Higher fuel prices test Sisi's patriotic pitch to struggling Egyptians

Pump prices are up by 78 percent, sparking protests by taxi drivers, as Egypt tries to cut its subsidies bill. President Sisi says Egyptians should sacrifice for the good of the nation. 

By , Correspondent

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    An Egyptian rides his bicycle past a gasoline station in Cairo, Saturday, July 5, 2014. Egypt's government raised the prices of fuel by up to 78 percent starting Saturday, following on a promise to cut subsidies that eat up nearly a quarter of the state budget, the official news agency reported.
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Taxi and microbus drivers brought the streets of several Cairo neighborhoods to a standstill over the weekend with strikes to protest a 78 percent hike in fuel prices. But newly elected President Abdel Fattah al-Sisi says the public discontent will not make him budge on austerity measures. 

Despite the increasingly precarious state of Egypt’s economy, previous administrations have avoided cutting costly subsidies for fear of a backlash from the streets. Now, Mr. Sisi has taken on the challenge. If he fails, the buck will stop with him. Egypt's streets and political elites have overthrown two presidents since 2011.

Police fired tear gas at small drivers' demonstrations in the canal cities of Suez and Ismailia and by Monday the army had been instructed to keep buses running in Cairo, offering an alternative to independent bus and taxi drivers, many of whom have raised their prices. 

Recommended: How much do you know about Egypt? Take this quiz.

“Was there another choice? No, I swear to God,” said Mr. Sisi in a televised address to the nation Monday night. “Could we have delayed this decision? It should have happened years ago,” he said.

Sisi’s austerity agenda is aimed at cutting Egypt’s deficit to 10 percent of GDP in the next fiscal year, from an estimated 12.1 percent in in 2013-14.

The question is whether he can convince a divided and struggling nation to swallow his bitter pill. Although fuel hikes will be felt most by the car-owning rich, who will also be hit with a sales tax on luxury goods, many citizens in Cairo rely daily on privately run microbuses to get to work and visit family. The subsidy cuts led to a 78 percent increase in fuel prices. 

“What does he want from us? Destitution?” shouted one woman, as she waved a fistful of Egyptian pound notes in the wair. “This is all we’ve made today, and petrol will cost far more. How do we put food on the table now, Mr. President?” 

Food prices are also expected to rise as it becomes more expensive to transport food from farm to market.

Patriotic duty

Since winning election with more than 96 percent of the vote in May, Sisi has used most of his public appearances to lay the groundwork for his austerity cuts, emphasizing the need for Egyptians to work harder and longer than ever before and framing it as a patriotic duty.

His decision to donate half his salary to a new "Long Live Egypt" fund attracted plaudits across the Egyptian media. Pro-government columnists have exhorted readers to do the same.  

Reviving a stricken economy will require more than public buy-in. Sisi must also convince investors that this is the time to commit to Egypt. But after more than three years of political turmoil, the investment outlook is bleak. 

Angus Blair, president of Cairo-based economic research center Signet Institute, says investors are looking for signs of a longer term economic plan.

“If you have a business right now, you are still waiting to see what is going to happen,” he says. “Egypt cannot maximize economic growth against this backdrop of uncertainty.”

This sense of uncertainty prevailed on the streets of Egypt on Tuesday morning as fruit sellers in the central neighborhood of Zamalek discussed their own economic prospects.

“Sisi is our president and we’ll stick with him until we can bear it no more,” said an orange peddler, as he wrote out new price tags for the piles of produce in front of him. “But life is already so hard. Who knows when we will break?”

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