia and its policies in regional conflicts like Syria, saw the Saudi state owned oil company, ARAMCO, abruptly halt all cheap shipments of gasoline two weeks ago, sending Egypt scrambling to fill the shortfall.
Facing mounting pressure from the IMF and the business sector, the central bank abruptly abandoned the pound’s peg of 8.8 to the dollar to attract inflows of capital and to close down a boisterous black market.
It also cut back unwieldy energy subsidies, sparking petrol price hikes of 40 percent. The pound sank to 17.9 to the U.S. dollar, half its previous value.
The measures applauded by bankers, economists, the World Bank and the IMF, could see inflation soar to 25 percent in the coming months.
“In the near term there will be economic pain for Egyptians, the cost of everyday imported goods—like rice, sugar and wheat—will go up,” Jason Tuvey of Capital Economics told The Daily Beast. “There will be a squeeze on incomes, higher interests will dampen business investment.” Subsidies will continue to be hacked away as well, he said.
That means people like Gamal, part of the 23 million Egyptians struggling under the poverty line, will go hungry.
The Egyptian Food Bank, the largest distributor of food packages in the country, told The Daily Beast they had already increased the number of parcels they deliver by 20 percent, anticipating the surge in demand. In addition to the 670,000 boxes of food staples going to the poorest each month, this year they launched a program secretly distributing 100,000 unmarked boxes to members of the middle class who have now dropped below the poverty line. People are eligible if, like Gamal, they are forced to live on a daily income of just $1.30 in the villages or $2 in the cities per family member.
“At least 10 percent of the middle class are moving to the lower classes,” said the group’s chief, Dr. Reda Sukker, explaining that the logo-less boxes were designed to spare families the social stigma of accepting aid.
“We are getting fresh applications for food donations every day. At least half the people we give these boxes to rely on them entirely for their monthly food intake even though it is not enough nutritionally,” he added.
It has also affected medical supplies, which are largely imported—there are chronic shortages of medicines to treat diabetes, cancer, heart and kidney diseases. Staff in public hospitals told The Daily Beast they were forced either to purchase drugs off the black market for 10 times the price or in some instances, where the drugs weren’t available at all, watch patients die.
Mahmoud Fouad, director of the Egyptian Centre to Protect the Right to Medicine, which monitors the country’s drug supply, told The Daily Beast that if this situation continued for the next three months, 80 per cent of the country’s public hospitals would close. He said 1,500 types of medicine were missing in Egypt, including 112 life-saving drugs.
“The lack of clear governmental policy towards medical supplies, fixed prices of drugs despite the fluctuation of the pound, and the absence of a health insurance law are adding to the crisis,” he said.
Despite limping through two uprisings and five presidents in as many years, many Egyptians fear that this combined pressure on the poorest may spark further unrest.
There has been increasingly public displays of dissent—rare in Egypt, which since the 2013 overthrow of elected President Mohamed Morsi from the Muslim Brotherhood has seen unsanctioned protests outlawed and tens of thousands of regime opponents jailed.
Cartoons criticizing the government and Sisi, who once enjoyed vast support, have been widely shared on line. The latest, accompanied by hashtag “dying,” shows the Egyptian pound as a cartoon character drowning, while being mocked by the U.S. dollar who urges it to “float.”
Last month a cartoon of President Sisi stealing the watch off the wrist of a dying man, identified as Egypt, garnered over 8,500 likes on Facebook.
Shortly after the devaluation of the pound, Egyptian students started a tongue-in-cheek Facebook group calling for “mass suicide” that got tens of thousands of likes before it was taken down.
Meanwhile a TV interview of a motorized rickshaw driver speaking passionately about the tough economic conditions gathered over six million views. It was deleted from the website of Al-Hayat, a pro-regime TV channel, after it attracted the attention of the Egyptian prime minister, who invited the impoverished father to join a parliamentary debate.
“You watch Egypt on television and it’s like Vienna, you go out on the street and it’s like Somalia’s cousin,” the man told the show’s host Amr el-Leissy.
It sparked a series of other viral videos including one of an unveiled Egyptian girl backing up his points.
When a Turkish-based critic of the Egyptian regime posted a video on his Facebook page calling for mass protests on Nov. 11, it got 144,000 views. On the day of the event, heavily armed security forces in balaclavas and armored cars patrolled all the major rallying squares. People were told categorically to stay home. Only a handful of people turned out and they were swiftly rounded up.
But the idea was real enough to have worried the regime and whipped up a frenzy in the media.
Over 300 people were detained in connection with the proposed rally, on charges of belonging to the banned Brotherhood. Residents of areas surrounding Cairo’s famous Tahrir Square told The Daily Beast police had conducted raids on private apartments.
The authorities are expected to slash fuel subsidies again in March. They may have to, given the strict reform plan of the IMF, reduce subsidies on bread, sparking fears of a repeat of the 1977 bread riots which erupted following similar major cuts.
In exchange for its efforts Egypt received the first tranche of a $12 billion IMF loan days ago, the finance ministry confirmed to local media. IMF chief Christine Lagarde has congratulated Cairo for its “ambitious reform” efforts.
But that is unlikely to fix the country’s woes in the short term or filter down to the poorest any time soon, and they are desperate.
Will President-elect Trump overlook the instability within Egypt? Will he come to the rescue, as Egyptian MPs and the Egyptian president himself have hinted?
Back in al-Shembab people say they cannot think about the future beyond trying to plan for tomorrow.
“I have nine children. How am I supposed to bear this responsibly?” asked Salah, 57, dragging a skeletal donkey around the village.
“The government has to do something—we don’t care how and backed by what. We can’t possibly cover this alone, people will not survive.”