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Ukraine war tensions North Africa’s economies

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Ukraine war tensions North Africa’s economies

Cairo – On her way to the bakery, Mona Mohamed realized that Russia’s war on Ukraine might have something to do with her.

Ms Mohamed, 43, said she rarely pays attention to the news, but as she walked through her working-class Cairo neighborhood of Sayyida Zainab on Friday morning, she heard some people worried about the fact that Egypt had lost most of its territory. imports wheat. Russia and Ukraine.

War meant less wheat; The war meant more expensive wheat. The war meant that the Egyptians’ budget had already been eroded by months of rising prices, they may soon have to pay more for ash baladi, or round loaves of native bread, than anything else. Egyptians contribute more calories and protein to the diet.

“How much more expensive can things get?” Ms. Mohamed said she was waiting to get her government-subsidized loaves from the bakery

Russia’s invasion of Ukraine this week threatens to further strain economies in the Middle East already burdened by pandemic, drought and conflict. As always, the poorest people have countered it with the worst food costs and scarce jobs – a situation that recalls the lead up to 2011, when rising bread prices helped bring anti-government protesters into the streets. Known as the Arabian Spring.

In an area where bread saves millions of people from hunger, bakeries’ concerns cause trouble.

In Egypt, the world’s top importer of wheat, the government was moving in the wake of the Russian invasion to find alternative grain suppliers. In Morocco, where the worst drought in three decades was driving up food prices, the Ukraine crisis was set to increase inflation, prompting protests. Tunisia was already struggling to pay for grain shipments before the conflict began; The war seemed to complicate the economic crisis-ridden government’s efforts to avert an imminent economic collapse.

According to data from the International Monetary Fund, the price of wheat has increased by 80 percent between April 2020 and December 2021. North Africa and the Middle East, the biggest buyers of Russian and Ukrainian wheat, were facing their worst drought in 20 years, said Sarah Menaker, chief executive of Grow Intelligence, an artificial intelligence platform that analyzes global climate and crops. Is.

“This has the potential to increase global trade flows, further increase inflation, and create even greater geopolitical tensions around the world,” she said.

After years of mismanagement of their water supplies and agricultural industries, countries such as Egypt, Algeria, Tunisia and Morocco cannot afford to feed their populations without importing food – and heavily subsidizing it. In recent years, excessive reliance on food imports, as well as a lack of arable land and rapid population growth, have led to an increase in the number of malnourished people in the Arab world.

Beyond its effect on the price of bread, the uncertainty and turmoil brought about by the war will increase interest rates and reduced access to credit, which, in turn, will lead governments to spend more to service their high debts and reduce necessary spending. will force you to do so. Ishaq Diwan, an economist specializing in the Arab world at the University of Paris Sciences et Lettres, said on health care, education, wages and public investment.

He predicted increased economic pressure on Egypt, Tunisia, Jordan and Morocco, warning that Egypt and Tunisia in particular could see a crisis for their banking sectors, which hold a large portion of the public debt.

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Egypt is also heavily dependent on tourism from Russia, which has helped its tourism industry recover from the Covid-19 pandemic, giving the country additional cause for alarm.

Global inflation and supply chain issues stemming from the pandemic have also raised the price of pasta in Egypt by a third compared to the previous month. The cooking oil was on top. The meat was on top. Almost everything was up.

But most important, bread, the price of which in non-subsidized bakeries had already risen by nearly 50 percent in the past four months; Bakery workers said the five-pound note (about 30 cents) now only buys seven loaves of bread, which is less than 10.

According to the Food and Agriculture Organization, an agency of the United Nations, Egyptians, about a third of whom live on less than $1.50 a day, rely on bread for a third of their calories and 45 percent of their protein.

Government officials said Thursday that Egypt has enough grain stocks and domestically produced wheat to last the country until November. But rising import prices prompted President Abdel Fattah el-Sisi to announce last year that Egypt would raise the prices of subsidized bread this year, sparking public outrage.

“Of course I am concerned,” said Karim Khalaf, 23, who was collecting and stacking baldi loaves, slipping from the oven, steaming a bit, at a bakery in Sayyida Zainab on Friday morning. “My salary has not changed, But now I am spending more than I am earning.”

Morocco, where the all-important agriculture sector employs about 45 percent of the workforce, is facing an economic crisis precipitated by global inflation, rising food and oil prices and the worst drought in three decades.

Anti-government protests erupted on Sunday, suggesting that many Moroccans have lost patience with their six-month-old government as they struggle to complete two years in a pandemic that has wiped out the once lucrative tourism industry. Gave.

Mina Idrisi, 48, who participated in a protest in Rabat’s capital and worked several jobs as a housekeeper in a nearby city, said: “I worked long hours and I was patient, but I had nothing is left.” of sale. “For two weeks, I could not even buy cooking oil. Does this government not realize that we are victims?”

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In the weeks before the protests, a series of videos circulated on Moroccan social media, which only served to heighten the sense of crisis. One video showed people creating a ruckus over food prices at a market in the town of Kenitra, near Rabat.

Experts said Morocco was an imminent crisis. Located in a climate change hotbed, the country’s rainfall has decreased dramatically in recent years, and could drop by 20 to 30 percent by the end of the century, according to the World Resources Institute.

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

The government has reacted to Band-Aids.

Last week, the royal court announced a $1 billion plan to ease the impact of the drought on farmers by providing financial support, water management and livestock food supplies.

But analysts said such measures would not offset decades of misguided economic management, which prioritized water-intensive industries and produced food for export, while leaving the rest of the country dependent on imported wheat – Some of it from Russia and Ukraine – and other food.

No Middle Eastern country wants to be like Lebanon, which has seen its currency and economy go through a devastating collapse since the end of 2019. Lebanon imports more than half of its wheat from Ukraine, and is already talking about wheat from other countries such as India and the United States. purchases, the country’s economy minister Amin Salam told Reuters on Friday.

The recent turmoil in the country has already raised the price of bread. To help cushion the effects of the economic devastation, the government has reduced subsidies on a range of goods, including bread, some of which now cost five to nine times as much as in the summer of 2019, according to government data.

Some analysts have warned that mounting economic pressure could leave Arab governments vulnerable to the kind of social unrest that rocked the region during the Arab Spring.

In Tunisia, where faltering public finances have driven food prices up, President Kais Saied is struggling to maintain his popularity after seizing power last summer with promises to recover Tunisia’s economy. The government is desperate for an International Monetary Fund bailout, but such a deal would force it to take unpopular measures like cutting public wages and subsidies.

Egyptians attempted to reprimand Mr al-Sisi in a series of anti-government demonstrations in September 2019, met only with a swift action. Still, years of government repression have persuaded many to make peace with it no matter how difficult things get.

“We have to resort to welfare, which is basically begging,” said 60-year-old Osama Izzat, a daily wage laborer pushing cardboard boxes in a hand cart in front of Sayyida Zainab Bakery on Friday. “It’s tough, but when you compare us to the countries around us, at least we’re stable.”

Vivian Yee reported from Cairo and aida alami From Rabat, Morocco. Nada Rashwan contributed reporting from Cairo, Ben Hubbard And hwaida saadi Beirut, Lebanon and . From Anna Swansonfrom Washington.

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