Current Affairs

Egypt is opening the door to the political possibility of an open discussion about where the country goes next. The opposition parties who have members in jail are negotiating with the Egyptian government of Abdel Fatah el-Sissi, and among their demands is the release of dissenters. So Egypt’s political opposition are preparing for a national dialogue with the government, which has left a number of questions among the political elite.

On 3^rd May 2023, the Presidential pardon committee launched on online application for the release of prisoners being held on pre-trial detention. But the question being asked is why is the government moving now, this maybe because the Egyptian authorities face a domestic and international crisis that may require the nation to restructure the nations economy, and according to Crisis Group, Lebanon’s “debt default and ensuing political crisis [is] a signpost for the future.”

Egypt is a very different proposition to Lebanon, it has creditors lining up, but it is reviewing the situation, it has devalued the Egyptian pound and is listening to its internal partners who are demanding that the economy takes the necessary reforms in order to bring about an economy that is resilient in the long term.

But the dialogue that the President has initiated with civil society has been seen as an attempt by the government to improve its international image through expanding the political and social base of the state before the harsh measures that the IMF and other creditors are demanding come into force. The Egyptian opposition have given a cautious welcome to the proposal of an open dialogue.

The Civil Democratic Movement have argued that the forum must have an equal number of pro-regime and anti-government delegates. But there is a worry among the activists about the formation of the dialogue that will take place, but they also realise that they are in a weak position and they have very little input into the way that the forum will happen and are instead trying to get all political prisoners released. The President has agreed to a number of the releases but has ruled out the release of members of the Egyptian Muslim Brotherhood. But an unnamed source argued that though there were positives in the argument put forward by the government, their response has been disappointing and according to a source speaking to crisis group who argues that “they (the government) aren’t interested in this initiative moving forward.”

Omar Khairy, a professor of political science at Sakarya University, spoke to AI Monitor and argued that “No political system can change overnight.” But the question has to be whether there will be dialogue and whether the forum will be capable of “serious measures […] to achieve political reform […]and provide the opportunity for political voices […] [to] take part in policy making.”

Samir Dawish an opposition journalist argued that “Sisi needs to build a new image that would help his government to cope with the severe economic crisis.” The government are looking to solidify its involvement with the national dialogue, in a press release Diaa Rashwan said that “this is the first time that a national dialogue has been held without pre-determined political goals other than building a consensus on the priorities of the nation.”

In October 2022, Egypt agreed to a loan from the IMF, but one of the sticking points has been Egypt’s unwillingness to lift subsidies to the poor, which the IMF have demanded. The implications are that social and political convulsions will take place, and though the demands by the IMF will have an effect on the thousands of beneficiaries who will be removed from social support programs gives an insight into the quandry that the government is facing to gain a loan. The government did remove subsidies for bread for the first time since the 1980s, however, a World Bank $500 million loan to support food insecurity, specified that the bread subsidy should remain.

So the national dialogue that Sissi has set up, is aimed at the question of where and how the country will manage the next tranche of loans. A source with Genena, said that they expect the three state owned banks will release more high yield certificates to increase their liquidity, which would increase the banks foreign currency reserves, however, the IMF estimated that at the end of last year that the financing gap in the next 46 months would be about $17 billion, including $5.04 billion at the end of June.

With the devaluation of the Egyptian pound, there has been a loss of solid investments from the Gulf. The Saudi national wealth fund has pulled out of buying the United Bank, which is owned by the Central Bank of Egypt, because of disagreements on how to value the bank. The Qatar Investment Authority is in a similar position in their talks to takeover Telecom Egypt’s shares in Vodaphone Egypt, similarly the UAE’s attempt to buy a share of Telecom Egypt and so it goes on. Bloomberg argued that the Gulf countries are delaying financial aid until Cairo enacts “reforms.” The Saudi Finance Minister Mohammed Al-Jadaan said that “the kingdom is changing the way that it provides financial aid to countries, adding that it now expects “reforms” in exchange for funds.”

One of the pressing points for the delegates is whether the Egyptian pound should be released into the markets and take market capitalisation, in other words should the Egyptian pound be allowed to free fall without government intervention. According to market analysts the Egyptian government is putting the finishing touches on another devaluation, similar to the one earlier this year when the Egyptian pound lost a quarter of its valuation, placing pressure on the importation of wheat and making bread that bit more expensive for the poor.

Whether the parties in opposition in the government are able or capable to take part in the national dialogue, Egypt is in need of ideas to manage the economy. If the opposition to the government take part and become part of the arguments that Egypt needs to move forward in the coming critically important years, then the dialogue between the government and the opposition could be called a success, but the main focus of the opposition is to get as many of their members out of jail, rather than being part of this crucial conference that is so necessary for the country at this critical juncture.