Ukraine War Tensions North African Economies

CAIRO – On her way to the bakery, Mona Mohammed realizes Russia’s war in Ukraine may have something to do with her.

Ms. Mohammed, 43, said she rarely pays attention to the news, but as she passed through Cairo’s working-class Sayyida Zeinab neighborhood on Friday morning, she heard a few people worried about the news. Egypt imports most of its wheat from Russia and Ukraine.

War means less wheat; War means more expensive wheat. The war meant that Egyptians whose budgets were already tight due to rising prices could soon pay more for their bagel. aish baladior country bread, which contributes more calories and protein to the Egyptian diet than anything else.

“How much more expensive could things be?” Ms. Mohammed said as she waited to get government-subsidized loaves of bread from the bakery

Russia’s invasion of Ukraine this week risks further straining economies across the Middle East already burdened by pandemics, droughts and conflict. As usual, the poorest got the worst, counting Food costs soar and jobs are scarcer – a situation reminiscent of the lead up to 2011, when soaring bread prices helped push anti-government protesters into the streets in what became known as the Arab Spring.

In a region where bread keeps hundreds of millions of people from going hungry, the anxiety in front of bakeries creates trouble.

In Egypt, the world leading wheat importer, the government moved after the Russian invasion to find alternative grain suppliers. In Morocco, where the worst drought in three decades has pushed food prices up, the Ukraine crisis is set to exacerbate the inflation that has sparked protests. Tunisia is was struggling to pay for grain shipments before the conflict broke out; War can seem to complicate the efforts of underfunded governments prevent a looming economic collapse.

From April 2020 to December 2021, the price of wheat increased by 80%, according to data from the International Monetary Fund. Sara Menker, chief executive officer of Gro Intelligence, an artificial intelligence platform specializing in global crop and climate analysis, said North Africa and the Middle East, Russia and Ukraine’s biggest wheat buyers, is experiencing its worst drought in more than 20 years.

“This has the potential to increase global trade flows, fuel inflation, and create more geopolitical tensions around the world,” she said.

After years of mismanaging their water supplies and agricultural industries, countries like Egypt, Algeria, Tunisia and Morocco cannot afford to feed their populations without importing food – and subsidies. a lot for it. In recent years, the number of undernourished people in the Arab world has increased due to overdependence on food imports, scarcity of arable land and rapid population growth.

In addition to its effect on the price of bread, the instability and chaos caused by war will push up interest rates and lower access to credit, which in turn will quickly force governments to spend more. to tackle high debt and tighten essential spending. Ishac Diwan, an economist specializing in the Arab world at Paris Sciences et Lettres, talks about health care, education, wages and public investment.

He predicted increasing economic pressure on Egypt, Tunisia, Jordan and Morocco, and warned that Egypt and Tunisia in particular could be in jeopardy to their banking sector, which accounts for billions large proportion of public debt.

Egypt is also heavily dependent on travel from Russiathis helped it Tourism industry recovering from the Covid-19 pandemic, giving the country more cause for alarm.

Global inflation and supply chain problems stemming from the pandemic have also boosted pasta prices in Egypt by a third from the previous month. Cooking oil is up. Meat was up. Almost everything has been completed.

But most importantly, bread, the cost of which has increased by about 50% at unsubsidized bakeries in the past four months; A £5 note (about 30p) currently buys only about seven loaves of bread, down from 10, the bakery worker said.

Egyptians, about a third of whom live on less than $1.50 a day, rely on bread for a third of their calories and 45 percent of their protein, according to Food and Agriculture Organizationan agency of the United Nations.

Government officials said on Thursday that Egypt has enough locally produced grain and wheat reserves to last in the country until November. But due to rising import prices, President Abdel Fatteh el-Sisi announced last year that Egypt would raise the price of subsidized bread this year, risking public outrage.

“Of course I’m worried,” said Karim Khalaf, 23, who was collecting and stacking loaves of baladi as they slipped out of the oven, steaming, in a bakery in Sayyida Zeinab on Wednesday morning. Six. “My salary hasn’t changed, but now I’m spending more than I earn.”

Morocco, home to an important agricultural industry use about 45 percent workforce, is facing an economic crisis caused by global inflation, soaring food and oil prices, and the worst drought for three decades.

The anti-government protests that erupted on Sunday showed that many Moroccans have lost patience with their new six-month-old government as they have struggled to make ends meet for two years into a pandemic that has destroyed the tourism industry. once fat.

Mina Idrissi, 48, who attended a rally in the capital Rabat and is working several jobs, including housekeeper, in the nearby city said of the discount. “For two weeks, I couldn’t even afford cooking oil. Does this government not realize that we are suffering? ”

In the weeks leading up to the protests, a series of videos went viral on Moroccan social media just to heighten feelings of suffering. One the video shows people rioting than the price of food at a market in the city of Kenitra near Rabat.

Experts say Morocco is a foreseeable crisis. Located in a hotbed of climate change, the country’s rainfall has dropped dramatically in recent years and could drop by 20 to 30 percent by the end of the century, according to the World Resources Institute.

“It is a simple fact that has been ignored for decades,” said Najib Akesbi, an economist in Rabat.

The government responded with Band-Aids.

Last week, the royal court announced a $1 billion plan to ease the impact of the drought on farmers by providing financial support, managing water and feeding livestock.

But analysts say such measures will not make up for decades of economic mismanagement that prioritized water-intensive and food-producing industries for export while leaving the rest of the country alone. The country depends on imported wheat – some from Russia and Ukraine – and other staples.

No Middle Eastern country wants to be like Lebanon, which has seen its economy and currency collapse catastrophically since late 2019. Lebanon imports more than half of its wheat. from Ukraine, and talked to other countries like India and the United States about wheat. The country’s Economy Minister, Amin Salam, told Reuters on Friday.

Recent turmoil in the country has pushed up bread prices. To help mitigate the impact of the recession, the government has reduced subsidies on many goods, including bread, some of which now cost five to nine times more, according to government statistics. compared to the summer of 2019.

Some analysts have warned that growing economic pressures could leave Arab governments vulnerable to the kind of social unrest that rattled the region during the Arab Spring.

In Tunisia, where food prices have escalated due to public finances wobbling, President Kais Saied is struggling to maintain his popularity after taking power last summer on promises to fix the economy. Tunisian economy. The government is desperate for an International Monetary Fund bailout, but such a deal would likely force it to take unpopular measures like cutting public wages and subsidies.

Egyptians for the Economy tried to rebuke Mr el-Sisi during a series of anti-government protests in September 2019, only to encounter swift suppression. However, years of government repression have convinced many people to be at peace with everything no matter how difficult.

“We’re going to have to resort to welfare, basically,” said Osama Ezzat, 60, a daily worker pushing cardboard boxes in a handcart through Sayyida Zeinab bakery on Friday. homeless. “It’s tough, but when you compare us to the countries around us, at least we’re stable.”

Vivian Yee reports from Cairo and Aida Alami from Rabat, Morocco. Nada Rashwan contributed reporting from Cairo, Ben Hubbard and Hwaida Saad from Beirut, Lebanon and Ana Swansonfrom Washington. Ukraine War Tensions North African Economies

Fry Electronics Team

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