Why Egypt is asking its people to eat chicken feet

By Nadeen Ebrahim, CNN

Egypt’s economic situation is so dire that the government is asking people to eat chicken feet.

The Arab world’s most populous nation is suffering a record currency crisis and the worst inflation in five years, making food so expensive that many Egyptians can no longer afford chicken, a dietary staple.

Poultry prices rose from 30 Egyptian pounds (then $1.9) per kilogram in 2021 to as much as 70 Egyptian pounds ($2.36) as of Monday, according to state media.

The soaring cost has prompted the nation’s National Institution for Nutrition to call on people to switch to eating chicken feet.

“Are you looking for protein-rich food alternatives that will save your budget?” it asked in a Facebook post last month, listing a number of items starting with chicken feet and cattle hooves.

Many Egyptians are furious that the government would ask citizens to resort to foods that are symbols of extreme poverty in the country. In Egypt, chicken feet are seen as the cheapest of meat items, considered by most as animal waste rather than food.

“(We have entered) the age of chicken feet, the collapse of the Egyptian pound… and drowning in debt,” tweeted Mohamed Al-Hashimi, a media personality, to his 400,000 followers.

But others seem to be heeding the call. After the recommendation to switch to chicken feet, the price of one kilogram of the product reportedly doubled to 20 Egyptian pounds ($0.67).

Authorities say that close to 30% of Egypt’s population is below the poverty line. The World Bank in 2019 however estimated that “some 60% of Egypt’s population is either poor or vulnerable.”

Here’s what you need to know about Egypt’s spiraling economy:

How did Egypt get here?

Egypt has gone through a number of financial crises over the past decade, which forced it to seek bailouts from creditors like the International Monetary Fund (IMF) and Gulf Arab allies.

But the country has become trapped in a cycle of borrowing that analysts say has become unsustainable. Its debt this year amounts to 85.6% of the size of its economy, according to the IMF.

Some of the factors contributing to Egypt’s failing economy include the military’s outsized role, which analysts say weakens the private sector, as well as the allocation of great sums to mega projects like Africa’s tallest tower and a new capital city in the desert which houses a defense ministry that authorities boast is bigger than the Pentagon.

Egypt’s economy took a significant blow in the past two years when the effects of the Covid-19 pandemic and the Ukraine war squeezed its foreign currency reserves and rising fuel prices pushed inflation up.

The pandemic saw investors pull $20 billion from Egypt in 2020, and the economic fallout from the Ukraine war led to a similar amount leaving the country last year, according to Reuters.

“Twenty billion dollars is the equivalent of every penny Egypt has borrowed from the IMF since 2016, and it disappeared in weeks (last year),” said Timothy Kaldas, a non-resident policy fellow at the Tahrir Institute for Middle East Policy in Washington DC.

Those events contributed to the currency crisis Egypt faces today. The Egyptian pound lost almost half of its value over the past year, and last week briefly hit an exchange rate of 32 pounds to the US dollar, the lowest in its history.

In its latest bailout agreed in December, the IMF loaned $3 billion to Egypt, which it hopes will catalyze an additional $14 billion in support from Egypt’s international and regional partners, including oil-rich Gulf nations.

What does the IMF need Egypt to do differently this time?

This year’s IMF loan was conditioned on Egypt implementing a number of structural reforms. And this time, the lender is taking on Egypt’s powerful military.

Along with introducing a flexible exchange rate — which would allow the value of the currency to be determined by the market instead of the central bank — the IMF also asked that Egypt reduce the role of the state, including the military, in the economy, and slow down national projects in order to limit pressures on the currency as well as inflation.

“What is exceptional about it is that it also encompasses Egypt’s military companies,” wrote Yezid Sayigh, a senior fellow at the Malcolm H. Kerr Carnegie Middle East Center in Beirut, Lebanon. “This contradicts the initial impression given by the loan agreement announcement in October 2022, that the IMF had not used its leverage to place the military companies on the agenda.”

The IMF also demanded that all companies — including those owned by the military — publish an annual report “with details and estimates of tax exemptions and tax breaks.”

It remains to be seen whether these reports will ever be published. Kaldas says that many Egyptians want to know how wealthy the military is and also “the level of risk that Egypt’s military economic empire poses.”

“One of the challenges right now of understanding Egypt’s level of economic risk is we don’t know how much money military companies have borrowed,” he said.

Why is the military’s role in the economy so controversial?

The private sector in Egypt has been shrinking in the last seven years, according to Kaldas.

The S&P Global Egypt Purchasing Managers’ Index (PMI) for December, which measures the health of Egypt’s non-oil private sector, showed a “solid deterioration,” remaining below the 50-mark needed for healthy economic growth for 25 consecutive months.

Egypt’s military owns and operates a significant number of companies which private enterprises struggle to compete with. From gas stations and pharmaceuticals to meat and dairy, military-owned companies make up a large proportion of Egypt’s economy.

But those firms don’t operate like private companies, enjoying special privileges without disclosing their financial data to the public.

The military also spearheads President Abdel Fattah el-Sisi’s vast national projects that critics say have sucked up much of Egypt’s funds.

Authorities have promised to list state-owned companies, including military-owned companies, on the stock exchange, a plan aimed at involving the private sector in their management. The plan is yet to be fully implemented, and analysts are skeptical about it given the secrecy with which these companies normally operate.

Is Egypt likely to heed the IMF’s call?

Sayigh of the Carnegie Middle East Center says the delay in getting military-owned companies listed on the stock exchange and having their finances disclosed is evidence of the military’s pushback against the conditions.

Experts have questioned why international creditors had not leveraged their loans to drive Egypt’s military out of the economy. The institution is a powerful one in Egypt, both financially and politically.

It was only with the military’s backing that Sisi was able to rise to power. The former field marshal was at the forefront of a 2013 military coup that overthrew former President Mohamed Morsy, the country’s only democratically elected president.

Speaking to CNN’s Becky Anderson in Abu Dhabi on Monday, Egyptian Foreign Minister Sameh Shoukry said that state-owned enterprises “will be sold off to the private sector to encourage further investment” and that Egypt “is supported by the IMF in this regard.”

Asked how soon the government would review the military’s involvement in the economy, Shoukry said that Egypt is dealing with the challenges in a “holistic manner” while also “recognizing the social dimension” at the heart of the country’s financial woes.

Kaldas of the Tahrir Institute said that there are ways for the government to circumvent the IMF’s conditions by making changes that seem like compromises but don’t change the structure of the economy.

“If everything in this agreement is actually followed, it is almost certain that there would be a reduced role (for the military in Egypt),” he said.

Why should the rest of the world be concerned?

When Egypt devalued its currency in October, the US embassy in Cairo issued a “demonstration alert,” warning of potential unrest.

More than a decade ago, Egypt and other Middle Eastern states slipped into a wave of protests that toppled governments, stunted economies, and even triggered civil wars that drove millions of refugees to flee the region.

In 2011, when millions took to the streets demanding changes of regime, the most commonly chanted slogan in Egypt was “Bread, freedom and social equality.”

Egypt is home to more than 106 million people, more than half of whom are living in precarious economic conditions. Many are unable to afford basic food staples, limiting their spending and even restricting diets, and analysts have warned of unrest should the situation deteriorate significantly.

The digest

Hamas releases purported first video of Israeli hostage since 2014 capture

Hamas on Monday released a video it claims is of Avera Mengistu, an Israeli man who has been held prisoner in Gaza by the Palestinian militant group since he crossed into the coastal enclave in 2014. The video is undated and appears to show Mengistu sitting in a buttoned-up purple shirt against a white wall, asking how long he will remain in captivity and where his country is. He appears for about 11 seconds. CNN cannot verify the authenticity of the video or confirm when it was filmed. It is likely that Mengistu made the statement under duress. Mengistu’s mother Agernish told Channel 12 she was sure it was her son.

• Background: Along with Mengistu, Hamas is also holding another Israeli civilian who crossed into Gaza, Hisham al-Sayed, as well as the bodies of two soldiers killed during the 2014 war with Hamas, Hadar Goldin and Oron Shaul. The Israel Prime Minister’s Office has previously stated that both Mengistu and al-Sayed are mentally ill, and said when the video of al-Sayed was released: “Distributing a video of a sick person is a despicable and desperate act.”
• Why it matters: The footage was the first video or photo seen of Mengistu since he was captured more than eight years ago. The timing of the video’s release is notable — coming on the same day the new Israel Defense Forces Chief of Staff Herzi Halevi took over from outgoing Chief of Staff Aviv Kochavi. A message at the beginning of the video directly addresses both Kochavi and Halevi.

Biden offers support to UAE on anniversary of missile attack

US President Joe Biden mourned the lives lost in a missile attack on the UAE last year and reaffirmed his administration’s “commitment to the safety and security of the Emirati people.”

• Background: Three people were killed last January when missile strikes hit fuel trucks near the airport in the UAE capital Abu Dhabi, causing multiple explosions. Yemen’s Iran-backed Houthi rebels quickly claimed the attacks. More strikes followed, with no casualties reported.
• Why it matters: The UAE has been lobbying the US to redesignate the Houthis as a terrorist organization, which Biden last year said was “under consideration.” A US official told CNN last year that the Gulf state felt slighted by the US when there wasn’t an overwhelming amount of support for it after the attacks. A senior UAE official told CNN on Wednesday that “clearly, the Americans felt they did not back us adequately in the aftermath of the terror attacks and trying to compensate… The big question is what will their practical support and possible guarantees mean.”

US partnership is crucial for global security, says Saudi envoy

Saudi Arabia’s ambassador to the United States said on Wednesday that maintaining the long-standing strategic partnership between Riyadh and Washington was “beyond critically necessary” for global stability, Reuters reported. “Yes there was a moment of conflict and disagreement, but that doesn’t take away from the fact that we are both strategic allies and we are friends, and this relationship is critical for the world,” Princess Reema bint Bandar Al Saud said at the World Economic Forum in Davos.

• Background: The traditional alliance between Saudi Arabia and the US has frayed under President Joe Biden’s administration over the 2018 murder of journalist Jamal Khashoggi by Saudi agents, Saudi Arabia’s involvement in the war in Yemen and more recently the Ukraine war and OPEC+ oil policy.
• Why it matters: Saudi Crown Prince Mohammed bin Salman has been defiant in the face of US ire over energy policy – which Saudi officials say has been vindicated by oil price stability – and pressure to help isolate Russia. Washington has also voiced concern about Gulf Arab states’ growing ties with major trade partner China. Saudi Finance Minister Mohammed al-Jadaan, when asked during the same panel about the visit by the Chinese president to the kingdom in December, said both China and the United States were very important to Saudi Arabia.

What to watch

Investment in hydrocarbons is needed to keep oil prices low as the world transitions to clean energy, UAE Energy Minister Suhail Al Mazrouei told CNN’s Becky Anderson in Abu Dhabi.

The minister said that controlling the rise in oil prices during the transition is necessary, especially since there is no system in place to totally compensate for hydrocarbons.

The UAE, he said, brought forward its target to raise output capacity to 2027 from 2030 in order to avoid market volatility.

“You need to juggle the three challenges: sustainability, security of supply and affordability,” he said.

The UAE has been arguing against divestment from fossil fuels in an effort to reduce emissions. “We need to fight the emissions, not the fuel,” he said.

Watch the interview here.

Around the region

A Saudi Arabian businessman has won an auction for a golden ticket to watch Cristiano Ronaldo take on Lionel Messi with a bid of 10 million Saudi riyals ($2.6 million).

The chairman of Saudi Arabia’s General Authority for Entertainment (GEA), Turki Al Sheikh, said Tuesday that businessman Mushref Al-Ghamdi, the general manager of real estate group AqarOne, was the winning bidder for the “Beyond Imagination” ticket, which gets the holder a seat at Paris Saint-Germain’s friendly match against a team comprised of players from Saudi teams Al Hilal and Al Nassr, the club that recently signed Ronaldo.

According to a video posted to Al Sheikh’s Twitter account, the winning bidder will get to attend the opening ceremony, watch the match next to the GEA chairman and have the chance to meet Ronaldo and Messi as well as the Argentine’s fellow PSG stars, Neymar Jr. and Kylian Mbappé.

Al Sheikh said the money from the winning bid will go to Saudi charity Ehsan.

Read more here.

By Matias Grez

Photo of the day

This story has been updated to correct the 2021 exchange rate in the third paragraph.

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