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Cablegate: Mubarak Orders Military to Assist in Resolving "Bread

VZCZCXYZ0001
RR RUEHWEB

DE RUEHEG #0587 0860753
ZNR UUUUU ZZH
R 260753Z MAR 08
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 8663
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0394

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

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