Egypt under Mubarak was a tightly-controlled kleptocracy, and Egypt since Mubarak has been an uncontrolled kleptocracy, in which public officials steal whatever isn’t tied down. Shiploads of rice, diesel fuel, and other tradables are leaving Egyptian ports for hard-currency markets, while the country–which imports half its caloric consumption–runs out of money. Mubarak’s elite has helicopters revving on their roofs. It’s no surprise Islamists swept this week’s parliamentary elections. Whom do we expect Egyptians to vote for?
A new book by an economics reporter at Egypt’s al-Wafd party’s newspaper alleges massive corruption at the country’s central bank. Reviewed in al-Wafd newspaper today, the book by Mohamed Adel Ajmi claims that central bank chief Farouk Abd El Baky El Okdah exercises one man rule over the country’s banking system through cronies in all the central bank’s major departments. The central bank’s reserves, Ajmi claims, are unaudited and subject to the personal control of the central bank governor, who abused his position to enrich political allies of deposed Egyptian president Hosni Mubarak.
Theft on the grand scale from central banks is nothing new in the Muslim world. Last September, “Mahmoud Bahmani, the head of Iran’s Central Bank, denied rumours that $2-billion has already been transferred out of the country as part of a $3-billion embezzlement,” for example. The al-Wafd report has some credibility, considering that the Egyptian military dismissed all the central bank’s outside directors in October, leaving no-one but political appointees.
The central bank has financed perhaps $7 billion of flight capital out of its reserves, according to Raza Agha of Royal Bank of Scotland, as the Financial Times reported Nov. 4. Egypt’s spendable liquid reserves are well below the $22 billion figure mentioned in most news accounts–probably $13 billion, according to Agha, or less than three months’ import coverage.