SPENGLER Palestinians ditched; Egypt
next? By Spengler
"No
one cares about the Palestinians," I wrote in this
space two years ago [1], and since then the world
has stopped funding them. As a result, the
Palestine Authority is collapsing, comments Khalid
Elgindy, a former PA adviser, on the website of
the Council on Foreign Relations, about "the wave
of Palestinian protests that swept through the
Israeli-occupied West Bank this month [and] ...
virtually paralyzed life in Palestinian cities,
with scenes reminiscent of the first intifada".
The PA can't pay salaries because
international donors, including
the Gulf States, haven't
sent promised aid:
A rapid infusion of cash from the
international community and Israel may buy the
PA some time, but it cannot kick the can down
the road forever - especially if a recently
released World Bank report is right that a more
severe fiscal crisis will take root if donor
countries fail to act swiftly.
Even if
the PA manages to hobble along for a few more
months or years, a weak and divided Palestinian
leadership with questionable domestic legitimacy
will be in no position to negotiate a
comprehensive agreement with Israel or make that
agreement stick. This week's mass arrests of
Hamas activists, carried out in the wake of the
protests, speaks to the PA leadership's deep
sense of insecurity. [2]
International donors are weary of
Mahmoud Abbas' sorry little West Bank kleptocracy,
while the squeeze on the state budgets of all the
industrial nations makes it harder to shake loose
money for an unpopular destination. The World Bank
warned on September 19 of a "deepening Palestinian
fiscal crisis" and issued an "urgent appeal" to
donors. [3]
Diplomats and bureaucrats at
international organizations will issue press
releases, wring their hands, make promises and
then break them. No-one is going to write a check
to the Palestine Authority.
The question
is: when will the world also grow weary of Egypt?
With liquid cash reserves down to a month or two
worth of imports in July, Egypt began bouncing
checks to oil suppliers in August, and has stopped
importing some urgently needed items. The latest
shortage to plague the Egyptian economy is infant
vaccines. (See North
Korea on the Nile, Asia Times Online, August
28, 2012.) The news site AllAfrica.com reports:
Cairo - Tens of thousands of
children are at risk because of a vaccine
shortage in Egypt, pediatricians warn."The
longer the government fails to immunize these
children, the more vulnerable to disease they
are," Eman Masoud, head of the Pediatrics
Section at Abul Riesh University Hospital in
Cairo, told IRIN. She said a delay of more than
one or two months in obtaining vital vaccines
like MMR, which protects against measles, mumps
and rubella, can put children's lives in peril.
Over the last two weeks, parents have
lined up at many of the government's 5,000
health offices which vaccinate children for
free, only to be told: "The vaccines are not
available." (Shots are, however, available for
the equivalent of US$50 at private clinics.) [4]
It's hard to get accurate readings on
Egypt's economic free-fall, but according to the
country's importers association, the reluctance of
banks to provide trade financing to Egyptian firms
has cut imports in half since the January 2011
revolution, and now threatens essential food
supplies. The government claims to have six
months' of wheat stockpiled and recently bought
additional supplies, but other staples, including
beans, sugar and cooking oil.
Ahmed Shiha,
the head of the Cairo Chamber Commerce importers'
group, warned earlier this month that Egypt has
been living off inventories of key food
commodities, according to the Egyptian news site
el-balad.com. [5]
After the 2011
revolution, importers stocked up on food out of
fear of devaluation. Now they are having trouble
obtaining letters of credit to replace their
diminishing supplies. Especially vulnerable is
Egypt's provision of beans, the biggest staple
after bread. High dollar prices and dwindling cash
reverses could lead to a 40% reduction in the
supply of imported foods, Shiha warned. Egypt
imports half its total food consumption.
By its own estimate, Egypt needs $12
billion to get through the next year. Some private
estimates quoted by the Egypt Independent put the
gap at twice that much. [6] Every few days, the
Egyptian government hails another
multi-billion-dollar aid package from a foreign
donor, but none of these packages appears to
entail much ready cash. Qatar deposited $500
million in Egypt's central bank in August, and
promised another $1.5 billion, which is yet to
appear.
Egypt announced that Turkey had
promised $2 billion in aid, but Turkish press
accounts doubt that Egypt will spend any of that
money in the near future; $1 billion is reserved
to finance the operations of Turkish firms in
Egypt, which does nothing for Egypt's urgent
import requirements. The other $1 billion, the
Turkish newspaper Star wrote on September 15, is
just an advance on the prospective $4.8 billion
loan from the International Monetary Fund (IMF).
[7]
Turkey still owes the IMF $5 billion
from its borrowing after the 2008 crisis, so it
will expect repayment out of the IMF money - if
the IMF loan ever comes through. In the meantime,
the $1 billion will sit in the central banks'
display window and won't be spent.
The
Barack Obama administration offered the Egyptians
$1 billion (half of which was debt forgiveness
rather than ready cash), but shelved the proposal
after the attacks on America's Cairo embassy until
after the November elections. Saudi Arabia seems
to have no intention of funding the Muslim
Brotherhood, the monarchy's most dangerous
internal opponent.
For the moment, it
really does seem like Egypt is living on
diminishing stockpiles, as the Chamber of
Commerce's Shiha warned. Egyptians will have
enough bread to go around, but not much to put on
it, and not enough gasoline to distribute it.
Some problems simply can't be fixed. In
the past, I have argued that the Palestine problem
is hopeless but not serious. Roughly one in four
Palestinian men between the ages of 20 and 40 is
paid to carry a gun, and a putative nation whose
economy is based on the imminent prospect of
violence does not have first claim on scarce
international resources.
Meanwhile the
living standard of Arabs in the so-called Occupied
West Bank is double that of pre-crisis Egypt;
compared with Egypt or Syria, it is an oasis of
peace and plenty.
After years of intoning
that the Palestine issue was the crux of the
world's security problems, the world has left the
keys in the wreck and walked away from it. And the
Oslo process is ending with a whimper rather than
a bang.
Egypt is a different matter. The
notion that the world will find $1 billion a month
for Egypt - let alone $2 billion - seems
whimsical. The catastrophic decline of a nation of
80 million people is something the world has not
seen in some time, and policymakers would be wise
to take precautionary measures.
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