Celebration or Collapse?
At the beginning of this month, in assessing Egypt's drawn-out negotiations with the IMF for a sorely-needed $4.8 billion bail-out loan, this writer noted that "the country is likely to struggle on for the rest of the year without the loan, or at least until the parliamentary elections in the fall, somehow coping with a summer of worsening fuel and food shortages, power cuts, a dearth of foreign investment and tourism - and domestic unrest".
About a month later, the IMF loan, under discussion for nearly two years, is still, at best, "pending" (according to a government spokesman), and economic disruption is indeed worsening. The summer has barely begun, yet already more of the perma-protest-process in Cairo, and other Egyptian cities, is virtually certain this Sunday. President Muhammad Morsi, the first Egyptian President to be freely elected, had hoped the day could be a celebration of his one-year anniversary. Instead, the army is already deployed at key sites throughout the country, and the unrest is expected to be on a scale equivalent to that which toppled Hosni Mubarak in 2011 , and at least as violent. Secular Egyptians object to the increasing influence of the Muslim Brotherhood in Morsi's government. But all Egyptians are frustrated by an economy on the brink of collapse, and a failure of government at virtually every level - fuel shortages are now acute, power outages frequent, food staples (even bread) rationed, if available at all, general price inflation is accelerating, and the marked ineptitude of the Morsi government in attempting to improve everyday conditions is made worse by corruption as insidious and prevalent as it was under Mubarak.
International investors have disappeared. So have tourists. The Egyptian pound and foreign exchange reserves continue to drop precipitously. Importers have been forced almost exclusively into a black market for currency exchange. This weekend's demonstrations, especially if they are violent and prolonged, will only ramp up pressure on the pound, with the threat of a disorderly fall that becomes beyond control of the monetary authorities. U.S. Secretary of State John Kerry, on his fifth recent visit to the Middle East, is set to meet with Israeli and Palestinian officials this coming week in efforts to renew peace talks. No doubt, while Mr. Kerry negotiates in Amman and Jerusalem, he will also be carefully watching events in Cairo. Descent into chaos in Egypt would only worsen the sectarian upheavals spreading from Syria into Lebanon, Jordan, Turkey and Iraq, and drawing in Iran and Israel.