A Path To Recovery?

We have recently spent class time discussing status quo responses to state failure and the effectiveness of these efforts. Egypt has recently engaged in several responses to state failure with the intention of encouraging development and peace.

A NEW CONSTITUTION

Egypt is rewriting its constitution for the fourth time in the past three years. This new charter, backed by the military-backed government, will remove some Islam references. As an Egyptian political analyst explained, “In terms of reducing the powers of the president and of the executive generally, in terms of holding many public officials accountable to popular questioning and accountability, these are all very positive features of the new constitution.” This new document will grant greater civil rights to citizens, and will only be passed if it receives majority support by the Egyptian people.

PAYMENT OF ARREARS

This week Egypt announced that it was going to pay back $1.5 of the $6 billion it owes to oil firms. These arrears were hindering foreign investments in the energy sector. The lack of investment along with the decrease in tourism has had an enormous impact on currency reserves and tax revenues, negatively affecting the country’s prosperity and development. This repayment of arrears is crucial for Egypt, as the country is hoping that this move will help drive cash into the country. UAE Minister of State Sultan Al Jabar explained how Egypt was becoming an attractive investment, and that “the most important thing [he’d] like to see happen is the topic of laws needed to assure investors and protect their capital.” In addition, the increase in importer demand will decrease the use of the black market, strengthening the Egyptian pound and diminishing the need for central bank intervention. Moreover, this move is part of a track to implementing a political roadmap to free elections and stability.

FOREIGN INVESTMENT

 Egypt is hoping to turn the Suez Canal into a “global economic zone” through its Suez Canal Project. This project will help increase trade between Africa and Asia, more specifically focusing on ties between Egypt and India. The country is hoping to use this money to stabilize the politically changing country.  In addition, this project will provide employment to the country’s youth.

In addition to relationships with India, Egypt is entering deals with Russia and China as well. Russia has just finalized a deal that would provide $4 billion in arms to the country. China is in the process of setting up the country’s first nuclear power plant with the hope of helping the country’s prevalent energy crisis. Many Gulf states are providing aid to Egypt as well.

IMF LOAN & CAPITAL CONTROLS

The International Monetary Fund has offered Egypt a $4.8 Billion Loan package under the conditions that the country makes certain economic reforms. The capital controls that Egypt would be forced to put in place could help stabilize the currency but could decrease needed foreign investment. Instead, Egypt is looking to relax controls. Egypt’s Deputy Prime Minister declared that they were going to hold off on this aid as the country doesn’t want to move too fast in its path to recovery. He explains that the money received from the Gulf, allows them to “implement [decisions] at the pace and in conditions that are much more favorable than when you are pressed to have to sign an agreement today or tomorrow.” Although the country has delayed payment for now, it states that it could use this IMF loan to implement a Value-Added Tax system in the country.

 

In conclusion, Egypt seems to be trying to stabilize the political mess in the country by implementing internal and external changes. Although these projects can be lengthy and difficult, most Egyptians are willing and ready to accept change after almost two years of instability and turmoil.

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Status Quo Responses

Today I’m going to focus on some of the responses to Egypt’s state failure and explain why some of these “status quo” responses failed to resurrect the country.

1)   Accessibility to Small Arms

The people of Egypt have access to small arms such as shotguns, riot control launchers, as well as armored vehicles and helicopters. Many countries, including the USA, Czech Republic, China, France, Germany Switzerland, and Italy, provide these supplies to the country in the hope that citizens will use them as a form of protection. As The Secretary General of Amnesty international explains, however, “weapons and equipment supplied irresponsibly to Egypt by a handful of countries are being used for excessive force and unlawful killings.” Instead of helping the country counteract violence and militancy groups, these supplies and armed weapons have only created more problems. Egyptian security forces have used these supplies in attacks against innocent protestors, increasing insecurity and violence in the country.

2) Tradable Natural Resources

Egypt traded $2.1 billion of goods with the US in 2011; this mainly included woven apparel, knit apparel, mineral fuel and oil, and fertilizers.  It is also the largest non-OPEC oil producer in Africa, and the continent’s second-largest natural gas producer. Often times, revenues from trade can be important to growing the economic sector if the profits are relayed down to the people. Egypt’s trade profits, however, have not positively impacted the general population and economy due to poor macroeconomic policies and corruption.  For example, under the Muburak era, gas was exported very cheaply, but it was also imported at 3 times the price that it was exported.

In addition, the economic sector lacks transparency; according to the Resource Governance Index (RGA) the country is failing (40/100) in its ‘enabling environment’ and ‘institutional and legal setting,’ and is weak in its ‘reporting practices’ and safeguards and quality controls.’ In addition, the Finance Ministry has not published any information on hydrocarbon revenues since the revolution, contributing to its lack of transparency and credibility. Interestingly enough, the three main companies in oil extraction are government owned.

3) Volatile Currency

Egypt has taken some steps internally to try and promote economic stability and growth. The country “focused on financing an expanding budget deficit and stabilizing the Egyptian pound in the face of a growing balance of payment deficiency.” The government spent over $20bn trying to stabilize their local currency and continued to consume foreign reserves at a rate of $1.4bn per month. Often times, central banks manipulate currency reserves to intervene against volatility and enhance the value of their local currency. Egypt’s currency reserves have shrunk by 60% since 2011, depleting the reserves to a point where this strategy is no longer feasible. After these attempts to stabilize their currency failed, the central bank tried to restrict foreign capital outflows; this late response came too late and did little to reverse the economic problems.

 

Although Egypt is “failing” in many other areas as well, these examples show how attempts to help often don’t lead to desired results. In the case of Egypt, imports of small arms, the trade of natural resources, and attempts to stabilize the currency have had a negative, instead of positive affect on the country’s stability.

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What has Democracy Done?

During class discussions, we have frequently brought up the concept of democracy by exploring the effectiveness of this political structure and comparing it to authoritarian rule.  Although democracy seems to be the most supported method of fighting state failure, arguments have been made for both sides.

As Egypt struggles to find a legitimate and effective leader, it is especially important to point out the impacts of these different ruling styles. As explained in previous posts, Egypt’s past leaders have been authoritarian; Mubarak ruled Egypt as a socialist dictator for 30 years before the 2011 revolution. Many have attributed this revolution to the undemocratic and repressive nature of this type of rule. Historically, Egyptian leaders experienced unchecked and unlimited power and nationalized extensively into the private sector. As a result, the country experienced poverty, government corruption, and political and social chaos.

Many foreign governments have attempted to promote market freedom with the hope of aiding development in weaker countries. Mubarak implemented structural adjustment neoliberal policies in 1991 when he signed an agreement with the IMF and World Bank. In our textbook, Geographies of Developing Areas: The Global South in a Changing World, Williams explains the concept of neoliberalism; it is described as an approach to development that focuses on the role of the market rather than the state. These ideas influenced the creation of Structural Adjustment Policies, which sought to decrease expenditures through reduced subsidies, reduced privatization and increased foreign investment. According to Fukuyama, neoliberals felt that reducing the degree of state intervention in economic affairs would promote stability and reduce poverty over time. As Fukuyama explains, however, this neoliberal assumption put too much emphasis on reducing involvement in state affairs; a balance between high institutional strength and lower scope has proven to be more effective. Often times, SAPs ended with increasing inequalities between the rich and the poor; this ended up being the case with Egypt.

The revolution proved that the foreign involvement and SAPs supporting neoliberal practices did not turn out well for Egypt.  Under Mubarak’s and Morsi’s rule, poverty and repression continued to grow and conditions worsened. In addition, neoliberal practices lead to the easy reduction of foreign funds from reserves, which can have an enormous negative effect during times of instability. As one critic explained, “it should not be ignored that it was its economic policy in response to IMF loan deals that triggered a huge downturn in fortunes for most Egyptians, and that these measures have been heavily praised from outside.”

As shown by the above example, Western countries often believe that they know “correct” way to help and increase development in weaker states.  After the 2011 revolution, many people believed that democracy was the right step for Egypt to take. This support for democracy is propelled throughout the Egyptian people, who are calling for a change from the old neoliberal and authoritarian regime. Democratic ideas, however, are easier said than done and many people are beginning to have varying opinions on its effectiveness.  

Some critics argue that although Egyptians claim to want democracy, their idea of democracy is tainted, and varies from that of the US. Since the revolutions, many crave firm governance, and want security first and foremost. A taxi driver expressed his opinion on the matter: “what has democracy done? People have died. We have more violence and no security.” A professor at an Egyptian university also asks, “what’s wrong with another Nasser?…I am ready to forget everything about my own freedom for an Egypt that does not have to ask for handouts from the international community!” These varying opinions and responses to failure are interesting to look at during this time of limited governance and lawlessness. In the case of Egypt, is democracy really the answer?

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Lawlessness in Sinai

The Sinai Peninsula is geographically a part of Asia; it is bordered by the Suez Canal, Israel and the Gaza strip. As we discussed in class, geographic location can have a huge impact on a state and its ability to successfully govern its people. The Sinai Peninsula has been an area of contention between Israel and Egypt, and has changed ownership between the two countries over the years. It officially became part of Egyptian territory in 1970 in a peace agreement between the countries.  Although this agreement is still in place, Egyptians refer it as a “cold peace.”

Although the area is not heavily populated, the majority of Egyptians are located in the northern area, which has a larger water supply, and the western area, which is industrialized with petroleum and manganese industries. However economic growth in the area has been hindered the state’s neglect for development in the region.

Violence and disagreement have spread to Sinai as it has become a base for Islamist militants in recent years. After the overthrow of Hosni Mubarak, the government lost control of the area and it has become heavily occupied and controlled by jihadist groups. These groups’ goal is to turn Sinai into an independent Islamic emirate. In response, the interim government launched Operation Eagle, which later turned into a crackdown called Operation Sinai.  This campaign seeks to rid militants of the area, and since has captured and killed dozens. However, civilians have commented on the actions of the military, stating that their attacks are random and don’t differentiate between civilians and terrorists. This lack of security within the region is a cause for concern and makes it difficult to build legitimate institutions. For example, poor security conditions in northern Sinai have prevented children from attending school and receiving an education.

A failing state can have an enormous impact not only within the country, but globally as well. Officials in Cairo, Jerusalem, and Washington have all expressed concern over Sinai, calling it a terrorist haven. In September of this year, a conference spokesman, Col. Ahmed Ali, explained, “the last week included a decisive confrontation with elements that threaten national security.”

Intense smuggling in the region has provided food and supplies to the radical terror groups. The extensive smuggling network is a result of the government’s inability to provide local Bedouin tribes with necessary food and supplies. In addition, Egyptians in major cities don’t recognize the legitimacy of the Bedouins and don’t consider them to be real Egyptians.  Ambassador Levanon explains, “the Bedouins need the approval of the army, interior ministry and security apparatus to build any thing. The Bedouins have learned that they cannot rely on the central government and turned to smuggling.” Strong family ties across the border with Gaza and Israel have only grown this network and opened the doors to a larger terrorist network. Conclusively, the Egyptian governments lack of attention towards the region has furthered its deterioration; the Bedouin people have offered to help with the security apparatus, but the government “refused despite [their] experience and knowledge of the terrain and its security.” The military is also attempting to shutdown illegal trade between Sinai and Gaza. Alternative trade and income, however, is unavailable to Egyptians, and they rely on this illicit trade to survive. In conclusion, the lack of trust and lack of national identity within the state has only increased lawlessness, terrorist occupation, and insecurity.

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Who is to Blame for the Violence?

It is a question of who is to blame: should the Egyptians and military be punished for ousting the Muslim Brotherhood? Or should the Muslim Brotherhood be reprimanded for terrorizing and attacking innocent Christians? Ambiguity over Obama’s support of the Muslim Brotherhood causes more tension on this matter.

Since the militants pushed Morsi out of power, the interim government has portrayed the message that the Muslim Brotherhood is a terrorist organization backed by foreign governments (such as the US). The military is trying to show that the Brotherhood directed a campaign of violence, however, many claim that the military attacked peaceful demonstrations without good reason.  On August 14, the military cracked down on protestors, killing at least 1,000 Morsi supporters.  To date, around 6000 supporters have been arrested, including all of the most senior figures. On September 25th, the interim government closed the Muslim Brotherhood’s “Freedom and Justice” Newspaper, the last media outlet of the organization. The military-backed government has pushed for democratic messages.

When the Brotherhood was ousted, many supporters automatically blamed Coptic Christians. As stated in an Egyptian newspaper, there have been “seventeen murdered Copts and 85 torched churches since [the] ousting of Morsi. Copts pay [the] price of [the] June 30th Revolution.” Pro-Morsi supporters also see the actions such as the closing of the newspaper and banning of the Brotherhood as anti-freedom acts and are calling al-Sisi (the head of the military) a traitor. Some protests have shifted their message to ones supportive of Morsi, to anticoup and nationalistic demonstrations.

Mr. Tossen of the military-backed government explains, “they think by arresting that many Brotherhood members that they will bury the Brotherhood and uproot it. They’re delusional because this will never happen. But this is expected from any dictatorship and it is meant to pave the road for the military rule.”

As if the political associations aren’t confusing enough, the Brotherhood itself is beginning to become divided. Support for the Brotherhood is decreasing, as a split between the member’s older conservative members and the younger activists. Ahmed Abdel Gawad, a grandson of a former Brotherhood leader explained, “The leadership lacks strategic vision and remains convinced that they have the sympathy of the street and powerful capabilities to mobilize…they talk as if their strategy is to wait for a miracle to come…that is not sitting well with a lot of younger members.” Disagreements within the Brotherhood began over the decision of whether or not to have a member run for presidency; Once Morsi won, it became a disagreement over whether or not to assume leadership over of a revolution. These divides have weakened the party significantly.

Egypt can currently be characterized as having a very confusing political landscape. The authoritarian and non-secular tendencies of its leaders have had a big impact on how both citizens and the rest of the world view the country. This tension enhances the instability of the country, makes it difficult to find a “good” and representative leader, and further confuses the direction of the country.

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Foreign Aid: Helping or Hurting?

Egypt has seen heightened violence in the past few years, especially after the overthrow of President Morsi on July 3rd.  Morsi’s Islamist government failed to provide basic goods and services to its people; more specifically it was unable to satisfy demand for subsidized fuel and food. After the 2011 Revolution, declines in tourism revenues and foreign investment shrank currency reserves. Morsi further depleted reserves to revalue the currency and help subsidize fuel and food. Inflation and shortages continued, however, causing outrage and eventually the overthrow of Morsi.

 

The new interim military backed government claims to be attempting to improve food and welfare conditions. However, with little cash to spend, the government can’t import a sufficient amount of goods and is having difficulty keeping food prices low. A confusing political landscape, violent attacks, and the lack of a constitution also add to the increase in prices.

History has revealed the importance of the alliance between Egypt and other foreign nations. The US has provided Egypt with $1.5 billion per year in economic and military aid. Consequently, the US is able to take advantage of the alliance with Egypt, gaining access to Middle Eastern politics and attempting to promote peace in other Arab countries. This relationship also gives the United States access to the Suez Canal and Egyptian airspace.

On October 9th of this year, it was released that Obama was planning to suspend financial assistance to Egypt. This excluded supporting counterterrorism, security in the Sinai Peninsula, and defense against Israel. The purpose of this decision was to prevent the mismanagement of military aid materials, which is a common practice in unstable and failing state governance. Military leaders could use these supplies against protestors, instead of for their intended counterterrorism use. In fact, military leaders have been seen attacking peaceful pro-Morsi protestors. The US has also attempted to persuade military generals to release Morsi and other Brotherhood members from custody.

Consequently, Saudi Arabia and the UAE have recently poured money into the state. After the military coup, they promised to provide $12 billion in aid in order to make up for cut aid. However, some of the US aid is more valuable, such as the weaponry and replacement parts.

Another important thing to note is how dependent the country has become on US economic and military aid. The US tried funding programs that supported and promoted democracy and good governance in Egypt. These programs, however, were not that effective due to “a lack of support” from Egyptian government, who “thought these organizations were too aggressive.” Therefore, military aid is the most supported and seemingly effective form of funds. With these investments slowing down, however, Egypt’s dependency on these materials can become more apparent, eventually leading to a steeper decline.

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What is the Muslim Brotherhood?

The Muslim Brotherhood was founded in 1928 by Hassan al-Banna. It was an Islamist religions, social, and political movement and began through a promotion of sharia law. The Brotherhood attracted the lower-middle class, and acted as an organized force against early British control. Although establishing an Islamic state based on sharia law is at the core of the Muslim Brotherhood, it won its true support through providing social welfare. Through the years, the central government had failed at supporting certain benefits to citizens; the Brotherhood offered charity and appealed to those in need of educational and health support.

The Brotherhood spread throughout the Arab world, creating and promoting Sunni Islamist groups. In 1948, members of the Brotherhood were caught during an assassination attempt and were banned by the government. In the following years, the Brotherhood engaged in more violence and assassination attempts, including one against Nasser in 1954. The Brotherhood considered Nasser’s push for nationalism and egalitarianism as un-Islamic and against sharia law.

The Brotherhood continued to be a powerful source within Egypt even though it was technically banned. In the 2000 parliamentary elections, they won 17 seats, and in 2005, they won 88 seats. Since they weren’t allowed to be associated with the Brotherhood, these members held seats as independents. When Mubarak stepped down after the 2011 revolution, the Muslim Brotherhood was legalized and began to take control. In December of 2011, its political party, the Freedom and Justice Party won half the seats in the lower house.

In June of 2012, Mohamed Morsi became Egypt’s first democratically elected president, winning just 51.7% of the vote. Once elected, he didn’t try to win the other half of the country’s support and only selected members of the Brotherhood for his cabinet.

Morsi failed to keep order and the economy plummeted and crime and sex assaults grew frequent. The new government also sought to rewrite the constitution, which was pushed through in 2012. Liberals and Christians felt it was unfair and unrepresentative, as the majority of the constitutional assembly was Islamist at the time. In response to Morsi’s new constitution, Mohamed ElBaradei tweeted, “Morsi today usurped all state powers & appointed himself Egypt’s new pharaoh. A major blow to the revolution that [could] have dire consequences. ” In 2012 and 2013, the country began to see massive uprisings in response to this.

Looking at the modern history of Egypt, it is clear that the country has struggled in terms of its institutional capacity. Presidents have had difficulty providing citizens with the services and welfare that they need. Although the Muslim Brotherhood obviously did not win such side support for it’s welfare services, it can’t help but prove the importance of this aspect in state building. In addition, religion has been a driving force throughout the country’s history and is becoming even more intertwined in politics. Morsi’s recent restructuring of the government and rewriting of the constitution has offended non-supporters and has denied freedom of speech to the many groups within the country.

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