EGYPT: New price hike on horizon

News reports saying that the government is considering lifting subsidies on oil and basic goods has raised eyebrows among Egyptians who might not be able to afford further price hikes. On every corner, you find people voicing concerns about inflation and further deterioration of their living conditions. Under the slogan of "achieving social equality", the government announced that it would revamp the subsidy system to "make sure that state subsidies reach those who deserve them."

Faced with a budget deficit, the government has said there is a need to revise Egypt's social legacies, namely state subsidies. However, the issue remains highly sensitive for President Hosni Mubarak. The memory of the riots that erupted throughout the country in the 1970s, forcing former President Anwar Sadat to go back on a decision to lift subsidies on bread still haunts the government. Yet, there seems to be a strong conviction among the people that the government will cut subsidies as the new year begins.

The president's son Gamal Mubarak is believed to be the architect of all unpopular economic policies. A strong proponent of economic liberalization, Mubarak has argued that Egyptians should be willing to pay the immediate price of the transition from a state-controlled to fully market economy contending that the move will pay off in the future. However, his claims fall short of convincing the public who believe that the President's son has helped businessmen and investors at the expense of the poor.

"I am concerned by Gamal Mubarak's and his men's leverage… He does not care about the people; he cares neither about me nor about you" wrote Ibrahim Eissa, one of the regime's staunchest opponents, in El-Destour newspaper, "Gamal Mubarak's camp will not give up on the issue of lifting subsidies…For those people, the abolition of subsidies is not just an idea but a belief."

If that happens soon, the government's cuts will come on the heels of labor unrest and social disenchantment. Thousands of workers recently went on strike to protest deteriorating economic conditions and low pay. Now comes the question: is the government capable of containing further social disenchantment that will definitely follow any move to cut subsidies?

— Noha El-Hennawy in Cairo

Comments

[Labiba Boyd]

This article did not mention that many Egyptian reporters and Egyptian businessmen have suggested a very simple solution to balance Egypt's budget so as to avoid removing the subsidies: revise Egypt's current petroleum agreements. Egypt is the only country in the world that sells most of its oil and gas for a set price below world market to the oil companies who discovered the oil fileds, then imports oil from the same oil companies for 3 or 4 times the price.

Egyptians have asked the current government repeatedly to debate and revise these oil agreements in Parliament. Egyptian reporters have repeatedly written that Egypt's current governemt will never debate or change these oil agreements because some members of the government are profiting from them.

Ms. El Hennawy, you speak and read Arabic and know all this, so I can't understand why your articles never show how Egyptians try to help the government solve their problems and be a positive part of the solution. I don't know why your articles tend to portray Egyptians like a tragic and helpless population that is 'Waiting for Godot'.