Egypt's Problems Are Mostly About The Price Of Grain

I remember a televised interview with Egyptian President Anwar Sadat back in the 1970's (perhaps on Ted Koppel's 'Nightline') where he discussed, quite candidly, that his decision to back away from his alliance with the Soviet Union, and to ally himself instead with the United States, was driven almost entirely by his need to feed the insatiable, growing population of Egypt. He had recently visited North Dakota, and was stunned to learn that that state's population of only 600,000 people produced more food, more grain, than all of Egypt did (with its many millions). It scarcely mattered what the nature of the Egyptian government was like - communist, capitalist, Islamist, whatever - if it couldn't feed the population at a reasonable price, it would soon be history. Sadat gambled that the U.S. would be a more-stable partner than the USSR, leading to a more satisfactory outcome for Egypt, and he was right. For nearly thirty years, Hosni Mubarak was the beneficiary of Anwar Sadat's bold moves.

But times change....

Low grain prices depend on several things, including the price of petroleum. There have been few major oil strikes in recent years, Chinese demand is insatiable, and pumping is nearly at full capacity, which leads to higher prices and makes petroleum susceptible to price shocks. In addition, recent American policies, such as ethanol supports, indirectly raise the price of American grain, and have led to a bubble in farm-property prices in the Great Plains. Thus, through short-sighted policies, we have helped destabilize Egypt and made its government vulnerable. To the extent that our national security depends on Egyptian stability, our own agricultural policies have helped undermine our national security.

This article also points to "quantitative easing" as a problem too. We export our economic problems, caused by the housing bubble, causing yet new problems that aggravate our old security problems:

For U.S. farmers, Egypt presents the eighth largest export market, much of it wheat sales, since the country is the world's leading wheat importer. American wheat and corn are sold across North Africa and the Middle East, prompting worries by U.S. farmers that Egypt's problems will spread throughout the region.

Wheat prices have risen by more than 70 percent over the past 12 months, and corn prices climbed in mid-January to their highest level since July 2008, a period when global food prices soared.

..."There are a lot of different sticks in the fire here," said Jerry Gidel, the president of Midland Research Inc., which provides assessments of financial risk. What happens to the price of one food crop affects others, he added, because "it is a human-consumption commodity, and things can get emotional, and they do get emotional. And right now, we're kind of in one of those periods."