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Abandoned Egypt Suffers

CAIRO, Jun 29 2013 (IPS) - As supporters and opponents of Egyptian President Mohammed Morsi prepare for a face-off on Sunday, a mushrooming problem for Egypt arises from the people not there – the tourists.

“The situation of tourism has become disastrous,” Moataz al-Sayed, head of the tour guides syndicate told IPS. A large number of hotels have closed down, he said. Accidents involving scores of boats have sent worrying signals to tourists and tour operators. In many popular resorts, the occupancy rate in hotels has dropped to less than 6 percent.

The U.S. warning over travel to Egypt only comes on top of the many worrying signals.

No signal is more worrying to tourism than the political one. A glaring example, Sayed said, was the appointment of Adel Mohamed al-Khayat, a former leader of Gamaa Islamiya and now a member of its political arm, as the new governor of Luxor.

Among tour guides the unemployment rate has jumped to 90 percent, and the national loss to tourism has crossed 4 billion dollars.

The Islamist group Gamaa Islamiya is held responsible for the Temple of Hatshepsut massacre in 1997 in which 62 tourists were killed. The Gamaa Islamiya is classified by the U.S. State Department as a terrorist group.

More than a million workers in tourism have quit, Sayed said. Among tour guides the unemployment rate has jumped to 90 percent, and the national loss to tourism has crossed 4 billion dollars.

In 2010, Egypt received 14.7 million tourists. It was at 18th position in an index of countries receiving the most international tourists. It has now slipped to 32nd position.

Sayed said President Mohammed Morsi is eradicating tourism through his policies. The Islamist president has made efforts to welcome tourists from Iran, but the number of those who have come from there is estimated to be less than a thousand.

Some Islamist hardliners argue that drawing economic benefits from tourism is against Islam. Tourism is a significant part of the economy, but the blow to the economy goes beyond tourism.

The economic policies of the ruling regime have pushed foreign investment away, and discouraged growth of local businesses, former minister for the economy Dr. Sultan Abu-Ali told IPS.

The Egyptian pound has lost 14 percent of its value since the 2011 uprising. Acute fuel shortage has led to long queues. Acute shortage of energy and soaring prices have led to massive public discontent with the Muslim Brotherhood.

In a three-hour speech on Wednesday, Morsi blamed the opposition for the economic and political problems. His speech came with Egypt anticipating nationwide demonstrations on Jun. 30, with expectations of violent confrontations.

Abu-Ali said the economic situation in Egypt has become “weak, scary and pessimistic.” Continuing violence on the street and political instability have worsened the security situation, and this has hit the national economy.

He said that the growth indicator shows a 2 percent increase, which is weak compared to the population growth rate in the past two years estimated at 2.6 percent. This actually means a drop in growth per capita, he said.

“The deficit in the balance of payments has become unacceptable, in addition to the lack of export growth and radical increase of the domestic debt reaching 14 billion dollars,” Abu Ali said.

Egypt is close to an agreement with the International Monetary Fund (IMF) on a 4.8 billion dollar loan that would help fight the deepening economic crisis, but is still bristling over the conditions.

IMF intervention could help stabilise Egypt’s economy, and unlock up to 15 billion dollars of aid and investment to improve the dismal business climate.

Meanwhile the deficit in the state budget is growing and is expected by the government to reach 220 billion Egyptian pounds (31.4 billion dollars) by the end of the current fiscal year.

The pressure on the local currency continues and threatens the exchange rate of the Egyptian pound against the dollar. This could have huge impact in a country that imports about 60 percent of its needs. The impact of this on inflation is expected to increase further.

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