mead berger shevtsova garfinkle michta grygiel blankenhorn bayles
Side Effects
Egypt Running Low on Medicine

Egypt’s economic crisis has taken a turn for the worse, as a falling currency and government-imposed price caps are now taking a toll on the country’s medicine supplies. Reuters has the story:

Pharmacies across Egypt are running short of medicines, some of them life-savers, as a plunge in the value of the Egyptian pound coupled with strict government price caps has made scores of products unprofitable to produce or import.

The shortages include some cancer treatments as well as basic items like insulin, tetanus shots and contraceptive pills.

Unable to raise prices above levels set by the Health Ministry but now paying roughly twice as much to import drugs or active ingredients, pharmaceutical firms say they have been forced to phase out certain medicine to stay in business. […]

The medicine shortages are piling pressure on the government of general-turned-president Abdel Fattah al-Sisi, who has been at pains to reassure a populace already struggling with double-digit inflation and intermittent shortages that they would be shielded from the worst effects of economic reforms.

The drug shortages are the latest symptom of an ongoing economic crisis in Egypt. As we noted this past month, Egyptians are feeling the pinch amid an economic downturn and a host of tax hikes and subsidy cuts aimed at securing a much-needed IMF loan. In the short term, the damage has been exacerbated by the government’s decision to let the Egyptian currency float freely. That was a necessary condition to receive the $12 billion IMF loan, but it has caused the Egyptian pound to plummet in value overnight. Before November 3, the currency was pegged at 8.8 pounds to the dollar; today, its value has halved and currently stands at 17.5 pounds to the dollar.

These are not merely routine economic troubles. Many Egyptians who have grown reliant on food subsidies to feed their families can hardly scrape by under the new conditions; now, life-saving drugs are out of reach for many. On a macro level, Egypt’s tourism industry and foreign investment have dried up amid concerns about terrorism, while Cairo’s erstwhile benefactor Saudi Arabia has abruptly cut off fuel exports. Given this dire state of affairs, popular discontent with the government of President Abdel Fattah al-Sisi is rising.

None of this is good news for U.S. interests. A breakdown in the Egyptian social order would be a disaster for an already fractured Middle East. Many of the economic reforms Cairo is undertaking are painful but necessary, promising long-term gain in exchange for short-term pain. At the moment, however, many Egyptians cannot see the light at the end of the tunnel. The next U.S. administration needs to keep its eye on Egypt to make sure that Cairo remains a stable partner. In the meantime, the Sisi government would do well to take measures addressing its current policies’ most dire side effects.

Features Icon
show comments
  • Andrew Allison

    Worth noting that tourism’s contribution to the GDP fell by 40%, from 19% to 11.4% from 2005 to 2015. But the real problem is massive corruption which has prevented the economic gains of the past quarter-century from trickling down.

    • FriendlyGoat

      Funny, whether its traditionally defined corruption or some other problems, when anyone has to depend on trickle down for the distribution of economic gains——well, stuff happens.

      • Kevin

        Going cold turkey is a brutal way to kick bad habits – sometimes it’s necessary but that doesn’t make it pleasant. Telling a guy suffering from a heart attack that he needs to exercise more more is not terribly productive.

        I’m not sure the current reforms will actually work all that well. The pain of ending subsidies won’t do much good if massive corruption and a horrendous crony-dirigiste system still hobbles the economy.

        • FriendlyGoat

          Are you talking about Egypt or extrapolating in general to all places?

          • Kevin

            Both. Egypt in particular, but it can be extrapolated to many other (non)developing nations.

            In general I think there is a lot to learn from the experience of E Asian nations such as Japan, S Korea and Taiwan which managed to break out of the cycle of repression, corruption and poverty. (It’s too early to say if the same will apply to China and much if SE Asia.)

        • LarryD

          I think Jefferson was right:
          Every man wishes to pursue his occupation and to enjoy the fruits of his labors and the produce of his property in peace and safety, and with the least possible expense. When these things are accomplished, all the objects for which government ought to be established are answered.

          The problem is, as Instapundit puts it, “there are insufficient opportunities for graft”. There will always be people who want graft.

    • Wayne Lusvardi

      Corruption by whom? The terrorist organized crime group masquerading as the Muslim Brotherhood manipulated their way into capturing the presidency in 2012 after a mass wave of murders of cops, judges, Coptic Christian priests to intimidate voters to not vote against them. And then the Brotherhood didn’t even count the votes and just declared themselves the winners. As soon as they took over the presidency they threw out the constitution (same as France’s), dissolved the upper house of the Parliament and then threatened anyone who opposed them with execution.

      An opposition movement of the people rose up called The Couch Party against the unlegitimate government and requested the military and supreme court to intervene. They removed Brotherhood president Morsi by use of the courts and put him in jail for threatening the people. The Couch Party movement was the forerunner of Brexit and Trumpit.

      Hillary Clinton visited Egypt after the 2012 election, pledged $300 million in aid to the Brotherhood by going around Congress to her “friends”, promised US military protection for the Brotherhood, and had ties to the Brotherhood through her assistant Huma Abedin.

      What the Brotherhood is now doing is buying up critical medical supplies, sugar and US dollars to create shortages and a crisis to bring down the democratic government. The Reuter’s reports are fake news planted by a Brotherhood operation in Turkey to give it the semblance of legitimacy. As you know by now, the Brotherhood has also taken over Turkey in a coup and is purging all judges, cops and military heads with Brotherhood loyalists. The Brotherhood has also purged the Turkish media.

      My sources are primary and located in Egypt and are not in the existing government but in academia and the media.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service