War in Ukraine strains North African economies

CAIRO — On the way to the bakery, Mona Mohammed realized that Russia’s war on Ukraine might have something to do with her. Ms Mohammed,...


CAIRO — On the way to the bakery, Mona Mohammed realized that Russia’s war on Ukraine might have something to do with her.

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

War meant less wheat; war meant more expensive wheat. The war meant that Egyptians whose budgets were already slashed by months of rising prices may soon have to pay more for round loaves of aish baladior country bread, which add more calories and protein to the Egyptian diet than anything else.

“How many times can things get more expensive?” Ms. Mohammed said as she waited to collect her government-subsidized loaves from the bakery.

Russia’s invasion of Ukraine this week threatens to put a strain on Middle Eastern economies already burdened by the pandemic, drought and conflict. As usual, it is the poorest who have suffered the most, given the inflated food costs and scarcer jobs – a situation reminiscent of the period before 2011, when soaring bread prices helped propel anti-government protesters onto the streets in what came to be known as the Arab Spring.

In a region where bread keeps hundreds of millions away from hunger, bakery anxiety spells trouble.

In Egypt, the world leading wheat importer, the government endeavored following the Russian invasion to find other suppliers of cereals. In Morocco, where the worst drought in three decades was driving up food prices, the Ukraine crisis was expected to exacerbate inflation that sparked protests. Tunisia was are already struggling to pay for grain shipments before the conflict breaks out; war seemed likely to complicate the cash-strapped government’s efforts to avert impending economic collapse.

Between April 2020 and December 2021, the price of wheat increased by 80%, according to data from the International Monetary Fund. North Africa and the Middle East, the biggest buyers of Russian and Ukrainian wheat, were experiencing their worst droughts in more than 20 years, said Sara Menker, chief executive of Gro Intelligence, an artificial intelligence platform that analyzes global climate and cultures.

“This has the potential to disrupt global trade flows, further fuel inflation and create even 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 own people without importing food – and heavily subsidizing it. In recent years, the number of undernourished people in the Arab world has increased due to overreliance on food imports, as well as scarcity of arable land and rapid population growth.

Beyond its effect on the price of bread, the uncertainty and unrest caused by the war will drive up interest rates and reduce access to credit, which, in turn, would quickly force governments to spend more to pay off their high debts and cut back on essential spending. on health, education, wages and public investment, said Ishac Diwan, an economist specializing in the Arab world at the University of Paris Sciences and Letters.

He predicted mounting economic pressure on Egypt, Tunisia, Jordan and Morocco, warning that Egypt and Tunisia in particular could see their banking sectors, which hold a large share of public debt, in jeopardy. .

Egypt is also heavily dependent on Russia tourismwhich helped his tourism industry recover from the Covid-19 pandemic, giving the country yet another cause for alarm.

Global inflation and supply chain issues resulting from the pandemic have also pushed the price of pasta in Egypt up by a third over the past month. Cooking oil was up. The meat was in place. Almost everything was in place.

But most importantly, bread, the cost of which had already increased by around 50% in unsubsidized bakeries over the past four months; a five-pound note (about 30 cents) now buys only about seven loaves of bread, down from 10 before, bakery workers said.

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

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

“Of course I’m worried,” said Karim Khalaf, 23, who was picking up and stacking baladi loaves as they came out of the oven, slightly steaming, at a bakery in Sayyida Zeinab on Friday morning. “My salary hasn’t changed, but now I spend more than I earn.”

Morocco, where the very important agricultural sector employs about 45 percent labor force, faces an economic crisis precipitated by global inflation, soaring food and oil prices, and the worst Drought in three decades.

Anti-government protests that erupted on Sunday suggested many Moroccans have lost patience with their six-month-old government as they struggle to make ends meet after two years of a pandemic that has wiped out the once lucrative tourism industry .

“I hustled for a long time and I was patient, but I have nothing left,” said Mina Idrissi, 48, who took part in a protest in the capital, Rabat, and has several jobs, including that of housekeeper, in the neighboring district. city ​​of Sale. “For two weeks, I couldn’t even afford to buy cooking oil. Doesn’t this government realize that we are suffering?

In the weeks leading up to the protests, a series of videos posted on Moroccan social media only heightened the sense of distress. A the video showed people rioting on food prices in a market in the city of Kenitra, near Rabat.

Morocco’s crisis was predictable, experts say. Located in a climate change hotspot, the country’s rainfall has declined significantly in recent years and could drop 20-30% by the end of the century, according to the World Resources Institute.

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

The government reacted with band-aids.

Last week, the royal court announced a billion dollar plan to ease the effects of the drought on farmers by providing financial aid, water management and livestock feed.

But analysts said such measures would not make up for decades of misguided economic management that prioritized water-intensive industries and produced food for export while leaving the rest of the country dependent on imported wheat – of which part of Russia and Ukraine – and other foods.

No nation in the Middle East wants to become like Lebanon, which has seen its currency and economy catastrophically collapse since late 2019. Lebanon imports more than half of its wheat from Ukraine and is already talking about wheat in other countries such as India and the United States. purchases, the country’s economy minister Amin Salam told Reuters on Friday.

Recent unrest in the country has already pushed up the price of bread. To help mitigate the effects of the economic implosion, the government has cut subsidies on a range of products, including bread, some of which now cost five to nine times more than in the summer of 2019, according to government statistics. .

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

In Tunisia, where food prices have soared as public finances have faltered, President Kais Saied is struggling to maintain his popularity after taking power last summer on a promise to fix Tunisia’s economy. The government is desperate for a bailout from the International Monetary Fund, but such a deal would likely force it to take unpopular measures like cutting wages and state subsidies.

Egyptians crushed by the economy tried to reprimand Mr el-Sisi during a series of anti-government protests in September 2019, only to come up against a rapid crackdown. Yet years of government repression have persuaded many to come to terms with the way things are, as difficult as they are.

“We will have to resort to social assistance, which is basically begging,” said Oussama Ezzat, 60, a day laborer pushing boxes in a handcart outside the Sayyida Zeinab bakery on Friday. “It’s difficult, but when you compare us to the countries around us, at least we are stable.”

Viviane Yee reported 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.

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