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Thursday, October 28, 2021
CAIRO, Feb 5 2011 (IPS) - The massive economic toll of Egypt’s popular uprising appears to be motivating the government to take extraordinary and often brutal measures to put an end to massive demonstrations calling for President Hosni Mubarak to step down.
The popular uprising, now in its 12th consecutive day, shows no sign of letting up. Police and armed thugs have attacked anti-government demonstrators with rocks, swords, teargas and, at times, live ammunition. UN officials estimate that over 300 Egyptians have been killed, and thousands injured in clashes since the uprising began Jan. 25.
Yet Friday’s turnout of anti-regime protesters in Cairo’s Tahrir Square may have exceeded the record crowds during last Tuesday’s ‘March of the Million’. Enormous anti-Mubarak demonstrations have also been reported in major cities across the country.
Egyptians are divided over their desired outcome, with some activists looking to topple the Mubarak regime overnight, others seeking to shorten the transition, and some groups calling for the president to serve his remaining term. But all agree that the longer the crisis lasts the more poor – at the heart of the uprising – are likely to suffer from its economic fallout.
“I am not pro-Mubarak, but I want the protests to end so we can get back to our lives,” says Gabr Mohsen, owner of a boarded up electronics shop in Cairo’s Mohandiseen district. “The crisis is only worsening our economic situation – the reason people are protesting in the first place.”
The country’s financial system is reeling. The government halted all bank and stock market activity Jan. 27 as Egyptians and foreign investors reacting to the unrest raced to pull out their savings and investments. Egypt’s stock market shed 12 billion dollars, or about 16 percent of its value, in two days before trading was halted.
Cabinet sources say the Egyptian government is determined to resolve the crisis and restore financial markets within the next 48 hours. Whether Mubarak will accomplish this through a heavy crackdown to suppress anti- government demonstrations, or by negotiating a political solution with activists and opposition groups, remains to be seen.
“Investors would like to see things open sooner rather than later, and not follow the Tunisia example, where the stock exchange took a long time to reopen,” says Simon Kitchen, a senior economist at investment bank EFG- Hermes. “They also want a clear indication from authorities on what the exchange rate policy will be.”
The Egyptian pound has fallen to six-year lows, and some economists forecast it could shed up to 20 percent of its value as investors retreat to more stable economies.
The Central Bank of Egypt (CBE) has said it would reopen selected branches of banks on Sunday with limited operating hours and certain restrictions in place. It has also pledged to honour all financial commitments, including 3.6 billion dollars worth of treasury bills that must be redeemed next week.
One major concern for international investors watching events unfold in Egypt is the Suez Canal, a vital shipping route and major conduit for oil shipments. Officials say the canal, which generated 4.7 billion dollars in revenues for Egypt in 2010, has remained open during the crisis.
While half a million barrels of oil pass through the canal each day, of greater significance to energy markets is the nearby SUMED pipeline, which runs from the Red Sea to the Mediterranean. The 350-kilometre pipeline carries about 1.1 million barrels of oil a day and is more vulnerable to attack.
Last week, the price of Brent crude oil topped 100 dollars a barrel for the first time in two years on fears the Egyptian uprising could disrupt supplies.
More critical to Egypt’s national economy is the long-term effect on the country’s key revenue earner, tourism. In 2010, over 15 million tourists visited Egypt, generating about 12 billion dollars. The sector employs about 12.6 percent of Egypt’s workforce, and represents about 11 percent of the country’s economic output.
Vice-President Omar Suleiman said in an interview on state television on Thursday that Egypt’s tourism sector had lost at least one billion dollars since Jan. 25 and that the protests had chased a million tourists out of the country.
“I haven’t sold even a postcard since the protests began,” complains souvenir shop owner Hassan Ibrahim.
The economy is also going to have to bear the brunt of Mubarak’s decision to cut off all Internet services for five days last week. Officials hit the kill switch in an effort to prevent online activists from mobilising anti-government protesters on the streets. They also temporarily halted mobile phone and messaging services.
The self-imposed Internet exile cost the country 90 million dollars, according to the Organisation for Economic Cooperation and Development (OECD).
“Shutting off the Internet to stop the protests proved totally ineffective,” says Diaa Abdel Hamid, a media rights researcher. “The protesters were already in the streets, and online businesses and call centres took a big hit.”
Adel Beshai, professor of economics at the American University in Cairo, says the economic fallout will put more pressure on the poor, but Egypt’s economy has historically demonstrated it can weather turmoil.
“If the dust settles soon, investors will look and find opportunities,” he says. “There will be an adjustment period during which the economy will limp, but economists are continually surprised by the speed at which Egypt’s economy recovers for crises.”
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