After a decade of introspection, Europe is beingforced to confrontthe instability on its borders, particularly to the east and the south.
At least five deeply troubled states – Mali,Libya,Syria, Iraq andUkraine– pose a diverse series of threats ranging from a flood of refugees to the radicalisation of individuals and terrorism, to the disruption of energy supplies.
The problems in each of the five could spread to other states and regions – including Lebanon, Algeria and the Balkans. But further problems could be yet to come, if the list of unstable countries is extended to includeEgypt. The risk is very serious.
A casual observer would be forgiven for thinking that Egypt has been stabilised by the election ofPresident Abdel Fattah al-Sisiand the removal from government of the Muslim Brotherhood. The outcome may not be exactly what was hoped for when the protesters gathered in Tahrir Square in Cairo three and a half years ago, but there is order in the streets. Unfortunately that is not the full story. Egypt is financially broke and dangerously dependent on the insecure generosity of the Gulf states. The risk of violence has killed the tourist industry, which was a major source of revenue and employment. Living standards have fallen and Egypt now faces a profound crisis with a shortage of energy, water and food.
Energy is at the heart of the problem. Two weeks ago President Sisi’s government imposeda 78 per cent increase in basic fuel prices– an increase only partially softened for the quarter of the country’s 82m citizens who subsist on less than $2 a day. The increases, which are designed to reduce the enormous subsidy bill, will add to the problems of individuals and businesses already struggling to survive. A reduction in subsidies is well justified, as in many other parts of the region, but to avoid damaging the economy the changes should have been gradual rather than instant and brutal.
Price increases are one problem. The next is a shortage of supply. There are already regular blackouts in Cairo and other parts of the country because of a shortage of electricity, and industry is operating at about 60-70 per cent capacity as a result, adding to the problems of unemployment. The issue is not a shortage of generating capacity but the country’s inability to import the raw materials necessary to produce power. Egypt already relies on cheap oil and gas from its Arab friends and cannot afford to import the extra supplies which the system needs.
The new government has incoherently put forward a range of options – from importing gas from Israelto drilling for shale gas in the Western Desert to building a newnuclear power station at Dabaanear Alexandria. At the very best these are long-term answers. Israel’s main offshore gasfield, Leviathan, has yet to be developed and the politics and security issues around a line which would in theory run past Gaza are enormous. The shale gas potential of the Western Desert has not been tested and a new nuclear development would take years or even decades if the experience of the industry atFlamanville in northern FranceandOlkiluotoin Finland is repeated. Of all the options proposed the cheapest answer – but also the dirtiest – would be to revert to imported coal.
Alongside the energy shortage, other serious problems are developing around water and food as spelt out in anexcellent briefing notejust published by the Australian-based think-tank Future Directions. Egypt depends on water from the Nile but relies on agreements dating back to the colonial age which cut out most of the countries through which the river flows. Those countries are no longer willing or able to tolerate the situation and are claiming more of the water for themselves. Water is already in short supply in Egypt and the situation could get worse over the next few years. The country is also short of food. There is chronic malnutrition among children. Agricultural production is below the levels needed now and the population is growing by 1.3m a year. Food imports are expensive and limited by what the country can afford. The whole problem is compounded by the failure of successive Egyptian governments to reform the inefficient and often corrupt military and state-owned enterprises which dominate the economy.
The stage is set for a humanitarian disaster but politics are also involved because President Sisi continues to crack down on the Islamic opposition at home and abroad. Egypt has strongly supported Israel’s actions against Hamas in Gaza and has convicted large numbers of Muslim Brotherhood members in a series of what can only be called show trials. Some have already been sentenced to life imprisonment. The leader of the Brotherhood, Mohamed Badie, also faces the death penalty in respect of other charges. In June the Egyptian courtsupheld the death sentenceon Badie and 180 other Brotherhood members. None of this is likely to be accepted passively within Egypt, and taken together with shortages of energy, food and water, could set the stage for the next round of change in the process of destabilisation which was once described as the Arab Spring. There is a sense that just as the fall of the Ottoman Empire 100 years ago brought chaos and conflict across the region, so now the decline of thePax Americanais exposing the whole area to years of instability.
Much has changed over a century, of course, not least the increased dependence of the developed world on energy from the region.As a recent and very detailed paperfrom the West Point Center on Global Terrorism makes clear, Egypt is located on one of the world’s most significant trade routes. Some 8 per cent of total global trade passes through the Suez Canal. Last year half of Europe’s LNG imports sailed through the canal – ie about 13 per cent of global LNG trade. Up to 3m barrels a day of oil also moves through the canal in both directions – about 7 per cent of the world’s oil trade.
As others have noted there is a deceptive sense of peace and tranquillity in energy markets at the moment. Don’t expect it to last.
(by Nick Butler, blogs.ft.com)
