Land of Pyramids Going Downhill

We held that Mubarak surely deserved his fate, but it was always a big question what would come after him. When last we wrote about Egypt, we remarked that it had gone from 'spring to winter in one go'. The new head of government is only loosely differentiated from the old one, and the entire apparatus of repression has simply been assimilated on an 'as is' basis. 

It turns out that the country is in the meantime suffering from a vast increase in internal instability, as vigilantes and criminals battle it out. Guns have become big business, while the formal economy is spiraling down the drain ever faster.

A symptom of the malaise is the performance of the country's currency, the pound, which has crashed this year as foreign exchange reserves have dwindled by 60%.

 


 

Egyptian pound


The Egyptian pound has crashed – click to enlarge.

 


 

The revolution has evidently not fulfilled its promise so far.

Bloomberg reports:

 

“Artisans who make machine parts by day are turning into bootleg gunmakers at night, says Hussein, 54, who asked not to be identified by his full name for fear of prosecution. He only sells to a middleman because “trust the wrong person and you’re going to jail.” He can make as much as 3,000 pounds ($435) per gun — about 20 percent of what a legally licensed one costs.

“Fear is big business nowadays,” Hussein said. “People buy the guns because they’re afraid. People buy the guns because they want to scare others. We’re in a jungle now.”

More than two years after the fall of President Hosni Mubarak, the proliferation of weapons and a spate of vigilante killings, violence and sexual attacks are eclipsing the hope born from the revolt. Fueled by political deadlock and economic stagnation, the security breakdown threatens to put solutions beyond the reach of President Mohamed Mursi.

A growing number of Egyptians feel that “you can actually achieve your goals using violence,” said Ezzedine Choukri Fishere, a political scientist at the American University in Cairo. Beneath that lies the “dashed expectation and hope of the youth,” he said.

[…]

Egyptians who had expressed hope for food and jobs during the uprising, are instead confronted with unemployment and rising prices. Lines for subsidized fuel have triggered protests and strikes, as well as brawls.

Hardship heightens the sense of breakdown, and the woes confronting the $257 billion economy add to the potential for violence. That, in turn, has a “massive and very serious chilling effect” on investors, said Michael Hanna, a senior fellow at the Century Foundation research group in New York.

Net foreign direct investment was negative for the first time in 2011, according to the World Bank. Investment will be 15.5 percent of gross domestic product in 2013, the lowest since records began in 1980, according to the International Monetary Fund, which is in talks with Egypt for a $4.8 billion loan.

Foreign portfolio investors have also fled, driving a slump in Egypt’s stocks and bonds. The benchmark equity index, the EGX 30, is down about 20 percent since the uprising, after climbing 85 percent in the preceding two years.”

 

 

(emphasis added)

The stock market is actually well off its lows, but that must be brought into context with the collapse of the currency's exchange value:

 


 

Cairo stock exchange


The EXG 30 since 2007- click to enlarge.

 


 

Fear and Loathing

Meanwhile, the security situation seems to grow ever more dire.

 

“Interior Ministry figures back up anecdotal accounts of rising crime. Murders rose to 1,885 in 2012, a 130 percent increase, while robbery cases jumped 350 percent and kidnappings 145 percent, according to a report by the ministry’s public security and anti-narcotics departments.

Seizures of illegal weapons and drugs also surged. The Social Affairs and Religious Endowments ministries announced plans in April to use religious schools to raise awareness about the dangers of narcotics.

Some choose to confront the security collapse head-on. There has been a rise in vigilante incidents, with civilians doling out death sentences to suspected thieves, rapists and kidnappers.”

[…]

Kamal, the Sharqiya security chief, said the police are in a difficult position, facing a population that’s “letting off steam.” He recalled an incident a few months earlier when thousands of villagers snatched suspected criminals away from police custody. The mob later killed them to exact revenge. “What can a force of 10 or 15 do against 10,000 people?” he said.

The vigilantism is tied to what Egyptians describe as a loss of faith in the security forces, which are seen as either embracing the old Mubarak-era brutality or simply refusing to do their jobs.

Emad Khaled, a 29-year-old doctor, recalled how his car was stolen several months ago, and he was contacted by a man who said he could help him get it back if he paid 30,000 pounds. He said he notified the police, who told him: “Go ahead and pay. It’s the only way you’ll see it again.”

The security vacuum has given rise to worries that militias will step in. Battles involving Islamists, secularists and police have already wounded hundreds in recent months.

[…]

At his illicit factory, Hussein said he also makes machetes and other knives, though he said the market for them is flooded, and demand for guns is higher. He said he sometimes wonders whether the weapons will fall into the wrong hands.

“Even children are armed these days,” he said. “They’re stoned on drugs. They wouldn’t think twice about shooting you dead or maiming you, just to take a phone.”

 

(emphasis added)

If the aim was to thoroughly destabilize Egypt, then the mission has evidently been accomplished. It is quite noteworthy that an ever wider arc of North African and Middle Eastern countries is falling into chaos of late. Oddly, one hears very little about this, even though Syria and its civil war are occasionally still in the news (most recently it got bombed by Israel). Iraq's internal security situation is also worsening considerably, with sectarian strife once again increasing sharply (just google 'Iraq news' – there are bombings and shoot-outs of varying intensity practically every day).

It is mystifying that the deteriorating situation in this part of the world has apparently become widely accepted as a kind of 'new normal'. Only as long as the Saudi king remains firmly ensconced in his saddle we would guess.

 

Charts by: XE.com, Investing.com


 

 

 

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