ElBaradei Unifies Opposition, Criticizes Obama; Business Grinds to a Halt; Ports Shut Down, Food Prices Soar; Shortages of Food, Water, Fuel

Business in Egypt has ground to a halt. Food and consumer goods stack up in ports. Gas stations have not had deliveries for days and supplies dwindle. Simple economic theory suggests prices will soar and they have.

After an initial lukewarm reception when he first returned to Egypt, Nobel laureate and opposition leader Mohamed ElBaradei has picked up some much-needed support from the Muslim Brotherhood. That support creates a somewhat united secular-religious opposition to Egyptian President Hosni Mubarak.

An emboldened ElBaradei is now openly critical of the Obama administration. "It’s better for President Obama not to appear that he is the last one to say to President Mubarak, it’s time for you to go," Dr. ElBaradei said.

ElBaradei Begins to Unify Opposition

The New York Times reports Opposition Rallies to ElBaradei as Military Reinforces in Cairo

Egypt’s powerful Muslim Brotherhood and the secular opposition banded together Sunday around a prominent government critic to negotiate for forces seeking the fall of President Hosni Mubarak, as the army struggled to hold a capital seized by fears of chaos and buoyed by euphoria that three decades of Mr. Mubarak’s rule may be coming to an end.

The announcement that the critic, Mohamed ElBaradei, would represent a loosely unified opposition reconfigured the struggle between Mr. Mubarak’s government and a six-day-old uprising bent on driving him and his party from power.

“Today we are proud of Egyptians,” Dr. ElBaradei told throngs who surged toward him in a square festooned with banners calling for Mr. Mubarak’s fall. “We have restored our rights, restored our freedom, and what we have begun cannot be reversed.”

Dr. ElBaradei declared it a “new era,” and as night fell there were few in Egypt who seemed to disagree.

“It’s better for President Obama not to appear that he is the last one to say to President Mubarak, it’s time for you to go,” Dr. ElBaradei said.

Ports Shut Down, Food Prices Soar, Business Grinds to a Halt

The internet is shut down, so are cell phones, and so are ports. Goods stack up at docks, and supplies of fuel are at critical levels. After six days of riots, the Political Crisis Now Has Serious Economic Repercussions.

For four days now, containers arriving on ships have been stacking up at Egypt’s largest port, shipping company employees and truck drivers here said. With distribution networks barely functioning and the Internet down since Thursday night, much of business in Egypt has nearly ground to a halt.

“A big part of the production system is government-run, and this is frozen, including many of the bakeries making the subsidized bread,” said Hoda Youssef, an economist at the Arab Forum for Alternatives, an independent think tank and a lecturer at Cairo University. “Here in the short term — today, tomorrow, the coming few days — we might have a serious problem with shortages of food, water and fuel,” Ms. Youssef said.

“We did not get any new gas for the last two days,” said Mustafa Ahmad Hamadi, the owner of an Alexandria Mobil station, adding that he usually received about 2,600 gallons a day and now has only about 1,300 gallons left. He said that he had owned the station for 12 years, but has “never seen a situation like this before.”

“When I called the company, they told me there is no more distribution at this point and they don’t know when they can deliver again,” he said, as cars lined up for his remaining fuel and arguments broke out among customers despite employees’ efforts to keep them in line.

A taxi driver with two women waiting in the back seat said he had been to 12 gas stations since Saturday, and this was the only one with gas. “I am really worried,” said the driver, Muhammad Youssri Said, 29. “This car is the income for me and my family. No taxi, no money, no food.”

Potential Runs on Banks

Banks are now shut down as is the stock market. However, Egypt’s Banks Risk Deposit Run when they do open.

Egypt’s banks may risk a surge in customer withdrawals when they open for business, placing them among companies worst hit by the nationwide uprising against President Hosni Mubarak.

“A run on the banks would be the biggest concern, which is possible in the current situation,” Robert McKinnon, chief investment officer at ASAS Capital in Dubai, said in a telephone interview. Authorities are likely to keep the financial system closed to avert the risk, he said.

Egypt’s banks and markets stayed shut yesterday after six days of clashes in the most populous Arab country that left as many as 150 people dead.

Asked about the risk of a bank run, Mohamed Barakat, chairman of state-run Banque Misr and head of the country’s banking association, said in a telephone interview that Egyptian lenders are “very liquid,” with average loan-to-deposit ratios of 53 percent.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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