Jan 11,2023 – JORDAN TIMES /
The Euro-centric Western prosecutors of the Ukraine war care little or nothing for the peoples of this region, Africa and Asia who have suffered collateral damage due to nearly a year of warfare. The US, its Western allies, and NATO are to blame for this war because, for decades, they pressed Ukraine to join NATO despite vehement opposition and warnings of consequences from Russia.
Millions of Egyptians are among the many who are suffering shortages of essential goods and paying soaring prices for essentials. On the occasion of Coptic Orthodox Christmas Eve, President Abdel Fattah Al Sisi reassured the congregation in a cathedral in a Cairo suburb that the government is doing all in its power to deal with the situation.
“I see that people in Egypt are worried, anxious and scared. I will not say that this is unjustified, but if my assurances have any effect on you, then rest assured: We don’t hide anything from you,” he stated. “God is here. Do you think he will abandon us? He is bigger and dearer than anyone and is trying to do everything that is good [for Egypt].”
Last month, Egypt made an agreement with the International Monetary Fund for a loan of $3 billion and could receive another $14 billion once a deal is reached. These funds should improve current conditions.
El-Sisi delivered his message shortly after the National Bank of Egypt and Banque Misr, the country’s two largest state-run banks, created federally insured Egyptian pound savings certificates with an annual interest rate of 25 per cent and a monthly rate of 22.5 per cent. These are the highest interest rates ever offered by Egyptian banks and are meant to increase the amount of foreign currency in Egypt, ease pressure on imports and bring down prices.
The measure is designed to create local demand for the Egyptian pound. Instead of maintaining bank deposits in Egyptian pounds, Egyptians generally hoard dollars and other hard currencies. There was, reportedly, a positive response to this offer from the public.
Thanks to the Ukraine war, Egypt’s economic growth rate, which was 6.6 per cent in 2021-2022, is expected to slow to 4.5 per cent this year, a rate of growth envied in the industrialised West but challenging for a developing country with a young population seeking employment.
Before the Ukraine conflict began, the government focused on development projects, such as the expansion of the Suez Canal, aimed at increasing revenue and the construction of a new administrative capital east of Cairo and a Russian-built nuclear power plant which could enable Egypt to export electricity.
This war has hit Egyptians hard just as they were recovering from COVID. The conflict has compelled Egypt to both cut the volume of essential imports and pay more for imports at a time foreign currency earnings have been reduced. While Cabinet spokesman Nader Saad said $9.5 billion worth of goods remained in Egyptian ports because there was no hard currency to pay suppliers, this figure had been reduced from last summer’s $14 billion. Another $300 million in foodstuffs is in the process of being delivered.
There are several causes for this situation. Foreign investors withdrew billions of dollars from Egypt once the war erupted and the tourism sector lost Ukrainian and Russian tourists who account for between one-quarter and one-third of total visitors. Tourism employs 10 per cent of the 27 million-strong workforce and accounts for 20 per cent of GDP.
Egypt has also been forced to pay more for essential imports of wheat and livestock feed which had been supplied by Russia and Ukraine. The prices of imported beans and lentils, which are on the daily menu of most Egyptian households, have risen sharply. The high cost of oil and raw materials for manufacturing goods for export have contributed to the drain of foreign exchange.
This has made it difficult for Egyptian households to provide food for families. Meat and chicken, which is locally produced, have become beyond the reach of millions who rely on vegetables and subsidised bread.
As the most populous Arab country, Egypt cannot be ignored. Last summer, the government acquired a $500 million loan from the World Bank and $221 million from the African Development Bank to cover the rising cost of wheat imports. The UAE, Saudi Arabia and Qatar pledged $22 billion in short-term deposits and investments.
However, there has been no assistance from the countries financing the Ukraine war to the tune of $140 billion, a figure provided by the British defence ministry’s intelligence end-of-year update. The US alone has contributed more than $50 billion in arms and humanitarian aid.
Although Egypt has negotiated with international suppliers for direct purchases of grain, there has been no thought of compensating Egypt, Lebanon, Yemen and other countries which used to depend on cheap grain from Ukraine and Russia.
Nevertheless, Western governments and media made a great fuss over the Russian blockade of Ukrainian grain shipments on which the populations of these countries formerly depended. In July, the UN and Turkey brokered a deal for the resumption of grain shipments from Ukrainian Black Sea ports. This deal was widely heralded as a means to save lives in war-affected developing countries. However, the deal was also meant to bring about the resumption of Russian grain and fertiliser exports. This was not implemented as Western sanctions prevented shipping firms from carrying Russian grain, banks from paying for grain and transport, and insurers from covering shipments, while some port workers refused to unload Russian cargoes.
The reduction of Russian grain exports has deprived poor populations of much more grain than the Ukraine normally supplied. Before the war, Russia exported 20 per cent of global wheat exports, Ukraine 9-10 per cent.
Once Ukrainian supplies resumed, 66 per cent of exported wheat and barley reached developing countries while 34 per cent went to developed countries. Sixty-three per cent of maize exports (animal feed) was bought by developed countries and 38 per cent by developing countries. This meant that only about half of total Ukrainian grain exports was delivered to those in need. Egypt, which relied for 80 per cent of its grain on both Ukraine and Russia, now must bid against wealthy Western countries. This makes supplies more expensive.