Assisting Egypt now

EGYPT, strongly affected by the world oil slump, is negotiating with the International Monetary Fund for a certificate of economic good behavior. An agreement is expected by the end of the year. Once certified, so to speak, Egypt intends to renegotiate and reschedule its loans from the United States and other lenders. Egypt surely needs - and deserves - the help.

The oil slump has not only cut Egypt's own oil revenues; it has also brought millions of Egyptians who had been working in oil-rich but people-poor Gulf states back home. This has naturally cut the remittances these native sons abroad send home. Thought to be at least $3 billion a year, such remittances are a major source of foreign exchange. And the return of these mostly young men has added to the population pressures in this land of some 50 million, with a million more added every 10 months.

Tourism, largely from other Arab countries, which a few years ago was just beginning to realize its potential, has been in a slump, and Suez Canal fees are down.

It all adds up to major macroeconomic problems, including $35 billion in foreign debt and a shortage of foreign currency.

This is unfortunately not the sort of problem the average Cairene in the street, trudging to market, relates to. Egypt must import about half of its food, and about a third of the national budget goes to subsidize foodstuffs such as rice and the flat brown bread that are staples in the local diet. President Hosni Mubarak, mindful of the riots that broke out when his predecessor, Anwar Sadat, let bread prices rise in 1977, must proceed very carefully if he tries that tactic again.

But Egypt doesn't want to let the burden of austerity fall entirely on the middle class, either. The possibility of an Islamic fundamentalist backlash against the government also demands alertness.

Like many other developing countries, Egypt faces the challenge of balancing internal pressures with external ones to keep from either collapsing or exploding.

Many of the loans in question are from the US, for military sales at the time when Egypt left the Soviet sphere of influence to seek military aid from the West. Other loans are for infrastructural improvements - power stations, water and sewer systems, communications, transportation - that were postponed during the long years of war and almost-war with Israel. Surely this is the sort of investment in the future that lenders should encourage.

Egypt is a valuable part of the Middle East. The US has had ties there off and on since the Suez crisis of 1956. More recently, its treaty with Israel was a major first step toward peace in the Middle East. For all its economic and other challenges, Egypt is a haven of calm compared with Libya next door, which has replaced Israel as Egypt's principal military threat.

And as a developing democracy, Egypt deserves Western support. The international lenders need to be sure they support, rather than complicate, its economic balancing act.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK