Egypt on the Brink of Starvation

From The Asia Times, 1 May 2012, by Spengler:
Egypt's national tragedy took a turn towards farce April 27, when Saudi Arabia closed its embassy and several consulates after demonstrations that "threaten the security and safety of Saudi and Egyptian employees, raising hostile slogans and violating the inviolability and sovereignty", according to a Saudi statement. Saudi Arabia and other Gulf States were supposed to anchor an international aid package that will forestall a disorderly financial crisis.
With a critical fuel shortage cutting into food supplies and essential services, Egyptians already have a foretaste of chaos. The two-for-a-penny pita, the subsidized flat bread that provides much of the caloric intake for the half of Egypt's population living on less than $2 a day, is at risk.
A battle over the Muslim Brotherhood's international ambitions may push Egypt over the edge into a Somali level of horror.... the Brotherhood prefers an early economic crisis to a later one, so that it can blame the disaster on the present military government.
The Muslim Brotherhood's then presidential candidate Khairat al-Shater"said he realized the country's finances were precarious and a severe crunch could come by early to mid-May as the end of the fiscal year approached, but that this was the government's problem to resolve." Since then, the military-controlled elections commission has excluded al-Shater as a candidate, and the Brotherhood replaced him with Mohammed Morsi.
Meanwhile, Egypt's Salafist party, the extreme Islamists, withdrew support from Mohammed Morsi and backed instead the more liberal Islamist candidate, Abdel Moneim Aboul Fotouh, often described as a "defector" from the Brotherhood.
Although the Salafists propose an even more extreme version of the Muslim Brotherhood's program, oil is thicker than blood in the region; the Salafists get a reported $50 million annual subsidy from the Saudis, and presumably are acting under Saudi orders.
As the situation on the ground deteriorates, Egypt's military government is becoming a bystander to events. Egypt is in a classic pre-revolutionary situation, like Russia in October 1917 or German in March 1933, with a vanguard party ready to dislodge a disintegrating civil society, and replace it with totalitarian party rule at street level. The Muslim Brotherhood, Egypt's largest political party, is poised to ride to power on the back of this crisis.
The International Monetary Fund (IMF) is negotiating a US$3 billion loan with the Egyptian government, with the understanding that all the major parties will support severe belt-tightening, and that the Saudis and other Gulf states will fund the loan as well as additional aid. Saudi Arabia had promised to lend Egypt $3.75 billion, but paid in only $500 million of its pledge. Last week the Saudis said that they would pay in another $1 billion. But that was before the demonstrations against their embassy.
As the main opposition body to military misrule during the past six decades, the Brotherhood harbors parliamentarians as well as firebrands. But the revolutionary dynamic in Egypt favors the firebrands. As critical shortages spread through Egypt's fragile economy, Islamist street justice already is replacing the corrupt and crumbling institutions of the military regime. There is a second analogy to revolutionary Leninism, in the form of the Brotherhood's international ambitions.
In effect, the Muslim Brotherhood has chosen to push the country towards chaos. "North Africa's biggest economy has imploded since a democratic uprising last year and the country will run out of money to meet basic subsidies including wheat and oil by the summer," the Daily Telegraph reported April 16.
 ...Fuel shortages have become critical in many parts of Egypt. UN observers report that the supply of diesel is down by 35%, and is so scarce that food supplies are threatened.
...More than a hundred Egyptian bakeries shut down in mid-April to protest the fuel shortage, the Egyptian news site Youm7.com reported April 12. In Beni Suef, dozens of bakery owners gathered in front of a government flour warehouse to complain that they could obtain fuel only at black market prices, which required them to sell bread at black market prices.
... Egypt is running out of cash - its liquid foreign exchange reserves have fallen from $25 billion when Mubarak fell to only US$9 billion in March - and a devaluation of the Egyptian pound is widely expected, followed by a sharp rise in the price of imported commodities.
...The Arab monarchies fear that the ascent of the Muslim Brotherhood to power in Egypt by revolutionary means portends a further revolutionary assault on their own regimes. And the result of American failure to take decisive action to interdict the Brotherhood's march to power is likely to be greater instability and a decline of American influence in the region.
Interdicting the Brotherhood, in turn, requires an uncharacteristic harshness on the part of American policy. War correspondent Peter Arnett might have concocted the notorious statement, "It became necessary to destroy the town to save it," supposedly said by an American officer of the Vietnamese provincial capital Ben Tre in 1968. Something like that might be the outcome for Egypt.