Now that America-hating Islamists control three-quarters of Egypt’s parliament and the military government has rejected American protests at the prosecution of U.S. citizens for supporting democracy, Egypt is asking for $11 billion in Western aid. That has to be the least popular idea to float down the Potomac in a long time. Nonetheless, the Obama administration and its supporters in the Punditeska doubtless will ask American taxpayers to ante up a large part of the $11 billion handout, in the interest of “promoting Egyptian democracy.” Only in America do we feed the mouth that bites us. CPI Financial News reported on Sunday:
Mumtaz El Saeed, Egypt’s Finance Minister, says the country needs $11 billion to help it get through the next fiscal year, as well as help with economic reforms, according to a report in Al Ahram, a local newspaper.
This comes as rating agency Standard & Poor’s lowered its long-term foreign- and local-currency sovereign credit ratings on the country to ‘B’ from ‘B+’; with a negative outlook.
S&P said that Egypt’s external position has deteriorated and is likely to weaken further, absent stabilisation in the domestic political situation alongside external financial support.
“Egypt’s external financing risks have risen significantly, with foreign direct investment having declined sharply and net portfolio flows also having turned negative. Egyptian Central Bank interventions–to support the Egyptian pound in the face of significant capital outflows and double-digit annual inflation–have resulted in a sharp decline in net international reserves. These were $16 billion at end-January 2012, down from $36 billion at the start of 2011. Historically, S&P’s assessment of Egypt’s external score has been a relative strength to the rating; this is now being eroded. It estimates that net international reserves, excluding gold, now cover less than three months of goods and services imports compared with more than six months at the start of 2011,” the rating agency said.
What Egypt’s reserves might be is unclear — the New York Times recently published an estimate of $10 billion, or less than two months’ imports — but at least half of the $20 billion to $25 billion loss in reserves is the result of flight capital. Only half reflects the minimum, essential import needs of a broken economy that imports half of its caloric consumption.
Wealthy Egyptians, that is, are moving their money out of the country at the rate of $2 to $3 billion a month. The actual rate is higher, because a great deal of diesel fuel, propane gas, rice, wheat, and other things are stolen and sold overseas. As I reported (exclusively in the English-language media) last October, Egypt’s generals fired all the outside directors of the country’s central bank, which means that no-one outside the military knows precisely what is happening. After sixty years of military rule, Egypt’s military runs the Egyptian economy, which means that most of the capital leaving the country belong to the generals or their friends and family.
To ask Americans to pour more money into this kleptocracy is outrageous. Like Somalia, ordinary Egyptians will never see the benefits. But that is precisely what the Obamoids will demand. Washington Post columnist David Ignatius, for example, begs America not to cut off aid in response to Egypt’s provocation:
What kind of democratic revolution in Egypt is it that brings charges against 19 American non-governmental organization workers who have been advocating democracy? The answer is that it’s a confused revolution, looking for people to blame for its troubles. The United States should stifle its anger for now – and avoid a hasty cutoff of aid that would make a bad situation worse.
Ignatius sounds like comedian Joe E. Brown at the end of Some Like It Hot: No matter what Egypt does, his response will be, “Nobody’s perfect.” Of course, Egypt is not only asking the United States not to suspend the $1.3 billion in aid that it already gets, but to hand over a great deal more. No doubt some colonels haven’t bought their 100-meter yacht yet, and it hardly seems fair.
Fortunately this is an election year, and Republicans can use the Egyptian fiasco as a horrible example of budgetary waste.
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