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The Cost of Egypt’'s Revolution?

Lee Smith

Three months after the uprising that toppled Hosni Mubarak, the new Egypt is still sorting itself out—and perhaps will be for some time to come. Observers are concerned about both the country’s domestic problems—attacks on the Coptic Community, the rise of the long-repressed Salafi movement, etc.—as well as Cairo’s foreign policy. To understand what’s happening right now in the largest and perhaps most influential Arab state, it’s useful to consider the country’s domestic and foreign policy as part of the same general initiative—a fund-raising drive.

An editorial in yesterday’s Washington Post contends, “Egypt’s previous foreign policy was often toxic.”

It opposed international initiatives on democracy and human rights, and it joined efforts in the United Nations to stigmatize Israel. It regularly made promises to Washington on which it failed to deliver—such as its attempts to broker cease-fires between Israel and Hamas.

But Mubarak’s value was not in brokering ceasefires between Israel and Hamas, an outfit backed by Egypt’s Iranian adversaries. Rather, it was the fact that the Egyptian leader and his intelligence chief Omar Suleiman gave Hamas no quarter. Among other very useful acts, Mubarak established a blockade of Gaza. Now that the new Egyptian government plans to end the blockade, as Egyptian foreign minister Nabil Elaraby told the Post‘s Lally Weymouth, Hamas will likely have an open supply line across the Egyptian border. As Martin Kramer, Wexler-Fromer fellow at the Washington Institute for Near East Policy, explains, this is something like Syria’s border with Lebanon, which is the location of Hezbollah’s supply line.

Other evidence of Egypt’s new sympathy toward Hamas is the fact that it brokered the reconciliation between the Islamic Resistance and Fatah. Some optimistic observers take this as a sign that Hamas as well as its Syrian sponsor have both been weakened. Nonsense, says Kramer, “it just means that Hamas can ride Egypt now instead of having to rely on Syria.”

Egypt could become a bigger headache for Washington; it might start acting a lot more like Syria. Cairo’s rulers might not like it, but they have little choice: the country is broke.

As David P. Goldman wrote in yesterday’s Asia Times:

Egypt is running out of food, and, more gradually, running out of money with which to buy it. The most populous country in the Arab world shows all the symptoms of national bankruptcy – the kind that produced hyperinflation in several Latin American countries during the 1970s and 1980s – with a deadly difference: Egypt imports half its wheat, and the collapse of its external credit means starvation.

The foreign investment that Gamal Mubarak and his band of reform-minded technocrats lured to Egypt all left the country after Gamal’s father was toppled. Egypt collects receipts on the Suez but its two other major sources of income are way down. Goldman calculates that guest worker remittances from abroad are perhaps half of what they were in 2009, largely because Libya has expelled its Egyptian labor. Tourism, Goldman writes, is a fraction of what it usually is. I had once thought that tourism was likely to rebound quickly; after all, al-Gama’a al-Islameya’s 1997 attack in Luxor that killed 58 foreign tourists was meant to undermine the industry, but within a year or so tourism bounced back. But Mubarak crushed the Islamists and got them off the front pages of Western newspapers. Today, with Salafis given free rein and setting fire to Coptic churches, Western tourists are staying away indefinitely.

Egypt, says Goldman, is in big trouble. “I can’t make the numbers add up,” he told me in an email. “The Egyptians seem to be out around $20 billion a year, and they’ve lost $13 billion in foreign exchange reserves during the first quarter. Who’s going to lend them that kind of money? The US was talking about $1 billion in debt relief, which means a tiny fraction of that in cash flow terms. Are the Saudis going to bail them out? The ticket’s too big, and they didn’t like what was done to Mubarak.”

To feed Egypt there are essentially two choices. The first is to keep the country as stable as possible, prove a relatively reliable partner to Washington, and reform the economy so that it’s amenable to foreign investment. But neither the Egyptian military nor the likely presidential candidates are going to go that route since this is what got Mubarak tossed out, and his sons locked up in jail—“corruption,” as Egypt’s young middle class revolutionaries called it.

The other option is to present an Egypt much less reliable and stable than Mubarak’s. In other words, a scary Egypt, an unpredictable Arab leviathan that might go to war with Israel or just fall apart at the seams. In order to keep this Egypt from exploding or imploding, someone has to pay, but it’s unlikely to be the Saudis or the Iranians. There’s no superpower contest in the Middle East, so the only option is Washington. To survive, Egypt needs to raise the rent on the Americans. “They think Mubarak sold Egypt for too little at $2 billion a year,” says Kramer. “They’re rattling the cup.”

Cairo is normalizing relations with Iran and giving Hamas a ride in order to get the Americans to pay up—unless they want to see Egypt get really ugly. The military is not going to crack down on the Salafists unless Washington pays for it, full price and not as part of any package deal. So what if street confrontations between Muslims and Copts leaving dozens dead in the streets of Cairo keep tourists at home? $15 billion a year in tourist revenue is not enough to cover Egypt’s basic requirements in the first place.

The problem of course is that the U.S. doesn’t have the money to keep Egypt afloat either. The bill for Egypt’s revolution has come due, and as it turns out, everyone left his wallet at home.

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