Solar eclipse

I'm not sure whether I linked to it, but last week my Latitude piece was about the shortages in diesel fuel in Egypt (called Solar). It's here.

For a closer look at the frustrations faced by microbus drivers, who have been blocking roads in protest at shortages, there is a fine piece of reporting in the Daily News Egypt. It's also the top story in many of today's Egyptian dailies, with fighting breaking out during protests and at gas stations. Some report that fuel is being diverted to Gaza (it is much cheaper to get Egyptian fuel than Israel fuel, after all.) Others that the fuel shortages reach as much as 60% in some provinces, and 30-40% in most. Apparently several fuel tankers are awaiting to be paid to unload their cargo — but the government has no cashflow.  

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Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.

How Egypt Can Learn from Iran’s Subsidy Mistakes

Breakfast Wrap: How Egypt Can Learn from Iran’s Subsidy Mistakes

Good post asking the right questions about Egypt  subsidy-busting plan. The biggest question I have is, considering that the approach is introducing quotas per family (all income levels having the same quota), is how quickly can this system be implemented? Sounds like a plan for in a  year or two at best, not something you can implement now to deal with an urgent budget deficit.

Comment

Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region, www.arabist.net.

Iran, a model for Egypt?

Don't get me wrong: Iran is absolutely not a model for Egypt in terms of its bizarre, unelected Ayatollah-led Islamic republic, or in terms of its nasty and repressive security apparatus. But it might be in terms of economic policy, if the IMF is anything to go by. Here's a statement from the latest IMF Article IV consultation for Iran, the annual "inspection" of economic policy and performance review it does in every country:

“The mission reviewed recent economic developments and revised its macroeconomic estimates and projections in light of new data and discussions with the authorities. Real GDP growth recovered to an estimated 3.5 percent in 2009/10 despite the drop in oil prices, reflecting strong non-oil growth and an exceptional agriculture crop. The positive growth momentum continued in 2010/11. The authorities’ monetary policy successfully brought down annual average inflation from 25.4 percent in 2008/09 to 12.4 percent in 2010/11. Gross external reserves also remain comfortable with improved prospects for the external sector on the back of higher oil prices.

The mission commended the authorities for the early success in the implementation of their ambitious subsidy reform program. The increases in prices of energy products, public transport, wheat, and bread adopted on December 19, 2010, are estimated to have removed close to US$60 billion (about 15 percent of GDP) in annual implicit subsidies to products. At the same time, the redistribution of the revenues arising from the price increases to households as cash transfers has been effective in reducing inequalities, improving living standards, and supporting domestic demand in the economy. The energy price increases are already leading to a decline in excessive domestic energy consumption and related energy waste. While the subsidy reform is expected to result in a transitory slowdown in economic growth and temporary increase in the inflation rate, it should considerably improve Iran’s medium term outlook by rationalizing domestic energy use, increasing export revenues, strengthening overall competitiveness, and bringing economic activity in Iran closer to its full potential.

Cutting energy subsidies and rationalizing other subsidies so that they target the poor better is exactly what Egypt needs to be doing. Mohamed ElBaradei is the first Egyptian politician who had the courage to bring it up, to my knowledge, in last night's appearance on the Amr Khaled "Boukra Ahla" show. Rather than borrowing money from financial institutions to finance increases in its budget, Egypt should cut the subsidies. It will be politically unpopular but it's necessary.

The previous government knew it and the next one better know it. An economic policy that delivers better social justice and poverty reduction doesn't just have to create jobs, improve infrastructure and deliver better social welfare — it also has to finance itself without systematically resorting to debt and to be efficient and fair in the way it delivers subsidies. The businessman who lives in a villa in Maadi and drives a gas-guzzling Range Rover should not be getting subsidized fuel — better to spend that money on the poor villagers who need affordable cooking gas. So perhaps there is something to learn from Iran after all.

Links for 12.04.09 to 12.07.09

ElBaradei on Zakaria's GPS - CNN | Check in at around 30:50 for his take on Egypt's current situation. ✪ Egypt to re-evaluate subsidies for the poor - The National Newspaper | The debate over subsidies reform in Egypt. ✪ Start the Week: 30/11/2009 | Andrew Marr interviews Eugene Rogan, author of "The Arabs". Also interviews on terrorism, etc. ✪ Cyber Jihadis' LOTR obsession | Super funny post on the use of Lord of the Rings in jihadi propaganda ✪ The Associated Press: Veil's spread fans Egypt's fear of hard-line Islam | I don't like this idea of the government backing a "moderate Islam" vs. some hardcore Islam. The government is as Islamist as anyone else. ✪ AFP: Egypt detains 10 senior Muslim Brotherhood members | 227 Brothers behind bars so far. ✪ Egypt to demand the Rosetta Stone from British Museum - Times Online | Fight to get antiquities back continues. ✪ Why U.S. Mideast Policy is (Still) Screwed Up | Stephen M. Walt | "Every appointee to the American government must endure a thorough background check by the American Jewish community." ✪ Arms smuggling heightens fears Iran may be building arsenal | US-backed UAE crackdown on arms smuggling to Iran. Interesting story, who leaked it and why? ✪ Congress.org - News : Rising military suicides | "More U.S. military personnel have taken their own lives so far in 2009 than have been killed in either the Afghanistan or Iraq wars this year." ✪ The Generals' Revolt : Rolling Stone | Are the generals pushing Obama on AfPak because of Petraeus' presidential ambitions? ✪ Egypt’s opposition misled by fixation with Mubarak’s son - The National Newspaper | Amr Hamzawy, ✪ FT.com / UK - Muslim Brotherhood rifts widen | Habib lays out the divide for the FT. ✪ Reset - Dialogues on Civilizations | Life | Interview with Joseph Massad on his ridiculous thesis of the "invention" of homosexuality ion the Arab world by the West and the "Gay International." ✪ Iran whistleblower died from drug-laced salad - Yahoo! News | Nasty.
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Links January 9th and January 10th

Automatically posted links for January 9th through January 10th:

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