After four years in power el-Sisi's Egypt is in worse shape than before he took over

Four years after the Egyptian military overthrew the democratically elected president, Mohamed Morsi, the country is in sad shape both socially and economically..

General Abdel el-Sisi announced the overthrow on state television on July 3rd 2013. He suspended the constitution and installed an interim government. There had been huge demonstrations against the Morsi government over fears that it was becoming increasingly authoritarian. El-Sisi was later elected president in May of 2014 with 97 per cent of the vote. There was only one other candidate. Morsi was the second Egyptian leader deposed in just over two years after an uprising overthrew the thirty-year old rule of military leader Hosni Mubarak. Now Mubarak is released from jail while Morsi continues to languish in jail. Mubarak was released in March of this year after six years in prison. On the other hand, Morsi remains in prison apparently in poor health and without proper medical attention according to a recent article. Morsi is suffering from fainting spells and twice fell into a coma.

The overthrow of Morsi created a social and political upheaval that divided the nation and no doubt helped recruit more jihadists committed to use violence against the Egyptian government. After Morsi was removed the interim government cracked down on the Muslim Brotherhood and others who mounted large protests against the interim government and el-Sisi. In August of 2013 the army and security forces attacked a demonstration in Rabaa al-Adawiy Square killing up to a thousand protesters. Human Rights Watch describes it as "one of the largest killings of demonstrators in a single day in recent history".

Shortly after Morsi's removal, in August of 2013 the military-backed interim government embarked on a crackdown on Muslim Brotherhood supporters, many of whom who continued to stage counter-protests and express their support for Morsi. As well as the Muslim Brotherhood being declared a terrorist organization and thus unable to participate in presidential elections the following year. Amnesty International had its assets seized, was banned and declared a terrorist organization by the government. Amnesty had issued a statement condemning the mass sentencing of hundreds of supporters of the Muslim Brotherhood. Abullah al-Arian of Georgetown University's School of Foreign Service in Qatar said: "The violent repression of Morsi's supporters sent a stark message to all Egyptians that under the resurgent authoritarian rule of the Sisi regime: Dissent will not be tolerated. Along with the mass imprisonment of over 50,000 people, this has ensured that opposition to the regime has remained limited in the years since." In 2015 the government adopted a controversial anti-terror bill.

In 2013 the government had already passed a bill placing many restrictions on demonstrations. Student demonstrations were often put down by the government. The government targeted not just former members and supporters of the Muslim Brotherhood but any activists opposed to the government. Many who had opposed Morsi now found themselves being arrested by the new el-Sisi government.

The el-Sisi regime was supposed to give rise to stability and prosperity. He adopted some of the type of neo-liberal policies that are favored by the World Bank and the International Monetary Fund (IMF). However, the government was aware that many of the austerity policies favored by such institutions were politically unpalatable. El-Sisi slashed fuel subsidies and raised taxes, to generate long term revenue. He also embarked on some infrastructure projects to boost employment. However, stability has begun to erode and the demands of the IMF for further austerity measures and subsidy reductions for further loans has caused inflation and may even generate social unrest as discussed in a recent Digital Journal article.

Sarah Yerkes, a fellow at the Carnegie Endowment for International Peace in Washington said: "Some Egyptians have accepted the return of some of the 'old guard' because they believe that, for all its faults, the Mubarak regime brought them more stability than the Morsi regime. In the long run, this type of thinking is irrational - Mubarak was only able to control Egypt for so long - but in the short run, some people are willing to put up with more repression [and] less freedom in exchange for what they perceive to be greater stability." As James Gelvin, a professor at the University of Los Angeles notes Egypt is much more authoritarian today than under any leader since General Nasser with all opposition virtually outlawed. He said today no one is safe from the government if they oppose it.

Yet, the repression has not resulted in any increased prosperity for most Egyptians. Mark Levine a professor at the University of California said: "With 30-40 percent of the country living on $2 a day or less, there is very little room for manoeuver for them. If the country grinds to a halt with new protests, literally millions of people face financial ruin and even hunger very quickly." While many may not protest for fear of the consequences the situation may be about to boil over. There were many demonstrations against the government when it ceded several islands to Saudi Arabia. Attempts to impose more austerity on the population may also generate spontaneous protests.

Ironically, as Egypt declines domestically it appears to be strengthening relations internationally and to be playing an important role in Libya. Yet Yerkes concludes: "On virtually every indicator, Egypt is worse off today than it was under Mubarak. The security situation is far worse, the economy is worse, the levels of repression are far higher and the ability of the government to deliver basic goods and services has declined." The Arab Spring appears to have transitioned quickly into an Arab Winter in Egypt.

Egypt fuel prices to increase over fifty percent

(June 29)Egypt announced that fuel prices will be increased by up to 55 percent. This is the second rise since Egypt allowed the local currency to rise seven months ago.

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Subsides on fuel and other items are being cut as one of a number of IMF-backed austerity programs. In exchange, Egypt is receiving a $12 billion dollar loan. The poor and middle class had already been hit by earlier measures such as the floating of the Egyptian pound late last year. Although fuel is still cheap compared to the price in many countries the increase is bound to boost inflation even more as well as increasing discontent with President Abdel el-Sisi's economic policies. However, Egyptian PM Sherif Ismail said at a news conference that the decision was essential and could not be delayed and said: "We took part of the value of the subsidies allocated to energy to use it for other subsidies that are important for limited-income and poor individuals." The IMF conditions also included the imposition of a value added tax (VAT) to help raise revenues. The IMF measures have helped create runaway inflation which is now about 30 percent. After floating the pound, Egypt spent billions trying to keep up the value of the currency but it went from a value of 8.9 pounds to the dollar when it was floated to 18 to the dollar afterwards, losing half its value.

Many Egyptians were surprised by the amount of the increase as many Egyptians are already struggling with soaring living costs. Subsidies have long been used in Egypt as a way of gaining support for governments. However, the IMF insists on moving towards free markets and reducing state expenditures by reducing or doing away with subsidies. PM Sherif Ismail told reporters that officials would monitor prices and said: "We will not allow any greed and exploitation of our citizens."

However, many of the poorest Egyptians will be worst hit by the increases as the cooking gas cylinders they use have doubled in price from 15 pounds a cylinder to 30 pounds ($1.66). Al-Sisi insisted in December that conditions would improve in six months. Yet Ehab Labib a Cairo taxi driver said of the new price increases: "It's completely the wrong timing. People can't take it anymore, all prices will increase. I will sell this taxi, what else am I going to do?"

Egypt is expected to receive a second instalment of $1.25 billion of the IMF loan with the next few weeks. Hani Berzi, head of one of the country's top food producers Edita Food Industries said that he expected costs to go up from 3 to 5 percent but said: "I will have to absorb that, I have no intention of increasing prices... the market can't stand it."

Egypt is hoping to reduce its deficit to less than the 10.5 percent of GDP forecast for this year. However, social unrest may increase with the rise in prices. About half of Egypt's 93 million people live below or near the poverty line. PM Sherif Ismail estimated that the price rises would increase the inflation rate now around 30 percent an additional four or five percentage points. However, the government did raise pension payouts and added exemptions for low income taxpayer, as well as allocating more funds to subsidized food programs. The expenditures will add about 85 billion pounds to next year's budget. The IMF mission chief to Egypt said: “The fuel price increases, together with the higher social spending already announced, will help the budget while protecting the poor." Reducing fuel subsidies will help put the government’s debt “on a declining trajectory and help free resources to support the most vulnerable groups by strengthening social protection measures.”

The Egyptian government hopes that in the next fiscal year the budget deficit will be about 9 percent of GDP. The value-added-tax is to be raised one percent to 14 percent. Fees for mobile phones, car licences, and taxes on tobacco will also increase. The government also intends to raise money by selling stakes in state-owned enterprises. Reham El Desoki, senior economist at Dubai-based Arqaam Capital said: “The government is getting all the painful measures done this fiscal year. That’s probably the government’s strategy: ‘Now, the worst is probably behind us.”’

Egyptian women require medical permission to buy subsidized baby formula

As part of the requirements of the recent IMF subsidies on various products had to be reduced or eliminated. This has had a drastic effect on the availability of baby formula in Egypt and created difficulties for many mothers.

A recent article in Digital Journal predicted that the austerity provisions accompanying the $12 billion IMF loan could generate social unrest and it already has. Earlier this month, protesting mothers blocked a major roadway in the capital Cairo.

An example of what can happen is shown by the case of Um Ahmed who lives in Fayoum, a city about 100km, or 60 miles, south of Cairo. She has been unable to find subsidized baby formula for her eight months old baby. She has diabetes and her husband only finds occasional work by the day. Ahmed often cannot find any of the subsidized formula: “I have had to buy the expensive kind, but even that sometimes isn’t available. When I can’t find it, I have to boil rice and feed it to him. Sometimes I give him yogurt. What else can we do?” The difference in price of the subsidized and unsubsidized milk is dramatic $7.32 (U.S.) compared to $1.90 for the subsidized packets. This makes a considerable difference for lower income families.

The government is trying to alleviate the situation. The military, which controls a considerable amount of the Egyptian economy claimed that pharmaceutical companies monopolized the market and that the military would provide the packets at $3.38. No mention of the IMF role in the price hike. The milk will only be available in government-affiliated outlets. The military said that the milk would be in outlets by mid-September.

However, the Egyptian Health Ministry is now requiring that women who buy subsidized baby milk, must be first examined to establish their need to do so. Women will be required to have their breast examined by doctors and obtain written confirmation by the examining medical group that the women should be allowed to purchase subsidized milk.

Ahmed, and many others, are infuriated by the requirement saying: “A woman might produce milk, but it might be very little. Or she might be physically able to breastfeed, but she has to work and doesn’t have time. It’s unfair.” A father at a recent protest on a news video said: "I have three babies. I come every week to get milk from here as no woman on earth can breastfeed three babies at once." But once at the outlet he's told there is no milk available. "What do we do with our babies? What do we feed them?" he says in frustration.

Ahmed says that space for speaking up becomes less as conditions worsen. She says there is a lot to say but given conditions a person has to be quiet: “I’m just an overwhelmed mother. I’m uneducated, but I understand, I’m aware and I care about my kids… and I get scared.”

IMF loan to Egypt comes with conditions the will hurt ordinary Egyptians

The Egyptian economy has done poorly during the presidency of Abdel el-Sisi. The IMF is coming to the rescue with a three year loan package of $12 billion.

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A Bloomberg article suggests that the loan is most likely to be good money thrown after bad. The loan is expected to be bolstered by further funds from Arab Gulf States. During the last three years, Egypt has received about $50 billion from Gulf supporters but the economy remains in the doldrums. The tourism industry has more or less collapsed and there is a lack of foreign investment. The amount of foreign currency just to supply imported basic needs for Egyptians now exceeds $80 billion.

The official jobless rate in Egypt is around 13 percent, but the rate for young people is more than double that. The annual trade deficit is about 7 percent of GDP while the budget deficit is about 12 percent. Tunisia with similar problems has a budget deficit of just 4.4 percent.

While the collapse of the tourist industry contributes to Egypt's economic woes, the economic policies of the government have also contributed. The government likes to spend huge amounts on mega-projects often of dubious worth instead of spending on basic infrastructure. El-Sisi's dream of a new capital at a cost of $45 billion appears to have been shelved fortunately. While the government started programs of cuts to fuel and agricultural subsidies, to decrease red tape, and raise taxes, they were all dropped. A plan to let the Egyptian pound depreciate was also dropped but inflation has increased.

The IMF is now demanding that el-Sisi devalue the pound and impose a value-added tax (VAT). Such measures will increase costs to consumers. Already a quarter of the 90 million Egyptians live in poverty. Almost the same percentage are illiterate. With a growing population Egypt could soon run out of water, especially as it employs some agricultural practices wasteful of water. The education system is totally inadequate and underfunded. Even el-Sisi admitted in 2014 that the nation needed 30,000 new teachers. However, money was not budgeted to hire them. Bloomberg concludes:Egypt should invest in simple infrastructure such as roads, schools and water-supply systems; make it easier for small and medium-sized business to get bank loans; and break up the military-industrial monopolies in everything from washing machines to olive oil. It also needs to end the crackdown on civil society, and move toward a free and fair presidential election.Much of the economy is controlled by the army. El-Sisi is not about to allow any political freedoms that might threaten his power and that of the armed forces.

The IMF has had a long history of negotiations with Egypt after the 2011 elections but there was opposition to conditions imposed so the negotiations were shelved. Under the Mohamed Morsi regime the negotiations were renewed.

A package of $4.7 billion was negotiated. Eventually the IMF backed out of negotiations because it said there was lack of political support for the deal. The IMF demands a sales taxk of 12.5 percent that was not acceptable to the Morsi government. However, the new loan involves even more demands. There must be an end to subsidies, a VAT tax, reduction of governmental jobs, and devaluation of the Egyptian pound. All of this will have a devastating effect on many Egyptians. Most Egyptians will not be able to afford the increased costs. 95 percent of Egyptians earn less than $14 per day and more than 25 percent earn less than $1.50 per day.

The economy under Morsi made modest gains with inflation hovering around 6.9 percent. Three years into the rule of el-Sisi after Morsi was overthrown, inflation is at about 14 percent and the Egyptian pound has lost half its value. The IMF demands it lose even more. Debt servicing is already taking up 31.5 percent of the budget but with additional debt this can only climb.

Much of the loan money will simply flow into the pockets of corrupt politicians and others. The government's own auditor estimated that over four years an estimated $67 billion was lost to corruption. His reward for revealing this was to be sacked and charged with harming Egypt's image. The regime seems not to have a clear vision of how to progress economically but resorts to mega projects it thinks will have positive propaganda value.

The brutality of the regime breeds terrorism which in turn makes attracting foreign capital difficult because of the security situation. The austerity policies associated with the IMF loan will cause even more social unrest. As an article in the Economist points out the ranks of young and embittered Egyptians without jobs are swelling. Options are emigration or, for a few, jihad. This sets the stage for another social explosion.