Today, the Egyptian economy is in as much distress as it was when Morsi took office. Not only are rates of poverty, inflation, and unemployment high, but GDP growth is sluggish, the budget deficit is yawning, tourism is down, the need for imported fuel is great, and public debt (both foreign and domestic) stands at $268 billion, or 107 percent of GDP.
Under Sisi, the military has sought to restore order and stability in the country, which can contribute to economic growth. But the violent, heavy-handed way in which it has done so has created its own instability, fueling terrorism by underground Islamic groups and anger among some of those who went to Tahrir Square to protest these very police-state methods. In a reflection of these security concerns, 5 million fewer tourists visited Egypt in 2013 compared with 2010, as revenues from tourism declined from $12.5 billion to $5.8 billion.
Egypt’s generals have also abandoned assistance from the IMF, EU, and U.S., instead turning for financial aid to Arab neighbors who viewed the Brotherhood as a destabilizing force and supported its overthrow. They’ve secured pledges of $7 billion from the United Arab Emirates, $5 billion from Saudi Arabia, and $4 billion from Kuwait. But these funds are not explicitly conditioned on any economic reforms. The UAE’s initial funding was used to buttress Egypt’s dwindling foreign-exchange reserves and protect its currency. And some of the other money is nominally slated to finance stimulus and infrastructure projects, in part through military-linked companies.
In announcing his candidacy on Wednesday, Sisi said that Egypt’s current reliance on “donations and assistance” was “unacceptable,” while steadfastly refusing to disclose any details about his programs or policies. It is far from clear whether the military will agree to reforms that threaten the economic privileges and sinecures it has secured through its version of state capitalism.
As president, rather than puppet master, Field Marshal Sisi will grapple with Egypt’s economic challenges in a far more exposed way. And, as was the case for the country’s past two presidents, these profound and prolonged problems could be his undoing—no matter how strong his security state.