COMMENT: Shortly before being disqualified as a candidate for the Egyptian presidency, Muslim Brotherhood luminary Khairat el-Shater expressed intent to reject an emergency IMF loan to Egypt.
One consideration this brings to mind is what the result of that rejection will be and what the Brotherhood seeks to gain from that gambit. It also makes us wonder what other Muslim Brotherhood (and “former” Brotherhood) candidates will do on this issue. Perhaps “Terrafractyl” can enlighten us on this point.
As noted in this column, Egypt is in dire economic straits and, the obvious warts and blemishes of the IMF aside, exacerbating the grave economic plight of that society can not be good for the Egyptian people.
The author notes the Nazi heritage of the Muslim Brotherhood and theorizes that the Ikhwan’s extensive social services network will win the organization massive and enthusiastic support in the social maelstrom that figures to result from an economic collapse.
In this regard, rejection of the IMF loan may be seen against the background of the effect of chancellor Bruening’s deflationary policies (the “austerity” embraced by Merkel, Romney and others) on the German people. That austerity was the engine that drove the German electorate into the arms of Hitler.
In our For The Record series about the “Muslim Brotherhood Spring”–FTR #’s 733 through 739–we expressed the thought that, in the absence of any real progress on the economic front, the Ikwhan’s agenda would be “let ’em eat Jews (Israelis).” One wonders if economic collapse and resulting social chaos will bring about that sort of phenomenon in Egypt
From the beginning, the possibility of any real economic progress in a country in which 56% of the women and 33% of the men are illiterate seemed like a reach.
It seems like rejecting the IMF loan will only make a bad situation worse.
Egypt’s Muslim Brotherhood signaled its intent on Sunday to push the country into economic chaos. With liquid foreign exchange reserves barely equal to two months’ imports and panic spreading through the Egyptian economy, the Brotherhood’s presidential candidate Khairat al-Shater warned that it would block a US$3 billion emergency loan from the International Monetary Fund (IMF) unless the military government ceded power.
“We told them [the government], you have two choices. Either postpone this issue of borrowing and come up with any other way of dealing with it without our approval, or speed up the formation of a government,” Khairat al-Shater said in a Reuters interview. 
The news service added that al-Shater “said he realized the country’s finances were precarious and a severe crunch could come by early to mid-May as the end of the fiscal year approached, but that this was the government’s problem to resolve”.
Last week, Egypt’s central bank reported that total reserves had fallen to $15 billion, but – more importantly – liquid foreign exchange reserves had fallen to only $9 billion, equivalent to just two months’ imports. Foreign exchange futures markets expect the Egyptian pound to lose half its value during the next year, and Egyptians have responded by hoarding diesel fuel, propane gas and other necessities.
With half of Egypt’s population living on $2 a day or less, the expected devaluation would push a significant part of the population below minimum nutrition levels, and balloon the government’s deficit as the cost of subsidizing imported necessities rose. Egypt imports half its caloric consumption.
The IMF loan was a stop gap to delay devaluation, but the Muslim Brotherhood’s al-Shater made clear that Egypt’s dominant political party would spike it. “It is not logical that I approve a loan that the transitional government would take for two or three months, then demand that I, as a permanent government, repay,” Shater told Reuters.” I have to agree to a loan, somebody else gets to spend it, then I have to pay it back? That is unjust.”
As Egypt headed towards chaotic breakdown, Western observers asked how its economy might be stabilized. This appears to have been the wrong question to begin with, for the Muslim Brotherhood will not allow the West to stabilize Egypt’s financial position. The right question is: who will benefit from the chaos?
At this writing, the Muslim Brotherhood appears to be the winner by default, for no other actor has the courage and cold blood to exploit the emerging crisis. America, by contrast, is locked into the defense of a deteriorating fixed position. And Egypt’s military leaders are more concerned with feathering their nests in exile, like the Iranian generals in 1979.
The Brotherhood believes that widespread hunger will strengthen its political position, and is probably correct to believe this. As the central government’s corrupt and rickety system of subsidies collapses, local Islamist organizations will take control of food distribution and establish a virtual dictatorship on the streets.
American analysts mistook the protestors of Tahrir Square for revolutionaries. The Muslim Brotherhood now reveals itself to be a revolutionary organization on the Leninist or Nazi model. . . .
. . . As a revolutionary organization that rose under the influence of Nazi Germany’s wartime foreign ministry, the Brotherhood has no qualms about exacerbating Egypt’s economic misery if it furthers its agenda. Paul Berman’s 2010 book The Flight of the Intellectuals summarized exhaustive academic research into wartime archives showing that the Brotherhood was shaped by Nazi ideology. Berman’s report evoked outrage, but has stood up well to its critics.  The New Republic essay that formed the core of Berman’s book is available. . . .