Egypt Relies On Gulf Aid For Economy: Then What?

Since the 2011 uprising that toppled Hosni Mubarak, Egypt has burned through $20 billion dollars in foreign reserves.

Egypt is engaged in a high stakes gamble, using billions of dollars from Gulf Arab allies to stimulate the economy and keep its politically charged streets calm in the hope that investors and tourists will return.

The biggest Arab country’s finances are in a precarious state with a massive deficit but the government, armed with billions of Gulf petrodollars, has rejected the conventional wisdom of IMF-prescribed austerity measures.

If the plan fails, a new government expected to be elected early next year could find itself deep in debt, its currency overvalued and an economy in crisis.

“Now we are living on a ventilator, (with) aid from neighbouring countries and that is understandable in the midst of a meagre tourism industry and reluctance of direct foreign investment,” Sherif Samy, Egypt’s Financial Supervisory Authority head, said.

Saudi Arabia, Kuwait and the United Arab Emirates pledged more than $12 billion in aid to Egypt after the army toppled Islamist President Mohamed Mursi of the Muslim Brotherhood on July 3 following mass protests against his rule.

“Nobody can live, in the long term, on aid,” Samy said. “It is not sustainable.”

Since the 2011 uprising that toppled Hosni Mubarak, Egypt has burned through $20 billion dollars in foreign reserves, borrowed billions from its allies and racked up billions in debts to foreign oil companies to prop up its currency.

AVOIDING PAINFUL MEASURES 

The Mursi government worked out an agreement with the International Monetary Fund (IMF) that would have included austerity measures, higher taxes and a reduction of subsidies that eat up a quarter of the budget. It was never implemented.

Egypt is going a different way from many European countries such as Greece whose cash-strapped governments have enforced repeated rounds of austerity measures, squeezing households, to rein in huge budget deficits.

The army-backed government, well aware that IMF conditions could cause a huge popular backlash before elections, has avoided austerity measures.

In a country where protests have forced out two presidents in three years and sent the economy into a tailspin, the interim leaders, appointed after Mursi’s ouster, have internalised this risk.

“The government is faced with a big challenge, especially as it faces coming elections within months,” Samy said.

“They must not be excessive with the social subsidy programmes and wage and pension increases that might titillate the feelings of ordinary citizens in the short term but have a severe impact on the state budget and on the deficit.”

Western powers want a return to democracy in Egypt, which has a peace treaty with Israel and controls the strategic Suez Canal, a global trade route.

What happens in Egypt could have a ripple effect on the rest of the region, which has also suffered from political and economic turmoil since the Arab Spring uprisings.

The government says it is still on track to rewrite the constitution and hold parliamentary and presidential elections in early 2014, part of a political roadmap the army announced after it removed Mursi.

PUMPING MONEY

Supported by the Gulf aid pledges, the government announced a 22.3 billion Egyptian pound ($3.2 billion) stimulus package in August. It later increased it by a third to 29.6 billion pounds and plans yet another 24 billion pound package early next year.

But the government has not spelled out details of any other long-term plans to strengthen the economy.

The interim government has raised the public sector minimum wage and pensions, and the central bank has lowered its key interest rates by a full percentage point since August to encourage growth.

In addition, the government has said it would focus on a series of labour-intensive infrastructure projects and unfinished public projects designed to quickly improve living standards of Egypt’s 85 million citizens.

Some businessmen say there are indications that investors and tourists, once its main source of foreign exchange, will return once the political turmoil subsides.

“Foreign investors are primarily concerned about stability, no violence, where they feel their investments are safe, where there is an ease of going in and out,” said Hussein Choucri, head of Cairo-based HC Securities, a mid-sized investment bank.

“You have some big companies in the Gulf that have discounted the economic and political risk already.”

However, many investors are not only worried about security but recoil from the way Egypt has treated businessmen since the uprising.

State companies that Gulf investors bought under the Mubarak administration have been renationalised and property sales renegotiated after private lawyers challenged the transactions in court.

The interim government has been taking steps to reassure investors.

“We are revising all economic legislation,” Investment Minister Osama Saleh said. “The bids and tenders law, which resulted in many complaints against investors, has been amended so that those who sign contracts with the government will be safe from complaints or lawsuits.”

Egypt’s tourism minister said last month the government plans to launch a marketing campaign in the hope of attracting 13.5 million tourists next year. Only 9.8 million tourists came in 2011, down from 14.7 million the previous year.

If the measures don’t succeed, the country could find its finances in even worse shape than before Mursi’s ouster, forcing it to return to its Gulf benefactors for even more aid.

During Mursi’s year in power, Egypt’s budget deficit widened to almost 14 per cent of gross domestic product (GDP), a number the government, backed by Gulf aid, hopes to reduce to around 10 per cent this year.

It also hopes investors and tourists will bring dollars, taking pressure off the Egyptian pound, which has lost almost 16 per cent of its value since the uprising and even more on the black market.

The country may not be able to count on its Gulf allies forever.

When an Egyptian delegation visited the Gulf last month, the United Arab Emirates deputy Prime Minister Mansour bin Zayed al-Nahayan said Egypt can’t live on Gulf aid alone to fix its economy.

“Egypt must think of innovative and unusual ways (to boost the economy),” he said.

-This article was published by Reuters on 16/11/2013

Tunisia's Troubled Talks

By Mokhtar Awad

Tunisia's now suspended national dialogue talks have thus far failed to end the country's political impasse triggered by the July 25 political assassination of leftist Popular Front Member of Parliament (MP) Mohamed Brahimi. The Ennahda led government had agreed to a conditional resignation and to sit with the opposition to arrive at a consensus candidate for yet another care-taker prime minister.  Ennahda, however, is keen to demonstrate what its leader Sheikh Rached Ghannouchi has reassured his followers: they are only giving up the government and not power. This has only precipitated the latest round of political squabbling and as the November 15 deadline for the resignation of the Ennahda government looms, the opposition is threatening a return to street protests.

It is unclear if the ruling Troika and the opposition National Salvation Front (NSF) will agree on a consensus prime minister in time after weeks of deadlock. In light of the recent suspension of the talks, the certainty of Tunisia's future political stability remains uncertain, and Ennahda's place in it is an even more complicated question. The heated and fluid political environment can either be viewed as healthy dynamism unseen elsewhere in the region or rather a slow and painful road toward an inevitable outcome of confrontation like that of Egypt's. 

The national dialogue is sponsored by four labor groups spearheaded by the powerful General Labor Union (UGTT) in what is called the quartet. The UGTT led the effort to offer a political reconciliation initiative after the assassination of Brahimi in July, which Ennahda ultimately accepted in principle by August. What has caused a great deal of confusion is that Ennahda said that it would only resign so long as the new constitution and election laws were passed and an election body selected. This has allowed Ennahda to behave as if it is still in control while the opposition deals with it as a party that has admitted to its own lack of legitimacy by agreeing to resign and thus has no authority to dictate the political roadmap.

Last week, the Ettakatol party of the ruling Troika, with the support of Ennahda, nominated 88-year-old Ahmed el-Mesteri for prime minister, and insisted on him. The opposition pushed for 77-year-old Mohamed al-Naser and stood its ground, but it found itself in an awkward position trying to articulate why it opposed Mesteri who they admitted had a respectable record of accomplishment. The no-nonsense Beji Caid Essebsi, leader of Nidaa Tounes, put it bluntly in various interviewsthat at least his party's objection stemmed from the attitude of Ennahda in suggesting Mesteri as opposed to any real disagreement over his qualifications.

But the opposition discovered a thorn in its side when the centrist al-Joumhouri Party said that it too supported Mesteri with Naser and others being a part of the new cabinet. This would have been an opportunity for Ennahda to prove its point and move on, but it failed to capitalize on the possible splinter in the opposition and now al-Joumhouri seems to be back in the fold and even part of the chorus threatening street action.

Indeed, Ennahda's leadership does not seem too worried about the results of this gridlock. When asked about how his party would react if the quartet picked its own prime minister and ignored the Troika, senior Ennahda leader and minister of health, Abdel Latif el-Mekki, responded by saying "we are Malikis [A Sunni school of religious law], and al-Malikiyya says: leave it be until it happens."

When it comes to the dialogue talks, Ghannouchi's promise to his supporters that they are not giving up power with the prime minister's resignation and that no government would be selected without Ennahda's approval seems to hold for now.

As the talks were suspended, the country's attention turned to ruptures in the National Constituent Assembly (NCA), where Ennahda still holds its power unchallenged. The Ennahda bloc had introduced amendments to the bylaws of the council that would lower the quorum needed to decide the assembly's agenda. One amendment would also remove the need for the speaker Mustapha Ben Jaafar (who is from Ettakatol) to approve the agenda. These proposed changes are designed to allow the remaining Ennahda members to speed through the constitution and other measures as the talks over who heads the government drag on, another testament to Ghannouchi's promise to his followers that they are merely giving up the government and not power. The amendments were described as amounting to a "coup" by the opposition and even MPs from Ettakatol joined a walkout of over 50 members last week.

This week the judiciary responded with a timely decision to annul the list of candidates for the elections body sent by the NCA for the second time this year. The court decision is a reminder of the potentially increasing role the judiciary can play in influencing the political roadmap.

The only remaining hope for the success of the political roadmap, despite bumps along the way, is for it to remain a purely political process. Although the danger of ideological bickering continues, underneath the surface, there is a dynamic political power play that sheds light on the ongoing reasons for the country's political rift.

Ennahda's opponents say that the party cannot be trusted for its doublespeak that promises reconciliation and resignation while engaging in divisive rhetoric and consolidating power in the NCA. As the national dialogue was set to start in late October, opposition parties in the umbrella NSF held mass rallies in an attempt to flex their street muscles despite a modest turnout. But many also went as far to demand a "second revolution" that would topple the rule of Islamists in Tunisia and reverse their political supremacy, which they view as the root cause of the failures of the past two years. Far left political activists like Adel el-Chewachi even appeared on the viciously anti-Islamist Egyptian satellite channel ONTV praising the political end of the Brotherhood in Egypt and wishing the same for Tunisia.

This far leftist strand in the opposition, specifically the Popular Front, may be overreaching and could facilitate the derailment of the national dialogue it accuses Ennahda of engineering. To this group,

 Ennahda only understands the language of pressure in negotiation and any attempts to meet it half way will only backfire. The more sophisticated critics accuse Ennahda of being like a "lazy student" who is constantly making excuses but in reality has no intention to study. But it is unclear that the Tunisian street has the same appetite as some in the political opposition for a return to street legitimacy or the prospect of street battles like those seen before the July coup in Egypt.

The opposition also directly blames Ennahda for the constant string of terrorist attacks and Salafi violence that has gripped the country since the revolution. But even as the Ennahda government moved to label the infamous Ansar al-Sharia Salafi group as a terrorist organization, its critics would not let go of the conspiracy that Ennahda is tacitly supporting or approving of its actions. The reality is that these Salafis are as much a threat to Ennahda as they are to Tunisia's secular forces.

In the charged and unconstructive atmosphere of conspiracies, many in Ennahda have also resorted to their own theories that elements in the security services may be behind the attacks in order to weaken the Islamist led government. This is something that Ghannouchi heavily insinuated in his latest op-ed, noting that Ennahda has been conveniently pushed to first have its prime minister, Hamid Jebali, resign, to give up key ministers, and now to give up the government all together due to two political assassinations by still unknown elements.

Political violence, terrorism, and assassinations have reshaped the relationship between Ennahda and the various opposition factions -- especially those on the far left. The held belief by both sides that they are the intended victims of the violence has done more than just complicate the road toward consensus. In this environment, a unionized security force is starting to flex its newly found political muscles, which raises Ennahda's fears of opportunists who may wish to capitalize on the failed political dialogue.

Ghannouchi's rhetoric is not helpful either. Before writing for the Guardian a forward looking op-ed on the merits of the ballot over the bullet, Ghannouchi published one in Arabic a few days earlier for Al-Jazeera  [translation] on the merits of Political Islam. In it, he fiercely defended the nobleness of Islamists and how their movement is "the closet to the consciences of our nation." Ghannouchi decried the term "Political Islam," clarifying that "Islamic Movement" is the preferred term for it "refers to all the actions calling for Islam as God's final word."

Talking broadly of the support of Arab secularists for the Egyptian coup that he described as their "collective suicide," he contrasted between them and "the honorable stand of the Islamic Movement in the face of tyranny." Ghannouchi ended the article by highlighting the core ideological difference that sets apart Ennahda from its secular opponents by stating that his vision of Islam embraces the achievements of modernity, like democracy, "after re-planting them in the field of Islam." The same was echoed in a speech he gave on November 2, elaborating on his belief that current ideological battles revolve around disagreements over how to modernize. In an understood reference to the Tunisian secular opposition, Ghannouchi blamed colonialism for introducing the idea that modernization can only come after the abandonment of Islam.

Perhaps the cause of these relapses into ideological polemics is the genuine uncertainty inside Ennahda over its future. The party seems to have not fully come to terms yet with why it finds itself in this undesirable situation of having to give up the government it rightfully won. Is it compromising because it has come to terms with the fact that the burdens of governing Tunisia at this stage are truly too great and that consensus not elections can save Tunisia? Or is it in this situation because of a conspiracy by whom Ghannouchi described as "eradicators [those wishing to eradicate Islamists], coup-aspirers, and terrorists," whose only objective is to overthrow the government? And thus facing the possibility of yet another unjustified coup the track of consensus building simply became a "strategic option" as he puts it?

Some of Ghannouchi's comments may feed his critics into thinking that the latter case is the most accurate assessment. In an interview [translation] with the Tunisian al-Dhamir, Ghannouchi dismissed claims of disagreements inside Ennahda over the talks and added that they "will not allow the coup-aspirers to lead us into strife... and drag the country into a security, political, and chaotic vacuum justifying the abortion of the revolution and stopping the democratic transition." To Ghannouchi this is the sacrifice to pay for Tunisia to "remain the last lit candle of the Arab Spring" that is "a steadfast insurmountable fort against the counter-revolution and coup plots."

The political wranglings of the past few weeks, despite suggesting failure and loss of consensus in their headlines, tell a different story behind the scenes.

Unlike his Brothers in Cairo, Ghannouchi understands that he must engage his opposition and entertain its demands even if he has the legitimacy of the ballot box. Some may even trace the change of heart to a an hour long television appearance in late August on Nessma TV in which Ghannouchi described his biggest rival, Nidaa Tounes, as a "big party that can balance Tunisia politically." He also dismissed a question about the controversial "protecting the revolution" law that was designed to exclude Essebsi.

Ghannouchi said that the time was not appropriate for such laws and that the issue of transitional justice should be addressed after the elections. This, coupled with a private meeting in Paris earlier the same month, has fueled conspiracies by some in Tunisia that Ennahda and Nida Tounes may be working toward a deal to split power as the national dialogue nears complete failure -- an allegation that may have induced laughter a few months ago but does not seem completely off the mark. Asked about such a deal in a recent interview, Essebsi simply said that it is "premature" to discuss this instead of an expected violent denial.

There remains a possibility for talks to resume and it will be up to Tunisia's political elites to decide if they wish to bring stability to their country. The failures of the past week and petty differences over the selection of a new prime minister highlight that the debilitating curse of lack of political trust that has plagued Egypt threatens to find its way to Tunisia. Both the opposition and Ennahda must show great restraint to avoid letting their fight make its way to Tunisia's streets, for this is an outcome in which all parties lose.

-This commentary was published first in Foreign Policy on 13/11/2013-Mokhtar Awad is a research associate at the Center for American Progress.

Did Bashar Al-Assad Killed Yasser Arafat ?

Months before he fell ill, on my last visit with Yasser Arafat, I knew he was not long for this world. But nine years later, the conspiracies live on.

BY MARK PERRY

The last time I saw Yasser Arafat was in Muqata, his hilltop headquarters in Ramallah, in August 2004. It was three months before his death in a Paris hospital. I had come from my hotel in Palestinian East Jerusalem and successfully navigated my way through the volatile Qalandia checkpoint to see him.

Arafat's tireless personal assistant, Nabil Abu Rudineh, greeted me outside Arafat's office, and told me to wait for the Palestinian leader in the arched walkway that led from the president's offices to the adjoining structure housing the Palestinian legislature. It was an unusual setting, because we customarily met in Arafat's office and the archway was an exposed position. For most of the previous three years, Arafat had been trapped in the compound as an Israeli Merkava tank churned the road outside his headquarters to dust. Since late 2002, I'd had to dodge this tank, a terrifying behemoth, while eyeing the squad of partially obscured Israeli snipers posted nearby to enter the compound.

I'd first visited Arafat in Tunis in 1990, on his invitation, after he read an essay I'd written on the Palestinian uprising after visiting the West Bank, Gaza, and Israel. He'd liked the article and wanted to meet me. We seemed to click in some way during that first meeting and, in the intervening years, we'd grown close. Which is why, despite the tank and snipers, I'd always found a way to make it to Ramallah.

But now, with the Second Intifada winding down, neither the tank nor the snipers were anywhere in sight, and the ruins of the Muqata -- its walls breached and chipped by rocket-propelled grenades and sniper fire -- basked in the afternoon sun.

Back in September 2002, on then Prime Minister Ariel Sharon's orders, Israeli tanks and bulldozers had flattened nearly all of the structures in the compound while snipers fired into Arafat's offices. Arafat and his closest aides, trapped inside, barely survived the assault. An Israeli sniper, Arafat later told me, had fired a round that came within inches of his skull. "I'm still here," he would say. It seemed a matter of pride to him.

It was while I was reflecting on this that Arafat emerged from the end of the walkway, smiling excitedly. He dispensed with the usual routine of cheek kisses and waved a small camera he was holding in my direction. "Look at this, my friend," he said, holding the camera up for me to see, pointing to its "digital features," a phrase he flourished with pride. It had been given to him for his 75th birthday the week before.

"Look here," he said, and he guided me to one of the open portals that looked west onto the Muqata courtyard. Arafat snapped a photo. "You can see it here," he said, pointing to the camera's viewer, "even before you take it." He marveled at the technology. "A digital feature," he repeated.

Jibril Rajoub, the former head of his security services, came onto the walkway. I'd only met Rajoub once before and he eyed me suspiciously, but Arafat put him at ease. He then did something I'd never seen him do before: He embraced Rajoub and grabbed the top of his head, tilting it forward while pretending to bite him. Rajoub was much taller and larger, but Arafat seemed to dominate him. Arafat opened his jaws, his teeth showing, while he laughed and growled. "Like a son," he announced to me. "Like a son." It was an unusual show of affection.

The energy, however, would not last. Arafat's excitement over his birthday camera soon waned and he appeared stooped and tired. When we left the walkway he shuffled back to his office, stopping twice to catch his breath. He seemed to be somewhere else at times during our meeting, staring into the distance before catching himself. "Repeat what you just said," he would ask me.

Arafat ended our meeting, after only an hour, by pleading fatigue. "I will go to sleep now," he said. I had been a part of Arafat's political talkathons, from Tunis to Gaza to Ramallah, as he exchanged views with his aides long into the early morning hours, and his stamina was legendary. He stood up in the midst of a sentence and, just as suddenly, left the room. It was a rare moment for a man known for his formalities, particularly with guests.

I watched him as he shuffled away, his shoulder sagging, his head down. "I think this is the last time I'll see Abu Ammar," I said to Rajoub, using Arafat's popular nom de guerre.

Rajoub nodded. "Don't say that," he responded. "He's not feeling well, that's all it is.  Perhaps a bit of the flu."

There was a long silence then, before I disagreed. "Maybe. But I think it's more than that." I hesitated for a moment, before going on. "He's dying," I said.

Just a little over two months later, on Oct. 29, after falling ill, Arafat was medevaced to Paris where, on Nov. 11, he died. 

This week, Al Jazeera published the result of a Swiss investigation that found Arafat's remains contained unusually high amounts of the radioactive isotope polonium 210. The scientists who authored the report were careful to emphasize that their findings were not conclusive, but stated that their study "moderately support the proposition that the death [of Arafat] was the consequence of poisoning with Polonium-210." 

It is not the first time the assassination claim has been raised: Almost since the moment of his death, rumors have circulated that he was the victim of a plot on his life. The plotters comprised a veritable Murder-On-The-Orient-Express list of suspects: the Israeli Mossad, the CIA, Syrian President Bashar al-Assad (whose father, Hafez, despised Arafat), and even his closest associates -- who, it was said, viewed him as an obstacle to peace. Even King Hussein of Jordan didn't like him, often referring to him, in his last years, as "that little shit in Ramallah."

Polonium poisoning? It's certainly possible. I am not a forensic scientist and have no reason to question the findings of Swiss doctors. But I am less convinced by at least one of the study's premises -- that it is suspicious that a patient "in good overall health" and "without any particular risk factors" should suddenly become sick and die. This seems perverse, particularly coming from a team of doctors: Isn't that what happens to all of us, if we live long enough? We are all healthy -- until we're not.

But, of course, this wasn't the first time Arafat became sick. In 1994, he grew so deathly ill in Tunis that several of his closest aides feared that he had pneumonia. He survived that illness, though no one ever told the public what it was that he had. Journalists were informed that he simply had a cold, but that seemed unlikely. The week before, Arafat had been hospitalized for four days at a Tunisia military hospital after the flare-up of "a vertebrae condition" that he'd contracted in 1979.

True: Arafat was a vegetarian, never smoked and lived a nearly abstemious life. But I still can't figure out how, given his apparent concern over his own health, he so carelessly ate the half cooked fish he shared with me and a table of many others in Gaza City. That alone was enough to kill him. I know it damn near killed me.

None of this, however, provides a counter argument to the finding of the forensics report released by the University Centre of Legal Medicine in Lausanne. Despite that finding's careful language, it may well be viewed as definitive by some -- especially those who always believed Arafat's death was unnatural. But if Arafat didn't die from poisoning, what other possible explanation can there be?

In the summer of 2007, Hani al-Hassan, who once served as Arafat's interior minister and was closer to him than anyone in the Palestinian leadership in those final days, told me that he suspected the medicine that Arafat took to calm his hand tremors had been laced with a lethal dose of warfarin. The drug is an anticoagulant that is used as a pesticide against rats, and when taken in large doses can cause massive bleeding. That makes sense, in a way: one of the doctors treating Arafat during his last days in Paris said the Palestinian president had suffered from Disseminated Intravascular Coagulation, a clotting disease resulting from an unidentified infection.

I was told this by Hassan while seated in a rooftop bar in Amman. I apologized to him when he arrived, for I was sipping scotch and it was Ramadan. "I can't drink it whether it's Ramadan or not," he said, but then he eyed the drink and looked over at me. "Just one," I said, "what the hell." He nodded and, when the drink came, savored it. "Please," he said. "Don't tell anyone."

What followed was a fascinating recounting of Arafat's last days in Ramallah, beginning on the night of Oct. 17, 2004, nearly four weeks before his death, when he collapsed after giving a speech.

"He was addressing a group of religious leaders," Hassan told me, "but I could tell even before he started talking that he was ill. I was standing nearby and halfway through his speech he nodded for me to take over. He was violently sick. I thought immediately that he was poisoned."

By whom? I asked. Hassan shrugged: "By them," he said. "They got into his medicine, that's how they did it. It's not as if he didn't have enemies."

I pressed him, but Hassan not only refused to speculate, he scoffed at rumors naming any number of suspects. A group of Arafat's closest associates? "Sure," he said sarcastically, "they did it and then they did the impossible, they kept it a secret."

The Israeli Mossad? "The Israelis wanted him alive," he explained, "so they'd have an excuse for refusing to deal with us."

Operatives sent by the Syria's Assad clan? "The son is not the father," he answered, "and even Hafez can't operate from beyond the grave."

The CIA? "If that were true," he said, "it would already be on the front page of the Washington Post."

"So where does that leave us?" I asked.

Hassan hesitated for a long moment, weighing his own ambivalence. He was one of the very few remaining leaders of a national liberation movement that had fought, sacrificed, and suffered for a cause. Sadly, that cause remained unrealized, its most powerful leader in a covered tomb in Ramallah. What was the ambivalence? It was that Yasser Arafat should have died on the front lines, as so many of his followers did -- a martyr. He must have been assassinated; he had to have been assassinated. How could it be otherwise?

Revolutionaries don't die in their beds. 

And so it was that Hani al-Hassan -- who so admired Arafat that he "appropriated" funds from the General Union of Palestinian Students in Germany to provide seed money for Arafat's movement in its early days -- was suddenly morose. He sipped his scotch, thought for a minute, then raised his glass.

"He was a dedicated man and he was my friend," he said. "He wanted more than anything to be a martyr to the cause. The tragedy here is not that he was assassinated, but that he wasn't. He died as you and I will likely die -- he got old and he got sick."

-This article was published first in Foreign Policy on 08/11/2013

-Mark Perry is a Washington-based reporter and author of eight books. His newest, a biography of Douglas MacArthur, will be released in June 2014