Egypt | Brussels Blog

Egypt

Amidst the jubilation that has accompanied the departure of the late Egyptian president, Hosni Mubarak, there is a nagging and awkward caveat. That is, how his successors will be able to address the deep-seated problems that afflict the Egyptian economy. Recently a growing number of commentators have raised this question. From it there arises an unpleasant spectre. If the Egyptian revolution fails to fulfill the expectations of the people, they might in retrospect view the Mubarak era as a golden age. If this proves to be the case then, undignified though his departure was, it might well prove to have been opportune. Perhaps, he got out while the going was good.

My interest is this. The subject matter of the Brussels Blog is climate change and resource depletion. At root these are the problems which face Egypt. Both are of course, problematic for the world but in Egypt it is possible to see the complex interrelationship between them and the way in which, together, they have an impact upon the economic and political order. The situation in Egypt is interesting for what it augurs. For those of us fortunate enough to live in a more affluent society the immediate future may not be so grim. Our time will come.

As dictatorships go, that of Mr. Mubarak was not perhaps, the worst. It had of course, all the hallmarks of a totalitarian regime, torture, widespread corruption, a pampered military, a brutal police force, a largely quiescent middle class and an ageing autocrat with badly dyed hair. It was not however, in quite the same league of oppression as for example, the regimes in Zimbabwe, Burma or North Korea or indeed, if one considers the plight of approximately 6000 political prisoners held without trial, of that of another staunch ally of the West, Saudi Arabia. In some ways it was the victim of its own success. There was economic growth, a proportion of the benefits of which trickled down to the poor. Food was subsidized and despite widespread poverty, few starved. The young were educated and were provided with modern tools of communication. Expectations were raised. So, when in recent times the educated young found themselves unemployed and unemployable and the poor could no longer afford staple foodstuffs, those expectations were dashed and social and political disorder was the inevitable consequence.

Twenty years ago Egypt was a net exporter of oil, providing approximately half a million barrels a day to the world market. This year it stands on the brink of becoming a net importer. That this is so is for two reasons. First, its own fields have peaked. In 1996 production reached 995 thousand barrels a day. Since then it has declined by 26%. Second, as its population has grown so too has its demand for oil. That population growth has been extraordinary. During the period of the Mubarak regime, the population doubled. The substantial surplus income that once was generated by the oil fields has gone. There is still plentiful gas and electricity albeit that both industries are dogged by inefficiency, but their presence pales into insignificance against the backdrop of the diminution in the supply of crude oil. In the absence of this revenue stream it has been impossible to maintain cheap prices for essential goods and inflation has been rampant.

Food in Egypt has therefore, increased in price in part because of the drop in domestic oil revenues. In addition, the increase in population has led to an increase in urbanization which has in turn, diminished the area of land available for agriculture. The increase in population has of course, also increased the amount of food consumed by the nation. From being an exporter Egypt has become an importer of staple food stuffs. This is not however, the whole story. At the same time the global cost of food has risen. There are two reasons for this increase. One is the rise in the price of oil caused by the squeeze on global supplies. When the price of oil goes up the cost of food does the same. That this should be so is because oil is used in every stage of agriculture from the manufacture of agrochemicals to the tillage, harvesting and eventual delivery of the crop. By a cruel irony, as the price of oil goes up so too does the viability of bio-fuels, thereby reducing the amount of land available for the growing of foodstuffs. So, Peak Oil in Egypt has affected the cost of food and at the same time the onward march of Peak Oil in the world has added its own pressure on prices. This is the most vicious of vicious circles.

By another cruel irony, as the price of oil increases so too does the viability of the extraction of unconventional oil from oil shale and tar. These industries create copious amounts of the green house gasses that have given rise to the second factor that has affected the cost of food, climate change.

In the past year wheat, sugar and rice crops have all been affected by extraordinary weather patterns which have given rise to floods and drought. All climate scientists accept the fact that the planet is warming. It is undeniable. A few non-specialists question whether this has been caused by the activity of man. It does not matter which view one takes. The recent extraordinary weather in Russia, China, Australia, and Brazil, in fact, in most parts of the world, is wholly consistent with global warming. Furthermore, there is no reason to expect that the situation will improve in the foreseeable future.

In summary therefore, the people of Egypt face the prospect of rising food prices and little hope of increasing their national revenue. So, what can an incoming government in Egypt do to prevent widespread hardship? It is a question that in the course of time many other countries will find themselves asking.

We are indebted to Dr.Jeorg Friedrichs of Oxford University for his analysis of the response of nations to a severe diminution in their supply of oil (“Global Energy Crunch, how different parts of the world would react to a peak Oil scenario” 2010 Energy Policy 38(8) 4562-4569). Dr. Friedrichs is not a Peak Oil doomsayer. He makes no predictions but merely documents the effect that an interruption of the oil and energy supply has had on various societies. His conclusions can be summarised thus- war, famine, adaption.

As far as war is concerned, Dr.Freidrichs cites the example of the entry of Japan into the Second World War. The United States had embargoed exports of oil to Japan. Faced with the prospect of an energy crisis that would have severely impaired the operational ability of her armed forces, Japan mounted a pre-emptive attack on Pearl Harbour and went on to invade parts of the East Indies that were rich in oil. Dr. Friedrichs could equally well have used the example of the German invasion of Russia, the primary motivation of which was to secure the oil supplies that kept Hitler’s armies moving, his aircraft aloft and his ships afloat. More controversially, others might cite the invasions of Iraq and Afghanistan as examples of modern wars the fundamental intent of which has been to secure the United States’ access to relatively cheap oil. Paul Wolfowitz, the former United States Defence Secretary certainly had no doubt as to the motive for the invasion of Iraq when he said “We just had no choice in Iraq…….the country swims on a sea of oil”.

It is doubtful that in future, there will be grand imperialistic invasions of oil producing countries by oil impoverished superpowers. Some of the more apocalyptic commentators, envisage the US, bloated with arms but desperate for oil being steered into a colonial adventure by a crazed right-wing president of the ilk, let us say, of Sarah Palin. I doubt it (but only just). The battleground between nations seeking to secure their supplies of oil will be the relative strength of their economies. The rich nations will win. China will get the biggest share.

What is more likely, indeed almost inevitable, is the prospect of civil and class wars within the oil producing countries.

At the moment, most major oil producing countries have deeply divided societies. The wealth from oil and gas has created wealthy elites and small but prosperous middle classes. The people at the bottom of the heap, the poor majority, have benefitted to a small extent-just enough in fact, to keep them from insurrection. This model can be seen in Egypt, Libya, Nigeria and Angola. It is in fact, the norm rather than the exception. As the oil runs out and revenues decline, the poor will be hit first and foremost. Local decline in production will give them less money to spend on food. At the same time they will experience the effect of higher food prices caused by global peaking. Famine will stalk the land. When people are hungry and see their children go hungry they become desperate. In the modern age people in the most remote of places are familiar with images of affluence. They are connected by mobile phones and the internet to a global community. They will not accept that their condition is inevitable when they see that it differs from the lifestyle of those who live in societies that have a greater degree of equality.

When in the past nations starved they often met their fate with docile resignation. In Russia there was no popular uprising in the wake of the starvation caused by Stalin’s disastrous policies. Even in modern-day Africa we have become accustomed to the image of starving people suffering in relative silence. But the people of Tunisia and Egypt have not suffered in silence. In societies where a few are seen to be possessed of wealth there will be class war. That war will be intensified by the dawning of the realization that the wealth that the oil created had been squandered and would be irreplaceable.

As far as famine is concerned, Dr.Freidrichs cites the example of North Korea after the fall of the USSR. North Korea had no significant oil reserves of its own and relied upon subsidised supplies of oil and gas from its ally, the Soviet Union. With the implosion of the Soviets in the 1990’s that aid ended. Within two years, North Korea’s supply of oil had halved. Its industry and agriculture, deprived of energy and chemical feedstock, suffered collapse. The government reacted by allowing an estimated 600,000 to a million people to starve to death whilst maintaining the privileges enjoyed by the elite military and governing classes.

At the same time that North Koreans were starving to death, the Cubans, who had also suffered the same drying-up of oil supplies from the USSR, were dealing with the situation in a profoundly different way.

The communist regime in Cuba operated with the assistance of local committees. These were mobilized during the so-called “special period” to establish local food production. Parts of the cities became market gardens. Agriculture, from being heavily reliant on artificial fertilizers became “organic” within a very short space of time. Public transport on huge tractor-towed busses, replaced private cars. The people not only survived but became healthier. Consumption of less meat and fewer sweet foodstuffs led to a decline in rates of heart disease and diabetes. Mortality rates fell. Cuba had adapted to what was, at a local level, the equivalent of a Peak Oil crisis.

Were I in a position to advise the Egyptian government I would suggest that there is a single commodity upon which it should focus its attention, that is, food. Cash crops like cotton should be replaced by food crops. The cities should be greened with small scale agricultural projects and the Nile should return to its old function as the lifeblood of the Egyptian people.

As the oil runs out, this will usher in higher food prices. At the same time, the loss of the income from oil will cause a decline in national revenues, further diminishing the ability of governments to subsidise food. Then, the overpopulated cities of the oil producing nations of the Middle East and Africa will begin to suffer hunger. This is the nascent problem in Egypt. Eventually it will be the problem of much of the Middle East and Africa.
As recent events have shown the old breed of dictators will not, even if they are still in power, have the North Korea option to fall back on. The people will demand food and will revolt if it is not provided. Unfortunately, it may be that, however well intentioned their governments might be, they might not have the means to deliver what the people want. If this proves to be the case then the dictatorships of Mubarak, Ben Ali, Gaddafi and their ilk might be viewed as times of plenty – Golden Ages in fact.

Robert Urquhart Collins