Could Russia’s invasion of Ukraine topple Egypt?
With the outbreak of the Russia-Ukraine war on Feb. 24, 2022, Egypt’s food security crisis now poses an existential threat to its economy. The fragile state of Egypt’s food security stems from the agricultural sector’s inability to produce enough cereal grains, especially wheat, and oilseeds to meet even half of the country’s domestic demand. Cairo relies on large volumes of heavily subsidized imports to ensure sufficient as well as affordable supplies of bread and vegetable oil for its 105 million citizens. Securing those supplies has led Egypt to become the world’s largest importer of wheat and among the world’s top 10 importers of sunflower oil. In 2021, Cairo was already facing down food inflation levels not seen since the Arab Spring civil unrest a decade earlier that toppled the government of former President Hosni Mubarak. After eight years of working assiduously to put Egypt’s economic house back in order, the government of President Abdel-Fattah el-Sisi is now similarly vulnerable to skyrocketing food costs that are reaching budget-breaking levels.
The Russia-Ukraine war catapulted prices to unsustainable levels for Egypt, increasing the price of wheat by an additional 44% and that of sunflower oil by 32% virtually overnight. Even more troublesome, the war also threatens Egypt’s physical supply itself since 85% of its wheat comes from Russia and Ukraine, as does 73% of its sunflower oil. With activity at Ukraine’s ports at a complete standstill, Egypt already needs to find alternative suppliers. A further escalation that stops all Black Sea exports could also take Russian supplies off the market with catastrophic effect. With about four months of wheat reserves, Egypt can meet the challenge, but to do so, Cairo will need to take immediate and decisive action, which can be made even more effective with the timely support of its American and European partners.
Bread, Protests, and Subsidies
Egypt’s massive wheat imports are driven by the widespread consumption of the traditional round flatbread known as eish baladi, a popular staple of every meal among the country’s working poor. Egyptians consume 150-180 kilograms of bread per capita, more than double the global average of 70-80 kg. Keeping the price of Egypt’s staple food affordable has been the bedrock of regime stability since the Free Officers revolution brought then-President Gamal Abdel Nasser to power 60 years ago. When Nasser’s successor acceded to World Bank and International Monetary Fund (IMF)-mandated subsidy cuts on wheat flour, cooking oil, and other staples, it triggered Egypt’s infamous 1977 “bread riots.” The gravity of the crisis compelled then-President Anwar Sadat to call out the army to suppress the protesters. Sadat’s successor, Mubarak, fared far worse when Egypt’s annual food inflation reached 18.9% in 2011 amid another round of World Bank and IMF-mandated subsidy cuts. Soaring bread prices — due in part at the time to a weather-related, lower-than-expected Russian wheat crop — kept Egypt’s working class on the streets, sustaining the protest movement for justice and dignity that toppled Mubarak and ended his 30-year rule.
