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Russian-Ukrainian war: How does it affect Egypt?

February 28, 2022 at 3:33 pm

An Egyptian man sells bread in Cairo on 8 December 2017 [MOHAMED EL-SHAHED/AFP/Getty Images]

Parallel to the Russian declaration of war on Ukraine, Egypt held its breath, fearing the harmful effects of the war on Egypt on various levels.

Egypt is the biggest wheat importer worldwide, as wheat bread is considered the main food commodity for most Egyptians, especially the poor. In addition, 93 million bread loaves are produced annually using the subsidised wheat in Egypt, with a loaf weight of 90 gm.

The total Egyptian import of wheat in 2021/2022 reached up to 13.2 million tons, with Russia and Ukraine being the leading sources for Egypt’s imports, including 8.96 million tons from Russia and 2.7 million tons from Ukraine, which means that both countries account for 88 per cent of Egypt’s wheat imports.

The military operations concentrate in Eastern Ukraine, where the most productive agricultural lands are located, which will lead to a direct decline of the Ukrainian wheat production and, subsequently, its exports.

READ: First Egyptian injured during Russia invasion as Arab students scramble to leave Ukraine

On the other hand, another crisis to arise is on shipping due to the war, which means that the recent Egyptian freight contract could be retained.

Additionally, the Russian wheat will be subject to the expected American and European sanctions on Russia, including cutting Russian banks off the Swift payments system preventing Egypt from transferring deposits to Russia.

The Egyptian government commented that there is no cause for concern over the wheat supplies because Egypt has over four months of wheat reserve, and the local wheat harvest season will also begin next April. Furthermore, the government added that it has ready solutions to get wheat during crises from other sources.

This means, however, that Egypt, managing to get wheat from other countries, will have to pay high prices, putting financial pressure on Egypt. Indeed, the Egyptian Supplies Ministry cancelled an international tender to get wheat due to costs.

Even if the government decided to raise the price of subsidised bread, the new high prices would devour the surplus made by the cuts, aside from the widespread outrage expected from such price increase.

Tourism is another field that took the hit of the war. While the Egyptian tourism sector is struggling to recover from the consequences of the Covid-19 pandemic, the Russian war on Ukraine came to frustrate it. The Russian and Ukrainian tourists represent about 33 per cent of Egypt’s total tourists annually.

The war consequences began to appear since the intensification of the conflict months ago. Investors and works reported that February witnessed a 30 per cent regression of Russian and Ukrainian tourists’ reservations in Egypt.

READ: Ukraine crisis raises concern in Arab world over wheat supplies

Peter Nathan, Head of South Sinai Hotel’s Chamber, stated that hotels’ occupancy in Sharm Al-Sheikh significantly decreased in February, compared to December and January. Nathan attributed the regression to the decrease of flights from Russia and Ukraine to Egypt in February with 30 per cent.

Hurgada and Sharm Al-Sheikh are expected to be Egypt’s most affected tourist cities as they are the leading destination of Russian and Ukrainian tourism.

Finally, Egypt comes under the pressures looming due to the war; on top of them are energy prices. The war raised the price of Brent Crude above US $100 for the first time since 2014, while Egypt had determined the price of oil barrels at US $61. The increase will significantly raise the fuel subsidies bill, distorting the governmental budget targets. The net fuel prices will consequently increase, threatening upcoming inflation.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.