As American weapons manufacturers chortle with glee at Russia’s invasion of Ukraine because they will sell more weapons, some countries are being negatively impacted by the war. Egypt, already a basket-case, has been particularly hard-hit for several reasons.
First, because of rising oil prices, Egypt will have to fork out more money to import oil. Last year, it spent $5.3 billion on oil and petroleum derivatives. That was when the price of Brent crude ranged between $30 and $85 per barrel. Now it hovers at $115 or more per barrel.
Second, Egypt imports 80% of its wheat from Russia and Ukraine, two countries embroiled in the war. The war has put an end to wheat exports and it will affect bread prices globally. Egypt will be particularly hard-hit because the vast majority of people eat bread. Already reeling from high prices due to inflation caused by the pandemic, wheat shortages will have devastating effect on people’s lives.
Third, Egypt depends on tourism revenue. Again, the majority of its tourists come from Russia and Ukraine. The war between them could not have come at a worst time for Egypt, or more particularly General Abdel Fattah el-Sisi, the brute in uniform who grabbed power in a military coup in July 2003.
To get a sense of Egypt’s tourism revenues, the following figures would help. In 2019, before the pandemic struck, its revenues from tourism were $13.03 billion. In 2020, they plummeted to about $4 billion, down by 70%. Last year, they climbed back to $13 billion as pandemic worries declined but the war has now put a dent in its revenues despite optimistic claims by Egypt’s deputy minister for tourism.
Such optimism may have been justified but for the Russia-Ukraine war. It is not certain how long the war will last. In preparation for welcoming large numbers of tourists in 2022, the regime had invested huge sums in various projects that will open this year.
These include the Grand Egyptian Museum, the Great Transfiguration Project in Sinai, the Galala Resort on the Red Sea coast, and expansion of hotels in the city of Alamein. Tourism contributes up to 15% of Egypt’s economic output and is a major source of foreign currency. The country’s reserves have severely shrunk because of multiple crises.
So, what is Sisi doing to ride the storm? He dashed to Riyadh on March 8 to meet his Saudi patrons for some bakhsheesh. He met both King Salman and his upstart son, Mohammad bin Salman (MbS). The Saudis and Emiratis had bankrolled his coup to overthrow the only democratically-elected government in Egypt’s history. Thus, Sisi could logically argue that his country’s stability was their responsibility too.
Financial handouts, however, always come with strings attached. Two actors in particular will make demands that Sisi may not be able to meet. Both Saudi Arabia and the United Arab Emirates (UAE) are involved in a brutal war in Yemen. They have failed to dislodge the Ansar Allah fighters from their positions in Sana‘a and other strategic locations in Yemen. Instead, the Ansar Allah have fired missiles as well as drones against Saudi and Emirati strategic assets.
The latest drone strikes were launched on the night of March 19/20 that hit a petroleum products distribution terminal in the southern Jizan region, a natural gas plant and the Yasref refinery in the Red Sea port of Yanbu, according to the Saudi energy ministry. The drones also struck a water desalination plant in Al-Shaqeeq, a power station in Dhahran al Janub and a gas facility in Khamis Mushait.
The Saudis admitted that “the assault on Yasref facilities led to a temporary reduction in the refinery’s production, which will be compensated for from the inventory.” It caused huge embarrassment because it is owned by Yanbu Aramco Sinopec Refining Company, a joint venture between Saudi Aramco and China Petrochemical Corporation (Sinopec). While the Saudis put a brave face, the fact that Yemen’s Ansar Allah fighters can target strategic installations at will shows Saudi vulnerability.
In return for financial handouts, the Saudis would want Egyptian troops to fight their war in Yemen. When it was launched in March 2015, the Egyptians had declined to participate. MbS was most upset. He had also demanded troops from Pakistan. Again, his demand was rebuffed, for the first time one might add, in Pakistan’s history.
Having come back virtually empty-handed from Kuwait, Sisi decided to use a different tack. He warned his Saudi hosts and anyone else who might care to listen that if Egypt’s economic situation worsens, it could lead to an explosion of public anger. With high bread and edible oil prices, Egypt’s 102 million people would erupt in fury as never before.
If people cannot feed their children and families are on the verge of dying from starvation, they might choose to die by bullets. But how long will the Egyptian police and army, despite their well-documented brutality, last against a people willing to die?
Sisi went with a message to the “Saudis that the situation in Egypt is on the verge of an explosion, and it may be difficult for everyone, especially the Gulf States, to control its repercussions.” Whether the Saudis would be scared into bailing him out is yet to be seen. What is certain is that Sisi is facing the toughest challenge of his nearly 20-year brutal rule which he may not survive.
The generals around him may not be as charitable in a crisis as they have been when the situation was easy.