Egypt’s Bread Subsidies May Bring Millions to the Brink of Starvation
In Egypt, the recent announcement that bread prices, long subsidized for much of the population, would likely have to rise was met with cries of despair. Indeed, over two-thirds of the population of Egypt depend on inexpensive bread for daily sustenance.
In order to understand the current situation in Egypt, it’s imperative to learn how the current situation was created in the first place. First, the word used for bread in Egypt is different from the word common to other Arab countries, and is intertwined with the word meaning “to live.” Also, the most common type of bread in Egypt, consumed by 85 percent of people there, uses a word that means “traditional” or “my country.” Perhaps this sort of nationalism via food is why bread production has been subsidized in Egypt since 1941.
With state reliance for this long, the provision of low-cost bread is “an expected part of the state’s social contract with its public…. Within most people’s lifetimes, they remember cheap bread being available…. It’s something that has always been there.”
This was perhaps never so clear as when bread riots erupted in 1977 in Egypt following the ending of subsidies for flour and other basics, which resulted in the rise of food prices by up to 50 percent. During the riots, at least seventy-nine people died, and 556 were injured, following deployment of the army. The riots only ended when the Egyptian government reinstated the subsidies.
But why had the Egyptian government embarked on this plan in the first place? You have to look at Egyptian president Anwar Sadat’s “infitah” policies, which took Egypt’s “Soviet-style system” and replaced it with different central planners, including the World Bank, which criticized the subsidizing
Article from Mises Wire