Words, Rudyard Kipling once said, are the most powerful drug used by mankind.
Individuals, companies, political parties and governments will work tirelessly to ensure the right words are transmitted to as many people as possible. Public relations can make or break a nation.
So it’s no surprise Egypt’s propaganda wheel is working overtime. In fact, it’s one of the few features binding the country’s warring sects.
While the military and some non-Islamist factions have branded the Muslim Brotherhood as terrorists and thugs, Brotherhood supporters consider the opposition as “putschists”, who are furthering a fascist agenda.
Slogans and logos now distinguish who is on what side, with each party trying to outdo the other in the hopes of capturing the majority support.
Except the propaganda, unsurprisingly, hasn’t worked. Egypt remains polarised and Egyptians suspicious of each other. Words spoken or written by the military, government officials or Brotherhood spokespeople now all seem to be part of the same political game citizens are no longer involved in.
As the Economist’s Max Rodenbeck highlighted:
At the hands of politicians, the truth can fare poorly in peacetime, too. Yet in Egypt, though the country is not at war, and normal politics is pretty much suspended since the army toppled an increasingly unpopular elected government last month, the truth is taking an unprecedented beating.
Now, Spin Doctors run Egypt.
General Abdel Fattah el-Sisi, who authorised a bloody crackdown on his opponents, has become a hero to some for the military overthrow of Islamist president Mohammed Morsi. His trademark dark glasses and soft-spoken addresses to the nation have won over Egyptians who were desperate for the stability Morsi failed to provide.
His picture, at times flanked by the logo “Egypt Fights Terrorism”, has been plastered on cars, shops and buildings.
“Right now, he could probably win an election at a canter,” Heba Saleh writes in the Financial Times.
Meanwhile, Gehad El-Haddad, the spokesman for the Muslim Brotherhood has been open to the international media, regularly engaging with his followers on Twitter and declaring the military overthrow of Morsi a crime against humanity and a bloody coup.
Muslim Brotherhood supporters, under the “Anti-Coup Alliance” have flooded journalists, diplomats and foreigners with English-language emailed statements daily.
Of course, some of these movements were wildly successful. The uprisings of January 25, 2011 and then again in June 30, 2013 were driven partly by organised PR campaigns, drawing hundreds of thousands to the streets.
Some have been less successful. Tamarod (“Rebel” in Arabic), the Egyptian youth movement that rallied street protests against Morsi, is struggling to retain momentum. Splits are forming within the group and some members have announced their collective resignation.
Black Bloc, more of a fashion fad than a movement, entered the political sphere in January this year, but drew more attention for their all black outfits and balaclavas than their anti-Brotherhood agenda. Months later, the group has lost steam and any of the original excitement they once garnered.
Still, small campaigns come and go. Masmou3 (“Heard” in Arabic) was created in the aftermath of the military overthrow to protest against the military-backed regime and the Brotherhood. Daily protests involved banging on pots and pans during the curfew. But the campaign was short-lived and soon enough, the tweets and Facebook updates stopped.
Egypt has lost its way, and brands, campaigns and movements won’t help. With each campaign, the Brotherhood and the military-backed government included, Egypt becomes more fractured and each party takes away the support of a smaller fraction of the population.
True recovery will come when the PR tools are put down and politicians prove they are civil servants organising along an economic revival.
“I have made many mistakes,” conceded Egypt’s President Mohammed Morsi in a major speech last week after just one year in office.
While not elaborating on what exactly went wrong, Morsi will today be haunted by his mismanagement as thousands take part in anti-government demonstrations across the country.
Rebel Economy is glad to shed light on the economic disasters of the last year:
1) The Failure of the Renaissance Project
Even from the start, the president’s “economic plan” was someone else’s plan – a manifesto created by the Muslim Brotherhood’s first choice for president, Khairat el-Shater, until he was disqualified.
Ambitiously called the Renaissance Project, or Al Nahda in Arabic, the 20-year plan trumpeted an Islamist roadmap for Egypt after the revolution in 2011. Morsi latched onto it later, and it became the pillar of the his presidential campaign last June.
The Project envisioned an ambitious transformation of Egypt’s economy that was expected to lead to a gross domestic product of 6.5% or 7% in five years, though how this growth rate would be reached was unclear.
Instead, Egypt has struggled to achieve even half this growth and the project has quickly become more of an incubator for grand ideas than a blueprint proposing specific measures for economic improvement.
Not only has he struggled to keep even the simplest of promises that he had vowed to solve in his first 100 days in office, but the plan has caused rifts between the government, the presidency and even the team behind the Renaissance Project.
2) The Pound’s Fall
Egypt’s domestic currency, the Egyptian pound, has lost over 15% of its value against the dollar during the course of Morsi’s time in office. The Central Bank of Egypt was forced to loosen its grip on the currency towards the end of last year, but many in the banking community criticised the timing of the new measures, saying the Bank should have adopted these measures a year earlier and that the late reaction will hit vulnerable people the hardest.
That is already proving to be the case.
The pound’s drop to around 7 Egyptian pounds to the dollar (and 8 pounds on the black market), from 6 pounds last year, has contributed to a rise in inflation which economists say is on course to reach double digits in the coming months. In May, the country’s annual urban inflation rate climbed to 8.2%, up from 8.1% in April and 7.6% in March, as food prices rise:
The price for a kilogram of chicken is about 33 pounds, or $4.77, placing meat out of reach of the many Egyptians who live under the poverty line of $2 a day. Azza Ahmed, a 55-year-old housewife from Cairo, said she has seen prices of as high as 57 pounds in some stores.
From the Wall Street Journal
3) No Reform of Energy Subsidies
Another pressure likely to contribute to double digit inflation is rising energy use, especially during Egypt’s hot summer months. Queues at petrol stations are already causing frustration as demand exceeds supply of locally refined gasoline. At the same time, diesel shortages are putting more pressure on the country’s finances, as it pays more to import more. This is undermining confidence in international oil companies, which are owed billions of dollars.
The fear of a public backlash by enacting energy subsidy reforms has so far steered the president and the government away from any dramatic moves, but as queues get longer, inflationary pressures rise, social unrest will become an intractable problem for the government.
As Rebel Economy has argued frequently, until energy subsidies are reformed (one reform strategy outlined here) so that the state is stops giving out cheap fuel to everyone, even those who don’t need it, then these pressures will continue.
4) Rising Jobless Rate
The country’s unemployment rate now stands at 13.2%. It was 8.9% on the eve of Arab Spring, and was hovering at 12.5% about a year ago. At the current rate of joblessness, 63,000 more Egyptians are unemployed than the previous quarter and a staggering 1.2 million (at least) are out of a job compared to the same quarter of 2010, according to the government statistics agency, Capmas.
And even if a few thousand jobs are created every month, the level of disruption from strikes, protests and the general economic downturn (from tourism and foreign investment) means this is unlikely to make a dent in the jobless rate.
But rather than invest in young graduates and the job creation in the private sector (which is so much more efficient than the public sector), the government has taken the easy way out: paying government staff a little more to continue keeping the 6 million employed in the public sector just content enough not to protest.
Economists at London-based Capital Economics say this has had a detrimental impact on the budget deficit:
It appears that the government has resorted to increased spending in an attempt to support the economy and quell civil unrest. Rising public sector salaries and pensions, coupled with ballooning subsidy expenditure, has caused the budget deficit to widen from 11% of GDP when President Morsi assumed office, to over 14% of GDP at present.
That debt position has put Egypt in a risky category. Egyptian credit default swaps, a kind of insurance against debt defaults, have climbed 12.5 basis points to a new record of 887.5 basis points on Thursday, according to the Financial Times:
This means it costs $887,500 a year for five years to insure $10m of Egyptian debt, the fifth highest in the world after surpassing Pakistan this week. Only Argentina, Greece, Venezuela and Cyprus are seen as more at risk of default than Egypt.
5) Drop In Tourism and Foreign Investment
Once major sources of hard-currency income, tourism revenues and foreign direct investment (FDI) have been hit hard. Even though tourist arrivals have picked up to 12 million tourists annually, the numbers are still nowhere near what is now seen as Egypt’s “golden year” for tourism in 2010, when nearly 15 million tourists made their way to Egypt.
Despite denials from the country’s Islamist government that this is the case, heightened political instability, localised protests that have turned violent and rising incidents of sexual harassment has led many embassies to warn about visits to Egypt, especially Cairo.
And while FDI has picked up, climbing to $3.1 billion today, from $1.8 a year ago, the figure is still nowhere near the pre-revolution level of $5.2 billion. Investors have adopted a permanent “Wait-and-see” attitude to Egypt, considering it too important to ignore entirely, but too risky to dive into.
6) No IMF loan deal
Failure to sign a $4.8 billion with the International Monetary Fund is arguably among Morsi’s biggest, and most high-profile, failures.
Negotiations have been ongoing for two years, and the country is still no closer to securing an agreement.
Instead key members of the IMF negotiating team have jumped ship, undermining the credibility of the president and his ability to steer the country away from an economic crisis.
Controversial as the loan is among some Egyptians wary of the previous deals with the Fund, the agreement would give Egypt the international endorsement it desperately needs now for long-term, sustainable investors to come forward from Europe, the US and international banks like the African Development Bank. The IMF’s priority is also right-siding the budget, and so the deal is much more than just money.
So far, Egypt has fallen back on the billions of dollars worth of loans and oil it is getting from Arab allies (namely Qatar). But none of this is for free, despite assertions to the contrary. The tap will not run forever.
Reforms and budgetary changes including reforming energy subsidies and raising taxes are also tied up in the IMF loan.
But so far, Morsi’s approach to the IMF talks sum up his approach to the economy overall: a confused, barely composed afterthought.
The president must prioritise the economy, and to do that means putting the country and important reforms before his own political career. And if there’s one thing we know after Egypt’s revolution in 2011, if a leader is more interested in power than the people he is meant to inspire, he won’t last long.
If there’s one analysis of the ongoing political situation in Egypt you should read today, it’s David Gardner’s piece in the Financial Times. He appears to buy the theory that there was a mutually beneficial deal between Mohammed Morsi and the younger officers that were appointed to the top of the Supreme Council of the Armed Forces, where the president gains politically from being seen as “leeching” power from the military and the commanders preserve their interests. He poses the question: “But is Cairo now set to become a Tehran on the Nile, as some US commentators are warning?”
The answer, he says, is that SCAF will still use their powers to prevent “a sharia-based, Islamist state in Egypt”, even while “the Brothers are expected to do well when new parliamentary elections are held, and the constitution, still to be drawn up, will reflect this make-up”.
The Brotherhood, founded in Egypt in 1928, is a patient organisation. Having waited more than 80 years, it will doubtless see no need to rush things now.
No doubt, they are a patient organisation. But everyone will be watching closely when he travels to Iran later this month. This is a historic visit and will give a signal of where foreign policy is going in Egypt, a key factor for businesses operating here because it will have ramifications on foreign trade agreements.
Things are looking rosy in Saudi Arabia, which overtook Russia as the top producer of oil during June.
Libya took a big step back from a path to stability yesterday with three car bombings on one of Tripoli’s main thoroughfares, Omar Mukhtar Street, killing two people. The same street houses many hotels – including the businessman hang-out Thobacts – and connects directly to Liberation Square. I’m sure that many business delegations will think twice about any imminent visits. The government said it had arrested 32 Qaddafi loyalists.