Egypt: The Endangered Country

In a rapidly changing world, nation states -- just like plant and animal species -- must evolve, adapt or perish. When the conditions that gave rise to their existence cease to exist, change must come. It can come in the form of a political breakup, as it did in the case of the Soviet Union, Yugoslavia or, more recently, Sudan, but it can also take a more sinister form, as is now happening in Egypt.

It would be easy to blame the economic woes that now threaten to engulf Egypt on political uncertainty, corruption and bad policies, and to dismiss its current difficulties as transient in nature, curable by a strong dose of good policies, religious tolerance, and a restoration of stability.

In truth, Egypt's troubles have been a long time in the making. While political turmoil and missteps have brought them to a head, Egypt looks like a demographic dinosaur incapable of surviving for long in today's global economy. Egypt's fertility rate is declining, but the Population Reference Bureau projects that its population, currently 82 million, will still rise to 136 million in less than 40 years.

For the moment, Egypt is surviving on economic life-support in the form of U.S. foreign assistance and cash infusions from its Arab neighbors, but not for long. Without a much anticipated $4.8 billion loan from the International Monetary Fund, disaster could strike in a matter of a few months, but even with the IMF loan, Egypt's long-term future is still very much in doubt.

The central problem, and it did not arise overnight, is that Egypt is heavily dependent on food imports, particularly wheat, for its very survival. Importing far more than half of its wheat and nearly half of all its food, Egypt must earn the foreign currency reserves needed to pay its import bills. Prosper or perish.

Egypt, however, shows no sign of prospering. For decades, Egypt relied upon oil exports to help pay for the importation of food and fuel, but Egypt is now a net oil importer. Its other economic mainstay, the tourist trade, has dropped precipitously, and while renewed political stability might restore tourism to its former levels, it will never be a growth engine for Egypt, particularly if the European Union and other advanced economies continue to falter.

For Egypt to survive it must achieve a dramatic boost in manufacturing or agricultural production... or both. Neither, however, is a prospect. Egypt has no shortage of young workers, but its labor force is poorly educated. One-quarter of its populace is living in severe poverty, and many of its youth will never find productive employment. If there was a surplus of arable land in Egypt, they might find jobs on the farm, but what arable land Egypt has is slowing being lost to the growing salinization of the Nile delta.

Egypt hopes one day to make its desert bloom by pumping water from underground aquifers, but it cannot pay for the diesel fuel needed to keep existing pumps operating, let alone undertake a massive new irrigation project in the western desert.

Soon, if not already, it will not matter who rules Egypt; the challenges will be insurmountable. For the moment, the Morsi government faces a Hobson's choice. The IMF is demanding an end to the terribly inefficient food subsidies that keep the poor fed and the diesel fuel subsidies that artificially support the farm economy. If the government rejects those terms, it will not have the cash needed to finance its imports. If it accepts the IMF conditions, the food and fuel subsidies must be curtailed. Either way, prices of food and other essentials will rise dramatically and political unrest will invariably spread. Pick your poison.

Egypt is not the only nation on the endangered country list. There are numerous countries that have no realistic prospect of growing enough food or earning enough foreign currency reserves to feed their projected population growth. Other nations on that list include such notables as Somalia, Yemen, Mali and even Pakistan. Unless more is done to meet the family planning and reproductive health needs of women in those countries, they will never make the demographic transition to peace and prosperity. They will remain forever on the other side of the demographic divide that separates the developed and emerging economies from the least developed countries of the world.

Not long ago, when the global economy was still booming, it was hoped that all countries, no matter how fast their populations were rising, would eventually prosper. If Egypt is any indication, that hope is now fading.