Money Flows Into Egypt, But Where Does It Come From?
Money Flows Into Egypt, But Where Does It Come From?
The aid propping up both sides of Egypt's ongoing political crisis largely comes from regional rivals. Saudi Arabia leads the financial support of Egypt's military rulers. Qatar leads the support of the Muslim Brotherhood. Renee Montagne talks to Max Rodenbeck, Middle East correspondent for The Economist, about funding sources
RENEE MONTAGNE, HOST:
There's been a lot of focus on the $1.5 billion in aid that the U.S. gives Egypt annually. But that amount is dwarfed by what other countries are offering.
DAVID GREENE, HOST:
Egypt's struggle between the military and the Muslim Brotherhood has seen both sides receiving money from rival neighbors around the Middle East. Saudi Arabia backs Egypt's military rulers, while Qatar is the lead supporter of the Brotherhood.
MONTAGNE: For an update on the money flowing into Egypt, we turn to Max Rodenbeck, he's Middle East correspondent for The Economist. Good morning.
MAX RODENBECK: Good morning.
MONTAGNE: First of all, all of this political upheaval since 2011 has not been good for the Egyptian economy, has it?
RODENBECK: It's taken a really heavy beating. Yeah. I mean, there has been, you know, a big exodus of capital from Egypt. But also things like the tourism industry has taken a big hit too.
MONTAGNE: And the tourism industry is quite big in a country with few natural resources or industries. Saudi Arabia's foreign minister yesterday reiterated his country's pledge to offer, as they put it, a helping hand to Egypt. Kuwait and the United Arab Emirates have also been pitching in. How much help are they giving?
RODENBECK: They pledged $12 billion to Egypt, which is a substantial fund for a country like Egypt. I mean that covers borrowing needs for at least six months to a year. But, you know, it's still kind of a black hole. I mean, that just papers over the problems. I mean, Egypt will need more money from outside as time goes on.
MONTAGNE: The Egyptian economy has been heavily dependent on the government, so how - even though I may not be enough to lift up the economy - how does this foreign money from neighbors fit into the larger picture?
RODENBECK: Well, for one thing, it bolstered the central bank reserves and it improves Egypt's borrowing position overall. So it lowers the cost of borrowing for a government that's got a really high deficit. So it makes a really significant difference. It does help to tide over the country, at least. I mean Egypt has such accumulated problems that it's going to take a lot more than that. And what it really needs is stability. I mean, we've had nearly three years of instability, and that's what Egypt needs more than anything.
MONTAGNE: Well, presumably, that's one thing that Saudi Arabia is looking for when it gives military government there in Egypt so much support.
RODENBECK: Well, that's true. Also, the Saudis don't like the Muslim Brotherhood, which was the party of the fallen president Mohamed Morsi. And there's something of a competition between countries like Saudi Arabia and other wealthy Arab countries, such as Qatar, that had supported Muslim Brotherhood. So I think the Saudis pretty much back the Egyptian army and this is a sign of their support for the Egyptian army and for the overthrow of the former government.
And right now, because of, you know, many years of high oil prices, Saudi Arabia and Kuwait and the United Arab Emirates have a lot of money to put into these things to, you know, put their money where their mouth is.
MONTAGNE: Turning to the Muslim Brotherhood, Qatar pledged more than $8 billion to them when they were in power. Where is that money going now?
RODENBECK: Well, there's a question mark over some of that money. I mean, a lot of that money is money that just props up at the central bank reserves. It's not money that's being dispersed for anything. It's like a deposit. And the Qatar government hasn't actually taken that money back, although that is a possibility. But now the money from Qatar had been matched and over-matched by money from other countries that are more hostile to the Muslim Brotherhood.
MONTAGNE: Still, given all of these billions coming from countries around Egypt, how might the U.S. stay in the mix with its aid? Much of it - most, almost all of it - is military aid?
RODENBECK: That's right. Well, actually the American aid doesn't have - provide that much leverage anymore as it used to. You know, as a proportion of Egypt's economy, U.S. aid, you know, 10 years ago, 20 years ago, 30 years ago, it used to be much bigger. Now it doesn't play in the equation so much anymore. And since most of it is military aid, it buys the very particular relationship between the U.S. and the Egyptian military, which had served both parties over a very, very long period of time.
MONTAGNE: Speaking to us from Cairo is Max Rodenbeck. He's Middle East correspondent for The Economist. Thanks very much.
RODENBECK: OK. Sure.
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