Egypt: Islamist’s increasing control unlikely to result in vital economic stability

By Oliver Coleman

Since President Mohammed Morsi issued his highly controversial constitutional decree on 22 November 2012 Egypt has lurched from one serious crisis to another. The decree which grants the president extensive and unprecedented new powers sparked weeks of widespread and violent protests. It allowed for the completion of a new draft constitution ahead of schedule and free from impending judicial interference. The constitution and the assembly drafting it have been extensively criticised for being Islamist-dominated and enshrining an Islamist vision of the state. Despite further opposition and protests, the constitution was passed in a referendum held on 15 and 22 December 2012, with 64% of voters approving the document.

Nevertheless, while the demonstrations appear to have calmed for the moment, Egypt’s economic woes are quickly mounting and the government’s strategy is unlikely to solve the problem. Dire socioeconomic conditions and lack of employment are likely to trigger further protests in the months if not years to come. Egypt’s economy has been in turmoil since the fall of the Mubarak regime in February 2011, with a spiralling budget deficit and foreign currency reserves that have been slashed in half down to US$15.015bn in December according to the Central Bank. The Egyptian Pound (EGP) that has lost 10% of its value against the US dollar since the revolution, with 4% of this loss coming in the first week of 2013. All of these problems pose a substantial challenge to Egypt’s government. (more…)