Some facts about the Middle-East

EGYPT

Maps can be deceptive. On an atlas Australia looks enormous, an island-continent of 7.7 million square kilometers.

But this is not a true picture of Australia. A better way to think of Australia is as an archipelago about the size of France surrounding a desert sea. Much of Australia is barely habitable.

Similarly, anyone who really wants to understand Egypt needs to look at this remarkable satellite image.

Egypt is not a large rectangular country with a surface area greater than New South Wales. It is a small Y-shaped country that exists mostly along the banks of the Nile and its delta. The effective area of Egypt is roughly half the size of Tasmania.

The rest is largely uninhabitable desert. It may be labeled “Egypt” on the map but most of it is not really part of Egypt.

Egypt has a population slightly greater than Germany’s, around 82 million to be (relatively) precise. In round numbers that’s three and a half times the population of Australia.

Imagine cramming 3.5 Australias into half of Tasmania and you get the picture.

The population of Egypt is still growing. Even the most conservative projections forecast a population increase of 10-12 million over the next decade. (The current growth population growth rate is 1.96% per annum so this forecast assumes a sharp drop in fertility.)

Assuming the conservative forecast pans out, add another half an Australia to the 3.5 Australias already living in half of Tasmania.

You now have a four Australias living in half of Tasmania.

Despite heroic efforts Egypt is unable to feed itself. Wheat production rose from 1.5 million tons in 1960 to 8.5 million tons in 2010 but this is well short of demand. According to the US Department of Agriculture (USDA) Egypt will need to import 10.2 million tons in 2011. This makes Egypt the world’s largest wheat importer.

It is often said that Egypt is “the gift of the Nile” and the satellite image I linked above bears this out. However the “upstream” states such as Sudan, Somalia and Ethiopia have indicated that they want to take more of the water that flows into the Nile for their own use. This can only worsen Egypt’s situation.

I do not think there is any doubt that food prices are headed upwards. How will Egypt finance ever growing food imports? It used to be an oil exporter but is now a net importer of oil. It does have some LNG exports but these have been flat for some time.

To understand the magnitude of Egypt’s failure look at geography. It is almost next door to the EU, one of the richest markets in the world. Europe sources many of its imports from Asia, notably from China but also from Vietnam, Malaysia, Thailand, Philippines and many others.

But it sources little from Egypt on its doorstep.

Why not ? Egypt has a large unemployed and under-employed and young labour force. Why aren’t factories springing up to supply the European market?

There are of course no simple answers but two factors stand out. The first is that Egypt is not exactly a business friendly environment. According to the global “Ease of doing business” rankings, Egypt comes in at a lowly 94. (Singapore ranks 1, Australia 10 and China 79. The most business friendly country in the Middle-East is Saudi Arabia ranking 15)

The second factor is that the labour force may be young and plentiful but it is ill-educated. 29% of the population is actually illiterate. Female Illiteracy is 40%.

If Egypt had an industrial base it would be able to trade goods for food. As it is I do not see how Egypt can either increase food production or finance rising food imports fast enough.

Egypt looks like a train smash waiting to happen.

SAUDI ARABIA

Another country that looks interesting is Saudi Arabia. Since the 1970s Saudi Arabia has been self-sufficient in wheat. But it’s pumped its underground aquifers dry. 2012 will likely be the last year Saudi Arabia grows wheat.

From 2013 onwards Saudi Arabia will depend on imports for 100% of its wheat requirements. Unlike Egypt Saudi Arabia can afford to pay for imported wheat. However this means a rapidly growing population of 30 million will now be competing for a limited supply of wheat driving prices up.

YEMEN

If Egypt is a train smash waiting to happen, in Yemen it’s happening.

This quote from the website of the World Food Program says it all:

“Abdo is a father to 15 children; only his young son Majed attends school. The children are barefoot and wear tattered clothes. The family relies on the limited income brought in by casual wage labour and some minor agricultural production. It is barely enough to feed the family, and Abdo must borrow from neighbours and shops in order to secure some basic needs for survival. Due to the extreme heat, the family spends their days and nights outside.

[…]

“Nearby, one of Abdo’s wives – Saeed Hassan – mixes borrowed flour with water from a local well and bakes the mix in a traditional Yemeni wood-fired oven dug into the dirt. They will eat this bread for all three meals. It is the only thing keeping the family alive. "I am extremely sad that I cannot give my children more,” she says, shaking her head sadly as she kneads the dough. "As a child I was able to go to school, and I am very sad that my children, my daughters do not have the same opportunity. One wants a better life for their children, not this," she says and looks tearfully off into the distance.

[…]

“WFP recently launched an operation to address life-threatening levels of hunger and malnutrition, including an emergency food safety net for 1.7 million severely food insecure Yemenis during the hunger season. Nutrition support is planned for 242,000 malnourished pregnant and nursing mothers and children in order to address the inter-generational cycle of malnutrition, treat and prevent acute malnutrition, and provide an incentive to visit health centres.

“Today, the operation is at a standstill for utter lack of funds.

“Abdo and his family have already lost seven children to hunger-related diseases. He has two more newborns on the way. Without increased support, the lives of his soon-to-be born infants and 15 remaining children hang in the balance.”

Yemen’s population of 24 million is increasing at a rate of 2.6% per year. It has one of the highest human fertility rates in the world.

Yemen’s disintegration looks inevitable. Is Yemen a glimpse into Egypt’s future?

JORDAN

In 1973 Jordan produced 256,000 tons of wheat. In 2008 just 25,000 tons. Jordan will probably soon be 100% reliant on imported wheat.

For the moment Jordan is heavily reliant on foreign aid to finance its food imports. However King Abdullah does seem to be trying to attract foreign investment. Maybe factories will spring up in Jordan to supply the European market. Maybe Egypt will then follow in Jordan’s footsteps.

SYRIA AND IRAQ

Syria and Iraq are maintaining fairly high levels of wheat production. However, like Saudi Arabia, they are over-pumping their underground aquifers.

In addition both countries are downstream from Turkey. Turkey is building dams in Anatolia which are reducing the flows of rivers into these two countries. It is questionable how long Syria and Iraq are going to be able to maintain their wheat production. It could go the same way as Saudi Arabia albeit with a less dramatic decline.

However while wheat production is not declining for the moment neither is it increasing. Both countries have rapidly increasing populations though in Syria the population increase is mitigated by one of the world’s highest per capita rates of emigration.

WHAT IS THE BOTTOM LINE?

Here is the bottom line

The important issues in the Middle-East relate to water, food and population. Of course this is also true of much of the rest of the world but matters seem to be coming to a head most rapidly in the Middle-East.

Changes of president in Egypt or Syria or resolution of the Arab-Israeli conflict or an “Arab democratic spring” will not resolve these issues.