What foreign observers forget about post-Morsi Egypt: It’s the economy, stupid

Special to WorldTribune.com

By Gregory R. Copley, Editor, GIS/Defense & Foreign Affairs

Egypt’s military leadership entered August 2013 without any illusions as to the magnitude of the challenges facing the Egyptian Armed Forces, the Egyptian government, and all of Egypt, in the coming months and years.

The decision by the Supreme Council of the Armed Forces (SCAF) to act as the instrument to replace the government of former President Mohammed Morsi with a civilian Interim Administration on July 3, was taken in the full certainty that it would lead to a new age of armed protest and insurgency by supporters of the Ikhwan al-Muslimin (the Muslim Brothers). The SCAF officers all recall when Islamist insurrection led to the assassination of President Anwar El-Sadat in 1981.
That expected new process of revolt has already begun.

Images of conflict in Egyptian cities dominate the international media, but there are many more dimensions to the transformation than that. Many of these facets focus around the impact of a declining economy, dwindling agricultural production, and exhausted food stocks. These factors would, in any event, have led to a collapse in national cohesion had Morsi stayed in power longer because the Morsi government was, if anything, compounding the causes of these trends of decline.

So, as analyst Yossef Bodansky pointed out, had Morsi stayed in power, he and the Brotherhood would have taken the full brunt of criticism for the total collapse of the economy and food supply. The military leadership was aware of that, too, but felt that it had to act to stave off the collapse as much as possible, even if it took Morsi “off the hook” for the collapse, when it came.

Equally, in understanding the consequences of the action to support the documented demand — the 22-million signature petition organized by the Tamarod movement — by a vast swathe of the Egyptian public for Mr. Morsi’s removal, the Egyptian Armed Forces leadership had considered and planned what it needed to do to hold Egypt together over the coming years.

Some of the key factors considered by the Egyptian SCAF include:

1. The necessity to make decisions, insofar as possible, which might be disapproved by — or incur the wrath of — Washington, even at the risk of a short-term suspension of US financial and military technology aid;

2. The necessity to bring in urgent infusions of cash and food from Saudi Arabia and the United Arab Emirates (UAE);

3. The necessity to stop further deterioration in relations with Israel and, if possible, to resume income from the sale of gas to Israel;

4. The necessity to stop external support for the Ikhwan from escalating and involving weapons importation, even at the risk of alienating Turkey;

5. The necessity to immediately stop Morsi’s “distraction war” which was being generated by the former government against Ethiopia, and returning dealings on Nile water useage back to the diplomatic track which interim leader Field Marshal Mohammed Hussein Tantawi had begun before Morsi assumed the Presidency;

6. The necessity to build an image of the new Interim government of President Adly Mansour as being secular and pro-business, as well as liberal, to reassure both domestic audiences as well as the international media; and

7. The necessity to continue/resuscitate the pace of foreign direct investment, and ensure ongoing confidence in the use of the SUMED (Suez-Mediterranean) pipeline and the Arab Gas Pipeline (to Israel and Jordan), in order to diversify the economic base, given the virtual total loss of tourism revenues, as well as agricultural exports (cotton, in particular).

Again, these are by no means the sum of concerns for the government. Day-to-day security is critical, and sources at the very highest levels in the Egyptian Ministry of Defense have indicated privately that there will be no compromise or delay in suppressing Islamist militancy, and in ensuring cooperation with allies internationally to ensure that foreign-supported agitation does not gain traction.

Of primary importance will be the initiation of attempts to revive agricultural output and food production, even if it means artificially supporting purchase prices for produce. This would assist in maintaining optimism (or restoring it) in the rural areas which have often been the source of support for the Ikhwan. Agriculture’s revival is also a slow process, but unless begun immediately the challenge of rural unemployment will be multiplied dramatically in the coming year, not only in terms of political unrest, but in terms of the highly-destabilizing tendency for even more rural citizens to migrate to Cairo, where little economic relief can be promised in the short-term.

In this regard. the new government can be assumed to delay or modify the plan of the 2012-13 budget to dramatically reduce the subsidy on consumer petroleum. Some subsidies have already been eliminated, and that would not be reversed, in all likelihood, but future subsidy removal would be done with extreme care over the coming year.

Egypt, with the single act of ending the Morsi “experiment” on which the Obama White House had insisted, has rebuilt optimism in Saudi Arabia, Jordan, the UAE, Israel, Syria, Libya, Morocco, and probably Tunisia. Certainly, there is a sense of relief in Addis Ababa and the Upper Nile riparian states. This, clearly, is a time for Egypt to build new intelligence and diplomatic relationships with all of the states mentioned. The Turkish and Qatar governments, the regional administrations most averse the the change in Cairo, are not in a strong position to act against the new government in Egypt.

The Iranian government, although wary at the example of popular revolt which removed Morsi in Egypt, see the broader framework as now being more favorable to a revived balance of “traditional” powers in the greater Middle East: with Iran and Egypt as the principal cultural poles.

The threat which the new Egyptian government faces is that the Islamist insurrection could take on the shape of the Algerian civil war which ran for a decade at the end of the 20th Century. Indeed, the Islamist-jihadists have threatened such a visitation on Egypt. But in Algeria, the government, with some heavy-handedness, prevailed over the Islamists, and the prospect is that the Egyptian government could also cope with such an insurrection.

Can Egypt, in the meantime, begin to rebuild tourism revenues, as Tunisia began to do after its change of government? It is possibly too early to begin a marketing campaign to achieve this, given that the first step is to ensure calm at locations frequented by tourists. But that process could begin within six to nine months, even though foreign tourists would be seen as an early target for Islamist militants.

In the meantime, the primary task is to ensure that the substantial emergency aid promised by Saudi Arabia and the UAE is managed to best effect in terms of ensuring immediate food supplies and stimulated employment.

The incoming Vice President, Mohamed El Baradei, meanwhile, is hoping to parlay his new position — which he could hardly have expected, having polled so poorly in the 2012 Presidential election race — into a real chance at the Presidency. He has already told his US confidants that “when I am President, I will broaden the implementation of the Camp David Peace Accords with Israel to give greater security to Israel, and I will reduce my links with Iran”. That sounded like a mixed signal, in some respects, but El-Baradei asked a major Washington law firm, which has dealings with Israel, to pass on that message to Jerusalem.

Vice President ElBaradei equally plays on the fact that, absent the restoration of Morsi, he has grudging approval from the Obama White House. This may have given Dr Elbaradei some cause for optimism, but it still remains to be seen whether the Egyptian Supreme Council of the Armed Forces will ever again blindly follow the wishes of the White House, given that so many of the problems Egypt faces today were the result of bad advice — or demands which had undesired outcomes — from Washington to earlier Cairo administrations.

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