From Meat to Wages, Economic Woes Fuel Anger and Political Unrest in Egypt

May 6, 2010 - 6:38 AM
The frustration over rising prices comes at a critical time for the country. Parliamentary elections are slated for later this year and the presidential vote is due next year.
Egypt anger

This April 20, 2010 photo shows a boy leading chants at a demonstration of workers and disabled people demanding improvements in wages and benefits, outside the Egyptian Parliament in downtown Cairo, Egypt. (AP File Photo/Ben Curtis)

Cairo (AP) - For the past six weeks, Khulud Mustafa has walked past the butcher near her apartment in Cairo's run-down Ain Shams district, casting wistful looks at the meat hanging outside his shop as the price has steadily risen.
 
From the equivalent of $8 per kilogram (2.2 pounds), to $9, then $13. When it peaked at more than $14, she stopped looking.
 
"I asked him, 'Are you crazy? What are you doing? How can it go up that fast?'" said Mustafa, a 24-year-old housewife with 3 children. "How are we supposed to eat?"
 
Mustafa's voice is one in a growing chorus of despair and frustration over rising prices of everything from food to housing in a key U.S. Mideast ally where more than 40 percent of the population of some 80 million lives under or near the poverty line.
 
What's worrisome for the government is that this anger is showing signs of turning political. The surge in the price of meat -- blamed by officials on a "mafia of traders" -- has led to a movement to boycott meat.
 
Near daily protests have been held outside parliament on a variety of economic issues, including demands for an increase in the minimum wage, which since 1984 has been stuck at $6 per month. Across the country over the past year, there have been numerous strikes at factories demanding better working conditions and salaries.
 
The protests have mostly been small, but they cast a spotlight on an income disparity that critics contend goes to the heart of Egypt's social and economic woes: An ineffective and autocratic regime more intent on preserving its authority and catering to the elite than the needs of the overwhelming majority of its people.
 
The buildup of frustration comes at a critical time for the country. Parliamentary elections are slated for later this year and the presidential vote is due next year. President Hosni Mubarak's 29-year tenure faces perhaps a prominent challenger -- the former head of the United Nations' nuclear watchdog agency, Mohamed ElBaradei, who has emerged as an opposition figure calling for sweeping democratic reforms.
 
Against that backdrop, rallies over food prices, salaries, housing and a host of other issues present an ominous message to the government.
 
"The Egyptian people have become the dry wood ready to catch fire," said Mahmoud el-Askalany, who is with the consumer group Citizens Against the High Cost of Living and an organizer of the meat boycott.
 
"Social peace in Egypt has come under threat," el-Askalany said, citing an increase in theft, homicides and other crimes where money was the motive.
 
"These are statistics that point to the fact that there is a revolution of hunger in the making."
 
So far, the economic protests have not merged with political ones that have also been held with increasing frequency demanding political reforms.
 
On Monday, a demonstration organized by opposition lawmakers and two reformist groups who oppose the renewal of the country's nearly 30-year old emergency laws ended violently, with riot police beating and arresting some protesters.
 
In contrast, the government has taken a lighter touch with economic protesters and has made small concessions at times to meet demands. Mubarak has raised civil service salaries by 10 percent, though that increase only affects bureaucrat's core salaries, not the bonuses and incentive pay that can turn a 300 pound ($55) per month wage into 1,000 pounds ($180), for example.
 
The government has also been pushing ahead with an economic reform program launched five years ago that helped boost economic growth rates to 7 percent before the onset of the global financial meltdown in 2008 -- compared to a 3.9 percent rate in 2000-2001. This year, GDP is projected to grow by about 5.4 percent, according to Mideast investment bank Beltone Financial.
 
But the growth is widely seen as mainly benefiting the upper class, and the business elite that form a core support for the government. "The trickle down effect hasn't materialized, and the majority of the population is still very poor," said Hani Sabra, an Egypt expert with the New York-based Eurasia Group.
 
"Do I see a revolution in Egypt as imminent? No, I don't. I see more violent opposition, but not an organized revolution that would dislodge the government in the short-term," Sabra said of the rising economic discontent.
 
In an interview with state newspapers published Wednesday, Prime Minister Ahmed Nazif vowed that increasing economic growth will "ease Egypt's problems." He downplayed the significance of the various economic protests, calling them "merely a new way of expressing opinions by anyone who things he has been wronged."
 
The food price issue is particularly sensitive for the government.
 
A shortage of subsidized bread in 2008 sparked riots, and some 10 people were reported killed after scuffles in bread lines. Egyptians have also had to turn to the black market for cooking gas after the key daily staple was in short supply in government shops this year.
 
But the minimum wage protests also speak to the dire conditions most Egyptians face daily.
 
A UBS Warburg study released last year showed that of all 73 cities surveyed worldwide, Cairo residents worked the most hours -- 2,373 per year compared to an average of 1,902 in the other cities -- a reflection of how many Egyptians are forced to work multiple jobs because salaries are so low.
 
The minimum wage movement stems from a March 30 court victory by the Egyptian Center for Economic and Social Rights ordering the government to set a new minimum wage at the equivalent of around $220 a month for a family of five. ECESR leaders have tried and failed to get a meeting with Nazif to discuss the court order and, as a result, the protests have mounted.
 
At one recent demonstration outside parliament, protesters spoke of working several jobs to make ends meet. Hussein Suroor, married with four children, said he earns only 425 pounds ($76) a month from his primary job as a technician at a public contracting company.
 
"The government wants us to be concerned with how we're going to put food on our tables, so they keep us busy while they rob the country," Suroor said.
 
Rida Noman traveled from the Gharbiya province 94 kilometers (59 miles) north of Cairo to show his support. He works as a property tax collector, making 350 pounds, or $63, but has to do carpentry in the evenings to feed his family of five. He broke into laughter when asked if he can buy meat.
 
"Meat?! We only eat meat in our dreams and possibly on holidays," he said.
 
Moody's: Debt Crisis May Hurt Banks Beyond Greece
 
London (AP) - The debt crisis enveloping Greece could spread to hurt the banking systems in Portugal, Italy, Spain, Ireland and Britain, a leading credit ratings agency warned Thursday.
 
Moody's Investor Service said that although banks in some countries, such as Portugal and Italy, were not heavily affected by the past years' financial crisis, they could be impacted by the fiscal crisis if it spreads outside of Greece.
 
"A key factor determining whether contagion risk continues in this case will be the market's view of the likely success or otherwise of the recently agreed International Monetary Fund and European Union support package for Greece," the agency said.
 
That bailout offers the debt-ridden country euro110 billion ($142 billion) in loans over three years from the IMF and the other 15 countries that use the euro. Greek lawmakers were to vote Thursday on austerity measures required by the rescue, and the bill was widely expected to pass despite violent protests that culminated in three deaths this week.
 
Moody's said the banking systems of Portugal, Italy, Spain, Ireland and Britain all face different challenges of different types, but warned that "contagion risk could dilute these differences and impose very real, common threats on all of them."
 
The banking systems of Portugal and Italy, like that of Greece, were not hit too hard by the global financial crisis, but their huge public debt load is remains threat. Banks in Spain, Ireland and the U.K. were more exposed to the credit crunch and have weakened their countries' finances significantly over the past year, the agency said.
 
Thursday's report comes only a day after the ratings agency put Portugal on watch for a possible downgrade of its sovereign debt and a week after rival Standard & Poor's downgraded Greece's government bonds to junk status.
 
With markets worried that Greece's debt crisis could deteriorate and spread, eyes are turning Thursday to the European Central Bank, which will hold a press conference after its meeting on interest rates. Some analysts say the bank could try to boost market sentiment with a bold move, such as buying government bonds.