Isobel Coleman

Democracy in Development

Coleman maps the intersections between political reform, economic growth, and U.S. policy in the developing world.

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The Economics of the Protests in Cairo

by Isobel Coleman
September 18, 2012

Protesters destroy an American flag pulled down from the U.S. embassy in Cairo on September 11, 2012 (Amr Dalsh/Courtesy Reuters). Protesters destroy an American flag pulled down from the U.S. embassy in Cairo on September 11, 2012 (Amr Dalsh/Courtesy Reuters).

Egypt’s President Morsi is discovering just how expensive was his decidedly mixed response to last week’s assault on the U.S. embassy in Cairo–it took the new leader more than 48 hours to condemn the attacks. Yesterday, U.S. officials announced that talks underway to forgive approximately $1 billion in debt and to facilitate other economic aid to Egypt have been suspended–and will likely not resume until after the U.S. election in November.

After initially encouraging through Twitter and other social media an inflammatory “Friday of rage” to demonstrate against the anti-Islamic video, leaders of the Muslim Brotherhood’s Freedom and Justice Party took a more conciliatory tone. President Obama’s late-night phone call to President Morsi last Wednesday, demanding that the Egyptian government lower the tensions, no doubt had some effect. Obama’s earlier statement in an interview that Egypt was not necessarily an “ally” of the United States perhaps also concentrated some minds in Cairo. The State Department jumped into the fray too–chastising the Brotherhood’s doublespeak after it served up a sympathetic message of support on its English-language Twitter feed. “Thanks,” replied the U.S. embassy in Cairo via Twitter, “By the way, have you checked out your own Arabic feeds? I hope you know we read those too.”

Yes, Morsi was under enormous domestic pressure to respond to Egyptian public sentiment that was outraged by the offensive video. But by not condemning the violence sooner, and in effect fanning the flames for several days, he put at risk important economic assistance from the West–not only the $1 billion debt relief from the U.S., but also a $4.8 billion loan from the IMF that is under negotiation. The IMF loan is important not only to address Egypt’s immediate liquidity problems but also to unlock other sources of financing. The ongoing demonstrations also certainly didn’t help Morsi’s campaign to attract critical tourist business back to Egypt. The fact that the anti-American protests coincided with the largest trade delegation from the U.S. ever to visit Egypt (or the rest of the Arab world, for that matter) provided particularly bad optics for a government that is trying to position itself as pro-business.

In short, the events of the past week taught Morsi the dangers of political prevarication. It’s almost impossible to ride the populist tiger without backlash. Given Egyptians’ long-pent up frustrations and anger toward a United States that backed the authoritarian government of Mubarak for so many decades, further instances of anti-American rage are all but inevitable. Morsi’s leadership challenge is to assuage that rage without alienating the U.S. and other Western powers. Otherwise he will find it far more difficult to meet economic expectations that will remain long after the protests have dissipated.

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  • Posted by Raja M. Ali Saleem

    Its strange how Muslim democracies are analyzed differently than other democracies in the US media. Although, analysts/scholars discussing these democracies live in a 24/7 politicized atmosphere and know how politicans think and decide, Muslim politicians are usually shown persuing some lofty agendas.

    Politicians are guided by voters and this is true for Muslim policitians too as they have to win votes to stay in power. Economic benefits are important but in politics perceptions are more important. So, don’t hedge your bets on Muslim politicans changing their positions, if the public is clearly on one side or if they can benefit by courting public sentiments.

    A lot of people think that President Morsi’s conduct during the current crisis can be adequately explained by just pointing out that he is from Muslim Brotherhood, Maybe these people are correct but there are many examples of liberal politicans forgoing economic benefits just to please their voters. Pakistan’s economy is in dire straits (much more than Egypt) but even then for the last whole year, Pakistani politicans (mostly not religious), have spoken against US actions in Pakistan and jeopardized economic aid. Why? Because the public is not pro-American and perceives US actions as guided by prejudice and arrogance. So, politicans follow the public mood.

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