mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Egypt Gets Economic Reprieve as Protests Gather Force


Egypt’s economy has stabilized this month as loans from the Gulf Arab monarchies start to kick in. $12 billion in aid that was promised immediately following the coup has by now stabilized food and fuel prices and boosted supply, normalized the currency, and stocks are surging, the WSJ reports. That should help Cairo get through this turbulent period without a loan from the IMF that would have necessitated difficult changes to Egypt’s generous subsidy program.

The economy might have stabilized for now, but the streets have not. Two days ago Army Chief Abdel Fattah al-Sisi asked Egyptians to take to the streets to stand up to “terrorists.” Today he announced that former President Mohamed Morsi would remain in detention and is accused of plotting with Hamas to escape prison, and of the “premeditated killing of officers, soldiers and prisoners” back in 2011. Thousands of pro-Morsi protestors are on the streets in Cairo today to continue calling for Morsi’s reinstatement and refusing to cooperate with those they see as the leaders of a coup.

Like other loans and aid to Egypt over the past few years, the $12 billion from the Gulf will dry up fast. The conditions the IMF has stipulated in its own loan package are necessary to fully stabilize Egypt’s economy for the long term. The big question is whether Egypt’s leaders, whether they turn out to be wearing military uniforms or suits, will have the courage and the mandate to make the necessary reforms.

[Muslim Brotherhood protesters in Alexandria, July 22. Photo courtesy Getty Images.]

Features Icon
show comments
  • wigwag

    “Like other loans and aid to Egypt over the past few years, the $12 billion from the Gulf will dry up fast.” (Walter Russell Mead)

    No it won’t.

    As long as the Egyptian military agrees to keep its foot on the neck of the Muslim Brotherhood aid from the Gulf will keep flowing. The Saudis have close to a trillion dollars in foreign reserves and the Gulf Arabs aren’t exactly hurting either. They have the ability to subsidize Egypt at the level of $10-15 billion per year for decades if they are so inclined.

    For the Saudi Royal family this is about survival. They will decide that $12 billion is a small price to pay.

    • Pete

      Thoughtful post.

      And it is good to see Arabs ‘helping’ Arabs for a change. Who knows, if the trend continues, it might give the US taxpayer some relief.

      As for the idea that the concerns of the IMF will become less consequential now that Egypt has found a new sugar daddy, I have a question. What happens to the previous western loans to Egypt? Are they to be forgotten, written off …. or to be re-paid?

  • Anthony

    The deep state institutionally has extractive political and economic patterns WRM. Short-term very little changes and WigWag alludes to some of the underlying factors (on plus side $12 billion normalizes currency and stabilizes prices) consequently institutional drift continues. IMF future conditions and loan superfluous without long-term political and economic transformation – and that’s revoluntionary to say the least.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service