EGYPT: PHARAOHS WEEP AS EGYPT’S ECONOMY, STATE COLLAPSE; M.E., ISRAEL THREATENED, AS OBAMA STICKS WITH MORSI

EGYPT’S CRISIS COULD BE HEADING TOWARDS US

Barry Rubin

Jewish Press, April 7th, 2013

Therefore, my Harry, Be it thy course to busy giddy minds With foreign quarrels; that action, hence borne out, May waste the memory of the former days.” –William Shakespeare, “King Henry IV, Part Two.”

THERE’S NO doubt about the growing crisis in Egypt, a country that is crashing economically and whose highest government official running the religious establishment just called for genocide against Jews. Here are four dispatches from a 24-hour period:

The Associated Press reports:

    A ferocious fight between members of Egypt’s Muslim Brotherhood and their opponents near the group’s Cairo headquarters…could mark a dangerous turning point… raising worries that the confrontation between Islamists, who dominate power in the country, and their opponents is moving out of anyone’s control.

The Christian Science Monitor speaks of “Bread riots or bankruptcy: Egypt faces stark economic choices.”

Then there’s the International Herald Tribune’s, “Fall in Egyptian Pound Weighs Heavily on the Ill,” which speaks of “a shortage of an estimated 400 different drugs, some of which are considered lifesaving….”

The Atlantic, formerly one of the most reliably apologetic publications on the Brotherhood regime, speaks of vigilante groups lynching alleged criminals.

And that doesn’t even include massive power cuts; the food poisoning of around 500 students at al-Azhar University due to negligence; the institution of blasphemy cases for alleged insults toward Islam (by an actress) and to the country’s president (by a television comedian). Even the April 6 Youth Movement, which functioned as an ally and something of a front for the Brotherhood during the early days of revolution, has turned against it.

The Brotherhood-controlled state institutions have threatened to lift the licenses of two television stations that have been critical. In the turbulent northern Sinai, armed militant groups openly paraded with weapons. So even with an almost $5 billion IMF loan supposedly on the way—none of which will ever be paid back, meaning taking away from Western economies to prop up an Islamist anti-American regime—the prospects aren’t good.

It also won’t change the ideology of the Muslim Brotherhood which is not, like Communism during the Soviet Union in its last days, a movement that doesn’t take its ideas seriously. This is a vigorous movement that feels the future belongs to itself and which will soon be governing four places (Egypt, Gaza Strip, Syria, and Tunisia). The official Muslim Brotherhood site just tweeted the claim, earlier made by President Morsi, that Jews control the American media. Of course, that same media has been incredibly friendly to the Brotherhood and apologetic for its behavior.

Egypt’s powerful minister of religious affairs, the person who gets to decide who gets hired as preachers in mosques, as religious instructors in schools, who approves those textbooks and controls vast funds, spoke as follows recently:

    We hope the words of the Prophet Muhammad will be fulfilled: “Judgment Day will not come before” the Muslims wipe out the Jews and added that Israel will cease to exist.

The fact that such statements don’t even register in the Western media input shows how conditioned such countries have become from ignoring such things, though anti-Jewish statements from Morsi got a bit of coverage–in the context of being regrettable but not anything meaningful–when that became unavoidable.

Consider, then the simple facts: A country of 85 million people, heavily armed (with U.S. help) is burning with anarchy and violence, teetering on the edge of an economic abyss, and threatening genocide against a neighbor with less than one-tenth of that population. Might this be a matter of concern? Well, the crisis is being covered but there doesn’t seem to be much worry about this in Washington. And even the media coverage lacks two vital elements.

First of all, none of the many articles pointing to the disaster in Egypt have pointed out that this was all totally predictable and yet no one in the establishment—the “herd-news,” to coin a phrase—predicted it. There is no reflection on how mistaken enthusiasm for an Egyptian revolution helped transform a mildly repressive pro-Western regime that managed Egypt’s economy as well as possible into an Islamist-dominated half-dictatorship, half-anarchy disaster.One reason recognizing this mistake is important is that the same thing is about to happen in Syria. And I don’t say that because I regret the fall of the anti-Western radical Assad regime but rather that I shudder at what is to come.

The second point is to analyze what this chaos means. It does not mean a stable democracy, that’s for sure….Ideally, of course, the forces in Egypt will say, “Let’s stop acting so silly! Let’s all be nice to each other and create a representative republic and pull together to fix the crisis.” That’s sort of the kind of fantasy usually reserved by the West for the “peace process.” In Egypt’s case it is too obviously nonsense for everyone except editorial writers who tell foreign dictators and terrorists what they “should” do.

Alternatively, the best chance in theory is a military coup. Let’s remember, however, that the Egyptian army is what people have been bad-mouthing for two years now and Western governments worked hard to push them away from any possible political power. The destruction of the Turkish armed forces’ political role—far more positive than that of Egypt’s equivalent—has also been achieved.

The army might some day step in but, after all, that would just bring us full circle to 1952, the last time it happened in Cairo, creating a regime that lasted almost six decades! Besides, the army is inhibited by concern that such an action might set off a civil war that would make Syria look like a picnic in terms of bloodshed though the army would eventually win. And the Egyptian army is not institutionally moderate either. It includes growing Islamist forces among the officers and it is mainly concerned about its own economic holdings.

So what’s left? Well, the moderates can’t win but the Islamists can. The Brotherhood is not going to give up power and the Salafists look forward to a chance to kill various categories of Egyptian citizenry.

The worst but by no means impossible outcome, then, is that the Muslim Brotherhood will suspend democracy—in practice if not in theory—and with the help of the other Salafists will crush moderates, which means Christians and anyone dreaming of equal rights for women.

It is vital to understand that there is no real solution for Egypt’s economy. There is no policy that a government might follow—especially once the country has become unstable—that would work. There are too many people; too few resources. Labor discipline and productivity simply cannot compete with Asia. Massive subsidies needed to avoid a violent explosion eat up all the aid money.

After the $5 billion from the IMF has been spent, Egypt will be no better off economically.

What happens when Middle East states become ungovernable for political or economic reasons, or both? There’s a long list of examples. But there’s another factor that happens, too.  It’s turning up the demagoguery against foreign scapegoats and getting involved in foreign adventures in order to mobilize support for the regime (which is incompetent at solving domestic crises). This sometimes leads to war.

One example of this is Iraqi dictator Saddam Hussein invasion of Kuwait in 1990 because things weren’t going well economically at home in Iraq.

Who are the two most popular scapegoats? Israel and the United States. Who are the two most popular scapegoats for the Muslim Brotherhood and Salafist extremists? Well, the contemporary Egyptian Islamists have added a third sector: the Saudis.

Moderates or any non-Islamist will be accused of being a foreign agent and being involved in economic and social sabotage to ensure they are thoroughly discredited.

Now this prediction might not happen. But it is certainly the most reasonable analysis, especially when the Egyptian regime could link up with a Syrian counterpart and—if they solve their current spat—Hamas which rules the Gaza Strip.

Obviously, this presents serious challenges to Israel. On one hand, Israel has no influence on what happens in Egypt or Syria. Does anyone really believe that “solving the Israel-Palestinian conflict” will fix these issues? Well, yes, all too many people say they believe that, especially in Western policymaking circles. But the difference is that far fewer believe that any longer.

On the other hand, Israel is going to have to face angry, hostile regimes in Egypt, the Gaza Strip, Lebanon, Syria, and Iran. Fortunately, these regimes will be in two different—Sunni and Shia– camps. Equally, as they wreck their own countries they are less able to form a conventional military threat. And as they spend most of their energy on internal battles over power, they have fewer resources for foreign adventures.

Still, they will be tempted to create dangerous crises anyway that will cost billions of dollars and damage (probably even end) the lives of actual people.

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THE PHARAOH WEEPS:
EGYPT IS PERCHED ON THE PRECIPICE OF CHAOS

Judith Miller

City Journal, April 4, 2013

The Cairo subway was one of Hosni Mubarak’s proudest achievements. Built at a cost of several billion dollars in the late 1980s, it reflected Egypt’s ancient civilization and modern Egypt’s national pride. Air-conditioned in summer, quiet as a pharaoh’s tomb, the subway was well-lit and beautifully appointed. Display boxes of ancient Egyptian artifacts lined its platforms. A special police unit kept the stations clean, safe, and graffiti-free.

Then came the Egyptian revolution in January and February 2011. Today, the subway that transports roughly 4 million passengers a day throughout this vast city of roughly 17 million is a wreck. The tile walls of its central hub, Tahrir Square—the epicenter of the protests that forced Mubarak from power—are chipped and filthy. Its platforms are strewn with litter. A main passageway from the platform to the square has been dark for weeks; no one has changed the burned-out bulbs. There are no policemen in sight. The passageways stink.

The subway is a metaphor for post-revolutionary Egypt. The square that symbolized the revolution is now occupied by riffraff and protestors who assemble periodically to show the government that the people remain in control. Traffic around the Middle East’s largest public square has been diverted.

While Cairo may still be safer than Chicago, or even New York, Egyptian women, for the first time in memory, fear shopping or taking cabs at night. Cairo’s police, blamed for the deaths of protestors and unhappy with their pay, working conditions, and lack of respect, sit in their precinct houses, refusing to provide security that Egyptians once took for granted. Tourists have vanished, depriving Egypt of a vital source of jobs and hard currency. Unemployment has risen from 9.8 percent in 2010 to 13 percent today. Inflation is officially 8.7 percent, though more like 9.5 percent, or even higher, for food and basic commodities, say economists. Even these figures are misleading, since an estimated 40 percent of Egypt’s economy is “black” or informal, unregulated by and unreported to the government, according to Hazem el-Beblawi, an economist who served as deputy prime minister under the army’s unpopular transition government in 2011. Beblawi, a strong advocate of free-market liberalism who resigned his post that year, accusing the army of taking Egypt in the “wrong direction,” says youth unemployment probably tops 19 percent. Egypt, he estimates, has less than its officially claimed $13.5 billion in hard-currency reserves (versus $36 billion before the revolution). “Egypt imports roughly $60 billion worth of goods and services,” he says. “It exports under $25 billion.”

By summer, Beblawi predicts, the government will be unable to import the wheat that sustains the poor—Egypt imports 10 million tons of wheat per year, the most of any nation—or the diesel that fuels bread ovens and transports 99 percent of everything that moves in this country of more than 85 million. Egypt’s dilemma is this: it cannot politically afford to stop providing the costly subsidies to the poor that distort its economy. Poor Egyptians spend 70 percent of their income on food, versus 55 percent for Egyptians as a whole; Americans spend roughly 14 percent. But unless it reduces these subsidies and adopts a pro-growth budget, Egypt cannot secure the $4.8 billion International Monetary Fund loan it needs to unlock what Angus Blair, a Cairo-based former investment banker and founder of Signet Institute, an economic think tank, estimates could be $14 billion in aid and investment. Egypt spends about 20 percent of its budget on fuel subsidies alone. In other words, the government would be committing political suicide to do what economists say must be done to sustain the country’s economic viability. Only a government that enjoys public confidence can risk taking such steps. “Egypt’s economic crisis has political roots,” Beblawi says. “And a political solution is needed.” So far, he adds, none is in sight.

With their legendary “sabr,” or patience, nearly exhausted, Egyptians blame the lack of growth, jobs, fuel, services, security, and stability on what many call the “incompetence” of President Mohammed Morsi and his ruling Muslim Brotherhood. And they blame the United States, too, for supporting Morsi, who eked out an election victory last year and took power last July thanks only to low voter turnout and a fractious, divided secular opposition. “People no longer trust Morsi,” Beblawi said, speaking for many among Cairo’s professional elite and middle classes.

Just about the only consensus in this deeply divided country is that Morsi and the Muslim Brotherhood are failing. The Brotherhood is seen as repressive politically and inept economically. The MB opposed the IMF loan before it was forced to support it. Even so, two years and three rounds of negotiations later, Egypt seems no closer to securing the IMF’s stamp of economic approval than it was when the Brotherhood took power last summer. Last year, Morsi announced that the government would cut subsidies to meet the IMF’s demands, only to renounce his decision hours later, fearing a public backlash. The MB’s legal moves against allegedly “corrupt” businessmen from the ancien régime—former finance minister Youssef Boutros-Ghali, activist trade minister Rachid Mohamed Rachid, and Coptic billionaire activist Naguib Sawiris, Egypt’s second-wealthiest citizen, all of whom have denied charges of financial impropriety—have alienated potential foreign investors and prompted many wealthy Egyptians, even die-hard patriots, to move money and assets out of the country. Sawiris’s claim that the Brotherhood is “distorting” Egypt’s legal system to punish its political opposition rings true among middle-class Egyptians. “What’s happening now in Egypt resembles Mussolini’s rise to power in fascist Italy,” Sawiris recently told Al-Ahram Online.

International efforts to bolster Egypt—Qatar recently gave the MB government some $4 billion in aid; Saudi Arabia has donated $1.5 billion; and the United States, during Secretary of State John Kerry’s recent visit, kicked in $190 million—are “drops in the bucket” given Egypt’s monumental needs, says Beblawi. He estimates that, before this fall, Egypt must have an injection of between $10 and $15 billion in hard currency to prevent widespread hunger and fuel-shortage riots. “The aid so far is aspirin,” he says. “Egypt needs cortisone.”

Tourists, who once brought over $10 billion a year into the country, will not return without security and political stability, neither of which the Brotherhood has restored. Foreign investment, which under Mubarak topped $13 billion a year, or about 9.5 percent of GDP, has shrunk to roughly 0.4 percent under Morsi. Suez Canal revenues total no more than $5.5 billion. Remittances from Egyptians working abroad—the third major source of income and hard currency—have increased, but this is deceptive, Beblawi says. Because many overseas workers have been laid off—more than 1 million Egyptians once worked in neighboring Libya, for instance—Egyptians are bringing their savings back home. “This is a one-time injection of funds,” Beblawi says. “Soon, these workers too will be demanding jobs.” Some 750,000 Egyptians enter the labor force each year. The government has been able to create work for only a small fraction of them.

Egyptians are growing desperate for change. Many are now calling for the military to take control. “Most Egyptians believe in the integrity of the military, but the military does not want to be back in charge,” says Blair. A military coup is unlikely, many diplomats and Egyptian analysts agree. The military “was badly burned by the pounding it took when it ruled Egypt after Mubarak’s departure,” says a Western diplomat. Foreign and domestic analysts alike give poor marks to the Supreme Council of Armed Forces, the so-called SCAF, which to quell public opposition to its rule increased wages and hired more public workers, even as productivity growth remained flat. The Muslim Brotherhood’s passion for secrecy; the opacity of its political wing, the Freedom and Justice Party; its ham-handed drafting of Egypt’s new constitution, which led Christians and most non-Islamists on the drafting committee to quit; its reluctance to work with other political parties and factions; its arrests and the charges of torture of political opponents—all fuel suspicion that the tightly disciplined organization is seeking to solidify its control of Egypt and may be unwilling to relinquish it, no matter what. Since a court decision struck down the country’s electoral law, the Brotherhood is unlikely to face elections for a new parliament until the fall.

“They won’t work with others,” complained Mohammed Nour, the leader of a Salafist (fundamentalist) rival to the MB in an interview last week. As the Brotherhood’s popularity plummets, that of the Salafists grows. Egyptians increasingly see the Salafists as honest and pure, a plausible alternative to the Brotherhood. Meanwhile, the secular democratic opposition is growing despondent. “The Brotherhood is a fascist organization in democratic clothing,” said Bassam Fathi, a secular activist who was a leader of the Tahrir Square protests that ousted the Mubarak regime. “I fear that only the military can save Egypt.”

Some leaders of the National Salvation Front, the coalition of liberal, secular groups opposed to the Brotherhood, now favor the formation of a so-called “national unity government” to enable Egypt to manage its impending economic implosion. In an interview, Amr Moussa, the former head of the Arab League and a former foreign minister under Mubarak, said that to “save Egypt,” he was willing to work with the Muslim Brotherhood to form a government that would have the “broad-based legitimacy” that economic reform and political reconciliation required. “We must consider such a step for the sake of Egypt,” Moussa said. But President Morsi has shown little interest in such inclusion or compromise. Nor have other members of Moussa’s own National Salvation Front, such as Mohammed el-Baradei, the former head of the U.N. atomic energy agency. Many political dissidents want Egyptians to hold the Brotherhood solely accountable for the slow-rolling economic collapse that they see as inevitable, given current trends.

As for the Brotherhood, it seems to have no interest in or strategy for healing Egypt’s political rifts or solving the country’s economic woes. “The price for saving Egypt may be the Muslim Brotherhood itself,” said Gehad el-Haddad, a Brotherhood spokesman who heads an internal reform effort called the “Renaissance Project.” Membership in the MB’s political party has grown to 600,000, he says, but 75 percent of its new members are not part of the Brotherhood. “We’re new to governance,” said Haddad in an interview. “We have splits on the left and on the right. The Brotherhood exists for social change, but was pushed by circumstances into electoral politics—far beyond our comfort zone.”

What was really damaging President Morsi’s rule, he concluded, was Egypt’s bureaucracy. “The SCAF added a million public employees to our payroll,” he complained. “And we can’t fire anyone!” Most of Egypt’s public servants were hostile to the Brotherhood’s Islamist agenda, he asserted. “The bureaucracy was a thousand times worse than we ever anticipated. We’re stymied. We control only the top positions in ministries, so getting anything done has been difficult, given such entrenched resistance.”

That Egypt’s would-be “Islamic fascists,” as their critics call the hapless Islamists, blame their woes on Egypt’s 7 million public employees speaks volumes about the nation’s crisis of governance—never mind its increasingly grim economic situation. Somewhere, in an ancient tomb, a frustrated pharaoh must be smiling. Or weeping.

Judith Miller is a contributing editor of City Journal, an adjunct fellow at the Manhattan Institute, and a Fox News contributor.

THE US, THE BROTHERHOOD AND 

THE OPPOSITION – OLD WINE IN NEW BOTTLES

Khalil Al-Anani

Egypt Independent, Mar. 14, 2013

“Egyptians will not be fooled into participating in a fake democracy, regardless of the internal and external pressures,” opposition leader Mohamed ElBaradei said, in response to US Secretary of State John Kerry’s call for opposition parties to take part in upcoming parliamentary elections.

Most opposition factions gave the same response to Washington, which they have accused of bias toward the Muslim Brotherhood.

Everything has changed since the revolution, except for one thing: The relationship between the administration, the opposition and Washington. It is a relationship marred by the paradoxes rampant in political life.

The statement given by ElBaradei — which was echoed by the political powers comprising the National Salvation Front, most of which rejected meeting Kerry — does not differ much from what the Brotherhood used to say under the rule of ousted President Hosni Mubarak. It’s as though political players are trading positions.

Some opposition figures have gone so far as to accuse Kerry of being the “Brotherhood’s man in the US.” In an act of one-upmanship, the opposition refused to sit with Kerry. Some of its members even staged protests against his visit in an attempt to pressure Washington to change its approach, which the opposition says is invariably supportive of the Brotherhood.

Under Mubarak, the Brotherhood was equally critical of any visit made by an American official to Egypt.

Much like Mubarak’s regime, President Mohamed Morsy and the Brotherhood’s relationship with Washington is based on maintaining security and stability at the expense of democracy. Security, in this regard, is a loose concept that encompasses wide-scale control and even forcible imposition of stability, as well as the security of Israel and the protection of US interests in the region.

But regardless of that abrupt change in the Brotherhood’s position, which previously regarded the US as the “devil” — for everyone was aware of how this issue was exploited to serve ideological goals or elicit sympathy to either rally support or embarrass the Mubarak regime — what is genuinely remarkable about it is this sudden harmony, even congruency, in the visions of Morsy, the Brotherhood and the US.

This transformation is flagrant in the sense that it was not preceded by any ideological socialization to internalize this new relationship with the US.

One good example of this shift was when the Brotherhood turned a blind eye on US pressure on the opposition to participate in the parliamentary elections and its offer to be the “mediator” between both sides.

Ironically, such a mediatory role would have not been possible under Mubarak, who was described as Washington’s “strongest ally in the region.”

If anything, this demonstrates the fragility of the ruling regime and its failure to solve the political standoff with the opposition.

Morsy and the Brotherhood are trying to persuade Washington that they are capable of managing the country in its current situation. In making this claim, they are, on the one hand, banking on the weakness and fragmentation of the opposition and, on the other, trying to portray themselves as a guarantor of keeping Islamist extremism in check.

They replicate the same approach that was used by Mubarak against them and enabled him to maintain power for three decades. The Brotherhood is aware that Washington will not trust an opposition that cannot mobilize the street against Islamist extremists or defeat them in elections.

It is also unlikely that Washington would, at least in the short term, run the risk of antagonizing the regime in Egypt, whatever its affiliations, for the sake of a weak opposition incapable of rallying its supporters to overthrow the current administration.

Meanwhile, Washington seems genuinely confused. Since the Brotherhood took power, it has failed to shape a clear policy or strategy toward the new government in Egypt, even though it has been keen on getting across a positive message that it will not interfere with the will of Egyptians, as President Barack Obama recently said.

Moreover, policymakers and think-tank circles in Washington are still at a loss in searching for new options on how to deal with the Brotherhood. Obama’s administration seems torn between options.

It does not want to risk antagonizing the Brotherhood or pressuring them too much, so long as Morsy continues to play Mubarak’s role in maintaining Israel’s security, keeping regional stability and fighting extremism, etc. In fact, it also bears in mind what happened in Iran some three decades ago when it lost its chief ally in the Gulf in the late 1970s. It definitely does not want that repeated.

But Washington is also trying to keep its strategic alliance with Egypt, particularly with regard to armament, intelligence, logistical cooperation and military support. That is why Washington is keen on bolstering its ties with the military institution in Egypt.

And yet, Washington seems to be torn between ties with Egypt and its vital interests in the Gulf. There’s even talk about the US mediating between Morsy’s regime and Gulf capitals, which have been wary of the rise of the Brotherhood in Egypt.

To complicate matters further, the Obama administration is under pressure from the US Congress, with some members condemning US ties with Morsy’s regime, which they consider an enemy of the US and Israel. In addition, media and civil society organizations are also piling pressure on Obama with regard to issues of democracy, protection of minorities and humans rights.

Washington is walking a fine line to preserve these conflicting interests, all the while realizing that sacrificing Egypt as a strategic ally is out of the question, not only because of the cost, but also because it is not the proper time to radically review relationships. Washington is counting on being able to provide economic and financial support to bolster the Egyptian economy, and on the ability of the Egyptian military to intervene if internal conditions deteriorate and Morsy’s regime loses control like Mubarak’s.

In other words, Washington is dealing with Morsy as a bitter medication that will either treat the patient or push him to take another pill that may be even more bitter and less effective.

Discussions of the relationship between the regime, the opposition and Washington disregard one important determining factor — the revolution, known as the Egyptian street. 

All three parties make logical calculations, disregarding what the street could do to spoil their careful calculations. Morsy’s regime pays no heed to democratic transformation and has not taken any genuine steps in this regard, while the adolescent opposition is too lazy to contest the Brotherhood at the popular, electoral and organizational levels. Meanwhile, Washington is happy with that state of contention, which allows it to pressure both sides to its favor.

Khalil al-Anani is a scholar of Middle East Politics at the School of Government and International Affairs at Durham University, and a former visiting fellow at the Brookings Institute in Washington, DC.

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On Topic

Bread Riots or Bankruptcy: Dan Murphy, Christian Science Monitor, April 3, 2013—It was a perilous time for Egypt. The International Monetary Fund (IMF) was demanding subsidy cuts in exchange for a loan Egypt's leaders desperately wanted. So they complied, cutting subsidies on the bread, cooking fuel, and gasoline average citizens relied on to live.

The Mills of God Grind Slowly but Surely: Amr Adly, Egypt Independent, Apr. 5, 2013—A few days ago, the pro-Muslim Brotherhood prosecutor general pressed charges against a number of iconic youth revolutionary figures. The allegations were related to the recent clashes that took place near the Brotherhood’s headquarters in Cairo.

Egypt’s Economy Breathes: Michael Bassin , Times of Israel, April 11, 2013—1

Cash-strapped Egypt finally got some relief yesterday when Qatar announced that his country would buy $3 billion worth of Egyptian treasury bonds and provide Egypt with natural gas “whenever necessary.” Libya quickly followed suit, lending Egypt $2 billion that will be interest-free for up to 5 years, Arab dailies report.. 

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