Benny Peiser09.12.2012 12:32
Prospective economic ruin has energized Egypt’s political crisis since the fall of Hosni Mubarak in January 2011. Mohammed Morsi’s Islamists and the opposition are not battling in the streets of Egyptian cities about economics, to be sure, but about how to govern a country that cannot meet the basic needs of most of its citizens. Egypt’s pound dropped suddenly on the foreign exchange market Thursday as the country’s central bank announced a drop in foreign exchange reserves during November. If the pound collapses – and it is hard to see how this can be avoided – the cost of necessities will soar and the crisis will deepen. In thirty-five years of following debt crises in emerging economies, I have never seen anything like this. Latin American economies suffered from hyperinflation during the 1970s and 1980s, but no-one went hungry, because the economies in question all exported food, while Egypt imports half its food. The difference between Egypt and a banana republic is — the bananas.
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