Egypt Political Crackdown Threatens Economic Recovery

Egyptian President Mohamed Morsi has announced a renewed focus on bolstering Egypt's increasingly troubled economy, but the Muslim Brotherhood-linked president's domestic and foreign policy tactics and priorities may complicate his agenda.

Morsi's statement came immediately after Egyptian voters approved a new constitution that has been widely criticized for institutionalizing Islamic law and failing to adequately protect the rights of women and religious minorities.

His speech was followed by a crackdown on the civil liberties of Muslim Brotherhood opponents inside and outside the Egyptian government. Within days of Egyptian voters approving the constitutional draft, which had been backed by Morsi and his Islamist allies, Cairo opened treason investigations against Morsi critics. Before the week ended, reports surfaced that civil servants had been ordered not to criticize the president.

The constitution's success and the government's rapid efforts to stifle dissent have deepened fears that the Egyptian Arab Spring will have overthrown a relatively secular autocracy only to replace it with a hardline Islamist autocracy.

Morsi's efforts to centralize power and suppress opposition have triggered backlashes from within the government. Egypt's Vice President Mahmoud Mekki announced his resignation over the weekend, citing incompatibility between serving in the government and his background as a judge. Communications and Information Technology Minister Hany Mahmoud subsequently announced his own resignation, a decision Egyptian media linked to efforts by the Morsi government to cut communication services in the midst of protests.

Egypt's uneven democratic transition is likely to have economic consequences and to undermine Morsi's efforts to pivot to economic stabilization.

Germany has already linked debt relief and economic aid to Egyptian progress on institutionalizing civil liberties, and at least some other Western countries can be expected to follow. Tourism has been badly damaged due in part to fears over political instability and creeping Islamization. Most immediately, capital is fleeing the country at such a rate that Cairo has banned citizens from taking more than $10,000 out of the Egypt. The country is fast approaching the International Monetary Fund minimum of three months of total foreign reserves, an inflection point that would badly damage confidence required to rebuild Egypt's economy.


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