x Abu Dhabi, UAEMonday 22 January 2018

Egyptians must focus on fixing their economy

When bread has to be rationed, it's clear that urgent action has to be taken in the interests of everybody in Egypt.

For over two years, Egypt's elites have been obsessed with political science: What should be the nature of the state? How should faith be reflected in governance? What is the proper role of the army? What rights should minorities be given? What powers should the president have? The judges? The legislature?

There has been, to put it mildly, no consensus on these questions. And now Egypt is discovering the consequences of so much emphasis on politics and so little on economics: bread rationing begins this spring, the minister of supply, Bassem Ouda, has announced.

It would be hard to find a better metaphor for the shambles of Egypt's economy. Heavily subsidised cheap bread is the main food for millions of people - and of course symbolic of public welfare. But now the state grain importer seems to be having trouble obtaining enough wheat on world markets. Wheat inventory, normally sufficient for six months of demand, is reportedly down to half that amount.

A government that cannot feed its people must expect real anger. But while President Mohammed Morsi and his allies continue to joust with the judiciary and with urban liberal factions - most recently over the fate of the country's top prosecutor, Abdel Maguid Mahmoud - nobody has been tending to the country's day-to-day business.

Incessant political quarrelling, with gusts of violence, has chased away foreign investment, damaged tourism, degraded the government's credit rating, fuelled inflation, inhibited industry, pushed the jobless rate to 13 per cent, weakened the currency and drained foreign reserves. Widespread evasion of Egypt's convoluted tax system is a particular problem, as The National reported this week. Mr Morsi's government has not enacted systematic reforms, but is accused of pursuing select firms for political reasons.

In this crisis, foreign donors have helped - Libya just pledged $2 billion (Dh7.35bn) - but cannot do so forever. The International Monetary Fund, serenely indifferent to politics, wants the government to reduce its costly subsidies for fuel and bread, improve tax collection, and make other crowd-displeasing reforms before it will approve major loans the country badly needs.

In the short term, remedies are hard to find. Some speak wishfully of the army resuming power, or of a technocratic new national unity cabinet, but neither of these is politically likely, and either could trigger major new unrest. And yet somehow, Egypt needs urgently to focus its political energy on its economy. Once bread starts disappearing from shelves, it will be too late.