Political Ambition, Economic Neglect

Last week, Egyptian President Mohamed Morsi took one step back from his - and his Muslim Brotherhood's - power grab. He reversed his snap decision on November 22 to grant himself sweeping new powers, which included "temporary" exemption from judiciary oversight. But he is proceeding with a planned constitutional referendum, now scheduled for this weekend and next. The draft constitution, hastily passed on November 30 solely by Islamist parties in a single, late-night sitting of the constitutional assembly, would strengthen sharia (Islamic law), and pays scant attention to the rights of individuals, the press, and trade unions, and to the role of the judiciary.

Morsi has clearly miscalculated. His decree and planned referendum have provoked secular Egyptians into further - at times violent - demonstrations in Cairo on a scale equivalent to those of the Arab Spring revolution against the Mubarak regime. Yesterday, the political crisis deepened, as judges announced their refusal to oversee the referendum, and the defence minister, Abdel-Fatah el-Sissi, felt compelled to call for a "national dialogue meeting" between the Muslim Brotherhood and other, secular political parties.

And as political upheaval rolls on, Egypt's economy continues to deteriorate. Its current account and budget deficits are huge (the latter estimated at 11% of GDP), the official unemployment rate is 12.5%, price inflation is running at 8%, and growth is in free-fall, as tourism and exports drop.  It was announced yesterday that an urgently-needed $4.8 billion IMF loan, scheduled for final Board approval this week in Washington, has been postponed. President Morsi, clearly attempting to mitigate the severity of the Cairo protests, this week cancelled planned tax increases on a broad range of goods and services which formed an integral part of the IMF loan agreement.

In commenting on the loan delay, Finance Minister Mumtaz al-Said noted that "of course the delay will have some impact, ..but I am optimistic everything will be well, God willing". Now that's optimism.