Category Archives: The Egyptian coup

Ali Mamlouk’s visit to Cairo confirms Egyptian alignment with Russian/Iranian axis in the Middle-East

The visit of Syrian intelligence chief Ali Mamlouk to Egypt isn’t the first, but its official nature now highlights the long-standing support of Assad on the part of the Sisi’s régime. 

The recent diplomatic break with Saudi-Arabia and the revelation that Iraq is prepared to replace severed Saudi oil supplies to Egypt, together with the recent military exercises carried out with Russian forces, confirms Egypt’s position now as an integral part of the Russian/Iranian axis.

This Al-Jazeera report covers the implications of Ali Mamlouk’s visit to Egypt.

It should be added that Obama’s foreign policy created the void in Syria which permitted Russia to install itself, through Iraqi auspices (so Iranian influence) at the UN, as a major player in the Middle-East. Furthermore, Israel would seem to be acquiescing to this new security architecture in the Middle-East, while at the very same time acquiring massive sums of money from the US as ‘compensation’ for agreeing to the Iran nuclear deal. Given the inane nature of US foreign policy, Israel, like Egypt, will get US Aid whether it does what the US wants or not.

The contradictions in US foreign policy are removing the very few options left the US may have to stand up against this new regional security architecture in the Middle-East. US support of the Syrian Kurds against Turkey, is driving even this NATO member to reorganise its own security with the help of the Russians. US acquiescence to the Iranian use of Shi’a militias against Sunni jihadi groups in both Iran and Iraq effectively wipes out its allies and proxy instruments in the region.

By the time DAESH/ISIL will have been deal with, the US will effectively have lost the Middle-East, and we shall be living in a multi-polar world.

25 million Egyptians go hungry, and many risk the sea

The Sisi régime is quickly destroying Egypt, turning it into a failed state in a mere 3 years since the coup.

A boat capsized eight miles off the Egyptian coast on 21 September, leaving 204 people drowned, including several children and teenagers. So far, the number of drownings this year surpasses the figure recorded last year of 3,771, until now the highest ever recorded.

27.8 percent of Egyptian population lives below poverty line: CAPMAS

Egypt’s official statistics agency said on Tuesday that the Egyptian poverty line stands at an income of LE5,787.9 annually and LE482 monthly, 48 per cent higher than in 2012/2013.

About 27.8 per cent of the Egyptian population is currently living below the poverty line, according to a Central Agency for Public Mobilisation and Statistics (CAPMAS) survey addressing income and expenditures in 2015.

The poverty line is defined as the minimum income deemed adequate for an individual to meet his basic needs. The poverty line in Egypt differs from one area to another depending on the cost of living in each area.

The Egyptian poverty line was raised from LE326 monthly in the 2012/2013 survey to LE482 in 2015, an increase of 48 per cent, said Professor of Statistics at Cairo University Heba al-Laithy who took part in preparing the CAPMAS survey.

The annual rate of inflation in consumer prices reached 14.8 per cent in June.

The data from the survey indicates that 2015 saw the highest poverty levels since 2000. Poverty rates have hiked to 27.8 per cent in 2015 compared to 26.3 per cent in 2012/2013 and 25.2 per cent in 2010/2011.

The current poverty line means that a family made up of 5 individuals needs LE2,372 monthly to float above the line.

Laithy believes there is a direct correlation between the increase in family members and the vulnerability to poverty. That is in addition to the role played by illiteracy. She said that “the illiterate are usually the poorest.”

She added that “Across all age groups, the poor are less likely to enroll in education, which means that poverty is inherited and the poor will remain poor. However quality education is able to eject citizens from poverty.”

The increase in food prices also contributed to an increase in poverty rates, according to the professor.

The CAPMAS survey pointed out that the urban population is richer than the rural one but the former suffers higher levels of income inequality.

Rural areas, on the other hand, witnessed increased levels of inequality and poverty during the past two years compared to the urban areas where inequality levels decreased and poverty levels stabilised.

Higher poverty levels were seen in the rural areas of Upper Egypt where poverty reached 56.7 per cent, while the poverty level in lower Egypt was recorded at 19.7 per cent.

The governorates of Assiut and Sohag ranked the highest in terms of poverty levels at a rate of 66 per cent. Poverty in Cairo, on the other hand, reached 18 per cent of its inhabitants.

The survey’s results signified that food subsidies protected 4.6 per cent of Egyptians from falling below the poverty line, according to the data.

The results also indicated that 77 per cent of the 10 per cent of Egyptians with the highest spending used subsidy cards in 2015. This is more than previous years, which shows inefficiency in Egypt’s subsidy system supposedly tailored to benefit lower income groups.

The Death of Moderation in Egypt: one extrajudicial killing too far

Western media broadcast the statement yesterday from Egypt’s Interior Ministry that Mohamed Kamal and Yasser Shehata, said to be members of the Muslim Brothers ‘armed wing’, were killed in a firefight when police raided their hideout in the southeast of the capital late on Monday.

The problem with that statement was that the night before, the spokesperson for the Muslim Brothers announced on the group’s Facebook page, that Mohamed Kamal had been arrested and taken into custody by Egyptian National Security at the agency’s headquarters in Lazoughly. This agency has been at the centre of a massive programme of ‘disappearances’, highlighted recently in Amnesty’s July 2016 reportOfficially You Do Not Exist’.

In view of this high level of state terrorism currently in Egypt, the official announcement from Muslim Brothers was careful to charge the Egyptian State with responsibility for Mohamed Kamal’s safety. Mekameleen TV anchorman Mohamed Nasir broadcast the Facebook announcement from Turkey to the world, as soon as it appeared. The subsequent Interior Ministry statement consequently fell flat on its face.

But this was no ordinary arrest. Kamal was a member of the Muslim Brothers ‘Guidance Bureau’, a small group of elected leaders who direct the affairs of the organisation. Hence the urgency behind the Mekameleen TV broadcast.

The arrest itself would appear to have been a routine operation. It is well known that Egyptian Military Intelligence personnel operate alongside UAE operatives trained by Israel in the country’s cellphone network control rooms. Arrests are made of targeted figures in order to set off a flurry of related phone calls in reaction, allowing tracers to establish the locations of the arrested person’s contacts. Voice over IP has been disabled in Egypt in order to drive all phone traffic over the cellphone network. Meanwhile, terrestrial phone communication in Egypt has atrophied sharply due to a lack of investment, and the fact that it has always been spied on anyway.

Kamal would not have been legally charged when arrested. The purpose of the arrest was merely to establish his network of contacts.

However, when junta leader Sisi was informed by Military Intelligence (which he used to run and over which he keeps strict personal control) that Kamal was in custody, and that he was being returned to his home, the order came that he should be murdered.

The course of these events resemble those of June 30th 2015 when 13 Muslim Brothers going about their business doing charity work, mainly attending to the needs of families whose breadwinners were being held in jail, were killed. Once again these were described as an ‘armed gang’ who ‘died in a fire fight’: except that the evidence on the corpses, specifically on their fingers, showed that they had been processed through the country’s penitentiary system the night before, and had been brought to the empty apartment where they were found, merely to be set-up and then executed in cold blood.

The death Mohamed Kamal, however, signals a new phase in the escalating violence in the Middle East and in the increasing lack of capacity of European nations to prevent future chaos from invading their shores. I shall come to the reason for this shortly. First, it is instructive to ask why it is that European governments are intent on self-harming.


Given that Italy is in the front line of the refugee crisis, it is ironic that it was the very first European nation to formally recognise the blood-soaked Egyptian junta leader. It is even more ironic that the Egyptian National Security Agency committed what has become its internationally most talked-about extrajudicial killing against an Italian citizen: that of Giulio Regeni.

It was all a matter of money and greed. Italy’s ENI had discovered a massive gas find in Egyptian waters, which it was keeping quiet about in the period after the 2011 revolution and during the rule of the legitimately elected president of Egypt, Mohamed Morsi. After the coup, and the formal recognition of its leader, ENI announced the find.

It may seem strange that this couldn’t be done at the time of Mohamed Morsi. However, it is clear that ENI was merely following the hard-nosed approach of British Gas’s negotiating tactics over the West Mediterranean Deep Water concession. The British company was demanding direct ownership over the gas assets and accrual to it of 100% of the profits. It is hardly surprising that Hatem Azzam, secretary-general of the parliamentary industry and energy committee under President Morsi, found that handing over ownership and all the profits on a gas concession to be patently absurd.

The principal cheerleaders and enablers of the 3rd July coup would appear to have been Blair and Britain Inc. This represents the very same agglomeration of interests that perceive a distinct danger in the potential coming to power in Britain of someone like Jeremy Corbyn, with a balanced and pacific approach to the Middle East. These interests not only organised a (now failed) coup to oust him from his position as leader of the opposition, but also scripted the British media’s attacks on him.

The Italians merely followed in the wake of Britain’s rapacious onslaught.


More recently, however, British interests have begun to perceive Sisi as a serious risk. His lunatic rule has led to clear signs of a rough ending for the soldier-fantasist. However, if Sisi is proving his staying power, it is largely thanks to France’s intervention and that of François Hollande. Egypt’s recent unusual turn to the French for a series of spectacular arms deals, including the $5.2bn contract for 24 Rafales, the $1.1bn contract for two Mistral amphibious assault ships, and associated helicopters, Gowind corvettes and FREMM frigates, is strange. What is even stranger is that they have all been delivered to the Egyptian Navy. One wonders why.

While the Rafale deal in particular appears to be a reaction to the souring of US-Egyptian relations, from Sisi’s point of view, it has actually more to do with the consolidation of his power in the Egyptian armed forces. Navy leaders are important allies of Sisi. It is under their control, and that of Chief of Naval Forces Osama el-Gindy in particular, that the country’s legitimate President was being held hostage in a hangar close to the Military Academy in the port of Abu Qir. If the hapless politician is being shunted around for security reasons, then this will inevitably be taking place between the various properties (including ships) belonging to the Navy.

Early in 2014, elements of the army attempted to get rid of Sisi, but were overcome. Their eventual trial was covered by journalist Hosam Bahgat, who was to be detained for his trouble. Journalists have been disappeared for much less in Egypt, but Bahgat has long standing links with the US democracy-promotion bureaucracy since 2002, and is an official UN committee member. Ban Ki-moon and the US secured his release. It would seem that events in the Egyptian Armed Forces at the time were troubling the White House.

Sisi consolidated his power by appointing Mahmoud Hegazi, whose daughter Dalia is married to his son, and who had succeeded him as head of military intelligence, in the post of army chief of staff in March 2014. In the move, Sobhy Sedky, who is Minister of Defence which posted acquired a guaranteed eight-year term under ‘Constitution for Everyone Except the Opposition’, was stripped of all effective control over the army.

Mahmoud Hegazi, together with naval chief Osama el-Gindy, are two of the figures who were revealed in the Mekameleen TV leaks, agonizing about how to reorganise Morsi’s incarceration to render it legal under Egyptian law, given that all attempts at charging the country’s freely elected president with various trumped-up charges, had consistently fallen foul at the very first hurdle: namely, that he had technically been kidnapped and been held hostage illegally in a secret unofficial location.


But what was Hollande’s purpose in coming to Sisi’s aid?

Basically, Sisi was prepared to help Hollande achieve those projects set in train in 2011 by former French president Nicolas Sarkozy, who it was generated the “political momentum” behind United Nations Security Council Resolution 1973 on Libya that authorized the defense of civilians in Benghazi with “all necessary measures” by NATO. (Note that it is this UNSC resolution in particular which left Russia feeling betrayed and which drove its officials to respond to Iranian pleas for help to defend Assad in Syria).

The words in quotation marks Above come from the 14 September 2016 UK foreign affairs committee report, which excoriated David Cameron’s slavish following of Sarkozy, who had sought to wage war in Libya in order for France to, again in the words of the report, “gain more influence in North Africa” for him to “improve his poll numbers”.

It is worth mentioning that the report laid “ultimate responsibility” for the air assault that led to Gaddafi’s fall and the civil war that followed at Cameron’s door. The ex-British PM having earlier refused entirely to cooperate with the report promptly left public life completely on its publication, to avoid being obliged to answer any questions.

Be that as it may, not only was Sisi prepared to help Hollande complete Sarkozy’s project, but he had the means to do so. Ahmed Gaddaf al-Dam, Muammar Gaddafi’s cousin and chief aide, had escaped Libyan justice and was living in Cairo under Sisi’s protection. Leaks from Sisi’s office from late 2013 disclosed the sordid details of negotiations with Gaddaf al-Dam, and involving the UAE, for a takeover of the oil ports in Libyan Gulf of Sirte. Not long after that, renegade general Khalifa Haftar’s first “television coup” took place on February 14, 2014 in Tobruk with Egypt’s backing, after considerable shuttling back and forth to Cairo, in a move which wasa surprise to the US’.

The pay-off for Hollande’s efforts, and those of his assorted allies, came as Haftar took control this September of all the oil ports and terminals and the first shipment of oil in two years set sail. Hollande’s pretence that his involvement in Libya is in order to fight DAESH/ISIL, is exactly that – pretence. It is the forces associated with the beleaguered UN-backed government of Fayez al-Sarraj that is doing the fighting against DAESH/ISIL in the city of Sirte, while Haftar’s forces backed by Egypt and Egypt’s UAE handlers actually attacked armed groups in Benghazi that posed a potential threat to oil flows.

Hollande, meanwhile, in a contemporaneous display of astonishing hypocrisy (even for him), attacks the US for its post 9/11 ‘war of terror’, on his Facebook page.


If Iraq, Syria, Libya and Yemen are not enough, Egypt, with twice as many people as those countries combined, promises a doom-laden future for Europe. Mohamed Kamal’s murder will lead to new levels of terrorism and violence on a scale not yet experienced. Perhaps for the brain-dead group-think addicts of US and European bureaucracies, complete unravelling and ultimately disaster are requirements of action.

There are two things about this murder which are different to previous extrajudicial killings: who the person was and the circumstances of his death.

First, this is the first time a member of the Muslim Brothers ‘Guidance Bureau’ has been gunned down in cold blood since Hassan al-Banna was killed in 1949 at the age of 42. The rage on the street is now palpable, but this is a result of a more complex series of events that took place in the ranks of Muslim Brothers this year.

Kamal was 61 and an ear-nose and throat specialist. Essentially a peaceable character, he went about his business without much fuss. However, Kamal became enraged at the policy of the Egyptian Interior Ministry and its thugs at the National Security Agency to abduct and gang rape women, often girls as young as 13, from districts whose populations were known to belong to the opposition. This was done while they were under arrest without charge in police precincts. The purpose was to goad relatives into violent responses that would then enable the police to kill them.

Kamal lobbied the various leaders of the Muslim Brothers for a less passive, more robust, form of resistance. Against the advice of his colleagues he developed a strategy of ‘targeted response’ to pursue acts of revenge directed at police officers involved in illegal and brutal attacks against the population. However, a serious backlash erupted from senior sections of the Muslim Brothers.

A war of words engulfed the movement at the beginning of 2016, with Kamal on the one side, Mahmoud Ezzat, acting head of the movement, and Talaat Fahmy, then spokesman for the movement, on the other, which shook the rank and file. In the face of the current unbelievable repression, the formal unity of the movement had, until then, been considered sacrosanct.

Kamal agreed to stall, and to defer to the judgement of éminences grises within the movement. Iraqi scholar Mohamed Ahmed al-Rashid, who resides in Turkey, was invited to judge between the conflicting parties. His decision, apparently after much soul searching, was that the Muslim Brothers should limit themselves to civil disobedience, and disavow retaliatory measures. Kamal – to the intense disappointment of many of the younger elements – agreed to obey the ruling.

His murder on Sisi’s orders has effectively driven the higher echelons of the Muslim Brothers hierarchy to irrelevance. The young have taken over. All they remember are the years since 2011. Moderation is now officially dead.

If anybody amongst brain-dead group-think addicted US and European apparatchiks have their fingers on the pulse, it is perhaps the British establishment. After considering a number of ways of finessing the incredibly complex task set them by the Brexit referendum, Teresa May’s Tory government, has suddenly decided on a ‘hard Brexit’, irrespective of cost.  The reason: controlling Britain’s borders and managing immigration.

Hungarian leader Victor ‘razor-wire’ Orban, seems to agree with the British, as do almost all other Eastern Europeans, and the German electorate. It is ironic that, irrespective of their Islamophobic bluster, these countries are unlikely, unlike Britain, whose past governments have been major drivers of these developments, to escape the worst ravages of what is to come.

Their discomfort, however, is as nothing compared to Egypt’s prospects of violence and despair, thanks to Europe’s greed and stupidity.


Unlike Morsi, Corbyn was able to rout the plotters

Peter Oborne writes

There are some intriguing parallels between the disloyalty of Blairite Labour MPs towards Corbyn and the attitude of the Egyptian deep state towards President Mohamed Morsi after he was elected president in free democratic elections in 2012.

The Egyptian Army and intelligence services, the business elite and the Nasserite left simply refused to recognise the legitimacy of multiple elections and would not enable Morsi to govern. They had their way, but the democratic transition was set back years in the process.

So far, that has been the approach of Hilary Benn, Tom Watson, Ben Bradshaw and the other Labour wreckers and saboteurs. They are refusing to accept that Corbyn has a democratic mandate and, as a result, are determined to destroy him from within.

read the full article here

Coptic Church astonishingly ties itself to the mast of the sinking ship

Amr Khalifa writes

For most world leaders, a visit to the UN general assembly is a political formality. But for an Egyptian head of state hemorrhaging support, it was life or death.

This is doubly compounded when the Coptic Church, a powerful entity in Egypt, hitches itself to the state’s wagon. An approach derided by almost everyone didn’t stop Pope Tawadros from declaring “’Egyptian dignity is represented by how Sisi is received“, thus politicising the church for the umpteenth time since the coup.

Domestic strife abroad

Across the street from the UN, where Sisi gave an extraordinarily ordinary speech on 20 September, two groups of Egyptians confronted each other. The pro-Sisi crowd was sprinkled with healthy doses of Egyptian Copts, while the opposing Islamist camp was a sea of yellow flooded with Rabaa signs.

Dynamics of the day: greatly reduced numbers all around but an inversely proportional increase in venom. Only one day after Sisi told renowned American journalist Charlie Rose on his PBS show that “there can be no return to dictatorship“, the madness of the statement was reflected in the insanity of  mini-war outside the UN, with Sisifites and Islamists barking at one another.

Appropriately, and with equal irony Obama, droned on in his UN speech: once strongmen take over via the military, said Obama, there are only two paths: “permanent crackdown which causes strife at home or scapegoating enemies abroad, which can lead to war”. Furthermore, in the case at hand, the strife spreads to Egyptians living abroad.

Under the leadership of H H Pope Tawadros II of Alexandria, the Coptic Church has supported  the Sisi régime ever since the 3 July 2013 coup d’état.

The pope’s decision to commit his all, including financial backing for buses to ship Egyptian Christians from local New York and New Jersey churches to the UN, only helped to inject more venom into protests that can best be labeled as a “rent-a -protestor” fiasco.

Further complicating the scenario was the decision by the evangelical church to join the melee.

The mini-war outside the UN

So confrontational and nearly violent were the previous skirmishes between the Sisifites and Islamists in New York City that the police saw fit to separate them by placing two other, cordoned, smaller demonstrations between them.

This did little to quash the ugliness. With faith the engine, religion becomes the match to politics’ gasoline. Each brainwashed side, however, left the politesse of their respective faiths behind at home.

“Sisi is their uncle and he makes their blood boil,” chanted the Sisi camp in rhyme in Arabic. Those brandishing the internationally known four-finger Rabaa salute instead used a middle -finger salute while shouting “Masr (Egypt), El Sisi 3ar (is a pimp)”.

Just for fun, a very agitated Sisi fan raised his shoe in the direction of the Islamists, a very insulting gesture in the Arab world.

So charged was the atmosphere, this writer felt the palpable danger that he should be identified as a journalist. Organisers – clearly aware of the threat of violence – had in excess of a dozen mammoth-sized bodyguards sprinkled throughout a pro-Sisi crowd of no more than 150. This did not temper the barrage of insults from both sides.

“The Brotherhood is terrorism,” volleyed the mostly Christian, pro-president group while the other side, numbering approximately half its counterpart, retorted, “Bye bye, bye bye, you sons of a wh*re.” These were supposedly adults, uninterested in anything but expressing their bigoted views. Sisi “is the president we chose and love” said the pro camp but, a pebble’s toss away, he was a man “who does not represent” the anti camp, guilty of grave human rights violations and crimes rising to the level of “high treason”.

Reality bites

The regime and the upper ranks of the church inhabit an alternative universe. In that world, the Egyptian autocrat insists that Egypt is a friendly home for 5 million refugees but, per the UNHCR, the figure is only a quarter million.

In this universe, Egyptian Christendom “is on the runway, on course [for]…a fantastic beginning”, according to a senior church official visiting New York as part of the Sisi visit.

Mind you, two weeks ago, the New York Times wrote of Egyptian Christians at “breaking point” amid rising sectarian attacks in the volatile south, where a large concentration of Christians live and the mention of a church being built can result in bloody riots.

In fact, with the recent passing of a controversial “new Church law”, it is a situation replete with unfairness towards a systematically trampled upon minority. Authorities “are sending a message that Christians can be attacked with impunity,” said Joe Stork, deputy Middle East and North Africa director for Human Rights Watch.

In reality, there is no “runway” for the betterment of Christian lives. There are only sectarian attacks that often result in the burning of Christian homes, kidnappings and forced migration of Christians. The new church law requires “church building be commensurate with the number Christians in the area” and gives governors vague veto rights with no recourse for appeal.

Because of a lack of separation between church and state, “reality”’, as seen by the Church’s upper rungs, bears no resemblance to the everyday reality of the congregation.

With anger rising among the church ranks, dissenting voices are not a majority yet are far from absent. A well-known and respected US-based church official, with over 100 books to his name, Father Morcos Aziz, recently called Sisi “the worst president” in an emotional video on YouTube. “We were deceived… in him I see treason,” blasted Aziz.

Shortly before the Sisi speech this week, 82 Copt activists also voiced their displeasure with church support for Sisi’s visit. “The Coptic church’s support of Sisi will result in negative outcomes for Copts,” said well-known activist and Coptic scholar Ishaq Ibrahim, one of the activists who signed a statement. Ordinary citizens, especially in the south, continue to suffer from “’discrimination and sectarian violence,” said their statement.

The marriage with no end?

So why does the church ignore increasingly disgruntled voices and put all its weight behind a regime that has made little, if any, structural changes to a minority under fire?

Political calculations are cynicism embodied. On 3 July 2013, while Sisi informed Egyptians of Morsi’s removal, sitting just to his left were the leaders of Al-Azhar and the Coptic church. Both leaders of the preeminent religious institutions of a nation that likes to describe itself as “religious” harnessed their political fortunes to Sisi’s horse.

So it goes, the Tawadros and Sisi marriage cannot end in divorce. Even as prospects for a successful Sisi presidency dim by the day, the Coptic patriarch holds Sisi’s hands stubbornly and publicly. In so doing, the Egyptian pope ignores the lessons of successful democracies. “The purpose of separation of church and state is to keep forever from these shores the ceaseless strife that has soaked the soil of Europe in blood for centuries,” once said James Madison, the fourth American president.

Even if Pope Tawadros is unfamiliar with Madison’s separation, his memory need only drift back to 2012 and the Muslim Brotherhood rule to understand the underlying logic behind it.

Millions of Egyptians rejected Morsi’s rule because of the intertwining of religious rhetoric with political rule. It is a major omission of historical memory to neglect that SCAF put their hands firmly in those of the Brotherhood. What makes Tawadros so certain Sisi won’t betray the church again?

Moreover, did the holy body’s patriarch forget that, until this day, the terrorist behind the Al-Qaddissin Church bombing, which occured days before the 2011 revolution, has yet to be caught? Accordingly, it seems rather mind numbing to many that church support for Sisi is cloaked in religious blessing.

Only days ago, a prominent church official, Bishop Beeman, dispatched by the pope to New Jersey to rally support for Sisi explained, “what I am doing here is patriotic work not politics”. Minutes later, his cohort Bishop Yoaanis, explained how buses, paid for by the church, would transport church goers to the UN. Actions, always, belie words.

In Egypt, instead of separation, we have desperation of church and state. Fail to understand the past and an entire nation will be doomed to emulate those UN protestors.

Read original article here

Egypt’s IMF mega-package: Throwing good money after bad

Amr Darrag, previous planning minister in Morsi’s government, writes:

The IMF recently announced an agreement in principle to provide the Egyptian regime with the second largest package in the international lender’s history. It is three times as large as the previous package offered to Egypt during the short-lived Mohamed Morsi presidency.

Egypt first entered into negotiations with the IMF shortly after the 2011 revolution. However, after broad-based opposition by Egyptians across the political spectrum to the harsh terms demanded by the IMF, negotiations were put off. Under the Morsi presidency, negotiations resumed with the objectives of securing an IMF loan to bolster the economic credentials of the country and encourage further injections of foreign capital, both loans and direct investment. The total package negotiated at the time was $4.7bn.

The initial IMF demands were opposed by the Egyptian government as likely to have a disproportionate impact on lower and middle income Egyptians. The Egyptian government presented a counter-proposal that mitigated the impact on poorer Egyptians and still met two key demands: reducing the budget deficit to 9.5 percent of GDP and restructuring the subsidy regime. The government developed a mechanism for food and fuel subsidies that targeted end-users rather than distributors and retailers thereby reducing the potential for waste and corruption.

Unacceptable demands

In June 2013, the IMF backed out of the negotiations on the pretext of insufficient political support from the opposition for the IMF package. Furthermore, it demanded a hike of the sales tax to 12.5 percent, which was not acceptable to the government due to its direct negative impact on low and middle-income families.

The IMF is making more demands: an end to the subsidy regime, implementation of VAT, reduction of governmental jobs and devaluation of the Egyptian pound. Given the massive deterioration in the Egyptian economy under the military government of Abdel Fattah al-Sisi, these changes will almost certainly wreak havoc on the majority of Egyptians, 95 percent of whom earn less than $14 per day, and more than one quarter of them earn less than $1.5 per day.

But beyond the impact on large strata of society, the important question to pose is whether this package will actually lead to an improvement in the moribund Egyptian economy. To answer that question, one must first ask another question: why is the Egyptian economy so moribund?

Under the presidency of Mohamed Morsi, foreign exchange reserves hovered at around $16bn, the Egyptian pound mostly traded around 6 pounds to the US dollar and there was no gap between the official and black market rates. The economy made modest gains and inflation was a reasonable 6.9 percent.

Three years of decline

Today, three years after the violent coup of 2013, foreign exchange reserves remain at $15.5bn, but that number is almost entirely made up of foreign government deposits due to be paid in two to five years. Inflation has doubled to 14 percent, a seven-year high, and the Egyptian pound has lost half of its value in three years, trading at nearly 13 pounds to the dollar with a severe shortage.

The official exchange rate stands at a Kafkaesque 8.75 pounds to the dollar; that is the gap between the official and black market rates is almost 50 percent of its value. Egypt’s foreign debt has now soared to $53.7bn. The combined domestic and foreign debt now stands at over 100 percent of the GDP with another $30bn being added as a result of the IMF package, which requires an additional $6bn annually to successfully implement the envisioned program.

Debt servicing currently eats 31.5 percent of the budget and this will only soar with the additional debt. And, ironically, the IMF has now dropped any pretence of requiring societal and political consensus to approve the package.

But this morbid account of the state of the Egyptian economy does not answer the underlying question of why it has come to this sad state.


There are three basic reasons that account for the current state of the economy and none of them is likely to improve as a result of the IMF deal.

First, the regime is corrupt to the bone. The government’s own loyal auditor announced that the estimated income lost to corruption totalled 600 billion pounds ($67bn) over four years. He was promptly sacked and prosecuted for harming Egypt’s image. The corruption is more than a symptom of political life, it is a structural feature of this regime that depends for its survival on paying off those that support it, whether crony pseudo-capitalists, security forces or other vested interests.

Lack of vision

Second, there is no economic vision for the country. The military has achieved a near total monopoly over economic life, thereby choking private enterprise and is focused on Soviet-era mega projects in the deluded belief that propaganda and growth are in fact one and the same thing.

Finally, this is a brutal, repressive and exclusionary regime that has engendered both legitimate peaceful opposition to its policies and practices as well as terrorist activity that threatens vital interests like tourism and the Suez Canal.

The IMF is unconcerned about the structural reasons for the economy’s near-death experiences. And yet, it is obvious that a substantial portion of the money that will be injected into the Egyptian economy will go to line the pockets of those in power, and some to cover the short-term accounts deficit, including debt servicing.

But the consequences to Egyptians of this package will be devastating, creating further instability and societal breakdown.

Over the past three years, Egypt received some $50bn from its Gulf sponsors and the economy has progressively flirted with complete disintegration. As the annual need for hard currency to secure imported basic needs of Egyptians now exceeds $80bn, with limited resources after the collapse of the tourism industry and lack of foreign investment, even if Egypt secures another $30bn over the next three years, there is absolutely no reason to believe that this constitutes anything other than “throwing good money after bad”.

Read original article here