Lest you think matters are done and dusted, remember that the $4.8B loan is not yet finalized but will require approval by the (Western-dominated) IMF Executive Board. Should Morsi @#$% up over the next few days by disclaiming conditionalities or siding strongly with Hamas--familiar Brotherhood feints--the money can easily be yanked away. Consider this "staff-level agreement" as a dangling hook Morsi must bite by toeing the American line on austerity, structural adjustment, and putting Hamas in its place. (Yes, this is global political economy.)
To me, several questions remain unresolved:
- How will Morsi broker peace with hardline Muslim Brotherhood figures of the sort he used to be before becoming the Egyptian president?
- How will the public react to a massive rollback of energy subsidies? Even without a (Muslim Brotherhood-dominated) parliament to take offence, the Egyptian public has acquired a taste for mass protests during the so-called Arab Spring that may yet upset Morsi's putative plans.
- How will the Brotherhood-dominated government react to public demands that all conditionalities be disclosed? Among other things the statement mentions, Egypt will for instance be asked to implement a national VAT system--something which the US of course does not have, but there's obviously nothing new with Westerners asking others to make sacrifices they aren't willing to make.
- Is financing totalling a said $14.5B from various "bilateral and multilateral partners" in addition to the $4.8B standby agreement enough to set Egypt on solid footing?
UPDATE: Just as Morsi was basking in praise from Obama et al, he decides to increase presidential powers. I wonder how this figures into IMF pleas for a more inclusive and consultative government to raise support for economic reform!