Supply chain disruptions caused by the COVID-19 pandemic and now the war in Ukraine have not been kind on Arab countries. Post-revolutionary Tunisia and Egypt have been particularly hard hit, with their governments struggling to have an impact on the cost-of-living crisis. The challenges in both countries are different, however. In Tunisia, there simply is not the money available to import products, while in Egypt the government, keen not to deplete its foreign currency reserves, is stymieing the flow of imported goods. In both situations, reduced imports are making an already challenging set of circumstances worse. Egyptian President Abdel Fattah El-Sisi this month made his first visit to Qatar since the end of the four-year diplomatic rift between the countries. Though not entirely unexpected, it was indicative of the strain under which Egypt has been placed. It has suffered greatly due to the Ukraine war as 80 percent of its grain was imported from either Russia or Ukraine in 2021. Inking investment agreements worth $5 billion and with about 350,000 Egyptian expats in Doha, it is hoped that strengthening bilateral ties will help alleviate the 13 percent inflation that Cairo is currently experiencing. This is part of a wider influx of Gulf investment, including from Saudi Arabia and the UAE, which it is hoped will provide a lifeline for Egypt’s economy. However, where once these were direct transfers to the Central Bank of Egypt to balance the books, they are now taking the form of investments, which will require returns paid to investors. Egypt’s problems run deep. The staggering inflation rate is surpassed by the rise in food prices, which has topped 20 percent. With 30.6 million Egyptians living below the poverty line in 2021, the government is struggling to manage the economy. As international investors have disengaged from their Egyptian holdings, the government has grown increasingly concerned about foreign currency shortages. Convoluted import regulations have slowed foreign currency outflows but, given the pressure they have put on consumer goods, the government has had to change course. Facing a tea supply shortage in the coming weeks, banks have had to release much-needed US dollars to allow imports to resume. Nevertheless, such measures do not fix the structural problems that Egypt faces. With a debt-to-gross domestic product ratio of 94 percent, the government cannot finance the country’s previous loans without further borrowing from the International Monetary Fund. This is a loan that it will receive pending a further devaluation of the Egyptian pound, but no number of gleaming new infrastructure projects can lift Egypt out of the debt cycle it has been in for decades. It is to the IMF that Tunisia is also looking as it hopes to be lifted out of its current situation. President Kais Saied’s populist “war on hoarders” has not put food back on the shelves, as — although hoarding and the black market have harmed the economy — the reality is that shipments remain stuck at the country’s main port as Tunisia’s foreign currency reserves will barely cover imports until the end of the year. Their chronic economic problems have not been caused by the current shocks on commodities, but rather have been exacerbated by them Zaid M. Belbagi This has greatly impacted the availability of basic goods, from dairy products to bottled water. Supermarket shelves in the capital Tunis have been empty for weeks, with consumers having to spend hours sourcing cooking oil and other essentials. With the crisis most acute among state-subsidized goods, the situation is indicative of the government’s inability to purchase and deliver these items owing to the poor economic situation. Given that public debt is currently estimated to be about 87 percent of GDP, the government is in a bind as to how to proceed. Two recent tranches of international help from the World Bank and the European Bank for Reconstruction and Development did not stave off the country’s grave economic challenges. Concerning political news from within the country, which has witnessed a rapid centralization of power, undoing the country’s fragile democracy, has made potential international partners hesitant. Seeking a loan of between $2 billion and $4 billion, Tunisia is in negotiations with the IMF. But the government’s inability to balance its books has seen unprecedented strike action and the greatest public disruption since the so-called Arab Spring. With the IMF likely to call for cuts to the government’s staggering wage bill in a country where the state is the biggest employer, more friction is expected. Ahead of this, the country’s most powerful union, the Tunisian General Labor Union, this month agreed with the government a 5 percent pay rise for public sector employees. However, this short-term measure does not limit the potential for the union to hold the government to ransom once again — a prospect that is delaying an agreement with the IMF. The chronic economic problems in both Egypt and Tunisia have not been caused by the current shocks on commodities, but rather have been exacerbated by them. Government inefficiencies, weak institutions, growing populations and mass urbanization have led to circumstances where neither country is able to feed itself and the state has had to assume huge outgoings to keep basic necessities heavily subsidized. Bailouts from the IMF will help in the short term, but they will also further indebt two already hugely indebted nations. The challenges of economy and demography faced by Tunisia and Egypt today are indicative of similar circumstances elsewhere in the Arab world. These will only worsen as the region seeks to cope with the effects of climate change, of which they are at the forefront. • Zaid M. Belbagi is a political commentator and an adviser to private clients between London and the GCC. Twitter: @Moulay_Zaid