Egypt: The ‘loan’ state

Posted: January 10, 2013 in Uncategorized

1797619844___-__-_____-______-___-_______-_____By ABDEL LATIF EL-MENAWY

The most important achievement — not yet achieved — that Egypt’s new rulers will brag about is sealing the International Monetary Fund (IMF) loan. What makes things worse is the way they are promising that this loan would open the door for more loans to come from other countries and international organizations. For years, talk about loans had been nonexistent in Egypt and now it’s back at the hands of those who claim to usher Egypt into a new era of prosperity while in fact they are dwarfing and destroying it. We have even reached the point where Egypt’s economic crisis is said to have made it subordinate to a Gulf state, whose prime minister came out to deny his country is seeking to control Egypt, but is just helping. It did not stop at loans; there is talk in political and economic circles about pawning Egyptian assets in order to get loans that would enable the leaders to stay in power and prevent their downfall.

Senior officials are not ashamed of doing their best to deceive the citizens. One of them talks about the success to secure the IMF loan as proof of how trustworthy Egypt is to the world. On the other hand, throughout the past few weeks a delegation of Egyptian economists accompanied by a few traders from the country’s top “clique” went on a Gulf tour, where they tried to get seven-billion-dollar loans to cater to urgent social needs. A former senior official who is knowledgeable on the Egyptian economy told me that if this information is correct, it would be a crime against the country and the coming generations and would subjugate the Egyptian economy with all the consequences this implies.

Increasing revenues?
  The country’s leaders only know how to use their success in monopolizing power for boosting their own businesses  Abdel Latif el-Menawy

A Financial Times report stated that the IMF requests from Egypt clear plans about reducing deficits through increasing revenues. This will be done through cutting down on subsidies on the public sector, including food and fuel. Egypt, the report added, needs to guarantee securing funds from other loan institutions in order to get this one.

The IMF had previously praised austerity measures taken by Sudan, where popular protests were staged, through cutting down on fuel subsidies and devaluing the currency in an attempt to bridge the gap between official and black market prices. It is believed that requesting a bigger loan reflects the frailty of the Egyptian economy which, according to economic observers, is not undergoing any growth despite the officials’ rosy statements including those of their “boss” who lately referred to the economy of another country.

The traders’ state currently in charge knows nothing about running the country or building the economy. The country’s leaders only know how to use their success in monopolizing power for boosting their own businesses and to take advantage of their control over state institutions for establishing special ties with new countries and new markets. All is done under the banner of the Egyptian state. The fact that businessmen from the “clique” constitute an integral part of official and presidential delegations proves what I am saying.

‘Islamic’ bonds

I am not underestimating the concept of trade, but there is a huge difference between running a retail store and a national economy. When traders go bankrupt, they start looking into their old logs or thinking of ways to make fast money. This could explain the idea of bonds that they labeled “Islamic” and “authoritative” and which were rejected by the Center for Islamic Research (CIR). Despite my reservations on the interference of religious institutions in political and economic issues, I have to say the CIR took a very commendable stance because it did not deal with the bonds issue as a religious matter, but rather as one related to national sovereignty and did so as a national and not a religious entity. However, this kind of reaction would only happen in the presence of scholars of that type and under the leadership of al-Azhar Grand Imam Dr. Ahmed al-Tayeb and this is not always guaranteed. Bottom line is that the center rejected the Islamic bonds project, stressing that it involves many risks to national sovereignty, including the right of foreigners to own land in Egypt. CIR explained that based on this project, everything in Egypt would be for sale and noted that the word “authoritative” means incontestable by any other law.

After their meeting, CIR members stressed that the law threatens the sovereignty of everything on Egyptian soil including the River Nile and that the authority of the state or its president is bestowed by the people and is meant to protect, not jeopardize, their interests. The assets and lands of the country, they added, belong to all future generations and not only the current one, pointing out that the loss of Palestine came as a result of selling its land bit by bit until Jews were able to seize it all.

So many details are involved in the Islamic bonds project, but what I care about most here is to highlight the system through which the state is managed and which will drag it to a condition that I would rather not imagine whether on the economic or political level or as far as national security and the sale of national assets are concerned.

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