Egypt's Bankruptcy and America's Foreign Policy Failure
The situation on the ground in Egypt is becoming desperate. The Egypt Independent reported March 29:
Egypt has not received a crude oil cargo from open market suppliers since January and, with money tight, the state grain buyer has not purchased
wheat since February. International trading houses Petraco and Arcadia were due to deliver crude after winning a tender, but the state importer, Egyptian General Petroleum Corp (EGPC) has cancelled both deliveries, several traders said. As a result, refineries are running well below capacity. On Thursday, the oil ministry blamed repeated power cuts on a lack of funds to buy fuel for power stations.
Egypt is in the hole to energy suppliers for $6 to $8 billion, which is to say that even if the IMF loan came in tomorrow, it would not even square Egypt with its grade creditors. It appears that the Muslim Brotherhood government of Mohamed Morsi is in denial, to coin a phrase. "Egypt has hit breaking point in its ability to pay for imports of oil, wheat and other basic commodities, forcing it to call in diplomatic favors or seek easy payment terms from suppliers who hope for future advantage in return," the Egypt Independent wrote. Emergency loans and in-kind payments have slowed Egypt's descent but cannot stop it. The country simply is too big for its neighbors to sustain indefinitely, and too backward to right itself.
Civilizational failure can't be fixed. It can only be contained, to limit the risk to America and American interests. In a February 15 essay for the Jewish Institute for National Security Affairs, I proposed a set of guidelines for such containment in Egypt. That is straightforward. The cat to be belled is the Iranian nuclear weapons program.
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