Egypt

The future of the Muslim Brotherhood

Via Daily News Egypt, by Ziad Aki

Almost nine months have passed since Mohamed Morsi was declared President. Nine months went by with the Muslim Brotherhood on top of state institutions, state authorities and in charge of political policies. Last summer when Morsi went to Tahrir Square for the first time, I was debating with a friend whether this experiment would be a successful one.

One of us saw that Morsi would be a powerful president who would set an example of how efficient Muslim Brotherhood governance could be. The other saw that Morsi’s presidency is hardly an experiment in the first place and that the Muslim Brotherhood, together with their grand projects, is doomed to failure.
Come to think of it, this is where most Egyptians found themselves, torn between the fear of failure and foolish hopes of efficiency. I would argue that ever since Morsi took office, Egyptians have been divided into three main groups, supporters of Morsi and the Brotherhood, skeptics who couldn’t make up their mind to be for or against and finally non-believers, those who thought that nothing good could come out of the Muslim Brotherhood.

However, nine months later, the “skeptics” category has disappeared. Those who had tints of hope that the Brotherhood’s renaissance project will actually take place now realise that the project is nothing but nonsense that’s not worth the price of the paper it is printed on.

Day after day for the past nine months, the political administration of the Muslim Brotherhood has moved steadily from one failure to the other. It became clear to anyone following up what happens in Egypt that the Muslim Brotherhood will not be able to rule without acute problems created by their closed mindedness, short vision and power hungry aspirations.

The ongoing hardships and crises make us wonder and speculate about where will all that end. In other words, what are the possible outcomes of the current situation, what kind of scenarios does the future hold for the Muslim Brotherhood?

Indeed one of the possible outcomes is open violent confrontation. The events of Moqattam on Friday are but a small taste of what could take place because of the Brotherhood’s inefficient administration and their unrestrained attachment to power. The persistence of grievances will make thousands of unsatisfied protesters direct their protests towards the Brotherhood after it has proved that real power is no longer within state institutions, it is embedded in the guidance bureau.

In the same manner that Morsi does not want to be held accountable until his term is over since he was elected, the Muslim Brotherhood does not want to be held accountable for their abuse of power. And since the political tools of the Brotherhood are all being used at the moment to draft enabling laws and prepare for fake elections, tools of violence are the only ones available to the Muslim Brotherhood since they have stricken out the possibilities of dialogue long time ago. Therefore, it is very possible for the current situation to end in episodes of violence that very much resemble civil war.

Another possible outcome is the involvement of the army. The army’s position until now seems to be somewhat vague. So far the army has demonstrated that it will not interfere in domestic politics, but it has also clearly signaled that it will not tolerate any threats to its strategic interests.

While the Brotherhood is unlikely to try and tamper with the regional order at the moment, its hunger for power is likely to direct it towards the two domestic interests of the army, state-owned land and energy trade. With the current Brotherhood performance, it will not be long before their businessmen and their cronies decide to invade those two resourceful avenues.

With growing popular discontent and an interest-based conflict between the army and the Brotherhood, it would be very likely that the army will interfere to either limit the Brotherhood’s involvement in its interests or simply to support the thousands of dissatisfied protesters.

The third possible outcome could very well be determined by economics rather than politics. The bleak economic future that threatens Egypt does not just constitute a threat to the Muslim Brotherhood; it is a threat for the political process as a whole. The administration’s failure to stop the economic decline could very well revert the political process back to square one destroying both the Brotherhood and the opposition.

Does that mean that there are no chances for the Muslim Brotherhood in a promising future? I believe that as long as the Brotherhood remains unable to give compromises and govern efficiently, as long as it remains in denial, as long as it hides behind the blood of its youth who are manipulated by dogma, as long as it refuses to be held accountable by the very people who brought them to office; prospects of a promising future for the Muslim Brotherhood will remain very low.

 

via www.dailynewsegypt.com

Egypt Confiscates Shipments of Military Uniforms

ABC News, by Aya Batrawy

Cairo airport officials confiscated 10,000 pieces of military-style clothing on Saturday as officials in the Mediterranean city of Alexandria seized 25 tons of camouflage material used for making military uniforms.

Maj. Gen. Yousri Abdel-Aziz, head of security at the airport, said the large shipment of items such as shirts and pullovers lacked proper shipping permits and was essentially being smuggled out of Egypt to Libya's eastern city of Benghazi.

Airport officials said an Egyptian businessman was trying to ship the uniforms to a businessman in Libya. It was not clear what the uniforms would be used for in Libya, where the government has yet to bring militias fully under its control.

In this image released by the Egyptian Presidency, Egyptian President Mohammed Morsi, center, is seen with Minister of Defense, Abdel-Fattah el-Sissi, left, and an unidentified officer, during his visit to a military facility in Cairo, Egypt, Friday, March 22, 2013. Morsi confirmed his full confidence in the ability of members of the armed forces to face any challenges taking place in the country. (AP Photo/Egyptian Presidency) Close

Separately, a state prosecutor in Alexandria said officials are investigating a Chinese company after two of its shipments from China were found to contain 25 tons of material in the khaki and brownish-green style worn by soldiers. The company manufactures clothing in Egypt and sells abroad.

All officials spoke anonymously because investigations are under way.

The incidents come days after a security official said the Egyptian military is investigating whether Palestinian militant group Hamas is linked to a batch of confiscated fabric that could have been used to make counterfeit uniforms. Hamas says it has no connection to the fabric.

That incident did not appear related to the confiscations in the Alexandria port or Cairo airport.

An Egyptian military spokesman warned a week ago that unnamed parties might impersonate Egyptian troops after the fabric, used for police and army uniforms, was seized near a tunnel running under the Egypt-Gaza border.

via abcnews.go.com

Egypt's Islamist president warns he may be about to take measures to protect the nation

Fox News

CAIRO –  Egypt's president warns he may be about to take measures he did not specify to "protect this nation."

Mohammed Morsi's warning came in a series of tweets posted on Sunday, two days after violent clashes between supporters of his Muslim Brotherhood and opposition protesters in Cairo. At least 200 people have been injured, some seriously, outside the Cairo headquarters of the Brotherhood, Egypt's most dominant political group.

An Islamist elected in June, Morsi also warned that "appropriate measures" would be taken against politicians found to be behind Friday's violence, regardless of their seniority. Anyone found to be using the media to "incite violence" will also be held accountable, he added.

Friday's clashes followed an assault a week earlier by Brotherhood supporters on protesters painting hostile graffiti outside the group's headquarters.

via www.foxnews.com

In Power, But Not in Control - By Eric Trager

Foreign Policy by Eric Trager--long, but informative, so read on. 

CAIRO — In the sparsely decorated waiting area just outside the Kafr el-Sheikh governor's executive offices, a photo montage depicts the governor overlooking scenes from his Nile Delta province. The artwork is dedicated to "His Excellency, Governor Saad Pasha al-Husseini."

It's an awkward way to address Husseini, to say the least. The Ottoman honorific "pasha" was phased out after Egypt's 1952 revolution, and its aristocratic connotation hardly suits a man who only two years ago was living on the edge of the law as a top leader in the Muslim Brotherhood, then an outlawed Islamist organization that built its reputation on providing social services to Egypt's impoverished masses.

The Brotherhood, however, has embraced the newfound trappings of power with gusto. "They were in prison two years ago," an aide to Husseini tells me. "They enjoy the cars and apartments they get as officials."

Now that the Brotherhood has climbed to the top of Egypt's political heap, it is doing everything it can to stay there. Brotherhood officials emphasize that their string of electoral victories since Hosni Mubarak's ouster two years ago has given them "legitimacy" -- a word that Muslim Brothers reflexively invoke to defend everything from President Mohamed Morsy's mass appointment of Muslim Brothers to top political posts to his Nov. 22 constitutional declaration granting him total authority.

But despite the Brotherhood's political power, it exerts virtually no control. Ever since Morsy's constitutional declaration and the rushed constitution-writing process that followed, a series of mass demonstrations, workers' strikes, and police-versus-protester clashes have plunged the country into near-chaos. Egypt's already weak economy is now in free fall, episodic instability has forced the military to assume control over three cities along the Suez Canal, and al-Gamaa al-Islamiya -- a U.S.-designated terrorist organization -- has deployed members to patrol the mid-Nile city of Asyut.

The Brotherhood's single-minded pursuit of power has catalyzed significant resistance to its rule, and thus contributed to Egypt's instability. But the Islamist movement shows no sign of changing course, apparently believing that further consolidating its power is the only way it can stymie what it views as a broad conspiracy against its rule.

In interviews that I conducted during a recent trip to Egypt, leading Muslim Brothers overwhelmingly traced this supposed conspiracy back to "feloul," an Arabic term referring to "remnants" of the previous regime. "Feloul are working against Egypt," Governor Husseini told me. "They're extremely against the ruling system now because the [president] is from the Muslim Brotherhood."

Mohamed al-Beltagy, a former parliamentarian who now sits on the executive committee of the Brotherhood's political party, was even more explicit. "There is a part of the system that, until now, is still connected with the old regime," he said. "This is found in many of the [state] apparatuses, like the police, media, and judiciary."

 

via www.foreignpolicy.com

Standard Chartered seeks Egypt acquisition, plans Iraq push - chicagotribune.com

DUBAI (Reuters) - Standard Chartered is looking to acquire a bank in Egypt to ride an expected boom in one of the Middle East's largest economies, the firm's regional head said. The bank also plans to expand operations in Iraq this year.

Many European banks are under pressure to cut costs and bolster their capital in the wake of the global financial crisis, but Christos Papadopoulos said such pressures would not deter Standard Chartered from growing in the Middle East.

"The Middle East is not only a regional hub for us but a global hub given its position as a trade corridor between Asia and Africa," Papadopoulos, chief executive for the Middle East, North Africa and Pakistan, told Reuters in an interview last week.

He said of Egypt, "The foreign reserves are at critical levels. Currency is depreciating and I won't be surprised if it depreciates further."

But he added that the bank believed Egypt was in a transition towards a more stable economic and political system, making investment attractive from a long-term perspective.

"The only entrance point to Egypt is through acquisitions. We expect that there could be other banks coming to the market for sale, and we will be ready to grab the opportunity," Papadopoulos said, declining to name potential acquisition targets.

French banks Societe Generale and larger rival BNP Paribas agreed last year to sell their banking arms in Egypt to Qatar National Bank and Dubai's Emirates NBD .

France's Credit Agricole and Italy's Intesa Sanpaolo may also eventually sell Egyptian operations, banking sources in the region have said. A Credit Agricole spokeswoman in Paris declined to comment, while Intesa Sanpaolo chief executive Enrico Cucchiani said in January: "Egypt is a country to be monitored. However at the moment Bank of Alexandria is having positive results. We look at it carefully."

LENDING BOOM

In the Gulf region, Standard Chartered will focus on lending opportunities in Saudi Arabia and Qatar because of the huge infrastructure building plans of oil-rich governments there, Papadopoulos said.

The bank, which currently has a representative office in Iraq, plans to open branches this year in the cities of Baghdad, Basra and Erbil as demand for project financing booms.

Papadopoulos said, "The amount of economic activity in Iraq now is substantial. We always wanted to be onshore in Iraq. It was never a question of if but a question of when."

Companies including oil giants BP , Royal Dutch Shell and Italy's Eni have announced plans to invest in multi-billion dollar projects in the country.

"Iraq needs everything from pipelines, power generation, infrastructure and housing. All this needs financing."

(Editing by Andrew Torchia)

Copyright © 2013, Reuters

via www.chicagotribune.com

Standard Chartered seeks Egypt acquisition, plans Iraq push

Via Chicago Tribune

A man walking past a foot bridge leading to the Standard Chartered main branch is reflected on a window glass in Hong Kong (Bobby Yip Reuters, / March 5, 2013)

DUBAI (Reuters) - Standard Chartered is looking to acquire a bank in Egypt to ride an expected boom in one of the Middle East's largest economies, the firm's regional head said. The bank also plans to expand operations in Iraq this year.

Many European banks are under pressure to cut costs and bolster their capital in the wake of the global financial crisis, but Christos Papadopoulos said such pressures would not deter Standard Chartered from growing in the Middle East.

"The Middle East is not only a regional hub for us but a global hub given its position as a trade corridor between Asia and Africa," Papadopoulos, chief executive for the Middle East, North Africa and Pakistan, told Reuters in an interview last week.

He said of Egypt, "The foreign reserves are at critical levels. Currency is depreciating and I won't be surprised if it depreciates further."

But he added that the bank believed Egypt was in a transition towards a more stable economic and political system, making investment attractive from a long-term perspective.

"The only entrance point to Egypt is through acquisitions. We expect that there could be other banks coming to the market for sale, and we will be ready to grab the opportunity," Papadopoulos said, declining to name potential acquisition targets.

French banks Societe Generale and larger rival BNP Paribas agreed last year to sell their banking arms in Egypt to Qatar National Bank and Dubai's Emirates NBD .

France's Credit Agricole and Italy's Intesa Sanpaolo may also eventually sell Egyptian operations, banking sources in the region have said. A Credit Agricole spokeswoman in Paris declined to comment, while Intesa Sanpaolo chief executive Enrico Cucchiani said in January: "Egypt is a country to be monitored. However at the moment Bank of Alexandria is having positive results. We look at it carefully."

LENDING BOOM

In the Gulf region, Standard Chartered will focus on lending opportunities in Saudi Arabia and Qatar because of the huge infrastructure building plans of oil-rich governments there, Papadopoulos said.

The bank, which currently has a representative office in Iraq, plans to open branches this year in the cities of Baghdad, Basra and Erbil as demand for project financing booms.

Papadopoulos said, "The amount of economic activity in Iraq now is substantial. We always wanted to be onshore in Iraq. It was never a question of if but a question of when."

Companies including oil giants BP , Royal Dutch Shell and Italy's Eni have announced plans to invest in multi-billion dollar projects in the country.

"Iraq needs everything from pipelines, power generation, infrastructure and housing. All this needs financing."

(Editing by Andrew Torchia)

Copyright © 2013, Reuters

via www.chicagotribune.com

Egypt’s troubled water management

Via Egypt Independent, by Dalia El Fiki

Josh Maricich

World Water Day is 22 March. This global event focuses attention on the importance of fresh water, and advocates for a more sustainable management of water resources. On this occasion, Dalia El Fiki, a student in Masters of Global Affairs at the American University of Cairo who currently studies  Water Policy and Governance at the National University of Singapore, wrote an analysis on Egypt’s misguided water management program, and offers alternatives to escape what she calls a governance crisis.

Doom is looming; the Nile is our only source of water; we don’t have enough money to finance new sustainable technologies; our infrastructure lags behind in light of increasing water demands. This is the story we have been told repeatedly.

However, it is not true.

Yes, as a developing country, Egypt has limited access to funding, and yes, our infrastructure requires urgent upgrading. But the Nile is not our only source of water, and we are not dealing with a water crisis — rather, it is a crisis in governance. 

The water shortage we experience is not related to demand, but rather to poor infrastructure and management practices, which result in gross losses within our water systems.

A study conducted by Professor Mohamed Allam of Cairo University and Ibrahim Allam of the Ministry of Water Resources and Irrigation (MWRI) suggested that 29 percent of our water is lost through the our mismanaged water system, mostly due to evaporation and outflow.

MWRI estimates that agriculture utilizes approximately 80 percent of the nation’s annual water supply, and remains the greatest polluter. So far, the government has offered few incentives to encourage farmers to manage their agricultural requirements in a way that emphasizes sustainable water use, either by saving water or maintaining water quality.

While drip irrigation can provide a quick fix to the issue, we need to bear in mind that the installation and maintenance costs are prohibitive for the average farmer.

So why not provide economic incentives for its use, or impose stricter regulatory measures on farming?

Surely agricultural water also falls under the auspices of the Ministry of Water Resources and Irrigation, and can therefore be managed appropriately with one set of consistent and implementable policies?

Wrong, and this lies at the very heart of the main structural issues facing the nation’s management of its water resources over the past decades.

There at least eight declared ministries that deal with water resources, including the Ministry of Water Resources and Irrigation, the Ministry of Agriculture, the Ministry of Interior, the Ministry of Foreign Affairs, the Ministry of Environment and the Ministry of Health.

Other stakeholders such as the Ministry of Electricity and Energy and the Ministry of Industry and Foreign Tradealso play an important role, as water is used for generating electricity, and is also an essential component in industries like cement, ceramics and textiles.

In a centralized system, what we would expect is cooperation across the board between the multiple ministries in charge. But the picture is quite different in Egypt’s case — the mandates and objectives of each ministry are so different that,  while one ministry may push for a new approach that would result in sustainable water use, another will often vehemently oppose it, although they promised cooperation.

Couple that with lax legislations on environmental protection, industrial and agricultural waste management, then the wastewater becomes non-renewable and consequently increases pollution.

So what is the solution?

It all comes down to governance. The country has 40 billion cubic meters of groundwater resources, according to the MWRI. A better management of agricultural runoffs and their recycling could create an additional source of water.

The fact that our government has all its eggs in one basket is very problematic, as solely focusing on maximizing the Nile water led the government to invest massive amounts of money in failed projects like the Toshka Valley Project. This project’s initial aim was to increase Egypt’s arable lands from 6 percent to 35 percent of the national territory by using a system of canals to divert the waters of Lake Nasser to the Libyan Desert. Although the government spent LE7 billion on this project, it achieved few tangible results.

What we really need at this point is a new vision that looks beyond the comfortable and easy solutions of relying on Nile water. More money should be invested in desalination, efficient groundwater extraction and proper management, as well as reducing demand.

Desalination is an expensive option, but it could provide some relief to Egyptians who feel extremely threatened whenever other Nile Basin states — who are entitled to manage their water sources as they deem necessary — decide to build a dam or review the Nile water treaty. It would also create a new industry in the country, contributing to much-needed jobs for the unemployed.

Alternative water resources are pivotal. We need to stop our shortsightedness and look at the long road ahead, and how we will be managing a rapidly growing population that is increasing by 2 percent each year.

If our government does not have enough money to cover the costs for ambitious desalination projects or water treatment facilities, then the private sector could be a viable partner.

For our technological requirements, our water engineers, environmental experts, policy makers and economists need to form a working group that can come up with local solutions to our water crisis.

We don’t need to import talent from overseas, we just need to cooperate and to push for better governance, transparency, accountability and a more long-term approach to our water resources.

Water is our country’s most precious resource, and should be treated that way. The Nile should not be taken for granted and the pollution of water resources needs to be dealt with seriously. Industrial and farmers should be fined for malpractice and our laws need to be implemented or amended to reflect the importance of water.

via www.egyptindependent.com

Egypt Confiscates Military Fatigue Shipments

Via ABC News, by Aya Batrawy, Associated Press

Cairo airport officials have confiscated 10,000 pieces of military-style clothing and officials in the Mediterranean city of Alexandria say they have seized 25 tons of camouflage material used for making military fatigues.

Cairo officials said Saturday that an Egyptian businessman was trying to ship the uniforms to a businessman in Libya. It was not clear what the uniforms would be used for in Libya, where militias have yet to come fully under the government's control.

In Alexandria, a state prosecutor says they are investigating a Chinese company after two of its shipments from China were found to contain 25 tons of material in the khaki and brownish-green style worn by soldiers. The company manufactures in Egypt and sells abroad.

Officials spoke anonymously because investigations are under way.

via abcnews.go.com

Egypt’s police: What happened to reform?

Via The Economist

The police are as rotten as ever

Walk like an Egyptian

POLICE brutality was a big reason why angry Egyptians took to the streets on January 25th 2011, the first day of their revolution. Within days they had routed the riot-control units. For months afterwards the country’s omnipresent security services were in disarray and sullenly promised to mend their ways. But, two years later, it is increasingly evident that little has really changed.

In recent months several cases of kidnappings of prominent activists, some of whom have died after being beaten, have been attributed to the security service. In some cases policemen are said to be taking revenge for the humiliation they suffered in 2011. Sometimes they have failed to protect citizens; at other times they have persecuted them. In one instance, in Beni Suef, a fly-blown town south of the capital, policemen took revenge on a man accused of killing one of their own. Random instances of police brutality are reported almost every day, ranging from ill-treatment of minors to the killing of protesters, with shots aimed at the head. When cases of police abuse do reach the courts, acquittal or a light sentence most often ensues.

The political crisis that has engulfed Egypt in the past three months, pitting President Muhammad Morsi and his Muslim Brotherhood against a range of opposition groups, has made things worse. Policemen complain that they are being asked to defend the regime from sometimes violent protests, but have to show restraint when attacked. In recent weeks the police have gone on a strike that has spread to ten of Egypt’s 27 provinces. They have often refused to protect offices of the Brotherhood that are being attacked by protesters.

An ethos of hostility to the Brotherhood persists in the interior ministry, according to Ihab Youssef, a former police colonel who co-founded a reformist group called “People and Police for Egypt”. “The police were blamed for supporting Mubarak,” he explains, referring to the deposed president. “Now they don’t want to be seen as serving the new regime.” A common refrain by the police around the country is that they “do not want to be dragged into politics”.

Mr Morsi’s administration is wooing the police by promising them more handguns, passing a law to restrict protests, making promotion easier and improving conditions for conscripts. Human-rights activists fear that, instead of trying to reform the police, the government prefers to co-opt them, with an eye eventually to imposing Brotherhood loyalists.

The interior minister, Muhammad Ibrahim, often described as close to the Brotherhood, has flatly denied claims of police brutality, even when displayed on YouTube, and has also played down the extent of the strike. A campaigner who monitors police abuses says that Mr Ibrahim’s statements amount to “an attempt to create an alternative reality”.

Yet the government and the Islamist-dominated parliament have not taken issue with him. The government’s alarm at the prospect of a police rebellion has prompted some Brotherhood members of parliament and the public prosecutor to suggest that an old law allowing citizens’ arrests should be put into effect. This has led to howls of outrage by the opposition, and accusations that Islamists are preparing to deploy their own militias.

 

via www.economist.com

Egypt and India Bring Two Opposite Economies Together: Great Trade For An Odd Couple

Via International Business Times,  by Jacey Forth

Photo: Reuters/Adnan Abidi Egypt's President Mohamed Mursi (L) and India's Prime Minister Manmohan Singh shake hands during a photo opportunity before their meeting in New Delhi March 19, 2013.

A pivotal link between Asia and Africa was cemented this week when Egyptian President Mohamed Morsi traveled to meet Indian Prime Minister Manmohan Singh.

 

Though the two economies have little in common, Egypt and India stand to benefit greatly. The partnership will do more than link up two of the world’s most important economic systems -- it will also help Egypt to maintain its diplomatic independence by lessening its reliance on Western powerhouses.

Typically, that’s China’s game; the world’s second-largest economy is putting down roots all across Africa. China’s annual bilateral trade with Egypt is around $9 billion, making it Egypt’s third-largest trading partner after the United States and the European Union. India comes in seventh -- but it’s now looking to move up in the ranks.

Morsi said he wants to double bilateral trade with India, which is currently estimated at $5 billion annually, over the next few years. He also revealed an ambition to become one of the world’s fastest-growing economies, a club to which Brazil, Russia, India, China and South Africa now belong.

"I am hoping Brics would one day become E-brics, where E stands for Egypt," Morsi said to The Hindu on Monday. "I hope E-Brics would emerge when we start moving the economy."

Unwieldiness aside, the acronym must have sounded good to Indian investors. This week, several Indian companies representing various industries agreed to spend up to $400 million on projects in Egypt, according to the Egyptian newspaper Ahram.

Up to $300 million of that would come from the Sanmar Group, a chemicals conglomerate, and another $100 billion is expected from the Egyptian-Indian Polyester Company. Sanmar already has a plastics operation in Port Said, and Egyptian-Indian Polyester has a plant in Ain Sokhna, on the Gulf of Suez.

Photo: Reuters/Vivek PrakashA worker works on the axle parts of the Mahindra Bolero vehicle at the company's manufacturing plant on the outskirts of Mumbai May 23, 2012.

At first glance, it looks odd that Asia’s powerhouses would vie for influence in an economy as small as Egypt’s. Both China’s and India’s annual GDPs are measured in the trillions, and they grew by 7.8 percent and 5.4 percent, respectively, in 2012. Egypt, on the other hand, had a GDP of $255 billion last year and growth of only 2 percent, according to the U.S. Central Intelligence Agency.

The country is struggling politically, having elected a president who is unpopular among the many secular urban youths who first banded together in 2011 to oust former autocrat Hosni Mubarak. Opposition leaders and activists argue that the Islamist administration does not respect minority rights, and their concerns are not assuaged by the overzealousness of police and security officials, apparently unreformed since the Mubarak era.

And then there are money troubles. Unemployment is at 13 percent, according to government data, and about one in four people live in poverty. The value of the Egyptian pound has fallen steadily against the U.S. dollar. Foreign currency reserves dipped below a 15-year low in January of this year, and went on to hit $13.5 billion at the end of February. The funds are not expected to last three months.

Two more signs of trouble came on Thursday. First, Moody’s Investors Service downgraded Egypt’s credit rating by a notch, to Caa1. Then the central bank made a tough decision to raise interest rates in order to beat back inflation, at the risk of saddling growth.

Egypt is in negotiations with the Internal Monetary Fund to secure a $4.8 billion loan, but the move has been delayed over concerns about Egypt’s policies. The IMF wants the government to enforce austerity measures, which might mean collecting more taxes or slashing the country’s cumbersome fuel and energy subsidies, which drain more than 10 percent of GDP annually.

Cairo is keen to secure that loan, but the pro-austerity conditions attached to it are an impossible sell at this point. There is no way Morsi will risk incurring more public animosity -- he’s got plenty already -- before parliamentary elections are held, which were going to take place in April but have since been postponed.

Economic morass notwithstanding, Egypt does have some leverage: No one wants the fledgling democracy to collapse, because its stability is integral to security and trade in the Middle East.

Egypt is the region’s most populous country; it also sits at the nexus of Asia and Africa. An economic default there would send shock waves around the world, especially since Western powers like the United States have great interest in maintaining Egypt as a diplomatic ally and security partner. Morsi is in dire straits politically and economically, but odds are he can count on global powers to bail him out if necessary.

Photo: ReutersAn Egyptian worker takes newly created fabric out of a circular knitting machine at a cotton garment factory in Cairo, Egypt on April 6, 2006.

Those basic strengths are attractive to India -- enough to make Egypt a suitable long-term investment. In terms of trade, the countries could mesh nicely; Egyptian exports consist mainly of crude oil, produce and cotton. And with its fast-expanding population, it can offer an expanding consumer market and human capital in the form of labor. India has come to specialize in engineering goods, chemicals, and refined petroleum -- capital intensive products that Egypt has little capacity to produce itself.  

Then there are historical connections. India’s first Prime Minister Jawaharlal Nehru and Egypt’s iconic second President Gamal Abdel Nasser were among the five original founders of the Non-Aligned Movement, or NAM -- they were also friends. The organization, which sought to represent countries that did not take sides the Cold War, still stands for solidarity and strength in the face of major world powers.

Today, the two biggest world powers are not the West and the Soviet Union, but the United States and China. The two nations currently dominate Egyptian trade, along with the EU.

India at least has a leg up in terms of shared history, and this week’s meeting between leaders seems to herald the strengthening of an old partnership. Egypt is, after all, desperate for new investments as its political problems increasingly deter foreign powers and the IMF.

“The levels of foreign direct investment in Egypt has dropped from 25 percent to 9 percent, especially in this period when the country is going through a political transition,” said Egyptian Minister of Investment Osama Saleh on Thursday, according to the Indo-Asian News Service. “Our aim is for FDI to pick up to levels of around 20 percent.”

India will be key to achieving that goal, and Singh noted on Wednesday that the benefits would extend to his country as well.

“[Egypt] is a bridge between Asia and Africa, astride a major global trade route, together with its skilled human resources, makes it an attractive business destination for India,” he said, according to Egypt’s Daily News.

“Morsi and I agreed that this provides a solid bedrock on which to build a strong and durable bilateral relationship and international partnership between our two countries.”

via www.ibtimes.com