The Washington Post reports: The yellow horse-drawn gasoline tank is out in the open, on a busy highway that snakes along a poor slum in eastern Cairo. Trucks and cars stop to fill up. Pedestrians come by, too, with plastic containers to fill.
The yellow tank isn’t alone. Mini-tankers and canisters of illegal diesel fuel have become ubiquitous in Egypt. Vendors hawk the fuel in crowded neighborhoods, next to shops and idle police officers who do little to stop the sales.
Egypt’s rapidly expanding black market for fuel — and for foodstuffs, other commodities and U.S. dollars — may be the most tangible illustration of just how badly the economy of this vast Arab nation is failing, two years after the fall of Hosni Mubarak.
The prices of most basic goods, like fuel and flour, have been fixed for decades, with Egypt pouring roughly a quarter of its GDP into a bloated and deeply inefficient national subsidy system each year.
But after two years of political turmoil, weak governance, a devastated tourism industry and sapped investments, the government is quickly running out of money to foot the bill.
Egyptian economists say the government, confronted with reduced purchasing power, is buying less wheat and diesel from abroad. But they said it is unclear whether that is the main cause of the shortages, or whether the scarcity is driven mostly by the growing black market and the hoarding of goods by ordinary Egyptians who are anxious about the unstable economy.
One way or another, the supply of subsidized goods is drying up, breaking down the long-standing subsidy system and pushing those who can afford it to the black market. [Continue reading…]