Egypt 'impoverished on brink of explosion', spy chiefs warn Sisi

Egypt faces social unrest stirred by its ongoing economic hardship, intelligence officials have warned President Abdel Fattah al-Sisi, as Cairo went into lockdown on Friday amid protests against price rises and austerity measures.

A high-ranking person within al-Mukhabarat al-Amma (General Intelligence Directorate), the country’s top security service, told Middle East Eye that reports sent to the presidency late last month highlighted a sharp decrease in both the popularity of the leadership and public support for the state.

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The directorate does not tend to submit reports to the presidency; usually it does so only when it has concerns or feels it can offer advice. The source, a general in the directorate, spoke to MEE on condition of anonymity.

The official made his comments before Egypt devalued its currency on 3 November and before protests, called for 11 November, focused on rising prices, harsh austerity measures and growing economic hardship.

'Terrorists' could capitalise on misery

The economic crisis was caused by several factors, the insider told MEE, including a lack of foreign investment, a rise in terrorism and an insurgency in the Sinai and a decrease in revenue from national projects including the Suez Canal and a weakening tourist sector.

The report, he said, cites a divide between the attitude of the government and public sentiment. Examples of this include administration plans for multi-million-dollar infrastructure projects amid daily economic hardship faced by normal people.

This divide, the general said, is widening amid ongoing price hikes and shortages of goods, which have the potential to spark protests. The report expresses concern, he said, that the situation may be capitalised on by “terrorist groups to use the miseries of the people to achieve their agendas".

The official dismissed possible upheaval in the Sinai because the region is already a “field of military operations”. Rather, he expected any protests to emerge in areas where the government's presence is absent or muted, including impoverished neighbourhoods in Cairo and marginalised regions in the south of the country.

“An upheaval is feared in places where there is no awareness of the economic efforts the country is making and where basic services are zero,” he said. He added that dissent, in the form of small angry gatherings, could also suddenly emerge if services promised by the government abruptly ceased.

“Look, for example, what happened in Port Said last month or at baby formula distribution branches [in August]," he said.

In October, thousands of Port Said residents took to the streets, condemning a sudden rise in housing costs. The previous month, dozens of families gathered in front of state-owned pharmaceutical companies to protest against a shortage of subsidised baby formula. The official suggested that these protesters were driven not by political motives but by the sudden end to benefits they had enjoyed.

Report suggested ration distribution

The report says the current crisis is a result of previous government policies as much as the current administration, the general revealed.

Last week, a failed attempt to impeach the government in the House of Representatives cited its failure to deal with economic turmoil as well as flooding in the east of the country.

The general said that economic reform was necessary, emphasising how hardship had impacted those on low incomes.

In early November, the Egyptian army announced that eight million rations, each containing several food products, would be distributed to the needy in impoverished villages and slums. The general, who spoke to MEE in late October, said the report recommended such a move ahead of planned demonstrations, a commonly used method in Egypt for defusing tension and winning the support of local populations.

The report also details how popular news and social media outlets, including privately owned newspapers and popular Facebook pages, have been monitored. Information has been gathered, it says, about media that might appeal to foreigners, especially English-language news outlets. During the past month, there have been several arrests and temporary detentions of activists and administrators of popular social media sites.

Egypt: Another week of economic woe

The leaked intelligence report comes as Egypt continues to be hit by economic hardship, which gathered pace in the past week. The government is rolling out an austerity programme and seeking billions in support from abroad in order to meet conditions for a $12bn loan from the International Monetary Fund.

On 3 November, the Egyptian central bank floated its currency. For decades, the Egyptian pound had been pegged to the US dollar. Its value will now fluctuate freely on a daily basis.

Floating the pound has long been on a list of measures demanded by investors and international creditors, but had been avoided for fear of rising prices provoking unrest.

The first sign of related price hikes came within hours, with a rise in the price of subsidised petroleum products. Lower grade petrol increased by almost 50 percent to 2.35 Egyptian pounds (15 US cents) a litre, while higher octane fuel increased by about one-third to 3.5 Egyptian pounds per litre, according to an oil ministry statement. In Cairo and elsewhere long lines formed at petrol stations as drivers flocked to buy fuel ahead of the increase.

Government failure to regulate fare prices sparked nationwide arguments between drivers of public transportation and passengers, leading to fights and minor strikes.

There were also conflicting reports from the prime minister and the Underground Metro Authority about a possible increase in metro tickets to three Egyptian pounds, which would hit Cairo's working and lower middle classes, who make up the bulk of passengers, especially hard.

The moves come amid continued fluctuations in the price of food basics at markets and in shopping malls as well as a growing shortage in medicines.

Last week it was revealed that some international food companies have halted production in Egypt, after the government seized weeks of sugar supplies amid nationwide shortages of the staple.

The companies include Pepsi and Edita, which is one of the country’s largest food manufacturers and produces the popular US snack Twinkies.

Egyptians have been left queuing for hours to buy supplies of subsidised sugar from the backs of trucks since the acute shortage of dollars cut the flow of produce imported by private traders.