Tomorrow the Queen of the International Monetary Fund arrives in Cairo and so we revisit the question of whether Egypt will get its $3.2 billion (or $4.8 billion) or not. The IMF loan is a critical catalyst for other donors to come forward, acting as a barometer of confidence in the Egyptian economy. Even so, a slew of other countries and financial institutions have promised aid packages.
In this comprehensive list, Ahram Online reminds us about what aid has been pledged and what has been received from donors. It is important to note, that even though Egypt has complained about the lack of aid coming from its Arab Gulf neighbours, far bigger and richer institutions such as the Group of Eight have yet to make good on promises.
“In March 2011, the leaders of the G8 said international development banks would give $20 billion to Egypt and Tunisia to support pro-democratic reforms. Nothing has been provided yet,” according to the Ahram article.
But with all this talk of aid, we are missing the point. Is reliance on foreign aid the right way to go, and the catch-all solution for Egypt’s financial problems? No. This analysis from the Council of Foreign Affairs explains how drawing on the US’s experience in Pakistan and frequently compares the situation to what might happen in Egypt.
It is a warning that Egypt must address.
“It is fruitless to assume that US civilian assistance provides serious leverage for democratic or other reforms, particularly when a recipient’s civilian government exists in the shadow of a dominant military…
“Civilian aid might help get the United States a seat and a voice at the policy table on difficult technical issues. But it cannot — on its own — coax change where there is no political will.”
And crucially: “Assistance should not be the principal tool for engagement with the post-Arab Spring regimes. Rather, the strategy should focus on initiatives to expand trade and support private sector investment, and should reflect collaboration with the World Bank and the European Bank for Reconstruction and Development (EBRD), both active in Arab Spring countries, on helping countries with labor, tax, and competitive reforms they so desperately need.”
The other big news today is Glencore laying the ground for a collapse of its multibillion merger with miner Xstrata, saying it was “not a must-do deal”. It has rejected calls from Qatar’s sovereign wealth fund for better terms for the tie-up.
Glencore is the largest shareholder in Xstrata, but Qatar, which has slowly over the past few weeks amassed a near 12% stake, has enough shares to single-handedly block the merger.
The trading house is offering 2.8 of its shares for each of the miner’s. Qatar, with the support of other shareholders in Xstrata, is demanding that be raised to 3.25 shares, Javier Blas writes in the Financial Times.
Glencore’s proposed merger with Xstrata, valued at almost $90 billion, now rests on talks between the heads of Glencore and Qatar Holding.
“[Mr] Glasenberg (Glencore’s CEO) could still make an 11th-hour offer to Qatar, but right now we are witnessing the meltdown of the biggest deal of the last five years in the natural resources industry,” one banker involved in the discussions said, according to Blas.