As we discussed in the weekly Call posted above, the Muslim Brotherhood leader and Egyptian President Mohamed Morsi received a $2 billion pledge from the visiting Emir of Qatar Sunday morning, and on Sunday afternoon fired the military leadership and announced a constitutional revision reducing the military's role in the Egyptian government. Whether this is manic overreach or the spring of a diabolical plot remains to be seen. Egypt has a $36 billion annual trade deficit, against earnings of about $5 billion a year from the Suez Canal, an undetermined amount (probably about $7 billion) from tourism, and a few billion workers' remittances--that is, an annual financing requirement of over $20 billion.

Qatar's $2 billion is a drop in the bucket; it just replaces the reserves that Egypt lost last month. So is a $3.5 billion IMF loan, under discussion for a year. The Obama administration has been telling people quietly that the Saudis will step in to bail out Egypt, but the Qatari intervention makes this less likely. The eccentric and labile Emir is the Muslim Brotherhood's biggest supporter; its spiritual leader, Sheikh Yusuf al-Qaradawi (who supports suicide bombings against Israel) lived in exile during the Mubarak regime. Qatar funds al-Jazeera television, the modern face of Islamism. The Saudis hate and fear the Brotherhood, which wants to overthrow the Saudi Monarchy and replace it with a modern Islamist totalitarian political party. Qatar has only about $30 billion in reserves and can't sustain Egypt for long.

Qatar is something of a wild card: it is ruled by an Emir without even the checks and balances that arise from having a large family behind a monarchy, as in Saudi Arabia. The whimsical Emir just bought the Italian firm of Valentino as a gift for his fashion-conscious second wife -- not a dress, but the entire company. His support evidently emboldened the Muslim Brotherhood in Egypt to take on the military in the aftermath of the Sinai crisis. But that makes stability in Egypt less rather than more likely, because it gives the Saudis, the only funder capable of bailing out Egypt, reason to stand aside.

Whether the Egyptian military chooses to fight Morsi or to retire to its barracks (or more likely townhouses in London) remains to be seen. But Egypt's root problem is a dysfunctional economy (it imports half its food), a population that is nearly half illiterate, a tribal social structure (nearly a third of Egyptians marry cousins), and a bloated university system that can't train a competent civil engineer. My bet remains that the military will let Morsi take the fall for a big devaluation by the end of this year and move back into power. The alternative is that the military leaders will take their loot and leave, and Egypt will fall into chaos.

Related Topics:  David P. Goldman receive the latest by email: subscribe to the free gatestone institute mailing list

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