So while 1977 isn’t a perfect parallel to 2008, it’s something more important: a lesson in how not to handle subsidy reform and popular unrest. It’s a lesson that has helped educate the current generation of Egyptian leaders. It underscores the centrality of food subsidies in Egyptian politics, and it has helped spur the upgraded authoritarian techniques now being used to cling to power.

While it has largely tamed domestic opposition to its rule, try as the National Democratic Party (NDP) might, it can’t control the economic and population dynamics that are making the food subsidies vastly more expensive.

Split personality. Egypt’s economy often seems to inhabit two disconnected spheres. In the realm of investment magazines and government PowerPoint presentations, Egypt is a promising emerging market. At the same time, however, the country’s poor and middle class are feeling a squeeze. Rising wealth has yet to trickle down, and inflation, which topped 19 percent in May, continues to gnaw into purchasing power.

In 2007, GDP ticked up at a strong but not overheated 7.1 percent, and is estimated to rise slightly further this year. Egypt’s now a darling of the World Bank (WB) thanks to market liberalization pushed through by Prime Minister Ahmad Nazif and his pro-business coterie (including Gamal Mubarak, a former investment banker). Privatizing state-owned companies and initiatives aimed at streamlining bureaucracy earned Egypt the WB’s “best reformer” award last year.

But talk to anyone outside business or government and you will hear a different story. Asked about the pressure rising food prices exert on her family, Samira, a middle-aged widow with two children, snaps: “We can’t survive.”

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