AFP

An economic crisis spurred by the Ukraine war is casting darkness upon Egypt’s streets, as the government dims lights to free up energy for export and bolster hard currency reserves.

Russia’s invasion of Ukraine had an immediate impact on Egypt, the world’s biggest wheat importer which has relied on the ex-Soviet states for over 80 percent of its grain.

Egypt, which turned to the International Monetary Fund for a loan after the war erupted, is pumping more natural gas abroad to increase its foreign currency reserves — a move that has come in for criticism.

And while the government announced electricity rationing this month, signs of wastage elicit scorn.

“I see streetlights still working during daylight hours… and we’re suffering from high electricity bills,” said a disgruntled Cairo resident in his 30s who spoke on condition of anonymity.

The country’s vital tourism sector has also been hit by the Ukraine conflict, cutting the flow of holidaymakers to a country still hurting from the 2011 revolution and Covid-19 pandemic.

Economic growth slowed to 3.2 percent in the fourth quarter of 2021-22 against 7.7 percent last year, although annual expansion was 6.6 percent.

Despite the better-than-expected annual figure, the government said growth had tapered off in the wake of  “global political and economic developments”.

Egypt’s monetary policy has been caught between a rock and a hard place since Russia invaded Ukraine in February.

Inflation hit a three-year high of 14.6 percent in July after Egypt devalued the pound, pushing up the price of imports and depleting forex reserves by $7.8 billion since February to $33.1 billion in July.

– Capital flight –

Egypt is negotiating an IMF loan to help mitigate fallout from the Ukraine war on the country, where 30 percent of the 103 million population lives in poverty.

But the talks have stretched out for six months, raising eyebrows among analysts.

“The fact that talks with the IMF have dragged is probably a sign that some officials are reluctant to follow through on the Fund’s demands and would prefer to rely on support from the oil-flush Gulf economies,” London’s Capital Economics said.

“We need to speed up negotiations with the IMF,” said Hany Genena, an economist and lecturer at American University in Cairo.

“Since last week, there has been a severe shortage of dollars provided to importers by banks in various sectors.”

Cairo had previously secured a $12-billion IMF loan in 2016 that required it to slash subsidies and devalue the pound.

In 2020, Egypt received two more loans, including $5.4 billion tied to reforms and $2.8 billion to tackle Covid.

Genena said Egypt needed to undertake more “drastic” reforms to restore its forex reserves, including a full float of the pound.

Last week, as the currency plunged to a near all-time low of 19.1 to the dollar, central bank governor Tarek Amer resigned.

It was unclear why Amer quit, but Egyptian media suggested it was because of his reluctance to implement a full float.

James Swanston of Capital Economics said the currency needed to depreciate to 25 pounds to the dollar by the end of 2024 “to avoid external imbalances rebuilding”.

But $14.6 billion worth of investments has flown out of the country in the first quarter of 2022, reflecting concerns over the Ukraine war.

Capital Economics said, however, that investment pledges worth $22 billion from Gulf countries will “go some way to alleviating external financing concerns”.

– Gas lifeline –

Among Egypt’s slate of measures to preserve foreign currency was a decision to let the pound slip 17 percent against the greenback in March.

The government said electricity rationing seeks to achieve “an additional surplus — at an average of 15 percent of the natural gas pumped to power stations — that can be exported and bring in hard currency.”

Among the measures to conserve energy were “reducing lighting in streets and public squares.”

Since 2018, Egypt has been ramping up its natural gas capacity, now setting its sights on an energy-hungry Europe, which is eager to decrease reliance on Russian gas.

The government announced this month “exceptional aid to nine million families at a cost of $52 million per month,” but for many, the soaring cost of living had already done enough damage. 

Mahmoud al-Saeedy, a fruit salesman in Cairo, has depleted his savings trying to keep up with rising prices.

“I return to my village in the south every 40 or 50 days, with only 600 pounds ($31.3) to give to my family,” he told AFP.

“What can they do with it?”

The world’s second biggest cryptocurrency after bitcoin, ethereum, will soon overhaul its blockchain technology to curb the network’s much-criticised environmental impact.

Ethereum, whose digital unit ether tumbled in a crypto crash earlier this year, will in September undergo a major technical revolution.

So what is the backdrop for the looming reset — known as the Merge — and how will it calm prices and cut electricity usage?

– Why does crypto use so much energy? –

Bitcoin, ethereum and other such currencies are “mined” by solving complex puzzles using powerful computers that consume enormous amounts of energy in vast warehouses, often near cheap electricity sources.

A blockchain is the decentralised and secure ledger for recording those transactions, which occur when encrypted codes are passed across a computer network.

Users validate their success via a so-called “proof of work” mechanism that rewards them with cyber currency — but only after they have proved their participation in such energy-intensive mining.

The lucrative crypto industry is worth about $1.0 trillion, despite crashing in the first half of 2022.

However, ethereum is still down by a hefty 55 percent in value so far this year.

– Why is ethereum popular? –

Ethereum is nevertheless regarded as vital because it is where most virtual assets, including headline-grabbing non-fungible tokens (NFTs), are bought and sold.

That is partly because users can create “smart contracts” or algorithmic computer code, which carry out customised transactions for different functions.

“The ethereum blockchain is the base layer infrastructure of the majority of the whole crypto ecosystem,” summarised Lennart Ante, CEO and co-founder of the Blockchain Research Lab.

“Everything relies on ethereum,” he told AFP.

“In the last few years, there have been other similar platforms such as Solana or Cadano, but none of these have this huge network and this huge amount of developers and projects, and historical success.”

– Why is it changing? –

Ethereum’s broad adoption makes it even more important to address environmental concerns and change tack, as those worries had sparked a partial boycott.

“Proof-of-work mining is environmentally destructive, expensive, and inefficient,” summarised digital currency specialist Eswar Prasad, a professor at Cornell University.

Yet the carbon footprint of a decentralised blockchain system is difficult to assess because electricity sources are not always identified.

– What is the switch? –

Ethereum creator Vitalik Buterin has planned for a switch to a so-called “proof of stake” mechanism from the middle of September.

This means that participation no longer requires proof of electricity usage, and instead relies on staking blocks of ether.

Users will then validate, or effectively bet their currency, in order to try and win more ether.

Ethereum currently consumes about 45 terawatt hours of power per year.

Bitcoin in contrast is estimated to use 95 terawatt hours of power per year, equivalent to Pakistan’s annual consumption.

– What are pros and cons? –

Experts estimates the upgrade will use 99 percent less energy than the current set-up.

It would therefore allow users to execute quicker and more efficient transactions.

“The energy consumption would be close to zero,” Ante told AFP.

“You do not need any of the hardware anymore, only the software.”

At the same time, the new approach is not without risks.

Some users might decide to switch to rival networks where they can still able to use enormous amounts of energy to mine currency.

Prasad also cautioned that the proof-of-stake method was “not perfect” owing to liquidity and governance concerns.

Facebook has reached a preliminary agreement in a long-running lawsuit seeking damages from the social network for allowing third parties, including the company Cambridge Analytica, to access users’ private data. 

According to a document filed Friday in a San Francisco court, Facebook says it is submitting a draft “agreement in principle” and has requested a stay of proceedings for 60 days to finalize it. 

The social network did not indicate the amount or terms of the agreement in the class action. 

When asked by AFP, Facebook said late Saturday night they had “no comment to share at this time.”

The deal comes as Meta boss Mark Zuckerberg and former chief operating officer Sheryl Sandberg, who announced her resignation in June, were due to testify in court in September as part of the scandal. 

In a lawsuit initiated in 2018, Facebook users accused the social network of violating privacy rules by sharing their data with third parties including the firm Cambridge Analytica, which was linked to Donald Trump’s 2016 presidential campaign. 

Cambridge Analytica — which has since shut down — had collected and exploited, without their consent, the personal data of 87 million Facebook users, to which the platform had given it access. 

This information was allegedly used to develop software steering US voters in favor of Trump. 

In 2019, federal authorities fined Facebook $5 billion for misleading its users and imposed independent oversight of its personal data management. 

Since the Cambridge Analytica scandal broke, Facebook has removed access to its data from thousands of apps suspected of abusing it, restricted the amount of information available to developers, and made it easier for users to calibrate restrictions on personal data sharing.

A year after the last wisps of smoke disappeared into the skies from the imposing chimneys of the Moorburg coal plant, hopes had grown that the mothballed site would see new life as Germany scrambles to secure energy supplies.

Russia’s curtailing of gas exports to Germany in the wake of the Ukraine war has forced Berlin to make the radical decision to restart coal power stations, at least temporarily.

But infrastructure issues, manpower shortages and logistical problems are proving to be major obstacles for the restart.

At Moorburg, operator Vattenfall has dashed hopes of new operations, saying simply that “restarting it would be neither technically, economically nor legally feasible”. 

“Many parts have been dismantled and sold,” said Robert Wacker, director of the site.

Even power plants that had not been completely shut, but put in reserve to generate power only occasionally, are struggling with a complete reboot.

Further south from Moorburg, energy group Uniper will on Monday fire up its Heyden 4 site, which had been a reserve plant since mid-2021.

But the company warned that its output would be affected by railway capacity limits in ferrying hard coal to the site.

– Dismantled –

Germany began winding down its coal-fired power plants in the last few years, in view of meeting a target to end usage of the fossil fuel by 2030. 

But Russia’s invasion of Ukraine has upended plans as Moscow reduced energy exports to Germany in what Berlin believes is retaliation for its support for Kyiv.

Chancellor Olaf Scholz’s government has said it would stick to the 2030 coal exit timetable, but in the meantime, it authorised the restart of 27 mothballed plants or those put in reserve to help fill the energy gap until March 2024.

With a capacity of 875 megawatts (MW), Uniper’s Heyden 4 figures as the largest on the list. 

But the Moorburg plant, located in the suburb of Hamburg, had been one of the most modern in the world.

It was shut down in the summer of 2021, just six years after it was put into service, in exchange for a public subsidy programme aimed at cutting coal from Germany’s energy mix.

Since then, the operator has started dismantling and selling the parts that are not necessary for hydrogen — a priority for Germany’s future energy sources. 

Before it closed, the plant churned out around 11 billion kilowatts per year — the equivalent of the electricity consumption for the city of Hamburg.

But now, the installation is no longer complete.

In the turbines hall, thousands of small components have been packed away into boxes. A rotor, an element that allows the turbine to turn, is packed in aluminium, ready to be sent off.

The transformer is also no longer functioning.

“Without the transformer, the power plant is no longer linked to the network and cannot produce any electricity,” said Vattenfall. 

Pointing at rust that has accumulated on the components over the last year, the operator’s spokesman Gudrun Bode said: “We can’t restart a plant just like that.”

– Retired –

With winter round the corner, the race is getting tighter for Germany to ramp up its power generation capacity.

But so far, only one — the Mehrum plant with a capacity of 690 MW, has restarted. 

Besides technical issues, power suppliers are struggling with an acute worker shortage.

In Moorburg, “most of those who left have found a job, or are retired,” said Wacker.

Energy giant RWE told AFP it is seeking several hundreds of workers as it prepares to reopen three plants with a capacity each of 300 MW.

Logistics was also turning out to be tricky, with a drought further putting pressure on the distribution network.

The river Rhine has been a key route for coal transport to power plants in the west of the country. 

But record low water levels over the last week have limited shipments and forced suppliers to turn to rail transport — putting further pressure on strained cargo trains.

Uniper has said Heyden 4’s operation will be “limited partly by limits of rail transport capacity bringing coal to the site.”

Energy supplier STEAG has also said that it would bring into operation two coal-fire plants from its reserve.

It has targeted November as a possible restart date, but it also noted that current rules require sites to have coal supplies for 30 days — something that would be unachievable “given the current tight logistics situation on rail transport”.

In a bid to unblock the jam, Berlin decided Wednesday to prioritise coal and oil cargo over passenger travel this winter.

China’s slowing economy has left millions of young people fiercely competing for an ever-slimming raft of jobs and facing an increasingly uncertain future.

Official data released this month showed one in five young people in Chinese cities was out of work in July — more than three times the national average and the highest recorded since January 2018.

Nearly 11 million graduates entered China’s bleak job market this summer with the economy growing at 0.4 percent in the second quarter, the weakest in two years.

Zhao Yuting, 22, told AFP companies were reluctant to hire as the economy cools — and that experienced workers were now jostling for entry-level jobs, elbowing out green hands such as her.

Since graduating in July, she submitted her CV to dozens of companies.

Only a handful called her back for an interview, only to turn her down saying she lacked experience.

Armed with a degree in English, Zhao thought she could earn a living as a tutor until she found full-time work.

But recent crackdowns on the tech and education sectors, which usually absorb fresh talent, have evaporated such jobs.

“I’ve been job hunting for two or three months but the prospects of being hired look slim,” said Zhao, who has been forced to move back in with her parents while she hunts for work.

“The longer it takes, the greater the pressure.”

– Slim prospects –

Analysts blame a slowing economy crippled by Covid lockdowns, as well as the large cohort entering the labour force during the graduating season in July and August, for the slim prospects facing China’s youth.

Official data does not track unemployment among rural youth, and the real jobless population could be more than double the official number, estimated Zhuang Bo, an economist at research group TS Lombard.

Blue-collar workers, too, are struggling to find work as growth in the manufacturing and construction sectors cools.

“The reality is more serious than what the data shows,” said Ho-fung Hung, who specialises in China’s political economy at Johns Hopkins University.

“If the problem continues without remedy, it will easily spread social disorders.”

At a job fair in the tech hub Shenzhen, long lines of anxious parents and young graduates waited for a chance to chat with recruiters.

But headhunters at the fair said they were cherry-picking graduates from top universities, because only a few positions were available.

“My goal was to work in Shenzhen, in China’s Silicon Valley,” Luo Wen, a computer science graduate, told AFP.

“But after more than four months of searching, I’m ready to work even in a smaller city, for less pay.”

– ‘I can’t see the future’ –

Graduates who managed to find work this year were offered salaries that were on average 12 percent less than last year, data from online recruitment firm Zhaopin showed.

And while some job seekers were lowering their ambitions, others were biding their time pursuing further studies.

Experts warned that this may lead to “degree inflation”, where employers demand higher and higher qualifications for jobs that do not necessarily require them.

Analysts blamed government policies that saw a rapid rise in college students over the past decade as the economy failed to accommodate more knowledge workers.

“The pandemic and lockdowns simply aggravated the problem,” Hung said.

The government has pledged to shore up employment by offering tax relief for small businesses and more start-up funding.

Premier Li Keqiang has said China’s employment crisis is “complex and grave” and called on state-owned companies to step up to stabilise the economy.

And as growth in the private sector slows, job seekers have flocked to cram schools to prepare for highly competitive civil service exams.

A record-breaking two million people signed up for the national civil service exam last fall.

A recent survey by 51job, one of China’s biggest job search services, found that 40 percent of respondents preferred stable state jobs over corporate careers.

But for Zhao, who cannot afford to study further and does not have the connections to secure a government job, few options remain.

“I feel that I can’t see the future,” she said. 

“I haven’t made any progress. It’s miserable.”