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Spengler

Egypt’s Economy Is No Longer the Problem, and Not Our Problem

April 16th, 2014 - 5:42 pm

Between the February 2011 fall of Egyptian President Hosni Mubarak and the July 2013 military coup that ousted the ill-fated Muslim Brotherhood regime, I published nearly two dozen articles contending that Egypt’s economy was the problem. Egypt is a banana republic without the bananas, dependent on imports for half its caloric consumption. The foreign policy establishment ignored Egypt’s economic free-fall, focusing its tunnel vision on the players on the political stage. The liberal internationalists of the Obama administration agreed with the neoconservatives that the “Arab Spring” would give rise to a new era of Muslim democracy, and both John Kerry and John McCain counseled patience and sympathy for Egypt’s Islamists. That this was delusional is demonstrated by events: the majority of Egypt’s adult population, nearly 40 million people, took to the streets to demand the Brotherhood’s ouster in the summer of 2013.

Now, long after the fact, comes Steven Cook of the Council on Foreign Relations, warning of Egypt’s impending insolvency and urging American aid to prevent it. In what the CFR calls a “Contingency Planning Memorandum,” Dr. Cook writes:

Egypt is experiencing a deep economic crisis. The country’s foreign currency reserves are less than half of what they were before the January 2011 uprising, threatening Egypt’s ability to pay for food and fuel. Egypt’s budget deficit is 14 percent of gross domestic product (GDP) and its overall debt, which is the result of accumulated deficits, is more than the country’s economic output. In this difficult economic climate, roughly 45 percent of Egyptians live on less than two dollars per day. Inflation, which reached as high as 12.97 percent after the July 2013 military coup, is currently at 11.4 percent. Tourism revenue—traditionally a primary source of foreign currency along with Suez Canal tolls and remittances from Egyptians working abroad—is less than half of what it was in the last full year before the uprising. Foreign direct investment has dried up outside the energy sector. Unemployment remains high at 13.4 percent. Among the unemployed, 71 percent are between fifteen and twenty-nine years old. This economic weakness makes it politically difficult to address the problems that contribute to a potential solvency crisis because the necessary reforms will impose hardship on a population that is already experiencing economic pain.

He wants the US to resume food aid, and he wants Egypt to come to terms with the International Monetary Fund — this after the Obama administration suspended military aid, and the Saudis paid for $2 billion of weapons from Russia. It is laudable that Dr. Cook has noticed Egypt’s economic problems, but situation has since changed. First, the Gulf States are financing the country’s emergency needs and will continue to for some time, because the Sunni world cannot afford to let the most populous Arab country collapse while it is trying to position itself against Iran.

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Top Rated Comments   
Americans elected Obie twice to abdicate its superpower role. I think it can be said now that this is one of the main reasons for people voting for Obama. The media had sold them on the Evil Bush. They were tired of draining wars in Iraq and Afghanistan that were not fought to be won. Perhaps that was impossible. They wanted to return to the island with two protective oceans, and to vote for a man that would make them feel good about themselves and the evolution of race relations in the US. This is the result, though many Obama voters would probably not have wanted it.

Regarding the post below about Christian nations exhausting themselves for... (??), the leaders of the EU states and the US hardly think and behave as if they led Christendom. They are basically mercantile globalists, and their diminished concern for their Christian brethren in the ME is glaringly obvious. Israelis, however, can be grateful for awareness of this Christian/Christian betrayal, as it is very instructional (to those who choose to pay attention).
18 weeks ago
18 weeks ago Link To Comment
All Comments   (38)
All Comments   (38)
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America has given Egypt tens of billions of dollars over the decades, in exchange for regional peace.
China isn't so generous. China will expect a substantial quid pro quo, and Egypt won't like the bill when it arrives.
18 weeks ago
18 weeks ago Link To Comment
God told Egypt that they'd never be great again... and He was right.
18 weeks ago
18 weeks ago Link To Comment
The Chinese are inundating African countries with start-up Chinese businesses built around insulated Chinese families and bosses. That's aside from Chinese goods. Anyone's whose gone through Egyptian stores knows the affordable products are Chinese and as likely to not work as work. Most Chinese products in Egypt would be illegal in America, unless you know of an electric space heater in America that will literally melt an extension cord.

Cairo has recently had sometimes nightly controlled rolling black outs lasting from 1 to 3 hours - usually around 7:30 PM - due to lack of fuel. And they're not yet into air conditioning season.
18 weeks ago
18 weeks ago Link To Comment
Before Egypt's economy was America's responsibility, it was Russia's. Before Russia it was a succession of European states. Now China wants part of the action? Good for them. Will they do better / worse than those who came before?
18 weeks ago
18 weeks ago Link To Comment
My Gosh. The last time Egypt was run by Egyptians was before Alexander. (Or am I exaggerating?)
6 weeks ago
6 weeks ago Link To Comment
China and Russia are slick to fill vaccuums the Chicago thugocracy are leaving all over the world.
Zero got in bed with the MB and Morsi to the tune of 8.4 billion and he was almost impeached. Seems all the wintesses that knew what morsi and zero were up to got disappeared.
Egypt will always be in jeopardy because they are an islamic based country.
As long as islam and sharia are the basic cult rule for the country they will have major league problems.
18 weeks ago
18 weeks ago Link To Comment
Egypts' problem is their population-maintained by western medicine and economic assistance from the world.

Same problem in the rest of the arab/muslim world and Africa.

Unsustainable population, ignorant primitive culture and incompetent infrastructure and natural resources not able to be used to advantage.

We 'save' people and create catastrophe-
18 weeks ago
18 weeks ago Link To Comment
This story might put Avigdor Lieberman and his pro-Russia foreign policy on the spot.

http://www.haaretz.com/jewish-world/jewish-world-news/1.585897
18 weeks ago
18 weeks ago Link To Comment
A small correction; "the New Silk Road that China is building from Beijing to the Bosphorus" is correct as far as that goes but the Chinese plans are far, far more ambitious. The southern leg of the high speed transcontinental rail stops in Istanbul but then continues through a tunnel on to the Mideast and Europe. The northern leg stops at Moscow and continues on to London, cementing the new Sino-Russian axis among other things. The Chinese want to complete this project estimated to cost .25 trillion in ten years.

http://www.industrytap.com/wp-content/uploads/2013/02/eurasia2.jpg

http://www.railwaypro.com/wp/?p=10965

18 weeks ago
18 weeks ago Link To Comment
The linked maps are out of date; the northern spur to Moscow is not a done deal. The main route will be via Kazakhstan to Turkey. Of course, it could expand considerably.
18 weeks ago
18 weeks ago Link To Comment
Return of the "Orient Express" ?

We've been hearing that maybe the Chinese high-speed rail "miracle" is not all it's cracked up to be.
18 weeks ago
18 weeks ago Link To Comment
My main concern with Egypt is the Suez Canal. Chinese influence there is not a good thing.
18 weeks ago
18 weeks ago Link To Comment
Remember Jimmah Carah gave away the Panama Canal that is now controlled by the Chinese. Ronald Reagan was against 'returning' the Panama Canal because it was built and maintained with American capital. The great American sale goes on.
18 weeks ago
18 weeks ago Link To Comment
According to what I've read, the Israelis are planning a land rail route from Eilat on the Red Sea to the Mediterranean of Ashdod. I think this may have some Chinese financial backing.
18 weeks ago
18 weeks ago Link To Comment
Wow. I've never heard of this.

Personally, I'm looking forward to the rail route through the Valley of Jezreel (right next to the road to where I work) and the semi-high-speed (I guess like the NE corridor in the US) between Jerusalem and Tel Aviv.
6 weeks ago
6 weeks ago Link To Comment
Americans elected Obie twice to abdicate its superpower role. I think it can be said now that this is one of the main reasons for people voting for Obama. The media had sold them on the Evil Bush. They were tired of draining wars in Iraq and Afghanistan that were not fought to be won. Perhaps that was impossible. They wanted to return to the island with two protective oceans, and to vote for a man that would make them feel good about themselves and the evolution of race relations in the US. This is the result, though many Obama voters would probably not have wanted it.

Regarding the post below about Christian nations exhausting themselves for... (??), the leaders of the EU states and the US hardly think and behave as if they led Christendom. They are basically mercantile globalists, and their diminished concern for their Christian brethren in the ME is glaringly obvious. Israelis, however, can be grateful for awareness of this Christian/Christian betrayal, as it is very instructional (to those who choose to pay attention).
18 weeks ago
18 weeks ago Link To Comment
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