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