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Diesel & Gas Shortages Worsen Egypt's Troubles.

For the first time in 20 years, the domestic price of natural gas in Egypt last week rose 60%, causing the people to blame the MB regime for worsened living conditions in the country since this Islamist party took power. The wait for diesel at Cairo's filling stations can stretch for hours. These were among many problems proving the MB was not fit

to rule, with the long-standing Arab allies of Washington having become certain of Obama's weakness and concerned about the implications of this for them. So Turkey is becoming more assertive.

Obama's backing for the MB to take power has convinced these Arab sceptics that the US lacked strategy for the GME. Even the new government of Benjamin Netanyahu in Israel no longer trusts an Obama preventing Iran from having nuclear weapons. The Jewish state's PM made it clear to the public in front of the then visiting US president that it reserved its right to self-defence, meaning it would hit Tehran's atomic sites and thus drag the Americans to a war with the theocracy when this becomes necessary.

The black market has flourished under Egypt's subsidised fuel system. Egyptian motorists with the money to pay for fuels from the black market do not have to wait for their cars to be re-fuelled. There are too many black market sellers of fuels in various parts of Egypt. Jerry-cans of diesel in the black market sell for about 42 cents a litre, 50% higher than the price at pumping stations.

Egypt imports about 70% of its diesel, which it uses to fuel cars, farm equipment and power plants. In addition, Egypt subsidises diesel to the tune of over $1.5bn a month, draining the country's already perilously low hard currency reserves. A spate of shortages in recent weeks has raised questions about Egypt's ability to keep the lights on, feed its people and prop up its moribund economy in the coming months.

The timing of shortages, over two years after the revolution, suggests MB-controlled authorities are ordering less fuel as the economic situation worsens. John Hamilton of the Africa Energy newsletter says: "The short-term problem is lack of money. How can they continue to buy expensive fuel on the international market and give it away to the population? That's what I find terrifying about Egypt. The financial troubles the government are facing are almost insurmountable".

Cairo has promised to cut decades-old fuel subsidies and ration supplies as part of a $4.8bn IMF loan package. On April 1, the authorities raised cooking fuel prices 60% for consumers and 100% for businesses. But that staunched the black market and was among several alarming signs pointing to continued socio-economic troubles for Egypt. The situation will worsen when the harvest begins and diesel-dependent farmers gather their produce and bring it to market. Summer power outages in Egypt will be huge.

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Publication:APS Diplomat News Service
Geographic Code:7EGYP
Date:Apr 8, 2013
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