Egypt’s Economic Struggle

Eighteen months after Egypt’s revolution, President Mohamed Morsi, the United States and the International Monetary Fund finally seem to be pulling in the same general direction on the question of how best to revive the country’s devastated economy. Their efforts are long overdue and will require a sustained commitment as Egypt struggles with its transition to democracy.

Mr. Morsi and his party, the Muslim Brotherhood, initially adopted the self-defeating posture of rejecting outside assistance. Since his election in June, however, Mr. Morsi has become much more pragmatic as he confronted the real challenges of governing.

Egypt’s problems — a huge budget gap, a perilous drop in currency reserves, the need for thousands of new jobs and better schools — are simply too big to solve without international help. Last month, Mr. Morsi acknowledged as much when he requested a $4.8 billion loan from the I.M.F. The deal is expected by the end of the year.

The Obama administration’s announcement on Monday that it is close to an agreement with Mr. Morsi’s government on an assistance package is the latest good news. Egypt’s debt to the United States exceeds $3 billion, and President Obama has now offered $1 billion in debt relief. The Americans and Egyptians are still negotiating the terms, but the relief is likely to take the form of a direct cash transfer to Egypt’s treasury.

Mr. Obama has also offered $375 million in financing and loan guarantees for American companies and banks that invest in Egypt and a $60 million investment fund for Egyptians to invest in new enterprises.

Mr. Obama offered an aid package last year, not long after the revolution. It languished, too long in our opinion, while Egypt’s transition played out and Washington waited to see whether the Muslim Brotherhood and the military would stick to a democratic path, which it has, though with rocky moments.

Some in Congress worry whether Mr. Morsi will abide by the peace treaty with Israel, and there are legitimate concerns about his harsh treatment of critics of the news media and whether he means to represent fairly all Egyptians, including Christians. But he has, so far, upheld the peace treaty, handled a militant attack in the Sinai Peninsula reasonably well and, on a trip to Tehran last week, publicly lambasted the Iranian leaders for supporting President Bashar al-Assad of Syria.

There is no reason Congress should not support the administration. Lawmakers should also be prepared to provide more aid as needed and to work with the administration to rebalance the relationship so that assistance goes to development projects, not just the military, which has received roughly $1.3 billion per year for three decades. Increased trade is also vital. An American-sponsored trade delegation to Egypt planned for next week should be the first of many.

It would be hard to overstate the importance of helping put Egypt, the most important nation in the Arab world and the key to Middle East stability, on a firm economic footing. China — which last week promised Cairo a $200 million loan and signed various deals involving agriculture, the environment and telecommunications — sees this clearly. So should Congress.

http://www.nytimes.com/2012/09/05/opinion/egypts-economic-struggle.html?_r=0

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