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In Egypt: A Crisis of Confidence

(Weekly Standard) David Schenker - Since the February 2011 revolution, Egypt's foreign reserves have dwindled from $36 billion to less than $15 billion and are falling at a rate of $600 million a month. Short on cash and with precious few sources of revenue, Cairo is borrowing from domestic banks at interest rates in excess of 15% to help cover its $23 billion budget deficit. As for Western institutional lenders, Egyptian populism and politics have made their money all but untouchable - 70% of Egyptians say they no longer want U.S. assistance. Washington and its European allies should emphasize to Egypt - and the Islamists who will soon govern - the inverse relationship between radicalism and foreign direct investment. Should Egypt's Islamists not behave responsibly, prospects for stability and economic recovery will remain remote. The writer is director of the Program on Arab Politics at the Washington Institute for Near East Policy.
2012-04-19 00:00:00
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