Saudis and UAE Pony Up $8B for Post-Brotherhood Egypt

by Andrew C. McCarthy

The military coup that ousted Egypt’s president, Mohamed Morsi of the Muslim Brotherhood, a number of commentators have observed, was mostly about Egypt’s slide into economic collapse. With the Brothers gone, the big Gulf donors are back.

David Goldman has described Egypt’s dire straits starkly:

Starvation is the unstated subject of this week’s military coup. For the past several months, the bottom half of Egypt’s population has had little to eat besides government-subsidized bread, and now the bread supply is threatened by a shortage of imported wheat. Despite $8 billion of aid from Qatar and smidgens from Libya, Turkey, and others, Egypt is struggling to meet a financing gap of perhaps $20 billion a year, made worse by the collapse of its major cash earner — the tourist industry. Malnutrition is epidemic in the form of extreme protein deficiency in a country where 40% of the adult population is already “stunted” by poor diet, according to the World Food Program. It is not that hard to get 14 million people into the streets if there is nothing to eat at home.

Nearly half of Egyptians are illiterate. Seventy percent of them live on the land, yet the country imports half its food. Its only cash-earning industry, namely tourism, is in ruins. Sixty years of military dictatorship have left it with college graduates unfit for the world market, and a few t-shirt factories turning Asian polyester into cut-rate exports. It cannot feed itself and it cannot earn enough to feed itself[.]…

As reserves dwindled perilously and Egyptians starved, the Brotherhood’s incompetent and ideologically-driven governance exacerbated matters. For example, the Brotherhood’s supporters in the West, from the Obama State Department to the IMF (from which Egypt was trying to arrange $5 billion in loans), counseled Morsi against pushing forward with the sharia constitution – advice Morsi predictably ignored because, as I observed at the time, implementing sharia is the Brotherhood’s raison d’etre. Witness also Morsi’s appointment of a member of the Blind Sheikh’s terrorist organization, the Islamic Group, as governor of Luxor, a major center of tourism – on which, as David noted, Egypt’s economy depends. As previously recounted (see, e.g., here), it was the Islamic Group that carried out the 1997 Luxor massacre of scores of tourists and police. It would be hard to imagine a more idiotic appointment.

Besides all that, Brotherhood control of the government also closed the pocketbooks of potential Gulf donors – other than Brotherhood backer, Qatar. In particular, authoritarian regimes in Saudi Arabia and the United Arab Emirates largely shunned post-Mubarak Egypt. Interestingly, for a half-century, the Saudis have underwritten much of the Brotherhood’s propagation of Islamic supremacism in the U.S. and Europe (just as they’ve financially supported jihadists as long as the jihad was kept out of the kingdom). Close to home, however, the House of Saud sees the Brothers as a threat to its reign.

So now, with Morsi ejected, the Gulf pocketbooks have opened wide. According to Reuters (via the Egypt Independent):

Saudi Arabia and the United Arab Emirates (UAE), apparently pleased with the ouster of the former President Mohamed Morsy, have approved $8 billion in aid to Egypt on Tuesday. The Saudi funds comprise a $2 billion central bank deposit, $2 billion in energy products, and $1 billion in cash, the Saudi Finance Minister Ibrahim Alassaf told Reuters. The UAE meanwhile offered $3 billion, including a grant of $1 billion and a $2 billion interest-free deposit in Egypt’s central bank.

The Emirati offer was made during a meeting between a UAE delegation to Cairo, led by UAE National Security Chief Sheikh Hazza bin Zayed al-Nahyan, and Egypt’s interim president Adly Mansour. “The United Arab Emirates stands by Egypt and its people in this crucial phase. It has confidence in the choices made by its people, as well as this people’s ability to overcome the current challenges,” Sheikh Hazza said[.]… Earlier, a senior Egyptian Petroleum Ministry official said on Tuesday that UAE  has sent 30,000 tonnes of diesel to Egypt via Suez. The diesel shipment is the first in a series the UAE has pledged to Egypt following the 30 June protests that ousted the Muslim Brotherhood’s Mohamed Morsy from power.

Egypt imports petroleum products worth US$300 million every month, squeezing the country’s foreign currency reserves which dropped to $14 billion by the end of June….

As the report goes on to explain, “only about half of those reserves are in the form of cash or in securities that can easily be spent.” The influx of billions in aid only gives Egypt breathing room; it does not come close to fixing the widening chasm between the country’s piddling production and the impossible welfare obligations it has assumed. But without it, Egypt was on the Brotherhood’s fast track to oblivion.

The Corner

The one and only.