♠ Posted by Emmanuel in IMF,Middle East
at 4/25/2012 10:09:00 AM
I am simultaneously fascinated and appalled by the developments in Egypt. Among the more influential academics in policy circles--see Anne-Marie Slaughter especially--there's been this idea that we're in a new foreign policy frontier where the availability of digital tools to the average person has reshaped the conduct of diplomacy. This sort of thinking is tied in to the neo-triumphalist version of the Arab Spring in which the "Internet freedom fighters" or whomever the Americans like to style them as to suit their own particular version of events overthrows a nasty (and don't forget longtime US ally replete with aid largesse over the years), autocratic regime.
Well here's the reality for you: It has come to pass that the "Allah and moolah" scenario I painted of Islamic lawmakers voting down much-needed IMF support has come to pass. So the freedom-loving digital mob has helped replace the old regime with...er, a well-established and well-organized hardline Muslim organization that now dominates parliament. Oh by the way, the new order or whatever passes for it won't accept conditionalities from the IMF due to some special dispensation whose exact nature I'm yet to pinpoint (see previous link).
Religious zealotry and unrealistic expectations of how the IMF grants emergency loans aside, there is utterly nothing new to this story: (1) Contrary to all the neo-triumphalism that surrounded the Arab Spring--call it the end of modern Arabic history--the replacement of a comparatively stable authoritarian regime by an unstable one with a volatile mix of military and fundamentalist identities has destabilized the Egyptian economy. Tourism--an important source of foreign exchange--has been particularly hard hit. (2) The still-US dominated IMF will only lend emergency funds to a now-troubled Egypt on its own terms.
Where exactly, then, is the change in this new foreign policy frontier? From where I stand, the overall description of events could be a generic description of a troubled LDC circa 1972 instead of 2012 and the instrument of financial enlightenment of Western powers:
Egypt's parliament overwhelmingly rejected the army-appointed cabinet's plan to cut state spending on Tuesday, complicating the government's efforts to secure IMF help to fight a balance of payments crisis. The International Monetary Fund (IMF) wants the backing of Egyptian political forces for the government's economic reform plan before it signs off on an emergency loan. Egypt has been hamstrung with economic troubles since a popular uprising in January last year.Again, there seems to be utter incomprehension among the newly-installed parliamentarians about what the IMF does. It is not concerned with public security as an international financial institution, nor are the usual prescriptions involving austerity meant to encourage higher wages for public servant of all things. That the current military caretaker head is due to be replaced by a less secular figure may go in one of two directions: more parliamentarians sympathetic to the Brotherhood may be willing to support a package negotiated by one of their own, or the "no conditionalities" impracticality favoured by certain hardliners could become the baseline Egyptian demand.
Prime Minister Kamal al-Ganzouri's government presented the Islamist-dominated parliament with the plan on February 26 and it has been discussed over ten sessions. Only six out of 365 lawmakers who cast their votes approved of the plan, which was criticized as vague and incoherent. Some said the program failed to improve public security, reduce poverty or provide the revenue to raise wages. Assembly speaker Saad al-Katatni said the "government must submit its resignation to the head of state".
Either way, I doubt these negotiations will proceed smoothly. It's certainly feasible that the same "Internet freedom fighters" may soon regret their actions given that, in most economic respects, Egypt is quantifiably worse off than it was than under Mubarak--and has a high probability of becoming even graver as this "Allah and moolah" impasse drags on. But that's just me; the official IMF blurb says...
The IMF remains ready to support a home-grown program that maintains macroeconomic stability and promotes inclusive growth, enjoys the necessary broad political support and includes adequate external financing from Egypt's international partners"..."We look forward to advancing these discussions and to bringing a program for consideration by the IMF Executive Board as soon as the above conditions are in place.And that's all she wrote about the Egyptian uprising.
