|
Racing against the Sea:
Egypt's Economy Today and Tomorrow
The economy of Egypt will be
influenced both by stark dangers and encouraging reforms in the
coming months and years. The World Bank gives Egypt high marks for
trade liberalisation measures and ongoing support of the private
sector in its efforts to found new businesses and ventures. However,
occurring in tandem, Egypt's agricultural revenue is threatened by
the possible effects of climate change upon the vulnerable Nile
Basin and its suitability for farming. Tourism, also a critical
sector, is similarly vulnerable both to literal climate change and
to the figurative 'climate' of global financial stormclouds and
anaemic growth.
The region around the banks of the Nile River is the only land in
Egypt which is arable naturally, without the need of manmade
irrigation projects. Agriculture along the Nile is extremely
important for Egypt's economy. According to U.S. Congressional
Research Service reports, the Nile delta is one of those critical
world regions that is vulnerable to rising sea levels due to global
warming. The whole gamut of possible ill effects from rising sea
levels fans out like a bad hand of cards. There could be large
numbers of internally displaced Egyptians in search of a livelihood.
There could be domestic unrest over competition for water resources.
Or, there could be unrest over food. Egypt relies upon Nile basin
agriculture for its domestic food supply as well as for exports.
Egypt subsidizes bread, and in 1977 when the Nasser government
briefly lifted the subsidy, hundreds were killed in the January
'Bread Riots.' None of which makes Egypt look particularly
attractive for investment - it may even be too cloudy for an
accurate forecast.
The picture for Egyptian tourism revenue is mixed for similar
reasons. Egypt is unique in being a part of northern Africa with
cultural ties to the Middle East. Close proximity to Europe makes it
an attractive destination for tourists. The Sphinx, the Great
Pyramids and the tomb of Tutankhamen are only the most famous of
Egypt's many landmarks, and the immense amount of historical
interest is a perennial tourist draw. However, the twin concerns of
recession and climate change hang over tourism as they hang over
farming.
Reports from the respected Intergovernmental Panel on Climate Change
call out Alexandria as just one vivid illustration. With so many
tourist attractions situated on or near Alexandria's beaches, the
estimated loss of revenue from a half-meter rise in sea levels could
be well over $100 million U.S. dollars a year, the report says. The
attractiveness of coastal areas for ongoing real estate development
remains a double-edged sword.
The bright spot for the economy may be that the Egyptian government
appears willing to take looming problems seriously and address them.
The many business and trade reforms have been undertaken out of a
recognition that they are necessary for Egypt to attract foreign
investment. In the wake of recession, the government has engaged in
deficit spending in order to implement stimulus programs, provide
income subsidies and attempt to ease the burden on Egyptians,
especially the 9.7% who were unemployed in 2009. The willingness to
act is encouraging (with a nod of acknowledgment towards the many
economists who express worry at the long-term consequences of
running deficits per se.)
The danger of climate change is also not lost on the Mubarak regime.
Their response has been to initiate public works projects to apply
drip irrigation to the desert and make new areas liveable and
farmable. According to Deutsche Welle television reports, billions
of Euros have been invested in the ambitious Toshka project. But the
admirable effort by Egypt to do something concrete about a future
economic disaster may be the roots of another one, as the
disproportionate demand for water is creating tensions between Egypt
and other Nile states such as Ethiopia.
On business and property development, fiscal policy and water, Egypt
is making a concerted effort to improve the economy and the
condition of the people. But the present and future Egyptian economy
is going to depend upon which is more robust and which happens
faster - the beneficial or the harmful trend lines.
Copyright FARUK
2008 |