These are staggering numbers, so any interruption to the import of food and aid — even if it relatively short — could easily tip the country into a full-on catastrophe.

Notably, food insecurity is not the only issue facing Sudan, and DCDR’s latest assessment of the situation is that it degrades further.

Sudan is a long-term, highly complex situation — arguably a series of situations — and shipping in more food is not going to solve everything right away. However, any sustained period of interruption to the import of food and aid will be catastrophic.

Sudan is largely contained, meaning that even a collapse of the country wouldn’t necessarily destabilize the region. Unfortunately, it’s this isolation that makes it so easy for things to deteriorate so much without it becoming a more prominent issue.

Lastly, let’s head north where these issues converge.

Several things come to a head in Egypt.

Foreign currency inflows are down due to the reduced shipping; increased grain prices deplete the reserves further — as well as creating shortages; and the country is also facing an increasingly difficult role in balancing its relationship with Israel alongside the growing humanitarian crisis in Gaza.

Here’s a summary of the issues from DCDR with additional research via perplexity.

Via DCDR & Perplexity AI directly

Egypt faces a complex array of challenges in 2024 that could impact its stability. These challenges are both internal and external, with immediate and second-order effects on the country's political, economic, and social fabric.

The Suez Canal, a critical artery for global trade, has experienced disruptions due to escalating tensions in the Red Sea, primarily from attacks by Iran-backed Houthi rebels. This has led to a significant rerouting of maritime traffic, with about 150 ships transiting the canal in January 2024, a 62.5% decrease from the previous year[1]. The canal's revenue reached $8.8 billion in the fiscal year 2022/2023, but the current crisis threatens Egypt's economic stability, as it relies heavily on these revenues[3].

The ongoing conflict in Gaza has strained Egypt's relations with its neighbors and heightened regional tensions. Egypt's historical role as a mediator in the Israel-Hamas conflict places it at the center of efforts to protect the Gaza population and broker ceasefires[2]. However, the potential influx of refugees into the Sinai Peninsula and the broader geopolitical implications pose significant challenges to Egypt's stability.

Egypt's economy is under severe strain, with foreign currency reserves falling by more than $7 billion in 2022 due to the war in Ukraine and rising commodity prices. The country has to repay $29.2 billion in external debt in 2024, equivalent to 85% of its foreign reserves. Moody's downgraded Egypt's foreign and local currency issuer ratings to Caa1, indicating very high credit risk[1]. The IMF forecasts Egypt's GDP in 2024 to be $368 billion, with a tax-to-GDP ratio expected to be 13.5%[1].

High national debt, budget deficits, and rising inflation exacerbate poverty and economic hardship for Egypt's population of around 110 million. The country's economic vulnerabilities have been exposed, with inflation accelerating to 37.4% in August 2023, and food inflation at 71.7%[9]. These economic pressures could lead to social unrest and demands for political change.

The military's control of the Egyptian economy since 1952, with the brief exception of the Morsi government, has stifled political reforms. Slowing down government-run infrastructure projects and reducing military-owned companies' holdings are necessary but risky reforms that could upset the military establishment and erode public support[4].

Egypt's regional clout has been overshadowed by Gulf Arab monarchies. The country's role as a power broker in the Middle East is diminished, and its stability is intertwined with the stability of neighboring countries like Libya and Sudan. An eruption of unrest in Egypt could have far-reaching implications for regional security, particularly along the Red Sea coast[8].

Egypt's stability in 2024 is precarious, with immediate challenges such as Suez Canal disruptions and the war in Gaza, compounded by deep-seated economic issues. The second-order effects, including inflation, poverty, and the need for political reforms, could further destabilize the country. Egypt's stability is crucial not only for its citizens but also for regional and global security, given its strategic importance and the potential ripple effects of its instability.

Most Relevant Points:

Please note that this briefing is based on the most recent data available and is subject to change due to evolving circumstances.

Also note that Egypt heavily subsidizes bread prices meaning that if grain prices go up, foreign reserves go down. Foreign reserves that will already be depleted by reduced transit incomes.

I’m not in the crystal ball business, so I won’t make any big predictions but I will note the following.

It’s hard to see what will get the Houthis to stop these attacks. They’ve managed to ‘punch up’ and draw the US into direct conflict. Even if this is mostly limited to American strikes on missile launches, this is an easy and highly beneficial strategy for them, increasing their relevance / caché as they stand up to ‘The Great Satan’. (RT ≠ an endorsement...)

There’s a scenario where a permanent ceasefire in Gaza AND an agreement from Israel to allow large amounts of aid and building materials into Gaza AND a coalition of regional powers backing the reconstruction might be enough to get them to back down, but these stars seem a long way from aligning.

(Moreover, these attacks have been so successful that even if the current series of attacks cease, it’s going to be tempting to start hitting ships again. Seeing as they can use the identification AIS system to target particular ships, these attacks feel like something they can turn on and off very easily, with some precision.)

That means that the disruption to traffic through the Suez seems unlikely to end soon, and could become a much more common occurrence.

1️⃣ - This points to an extended period of grain shipment disruptions, increased fragility in Sudan, and increasing pressure on Egypt in the short term.

Even if attacks stop, it will take some time for insurers to start covering Red Sea transits again, meaning it could be some time before supply chains revert, particularly once organizations normalize the new routes.

2️⃣ - This points to sustained pressure on Egypt as foreign currency reserves are depleted.

— End of report —

If you found this useful, consider trying DCDR yourself: I used the DCDR agents and country assessments for large chunks of this report.

Plus, you can ask it to help you develop contingency plans and exercises to prepare your organization for the specific situation you face.

You can register for a DCDR account and get started with your own research at app.dcdr.io

I’ll be back with the country SITREP tomorrow.

See you then

~Andrew

PS - This was the first deep dive of 2024: how did I do?