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Egypt’s disaster and Israel’s miracle

By Missing Peace


This article was first published by The Times of Israel:


On Monday Robert Walker who heads the US based Population Institute and  worked for 14 years on Capitol Hill wrote a devastating analysis about Egypt’s severe economic crisis in the Huffington Post. In the article titled: ‘Egypt: too big, too late to save?’ , Walker paints a bleak picture of Egypt’s immediate future. The country desperately needs cash and its food, energy and foreign currency reserves are steadily shrinking.

Following are some excerpts from Walker’s analysis:

With a population of 82 million, Egypt has more people than Saudi Arabia, Jordan, Palestine, Syria, Lebanon, Libya, and the United Arab Emirates combined. Half or more of Egypt’s food, including its wheat, is imported. Egypt is also heavily dependent on diesel imports to transport its food and run its agriculture machinery.

For years, Egypt has relied heavily upon tourism to pay the bills, but unless political stability is restored, it has no hope of bringing the tourists back. And without a healthier economy, there’s no end in sight to the political unrest.

Egypt’s poor and middle class are heavily dependent on government food and fuel subsidies for their economic survival. Believing — and correctly so — that the subsidies are wasteful and inefficient, the IMF is insisting that the government agree to trim them. Doing so, however, would almost certainly fuel widespread protests and further undermine the government. It’s a colossal Catch 22.

Given sufficient time and aid, Egypt might be able to muddle through for some years to come, but time may be running out and when it does, so will the aid. The IMF is not an international relief agency; it expects its loans to be repaid. Without a reasonable prospect of repayment, the IMF will not extend credit, and neither will many other international lenders.

Egypt is not just food dependent, it is young and poor. One-third of its population is under the age of 15, and, by some estimates, as many as 40 percent of Egyptians are living on less than $2 a day. Egypt’s population growth rate, unfortunately, makes it highly unlikely that it will turn the corner on food dependency and poverty anytime soon. In 13 years or less, Egypt’s population, currently 82 million, is projected to reach 102 million, and by 2050, 135 million.

At the end of the article Walker writes that Egypt is not the only country in the region whose long-term prospects appear dim. Syria is a political nightmare. Yemen is a hydrological disaster; Sanaa, its capital city, could run out of water by the end of this decade. Who will ultimately bail these countries out? Not Saudi Arabia; Citigroup Inc. warned last year that the kingdom could be a net oil importer by 2030. He then concludes that Egypt may be ” too big to save”.

Two days later Middle East expert Barry Rubin analyzed Israel’s economic situation. He wrote the following:

 ‘Israel’s economic and strategic situation is surprisingly bright. During 2012, Israel’s economy grew by 3.1 percent. While some years ago this would not be all that impressive it is amazing given the international economic recession. The debt burden actually fell from 79.4 percent of Gross Domestic Product to only 73.8 percent. As the debt of the United States and other countries zooms upwards, that’s impressive, too.


Israel’s credit rating also rose at a time when America’s was declining. Standard and Poor lifted the rating from A to A+. Two other rating systems, Moody’s and Fitch, also increased Israel’s rating.


And that’s not all. Unemployment fell from 8.5 percent in 2009 to either 6.8 to 6.9 percent (according to Israel’s bureau of statistics) or 6.3 percent (according to the CIA).

And of course there is the usual and widely varied progress on medical, agricultural, and hi-tech innovations. Here is a summary of those inventions.”.


Rubin concludes that the big issue in the region is the struggle for power in the Arabic-speaking world, Turkey, and Iran between Islamists and non-Islamists. The Arab-Israeli conflict has very little to do with these issues. Those who don’t understand those points cannot possible comprehend the region, he wrote.

More than two years after the start of the so called ‘Arab Spring’ which was supposed to bring democracy and prosperity to the Arab world, Islamists have brought countries like Egypt to the brink of disaster and are threatening to reinstall autocratic rule.  The same upheavals have caused a deterioration in Israel’s security situation on the Golan Heights in the north and  in the Negev desert in the south. But at the same time – as Rubin put it – ‘ the world’s most slandered and reviled country is doing quite well’ .

Indeed, when taking into account the fact that Israel is an isolated country in the Middle East and is heavily dependent on trade with countries who are in a recession, one could even say  it’s a miracle.