Fuel Shortages Cause Further Problems for Egypt

Jenna Goldsmith

April 2, 2013

Along with the political crisis that Egypt has been dealing throughout the last 2 years since the revolution ousted and replaced Hosni Mubarak with President Mohamed Morsi and the Muslim Brotherhood, Egypt is recently facing a catastrophic economic situation, which the government is not adequately addressing.  This dire economic situation has been caused by fuel shortages, which have dramatically increased the price of food, fuel and electricity.  Economists say that the fuel shortage is caused by the fact that “Egypt is running out of the hard currency it needs for fuel imports [while] the shortage is raising questions about Egypt’s ability to keep importing wheat that is essential to subsidized bread supplies.”  Because wheat farmers already “lack fuel for the pumps that irrigate their fields, [they fear] that they will not have enough for the tractors to reap their wheat next month before it rots in the fields”, leading to undoubtedly a serious food shortage in the future.  While the global community and independent analysts inside Egypt understand these economic problems, Morsi’s government refuses to admit that there is a problem.  Naser el-Farash, the spokesman for the Ministry of Supply and Internal Trade and a member of the Muslim Brotherhood, states that “those who say Egypt cannot afford fuel are trying to make problems for Dr. Morsi and his party,” and Morsi has resisted deals to borrow loans from the International Monetary Fund, declaring that “Egypt can wait”.  Other officials, economists and experts outside of the Muslim Brotherhood, along with the Western world, agree that the situation is urgent and needs to be handled as soon as possible.

We should care about this issue because a continued increase in economic problems caused by this, such as hunger and increased unemployment, will no doubt contribute to a revolution that would complement the political protests that exist against Morsi and the Muslim Brotherhood today.  Because the lack of fuel and wheat is going to damage Egypt’s economy, already the government’s “reserve of currency has fallen to about $13 billion from $36 billion two years ago”.  It is important that Morsi, along with the international powers, make sure the situation doesn’t become too dire, especially if the Egyptian people become violent towards their government. We do not want to see another escalating civil war in an already fragile region.

Policymakers, especially those in Egypt, need to address this situation before it progresses further.  Because there is the large problem that the majority of the imported fuel is being kept and sold on the black market instead of making it to the country’s gas stations, Morsi talked about “installing a smart card system for the tanker trucks, to track the supply of fuel and ensure that full shipments reach their destination.”  Farash has said that this will solve the problem in a week or two.  This is not enough of an action taken by the government.  Morsi has said that they will wait to make a decision on carrying out a “package of tax increases and subsidy cuts tied to a $4.8 billion loan from the International Monetary Fund” until the new Parliament takes session. Since the Parliament elections have been postponed to this fall at the earliest, Morsi needs to address this situation immediately and make the deal with the IMF.  What do you think the Morsi’s government should do to prevent this economic situation from getting worse? Do you think the international community should be more involved?

Sources:

Kirkpatrick, David D, “Short of Money, Egypt Sees Crisis on Fuel and Food,” The New York Times, 30 March 2013, http://www.nytimes.com/2013/03/31/world/middleeast/egypt-short-of-money-sees-crisis-on-food-and-gas.html?pagewanted=1&_r=0&ref=global-home.