Saudis to Muslim Brotherhood: Drop Dead
"The uneasy modus vivendi between the Muslim Brotherhood and the military most likely will fail, and probably sooner than later," I argued July 9, and the aftermath of the terrorist execution of sixteen Egyptian soldiers in the Sinai peninsula supports this conclusion. The funeral service for the dead soldiers erupted in rage against the Brotherhood, Al Ahram reports today from Cairo:
Crucial to understanding Egypt's internal wrangling between the Brotherhood-dominated elected government and the military in the wings is the harsh reality of Egypt's economy: the country is nearly dead broke, and close to the point where it no longer can finance its $36 billion annual trade deficit. Egypt imports half its food, and is the world's largest wheat importer. Wheat and other food prices went through the roof due to the American drought and poor harvests elsewhere. Egypt is almost out of money. It also has trouble financing its enormous internal budget deficit (around 12% of GDP). The most likely outcome will be a substantial currency devaluation before year-end, with a sharp rise in food and energy prices, all of it laid at the door of the Muslim Brotherhood. The military will consolidate its grip over Egyptian politics in one fashion or another. As I wrote in the cited July 9 post: "The economic context is necessary to make sense of Egypt's politics: it points to an important conclusion, that no path exists to stable rule by the Muslim Brotherhood."
The most important news to come out of Egypt in the past several weeks was yesterday's central bank announcement that foreign exchange reserves fell sharply during July. Liquid reserves fell by a quarter, from $7.8 billion to $5.9 billion. Al Ahram reported:
Source. Central Bank of Egypt
Saudi Arabia, that is, didn't peel off a single dinar for the flailing Egyptians during the month of July, despite Prime Minister Morsi's high-profile trip to Riyadh during the middle of the month. With liquid reserves below $6 billion (the rest is gold, credits at the IMF, and a few other illiquid items) Egypt can pay for another two months' of its trade deficit. The Saudis do not want to feed the mouth that bites their hand.
A great deal of wishful thinking arose from Morsi's visit about a new Saudi-Egyptian rapprochement, supposedly motivated by common opposition of the two Sunni Muslim countries to Iran, for example, by Prof. Fouad Ajami in Tablet. The Saudis fear the Muslim Brotherhood, though, as much as they fear Iran: the Brotherhood's updated Islamism combines traditional religious authority with the organizing methods of modern totalitarian parties, and represents the most credible internal challenge to the Saudi monarchy. Saudi Arabia supported deposed Egyptian president Hosni Mubarak and bitterly rued his overthrow.
Evidently the Egyptian Supreme Council of the Armed Forces and its Saudi backers intend to let the Morsi government take the blame for Egypt's impending economic disaster. The assault on Egypt's prime minister at the soldiers' funeral may mark the decline of the Islamist organization. The only friend the Muslim Brotherhood has left is the Obama administration, which cannot–in an election year–give the Morsi government what it needs the most–enough money to get through the next few months.
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