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Fractures in Egypt’s Ruling Coalition, and Divisions Between Islamist Parties Healed

2:40 PM, Jul 11, 2013 • By LEE SMITH
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On Tuesday, Egypt’s interim government named a new prime minister, Hazem el-Beblawi, an economist who served briefly as the interim military government’s finance minister after former president Hosni Mubarak was toppled in February 2011. Beblawi is a good choice, insofar as he seems to understand that one of Egypt’s core economic problems is that the government cannot afford to subsidize so many goods, from vital foodstuffs like bread and cooking oil to fuel.


“We must create a clear understanding for the public that the level of subsidies in Egypt is unsustainable, and the situation is critical,” said Beblawi. “The canceling of subsidies requires sacrifices from the public and therefore necessitates their acceptance.”

That’s the sort of language likely to appeal to the IMF, which held up a $4.8 billion aid package to Egypt because the government of Mohamed Morsi was unable to implement the necessary reform measures, like slashing subsidies. However, if Beblawi has identified the key issue, it’s worth pointing out that he made these comments in an interview before Morsi was ousted last week, and before he was tapped to become prime minister. When he assumes office, he is likely to find that practice is very different from theory.

Many Egyptians like their subsidies and do not want to see them cut no matter how critical the situation may seem to a man with a PhD from the University of Grenoble like Beblawi. Without subsidies it would be hard to get by with the salaries from low-paying lifetime jobs in the public sector that many Egyptian college graduates expect their government to provide for them. Without subsidies, it is virtually impossible to live on the less than $2 a day on which 40 percent of Egypt subsists.

Thus, advocating on behalf of a heavily subsidized Egypt and against austerity measures, will be the young revolutionaries of the Tamarrod movement camped out in Tahrir Square. There are very few cries for slashing subsidies or economic liberalization among the protestors, for the fact is that this component of the opposition typically characterized as liberal does not believe in liberal economic policies.

Beblawi’s problem is that, from the perspective of Egyptian officials, the Tahrir activists have already toppled two Egyptian leaders—first president-for-life Hosni Mubarak and then the country’s first freely elected leader. If you take on the populist demagogues at Tahrir, your chances of winning are not good.

In other words, cracks are already starting to show in the ruling coalition. There likely won’t be any direct confrontation just yet, for Beblawi has a grace period carved out by the billions of dollars in loans and donations that the Gulf states, led by Saudi Arabia’s $5 billion, have pledged to Egypt. Egyptians will be able to enjoy the rest of their month-long Ramadan season in peace—except for the storm clouds gathering over the horizon, in Sinai.

Yesterday it was reported that Hamas attacked Egyptian soldiers in the Sinai, killing three, while Egyptian security forces arrested another 150 Hamas operatives. Other Gaza-based Islamist groups are also reportedly headed to the Sinai, where they’ve attacked several Egyptian army posts. In addition, there are also Sinai-based jihadist groups, some apparently affiliated with al Qaeda, who are looking to target Egyptian soldiers. Reportedly, all of these groups are acting in concert with the Muslim Brotherhood in Cairo, as part of its struggle with a military that humiliated it by removing Morsi from power and arresting its leaders.

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