Qatar Cuts Egypt Loose as Financial Picture Darkens

With the IMF loan in limbo and Qatar now unwilling to help out, Egypt may be at the mercy of the White House

By gail norton

Egypt’s death spiral is now scaring off even its closest friends. Last year, Qatar give an Egypt in crisis $5 billion in aid money. But Qatar won’t help Egypt anymore, according to the FT. Qatar’s decision comes as Egypt continues its downward spiral:

Shortages of diesel in recent weeks have already created long queues in filling stations, fraying tempers and sparking anger, while villagers frequently cut roads and railway lines over such grievances as water cuts and irregular gas supplies.

The country’s toxic political atmosphere, with fractious leaders intent on undermining each other, could also fan the flames of popular fury and speed up a descent into chaos.

On top of that, the rising price of imported food ingredients is putting heavy financial burdens on the country’s poor. Reuters reports:

Flour and sugar are 50 percent more expensive than they were a year ago, said [baker Mohammed] Alif, and for now the bakery feels it has no choice but to absorb the increase rather than passing it on to customers:

“I can’t make it more expensive because people cannot pay,” he said, pausing between filling shelves with freshly baked rolls and serving a steady flow of shoppers on the pavement.

A $4.8 billion grant from the IMF could stanch the bleeding, but it requires Egypt to accept austerity measures. Austerity remains deeply unpopular with most Egyptians, and politicians are reluctant to risk losing support among constituents.

With the IMF loan in limbo and Qatar now unwilling to help out, Egypt may be at the mercy of the White House. The Obama administration may be about to face a deeply ugly choice: watch Egypt sink further into chaos or ask Congress to send even more aid money than we’ve already promised—to bail out a Muslim Brotherhood government.