Egyptian Debt Threatens Tahrir Square's Promise of Freedom
NO ADVERTISING, GOVERNMENT OR CORPORATE FUNDING
DONATE TODAY


  March 3, 2013

Egyptian Debt Threatens Tahrir Square's Promise of Freedom


As the U.S and the IMF apply pressure to the Egyptian government to cut public spending and pay a high interest rate on debts incurred during the previous regime, the Egyptian government targets international NGOs with repressive policies
Members don't see ads. If you are a member, and you're seeing this appeal, click here
   



audio

Share to Facebook Share to Twitter



"The Real News Network" delivers as the title indicates -"Real News". Not news cycle trash or fluff. - Laviero
Log in and tell us why you support TRNN


transcript

Egyptian Debt Threatens Tahrir Square's Promise of FreedomSHIR HEVER, ECONOMIST, ALTERNATIVE INFORMATION CENTER: 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.

End

DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.



Comments

Our automatic spam filter blocks comments with multiple links and multiple users using the same IP address. Please make thoughtful comments with minimal links using only one user name. If you think your comment has been mistakenly removed please email us at contact@therealnews.com

latest stories

Corbyn Wins Leadership, But Can He Unite the Labour Party?
Danny Glover on the Struggle for Democracy in Haiti
Should Third Parties Be Included in Televised Debates?
Anti-BDS Campaign Aims to Undermine Academic Freedom and Free Speech on Palestine
Ecuador Proposes Worldwide Elimination of Tax Havens
Why the Federal Reserve Needs To Go Beyond Interest Rate Policy
'Hands Dripping with the Blood of the Afghan People': US Agrees to Pardon and Reward Warlord
Recall Referendum on Maduro Moves to Next Phase in spite of "Irregularities"
Gary Johnson Supporters: Privatize Everything, But Not the Commission on Presidential Debates
TPP Will Effectively Kill Climate Treaties
US National Security Policy for Climate Change Seeks Security for Corporate-Controlled Assets
U.S. Policy in Syria: Regime Change or Regime 'Facelift'?
Berlin Election Outcome Signals Merkel's Tenuous Grip on Chancellorship
Charlotte Protests Escalate as Police Refuse to Release Video
Dangers of the Proposed Bayer-Monsanto Merger
Police Killings from Charlotte to Tulsa Spark Calls for Boycotts and Justice
SEC Accusations Against US Billionaire Highlights Centrality of Insider Trading to Hedge Fund Profits
MST Occupies Government Building in Salvador, Bahia
Baltimore City Council Candidate: Neighbors Need to Organize to Change the City
Israeli Arms Industry Faces Existential Threat in New US Aid Agreement
Trudeau's Liberals Adopt Harper Government's Carbon Targets
Corbyn and the Roots of Labour's Discontent
With Most of Dakota Access Pipeline Approved, Final Battle Remains Over Critical Portion
Does a Golden Parachute Await Wells Fargo CEO John Stumpf?
US Indifference to Congolese Repression Ensures Its Access to Nation's Mineral Resources
Chris Hedges: To Stop Terrorism, End U.S. Occupation of the Middle East
Can a Lebanon-Style Solution End the Syrian War?
Yale to Face Protests for Whitewashing Paul Kagame's Human Rights Record
Record US Aid to Israel Reflects Growing Influence of Military-Industrial Complex
Work Stoppage Prison Strike Continues in 11 US States

TheRealNewsNetwork.com, RealNewsNetwork.com, The Real News Network, Real News Network, The Real News, Real News, Real News For Real People, IWT are trademarks and service marks of Independent World Television inc. "The Real News" is the flagship show of IWT and The Real News Network.

All original content on this site is copyright of The Real News Network. Click here for more

Problems with this site? Please let us know

Linux VPS Hosting by Star Dot Hosting