Egypt

The manager of the Cairo Sheraton Hotel and his wife, the famous belly dance Nagwa Fouad, recently threw a lavish early evening cocktail reception to mark the hotel's eighth birthday.

Every inch of wall space in the ballroom was lined with tables bearing limitless quantities of roast beef, smoked salmon, shrimp, and local delicacies like stuffed vine leaves and shawarms, marinated sliced lamb grilled on a spit and served on bread with sesame sauce.

The liquor supply, in a country where the retail price of a bottle of Scotch is nearly equal to a policeman's monthly salary, was unlimited.

AMID THE USUAL conversation about Middle East peace prospects and vacations in Europe, hardly a word was heard about the issue that really matters to the overwhelming majority of Egyptians at the other end of the social and economic scale - a breakdown of the food distribution system that has created shortages of bread, flour, fruit and tomatoes and has driven meat prices even further beyond the reach of many families.

The supply of oranges and bananas, normally plentiful this time of year, dropped to a trickle a month ago. Long lines have formed at markets selling black market tomatoes at inflated prices. The bread shortage has touched off debates in the parliament and a burst of directives from Cabinet officials.

What appears to have happened is that Egypt's delicately balanced system of distributing essentials to its 40 million people - a hard-to-manage mixture of private enterprise, state and cooperative markets and government subsidies - gave way at several points at once.

The oranges are said to have vanished because the government, always on the lookout for hard currency, tried to take advantage of the scare in Europe over mercury poisoning in oranges from Israel and authorized excessive exports. Tomatoes and other vegetable, though plentiful in the villages, are hard to fin in Cairo because wholesalers kept them off the market in protest over price controls.

As for the bread shortage and the soaring price of meat, they are linked in a bizarre economic chain that the government has not been able to break.

A staple of the Egyptian diet is a rough loaf of bread made with coarse flour that sells for a few pennies because it is heavily subsidized by the government. Its weight and price are fixed by law.

Some bakers are cheating by shorting the weight without cutting prices and using the extra flour to make higher-profit items like pastries. In rural villages, according to newspaper reports, peasants who in the past baked their own bread are buying in markets because the subsidy makes it cheaper. But the real problem is that the subsidized bread is so cheap that cattle breeders are using it for fodder.

It's about a third the price of hay, which is so expensive it has been driving up the price of meat, and since the bread can be purchased in unrestricted amounts, it's going to the animals instead of to the people.

In a wry commentary on this situation, a newspaper cartoon depicted a group of barnyard cows eating round loaves of bread, with one of them observing. "This people food isn't any good unless it's washed down with 7-Up."

The government cannot cut the bread subsidy because that would drive the price up beyond the reach of many families, especially urban workers, who depend on it. But it is looking for ways to control abuses.

The Ministry of Supply authorized an increase in the flour allocations to all provinces, and ordered surveillance teams to inspect the bakeries and make sure they produce authorized products at full capacity.

MEANWHILE, MEAT prices have enriched Cairo's butchers, who are regarded with disdain by the Egyptian bourgeoisie because they don't have the social standing or education to match their money.

At a recent luncheon sponsored by General Motors - also at the Sheraton - to introduce its new models, an Egyptian journalist who specializes in economics offered this list of the kinds of people who can afford air-conditioned Buicks and Chevrolets in such a poor country:

"First, thieves and smugglers. Second, butchers. Third, doctors. Every doctor in Egypt has a waiting list of patients. And fourth, anyone who owns an apartment."

The last was a reference to the acute housing shortage in Cairo, in which ownership of an apartment is like ownership of a gold mine. With the approach of summer, the city is witnessing the annual phenomenon of people moving out of their own flats to live with relatives or parents so they can let out their own places to hot weather visitors from the Persian Gulf at vast markups.