updated 4/8/2008 4:59:03 PM ET 2008-04-08T20:59:03

Egypt's prime minister on Tuesday rushed to contain an explosive situation in a northern industrial city rocked by two days of deadly riots over high prices and low wages, some of the worst economic unrest here in 30 years.

The worker bonuses and other concessions promised to workers by the prime minister show the government's worry that economic angst could boil over — a risk the U.N. warns could hit many poor countries as world inflation spirals.

The soft approach is in stark contrast to the rough treatment that the quarter-century-old regime of President Hosni Mubarak metes out to its political opponents, particularly the Muslim Brotherhood, the country's most powerful opposition movement. Hundreds of Brotherhood members have been arrested in recent months, and the group was all but completely barred from running in elections held across the country Tuesday for local councils.

The worldwide rise in prices has struck particularly hard in Egypt, a top U.S. ally where 40 percent of the population lives near the poverty line of U.S. $2 a day. The Nile Delta industrial city of Mahalla al-Kobra has seen a wave of labor strikes since December 2006. On Sunday and Monday riots broke out, in which protesters tore down a billboard of Mubarak and clashed with police, leaving one protester dead, a wave of unrest unseen since 1977 bread riots.

Prime minister meets with workers
Prime Minister Ahmed Nazif rushed to Mahalla with several top economic ministers to meet with the workers at the 50-year-old state-owned Misr Spinning and Weaving factory complex that employs 25,000.

"We know Mahalla is suffering and you have passed through many crises," he told workers. "But it is through crises that men prove their mettle." He announced they would receive a 30-day salary bonus and promised to address their demands on healthcare and wages.

Workers in the hall cheered Nazif. But after the speeches, many in the audience were skeptical.

"What Nazif has said, we've heard it all before — what's new? They really have no idea how we suffer here," said Rashad Fathi, a factory worker who says his monthly wage of $34 is not enough to feed his four children.

The economic woes overshadowed Tuesday's municipal elections, in which turnout was meager. In polling stations in Cairo, only a few people were seen drifting in to cast ballots over the course of hours.

"Bread is getting more expensive. People are worried about that and most don't care about politics," said Medhat Abdel Nasser, a 20-year-old student, who walked by a polling station in Cairo without a pause.

The election underlined the government's ability to force out its top political competitor, the Brotherhood, which shocked authorities in 2005 with big victories in parliament elections that gave the group a fifth of the legislature's seats. Ahead of the local council vote, hundreds of Brotherhood members were arrested, and nearly 10,000 Brotherhood candidates were rejected or not allowed to register as candidates.

Officials try to curb violence
Authorities appeared far more concerned with preventing a continuation of violence in Mahalla.

"I think they realized what happens if there are street battles for a protracted period of time and this way is cheaper and better," noted Joel Beinin, an expert on labor politics at the American University in Cairo. "What if it (the unrest) lasted for a week, what if people did the same in Alexandria?" he said referring to the second largest city.

With prices for many staples in Egypt doubling over the past year, the government has also tried to stem complaints over shortages in supplies of subsidized bread, on which the country's poor rely. Fights over subsidized bread have killed several people in recent weeks.

Unrest over food prices is not unique to Egypt. On Monday, protesters angered by high food prices flooded the streets of Haiti's capital forcing businesses and schools to close as unrest spread from the countryside.

The U.N. humanitarian chief John Holmes warned Tuesday that the poor worldwide are under increased pressure by the expense of food.

"The security implications (of the food crisis) should also not be underestimated as food riots are already being reported across the globe," he told a conference in Dubai. "Compounding the challenges of climate change in what some have labeled the perfect storm are the recent dramatic trends in soaring food and fuel prices." he said.

Rising food prices
Holmes cited a 40 percent increase in the price of food worldwide over the last year,

Even after Nazif's visit, Mahallah remained tense amid fears of new unrest. Elections in the city were cancelled, and 15 of the 56 local council seats were given to various small opposition parties, while the ruling National Democratic Party took the rest.

"The election committee said they just didn't want any more problems in the city," said Zakariya Mahalawi of the small liberal opposition party, the Democratic Front.

The hospital, meanwhile, has yet to release the body of the dead teenager, in a move widely interpreted as an attempt to avoid an explosive funeral.

"I understand why people are so angry. These are just our kids and our sons they are rioting because they are depressed and frustrated," said worker Mervat Ahmed, right after the prime minister's speech.

A 28-year-veteran of the factory, Ahmed said she makes about $91 a month. "What can I do with my salary? I have three kids, and every day prices go higher and higher."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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