$12 billion in aid for Egypt only temporary boost

[dipsydoodle]

CAIRO (AP) -- A promise of $12 billion in aid from wealthy Arab Gulf nations would give Egypt's new military-backed leadership breathing room by paying for vital food and fuel imports. But the benefits would be only temporary, because Egypt's broken economy remains unrepaired.

More than two years of political turmoil, violence and deterioration in security have frightened away tourists and foreign investors. Just as harmful, badly structured subsidies on food and fuel eat up almost a third of Egypt's strained budget.

The most recent round of violence, when more than 50 supporters of ousted Islamist President Mohammed Morsi died in clashes with the military on Monday, is likely to ripple through the economy, spreading doubts over the new leadership's ability to provide stability.

A key demand among millions of people who demonstrated against Morsi was better living conditions. Little improved when he took office a year ago, after poverty, rampant corruption and crony capitalism propelled millions to join the youth-led uprising against President Hosni Mubarak in 2011

http://hosted.ap.org/dynamic/stories/M/ML_EGYPT_ECONOMY?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-07-11-02-14-30

frightened away tourists................tourism was one of their main sources of income.

TWO years of political upheaval have battered tourism, a motor of Egypt’s economy. Much of the Nile cruise fleet lies idle. Trinket-sellers and would-be guides at the Giza pyramids are so hungry for custom that they often mob or simply jump aboard approaching taxis. And though the damage has been patchy, with beach resorts still thriving even as visitors shun the ancient monuments, lingering uncertainty over the future means it may be years before Egypt regains its place in the sun.

In 2010, the last year before Egypt’s revolution, a record 14m tourists arrived. The industry was 13% of GDP and directly or indirectly employed one in seven workers. Arrivals plummeted to 9.5m in 2011, and have yet to recover (see chart). Tourism Economics, a consultancy, predicts that 11.4m tourists will come in 2013.

Yet those numbers disguise the sharpest pain. The Egyptian Tourism Federation estimates that hotel occupancy rates are barely 15% in Cairo and below 5% in Luxor, the site of the Valley of the Kings, where 19 people died in a hot-air balloon explosion in February. In January armed looters infiltrated a protest in central Cairo and stormed into the InterContinental Semiramis, one of the Egyptian capital’s swankier hotels. Chefs, waiters and honest protesters fought them off with saucepans and chairs, but the hotel had to close for weeks.

http://www.economist.com/news/business/21577089-turmoil-has-scared-all-rugged-and-russians-arab-spring-break

Above article is dated May 4th 2013 which easily precedes recent events. 11.4m tourists will come in 2013 is likely to have turned into a pipe dream.

[Igel]

1. Then there's today's NPR report.

Good old Fadl.

She was reporting that within a couple of days of Morsi's ouster a lot of the lines for basics--fuel, bread, that sort of thing--vanished. She attributed the cause not to a sudden return to peaceful streets nor to a cessation of hoarding, but to the supply flow suddenly being released by the wealthy foes of Morsi. Same applied to the banking system.

In other words, not only did they not play politically with Morsi, turning down cabinet appointments and boycotting elections, the economically powerful among their group, to use the standard DU term, "sabotaged the economy." This is, of course, the group that's preferred by a majority of DUers.

Not that there's much to sabotage. It's still a basket case. It brought down Mubarak. It brought down, ultimately, Morsi.