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 “Pterrafractyl” 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.
“Muslim Brotherhood Chooses Chaos” by “Spengler”; Asia Times; 5/11/2012.
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. [1]
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. [3] The New Republic essay that formed the core of Berman’s book is available. . . .
I just finished Paul Berman’s book. He is an exceptionally fluid writer.
The historical links between the Third Reich and the Muslim Brotherhood (particularly their combined propaganda efforts) are synopsized and recounted in very readable language. He cogently argues for doubt regarding the MB and their legitimate claim to any true modernity or Enlightenment principles. And here, in this post, we see more evidence of the same.
A must read for all spifirelisters. Thanks for the recommendation, Dave.
One thing is becoming clear in Egypt’s IMF loan negotiation: Egypt’s ability to finance its global imports is getting close to running out and that’s proving to be a tempting political football. Egyptian tourism has collapsed in the last year and that was a huge source of foreign cash on top of everything else that’s sent the country’s finances into turmoil. With tourism imploding and cash running out, the IMF loans are the main thing standing between the Egyptian poor and hunger. That’s becuse Egypt is going be forced to do what non-eurozone countries do when they run out of cash and have to keep paying the bills: devalue their currency (In the eurozone, the countries undergo “internal devaluation”). Egypt currently artificially props up their pound against the dollar, so if there is some sort of devaluation that takes plans in the midst of panic it could be a rough one (there’s an estimate of a 50% drop of the egyptian pound against the dollar in one of the articles below). And with with something like half of Egypt’s population living on less than $2 a day, a currency devaluation on that scale risks an extreme social catastrophe.
It sounds like all parties involved agree that the IMF loan at hand for $3.2 billion is going to have to happen SOMEHOW for Egypt to avoid choas so it’s just a matter of HOW the loan is works out and WHEN it happens. And, it appears, WHO signs off on the deal and gets and WHO decide HOW the money is spent. The argument that al-Shater was making (before his expulsion from the race) was “since the loan money will be lent out now but the Muslim Brotherhood won’t come to power for several months, why should the MB-dominated assembly agree to a loan package where the future MB government has the liabilities to pay back the money but a the current army-run intermin government gets to decide how the money is spent”. So, according to al-Shater, unless an argreement is worked out with the army to allow the MB to assume power at an earlier date OR the terms of the loan is worked out so that the MB will have a greater say over how the billions are spent, the MB is going to use its votes in the assembly to block the economic package. As the article below points out, these were demands that almost certainly wouldn’t be met, and if there’s a disorderly devaluation (say, from conflicting erupting in the Middle East before the aid package is finalized), the potential for political chaos and violence is real. So this is one hell of a game of chicken the MB has been playing:
So this next 3–6 months is going to be an especially vulnerable period for Egypt because that financial cushion that it had last year, when the revolution was just beginning, is now almost officially out. It’s also likely to be a period of endless IMF-dictates for austerity...and period when Egyptian nationalism is allowed to manifest itself for the first time in decades. AND, as the article above indicates, everyone agrees that, sooner or later, Egypt is going to implement a series of painful tax hikes and spending cuts. So the MB has to know that it’s the only political group that will be forced to implement and “own” whatever future reforms pop up. Unless, of course, things get really bad. So bad that economy the falls apart in a way that doesn’t leave the MB as the default culprit. It’s the “things get really bad for Egypt, but good for the MB” scenario that’s looking like the scariest possibility right now, so any further indication that the MB is intent on fomenting an out of control situation is something to watch for between now and whenever the inevitable “reforms” get officially passed. The more chaotic the situation when those reforms get passed, the better the situation for the MB.
As this article from yesterday indicates, there’s been pretty much no progress on the loan issue even after the MB was handed the presidency by the ejection of the candidates. Yeah, al-Shater was ejected too, but his replacement, Muhammed Mursi, should overwhelm the competition now that the other Islamist candidates are out too and can’t split the Islamist vote. So the MB knows unambigously that they’ll be holding the reigns of power in a few months. They also know that the IMF will be pushing for
austerity madnesseconomic reforms that could be exceptionally painful for the Egyptian people. So we all know that somehow this situation is going to have to change:That last paragraph about the recent Egyptian strains with Israel and Saudi Arabia is particularly interesting. Other than the US these are perhaps the two most expensive countries Egypt could have strains with even during economic good times. But as the above article points out, the Saudis are the one government contining making loans to Egypt in spite of the IMF halt. $4 billion dollars, even more than the entire IMF loan. So this is a particularly high-risk pair of tiffs for the Egyptian government to pe engaged in during a time like this and it’s notable that the MB is leading that popular anti-Saudi/Israeli backlashes:
Considering the critical role the Saudi monarchy played in MB’s international branches following Nasser’s crackdowns(and all the other jihad-financing from the Saudi royals over the decades) it’s a little historically ironic that it’s the Saudis are now apparentlc freaking out over the possibility of MB-style religiosity becoming a competitive alternative Sunni movement in the region. And yet that’s what seems to be happening:
So, to summarize, we have a situation where Egypt is rapidly running out of its currency reserves — reserves it needs to buy grain on the international markets just to feed itself — and all this is happening right at a time when the MB and military are locked in an uneasy power struggle. That power struggle, in turn, appears to now include the government approval of an IMF loan package that is required to avoid complete choas in a few months after the currency reserves run out. AND not only is this IMF loan package tussle a fight over who gets to disburse the billions in loans (a fight for the political spoils) but it’s also apparently a fight over who gets blamed for the inevitable tax hikes and spending cuts that the next government is going to HAVE to pass in order to please the IMF(because the loan comes with stings attached). The IMF is demanding that Egypt’s government provides broad support for the loan package and that means the MB HAS to approve of the deal. But so far the MB appears to be uninterested in approving the loan package unless the military hands over complete power in advance or changes the loan terms to give the MB greater control of the spoils. And, to top it all off, the MB is leading the political charges against two of Egypt’s biggest trading partners, one that could create a major military headache and the other that effictivly bankrupt the country overnight. It does indeed look like the MB is betting on chaos.
@Pterrafractyl: I don’t think I could have put it better. Bravo. =)
[...] Egyptian Muslim Brotherhood Embraces Social Chaos [...]
@Pterrafractyl: Great research. One thing is certain. When the country will collapse, we can be sure it will, there will be chaos. People will turn to each other to blame and you can be sure Christians and Jews will be slaughtered to the last ones. It’s already started thoughout North Africa and the Middle East.
On another matter, the fact that there is an anger shift from Mubarak and his regime toward Israel and Saudi Arabia could mean an Iranian influence. The reports I get from some Jewish friends is that Iran would bomb Israel and Saudi Arabia if they were to have a nuclear bomb and make the decision to act. This sudden shift in anger suggests that Iran may be involved in the development of the political situation on the ground, for the so-called Arab Spring there.
@Claude: Not so sure about Saudi, TBH. After all, they too, are under the control of radical Islamist fascists just like Iran. And perhaps the Iranian gov’t may indeed be assisting with the hijacking of the Arab Spring movement.....only time will tell, I guess.
http://articles.chicagotribune.com/2012–05-17/news/sns-rt-us-egypt-election-brotherhoodbre84g1iv-20120517_1_egypt-s-muslim-brotherhood-abdel-moneim-abol-fotouh-human-chain
Egypt Brotherhood forms human chain for candidate
May 17, 2012|Reuters
CAIRO (Reuters) — Egypt’s Muslim Brotherhood organized a 760-km (470-mile)-long human chain of supporters across the country on Thursday to back the group’s presidential candidate Mohamed Mursi in a show of strength ahead of next week’s historic vote.
From Cairo to Aswan, members of the Brotherhood and its Freedom and Justice Party (FJP), held posters of Mohamed Mursi, the Brotherhood’s alternative choice to the group’s initial candidate Khairat Shater, who was disqualified over a military court conviction.
http://www.debka.com/article/23189/Egypt%E2%80%99s-Muslim-Brotherhood-goes-underground-hides-command-structure-in-Gaza-
Egypt’s Muslim Brotherhood goes underground, hides command structure in Gaza
DEBKAfile Exclusive Report August 11, 2013, 6:27 PM (IDT)
Tags: Egypt’s military coup, Muslim Brotherhood, Gaza, Israel, Sinai, Al Qaeda,
On July 22, debkafile revealed that a group of six Muslim Brotherhood officials escaped from Egypt after the July 3 overthrow of president Mohamed Morsi in a military coup and smuggled themselves into the Gaza Strip to lead an uprising against the military. The group was headed by Mahmud Izzat Ibrahim, known as the Brotherhood’s “iron man” and fourth in rank in its hierarchy after Supreme Guide Muhammed Badie.
The fugitives set up a command post at the Gaza Beach Hotel for operations against Egyptian military and security targets in collaboration with Hamas and armed Al Qaeda-linked Salafist Bedouin in Sinai. The group planned their revolt to spread quickly out from Sinai to Egypt proper and topple the interim rulers in Cairo.
Western intelligence agencies following the inner workings of the Muslim Brotherhood have since discovered that the Brotherhood’s plans are a good deal more high-powered than first thought.
According to debkafile’s intelligence sources, the movement never dismantled its clandestine paramilitary underground. Its hidden commanders manipulated front politicians from the shadows under three Egyptian presidents and continued to do so after the Brotherhood was elected to power in Cairo in 2012.
At all times since then, the Brothers stood ready to step in should their Freedom and Justice Party leaders be ousted and sent back to prison. “Supreme Guide,” Mohammed Badie was therefore no more than an obedient front for the Muslim Brotherhood’s real leader, who was until now Mr. X.
It now transpires that he is none other than Mahmoud Izzat Ibrahim, who is firmly at the helm and running the show both in Sinai and Cairo from the Gaza Beach Hotel, under the auspices of the Palestinian Hamas rulers.
He plans to confront with violence every action ordered against the Brotherhood by Defense Minister, Gen. Abdel-Fattah El-Sisi.
While conducting a war of terror against military targets in Sinai, Izzat Ibrahim’s orders keep thousands of followers maintaining their sit-in protests in Cairo for their president’s reinstatement. They are determined to leave the military no option but to use force to disperse them.
Ibrahim’s goal is to lead his movement into a bloody confrontation with the military.
Gen. El-Sisi, for his part, knows that the Brotherhood’s underground command center in the Gaza Beach Hotel must be destroyed in order to beat its war of resistance.
For effective action in the Gaza Strip, the Egyptian military needs help from Israel’s Defense Forces, just as the IDF needs the Egyptian army to counteract the al Qaeda and other Islamic terrorists in Sinai who are dedicated to attacking Israel as well as Egypt.
This tacit interdependence and the interchanges against a shared enemy shot into prominence over two incidents. The first was the two-hour closure Thursday, Aug. 8 of Eilat airport at Israel’s southernmost tip, following an Egyptian intelligence tip-off over a missile threat from Sinai. Then Friday, Aug. 9, foreign sources reported that two missiles fired by an Israeli drone in North Sinai destroyed a missile launcher and killed four or five terrorists at Ajarah.
Israel never confirmed this attack. The impression it made was quickly overlaid with conflicting reports. Egyptian officials initially attributed the Israeli drone attack to intelligence cooperation between the two armies. An Al-Qaeda group in Sinai, Ansar Beit al-Maqdis, accused Israel of killing four of its members by a drone strike and vowed vengeance. debkafile reported that the attack may not have been conducted by Israel but Egyptian authorities, which preferred to disavow an operation carried out on the Muslim festival of Eid al-Fitr.
Finally, Sunday, the Egyptian military reported that its operation against armed groups in the Sinai believed to have been plotting attacks on security forces and other targets was ongoing. At least seven people were killed over night and six arrested in a raid.
The Egyptian military statement went on to report that the raid followed an air strike by the Egyptian military on Friday, which saw at least four people killed. The assault on Saturday happened when Apache helicopters hit areas south of Sheikh Zuwaid in north Sinai, according to Egyptian state media.
Israel’s Defense minister commented: “The Egyptian army is fighting first and foremost to defend Egyptian citizens and sovereignty. We will not let rumors and speculation impair the peace relations between our countries.”