The Wall Street Journal today offers a troubling look at Egypt’s economic woes. As the Sisi government seeks to get its fiscal house in order through unpopular austerity measures, inflation is soaring and middle-class Egyptians continue to feel the pinch:
Inflation in Egypt hit its highest level this decade because of a weaker currency and slashed state assistance, escalating concerns about the economic health of the Arab world’s most-populous nation.
The annual urban inflation rate increased to 28.1% in January on higher food-and-beverage prices, Egypt’s statistics agency said on Saturday. Egypt’s headline inflation was at 23.3% a month earlier, according to data from the central bank, up from 19.4% in November, when Egypt floated its currency and allowed it to fall more than 50% against the U.S. dollar.
The steep drop in the Egyptian pound’s value has made imports more expensive, while other recent government measures such as a cut in subsidies for fuel, the introduction of a value-added tax and increases in import tariffs have sharply increased the cost of living for the country’s largely working- and middle-class people.
We can’t now know how this will work out. Inflation has sparked protests in Egypt before, but many Egyptians are tired of protests. Protests against Mubarak were exhilarating back in the day, but the result was, first, an economic and tourism crash; second, the failed government of the inept Morsi and the not-ready-for-prime-time Muslim Brotherhood; and third, a wave of repression and austerity under Sisi. Stability looks like what the country wants and needs more than anything else, and Sisi and the army remain the only forces remotely capable of providing it.
Even so, the economy is on dangerous ground. The potential for recovery is there, but the world is unstable these days, and Egypt’s fragile prospects could be hit by anything from conflict between the U.S. and Iran in the Gulf to some kind of global trade war to a eurozone crisis that hikes interest rates.
Human rights advocates and many others in the West can’t forget the repression and brutality that accompanied the Sisi crackdown on the Muslim Brotherhood and its allies, but it remains true that the health, stability and success of the Sisi government in Egypt is absolutely critical to what’s left of the hopes for a more peaceful and stable Middle East.
Let’s hope Team Trump can stop with the infighting and leaking long enough to focus on getting the job done in Egypt; America needs to do its part to help the Sisi government make Egypt great again.