MUBARAK ORDERS MILITARY TO ASSIST IN RESOLVING "BREAD

UNCLAS CAIRO 000587 SIPDIS SENSITIVE SIPDIS STATE FOR NEA/ELA, NEA/RA AND EEB USAID FOR ANE/MEA MCCLOUD AND DUNN TREASURY FOR MATHIASON AND CONNOLLY COMMERCE FOR 4520/ITA/ANESA/OBERG E.O. 12958: N/A TAGS: PGOV ECON EAID EG SUBJECT: MUBARAK ORDERS MILITARY TO ASSIST IN RESOLVING "BREAD CRISIS" REF: A. CAIRO 530 B. CAIRO 152 Sensitive but Unclassified. Not for Internet distribution. ¶1. (U) Summary: In apparent reaction to what the media is characterizing as a "bread crisis" - shortages of subsidized bread and rising prices for unsubsidized bread -President Mubarak has ordered the military to assist civilian agencies in ensuring availability of subsidized bread. According to press reports, at a cabinet meeting on March 17 Mubarak charged the Ministry of Defense's National Service Agency and the Ministry of Interior with increasing production and distribution of subsidized bread. Prime Minister Nazif and Minister of Local Development Othman were also ordered to report to Mubarak weekly on progress in resolving the crisis. The Minister of Local Development acts as a liaison between the government in Cairo and the regional governors, who Mubarak has called on to directly oversee implementation of his plan in their individual governorates. ¶2. (U) With Egypt's inflation rate at 12.1% (ref A),unsubsidized bread prices are now averaging LE .50-1.00 ($.09-.18) per piece, spurring demand for the subsidized bread sold at public bakeries for LE .05 ($.01)/piece. But public bakeries have only been using part of their subsidized flour quota to produce bread, selling the rest of the flour on the black market (ref B). The Ministry of Social Solidarity (MSS),the agency responsible for the bread subsidy program, has so far been unable to stop the black market trade in subsidized flour. The result is limited quantities of bread at public bakeries, and long lines and waiting times. Tensions run high in the lines and recently violence has broken out, apparently causing some deaths. Press reports claim up to ten people have died in the last few weeks, either from fights breaking out in line or from heat exhaustion. The reports cite various causes for the fighting, some claiming it is competition for scarce bread and some claiming it is personal and family conflicts. ¶3. (U) A spokesperson for the presidency said the plan to resolve the crisis includes separating production from distribution of subsidized bread, to reduce opportunities for corruption on the part of public bakeries. The MSS had already begun separating production and distribution in some governorates, and this new procedure will be extended to all governorates, according to the spokesperson. Bakeries operated by the ministries of Defense and Interior, which produce bread for soldiers and police officers throughout the country, will also begin producing subsidized bread for civilians. Military and security personnel will open new distribution points for the bread produced in military bakeries. ¶4. (SBU) Comment: The bread crisis comes at a difficult time for the NDP, right before local elections on April 8. According to our USAID Mission Director, the atmosphere was very tense on a recent visit to Fayoum, southwest of Cairo, to inaugurate USAID projects with the local governor. Fayoum residents swarmed the governor when he arrived at project sites, complaining about high prices for basic goods, scarcity of flour, and poor government services. The GOE's plan to involve the military in solving the bread crisis is likely to increase the availability of subsidized bread for the public. It may also likely to send a signal to Egyptians that only the ubiquitous military/security forces can be counted on to solve national crises, a message the NDP may want the public to have in mind as they cast their votes on April 8. RICCIARDONE