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SHIR HEVER: It has been almost two years since the revolution in Egypt, the ousting of President
Hosni Mubarak, and the beginning of a new era.
The first democratic elections in Egypt were held, but the newly elected government now
discovers that external forces are still in place, and if the government will not comply
with the demands of global capital interests, dire consequences could apply to the Egyptian
population.
Egypt's referendum on the approval of a new constitution last December has passed with
a small margin after only a third of Egyptians took part in the referendum.
Yet in addition to the political controversy, Egypt's economic situation is in crisis. The
Central Bank of Egypt published data comparing the economic situation in Egypt in February
11, 2013, to the same date two years ago. The numbers speak for themselves. Egypt lost
nearly two-thirds of its foreign currency reserves, its currency has weakened, its balance
of payments deficit has worsened, and unemployment has increased.
According to Farah Halim, a journalist and blogger of the Rebel Economy blog, policies
implemented by the Egyptian government included increasing hiring in the public sector in
order to reduce unemployment and gain public support.
Energy subsidies have been a way by which the government could ease the costs of living
and support local industry even before the revolution.
The Egyptian Ministry of Finance, however, admitted on February 16 that the money for
the subsidies is running out.
Egypt has accumulated a debt burden of 80 percent of its GDP. Such a high debt rate
makes it vulnerable to international pressure. Merely paying the interest on the public debt
consumes a quarter of all of public spending.
Egypt's overall budget deficit is expected to increase in 2013 to EGP 135 billion. Therefore,
interest payments could quickly take up a larger portion of the public spending, dealing
an additional blow to the standard of living in Egypt.
Nothing demonstrates the external pressure which restrict Egypt's economic decision-making
better than the U.S. intervention. The U.S. supports the Egyptian army with FMF (foreign
military financing) of approximately $2 billion annually, making it the second biggest recipient
of aid from the U.S. after Israel.
This money does not flow into the Egyptian economy. The Egyptian army must use it to
purchase weapons from the U.S. military companies. It does, however, give the U.S. significant
influence over the Egyptian military. This influence was used to keep Mubarak in power
between 1981 and 2011.
Egypt, which was once able to supply its food needs locally, has become increasingly dependent
on food imports over the last decades because Mubarak's government favored the business
class and allowed much of Egypt's fertile lands to become desert. Today Egypt must import
more than half of its wheat from abroad. The U.S. exports to Egypt a quarter of Egypt's
wheat consumption, and France is the second biggest source of wheat for Egypt.
In February 10, the U.S. ambassador to Egypt, Anne Patterson, was not shy in making public
demands for policy changes from the Egyptian government. She demanded that Egypt will conclude
an agreement with the IMF (the International Monetary Fund), that Egypt will cut back on
energy subsidies to the population, and that it will honor the financial obligations of
the previous regime, essentially paying the debts incurred by the non-democratic Mubarak
presidency.
Another way by which foreign interests are involved in the Egyptian economy is through
non-governmental organizations (NGOs) and governmental agencies. Such organizations
operate using foreign funding, and provide various projects in Egypt, including development
projects, humanitarian assistance, and projects for promoting human-rights.
The Morsi government in Egypt is highly suspicious of these organizations and has taken steps
to reduce their influence over Egyptian politics. Workers in many NGOs were encouraged to leave
the country. Several offices were closed. The Egyptian government is now drafting a
new law to restrict the operations of NGOs.
On the one hand, foreign aid disbursed through NGOs can be a subversive method to exert influence
on the Egyptian political sphere and to exert pressure on the Egyptian government to play
by the rules of global capitalism, meaning, for example, to abide by demands of the IMF
and to repay debts which have been extracted from Egypt through corruption by a non-democratic
government.
On the other hand, curbing NGO activity also harms local civil society and threatens the
democratic process in Egypt. It raises questions about freedom of speech, freedom of organizations,
and the ability of Egypt's civil society to maintain links with the civil society in the
rest of the world.
From an economic point of view, these NGOs support impoverished Egyptians, and provide
employment for the Egyptian middle class. Egypt's economy is dependent on foreign aid,
which has already been dropping considerably because of the international economic crisis,
from $22 per Egyptian in 2008 to only $7 dollars in 2010 on the eve of the revolution.
The Egyptian government must now choose between complying with international pressure, implementing
austerity programs, and worsening the social conditions in Egypt, or defaulting on its
debts and bracing itself for severe sanctions from the U.S. and international institutions.
This is Shir Hever for The Real News.