Egypt remains the key to what is left of the stability of the Middle East, and the indicators aren’t good.
Foreign investment is below levels reached during the second half of the last decade, according to Moody’s. Meanwhile, tourism has dropped sharply since the 2011 Arab Spring uprising because of political uncertainty. Terrorist attacks in recent months have further dented sentiment.
Since the Arab Spring, foreign-exchange reserves are down by half to about $15.5 billion at the end of July. This month, Cairo turned to the International Monetary Fund for a $12 billion loan over three years. Egypt is in discussions with other agencies, including the World Bank and African Development Bank, for more funding to help plug a funding gap that authorities estimate at $21 billion over the coming three years.
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Egypt’s economy is expected to expand at about 4% this year, according to the World Bank, not fast enough for a country where inflation hit 14% last month and the rate of unemployment is in double-digit percentages, according to the country’s statistical bureau. An IMF report in April predicted inflation this year would fall to 9.6%, compared with 11% last year.
The bureau said Monday that the number of tourists in July was 42% lower than the year-earlier period. According to official statistics, the number of tourists has dropped by nearly 50% since a Russian jetliner was downed by a terrorist bomb in October, killing all 224 on board.
Many Egyptians live on the edge of absolute poverty. Economic trouble isn’t a statistic to millions of people: it is hungry children, school fees that can’t be paid, medicine that can’t be bought.
Egypt is paying the penalty for its integration into a regional and global political system that has been upended. The rise of jihadi ideology, the inability of the government to maintain order, the combination of American retreat and low oil prices, the chaos in Libya, and the war in Yemen—these are all symptoms of a growing disorder.
The United States and other governments are wise to hold their noses about the Sisi government’s human rights record and provide aid, either directly or through organizations like the IMF. The human suffering if the economy continues to melt down and the political risk if the situation continues to deteriorate, would be profound.
But these are all stopgap measures, not a solution.
Meanwhile, the continuing problems of what was once the most powerful and influential country in the Arab world are encouraging those in Iran and Turkey who think that the Arab Era in the Middle East that began when the Ottoman Empire collapsed might be coming to an end.