Egypt’s rejection of an emergency loan from the International Monetary Fund on Tuesday, coming on the heels of major benefactor Qatar’s announcement that it had no plans to offer additional economic aid in the short term, is sure to fuel uncertainty in a country that now finds itself in increasingly dire financial straits. The dismaying economic developments highlight the awkward balancing act Egypt’s leaders find themselves negotiating as they seek desperately-needed funds for the country’s faltering economy while also warily considering the political ramifications of accepting aid from outside donors.
For President Mohammed Morsi’s Muslim Brotherhood-controlled government, the challenge is daunting. On one hand, the Egyptian economy is struggling under a growing budget deficit, rising inflation, along with shrinking foreign currency reserves, all of which make the prospect of an infusion of funds an inviting one — on the other, the austerity measures necessary to procure an IMF loan are almost certain to lead to even more unrest in an already politically tense Egypt. There is also the added dimension of the prevailing negative attitude in the country towards foreign aid, which is increasingly being directed towards the Qatari government.
Since Morsi’s election in June 2012, Qatar has in total deposited $5 billion in Egypt’s central bank, while also announcing plans to invest $18 billion in the country over the next five years. Critics of the Brotherhood have eyed Qatar’s financial support of the Egyptian government with suspicion and have questioned the tiny Gulf kingdom’s objectives in Egypt. The perception that Qatar is attempting to politically influence Egypt by supporting Morsi’s Islamist government has been compounded by the widely-held view that Doha-based Al Jazeera, the Arab world’s biggest satellite news channel, slants its coverage of Egypt to favor the Muslim Brotherhood. Qatar’s ties to the Brotherhood in Egypt go back decades and were most prominently highlighted by the government’s 1961 decision to shelter exiled Brotherhood televangelist Yusuf al-Qaradawi — who also has a long-running religious show on Al Jazeera. The animosity towards Qatar has become so heightened in recent weeks in Egypt that a rumor that the kingdom was planning to rent the Giza Pyramids gained immediate traction in the Egyptian press, causing hours of hysteria on news programs. The discussions in the wake of the pyramid rumor not only revealed the growing hostility towards Qatar’s financial involvement in Egypt, but the determination to lay the blame for their increased clout in Egypt at the Brotherhood’s doorstep.
While the news that Qatar was not planning to disburse additional aid to Egypt this week may on the surface suggest some disharmony between the Brotherhood and the Qatari government, it is unlikely a vote against Morsi’s government — at least not yet. As strong as the Muslim Brotherhood’s own ranks are, the intense resistance to the group’s rule in Egypt at the moment is becoming a major liability for Morsi — especially where Qatar is concerned. With the growing security crisis in Egypt and the clear fractures in Morsi’s ties to the security establishment, his position is becoming increasingly precarious. Qatar’s aid announcement — which did not discount the possibility of further aid down the line — is a nudge for Morsi to get his affairs in order.
The buzzy talk around a Qatari bid to acquire Emirate-held investments in the Suez (one of Egypt’s most economically viable regions, containing the Suez Canal which accounts for 2% of the country’s annual national income) may be a factor here, as well. The industrial region, which in addition to the canal contains 480 factories and companies as well as popular tourist resorts, is also the site of the Sharq al-Tafria project which seeks to transform the area around the Suez canal into an international logistics zone which would provide services to passing ships along with other industrial projects. The World Bank had estimated the project would generate $50 billion a year, making it a lucrative site of investment. As indebted as the Egyptian government is to Qatar for its financial support, the involvement of the UAE in the region could pose a problem. Like Saudi Arabia, the UAE’s relations with Egypt have cooled since the rise of the Brotherhood. The UAE’s investments in the country, while nowhere approaching Qatar’s in the past year, are still major. Should Morsi’s government be perceived to be supporting Qatar’s bids in the Suez — a stronghold of anti-Brotherhood sentiment — it risks provoking additional backlash from the Egyptian street, but also from another Gulf ally.
Qatar has also raised eyebrows around the region with its robust financial involvement in Egypt and in other countries which experienced their own popular uprisings, such as Libya and Tunisia. And it is clear from the modes and methods of this involvement that the kingdom has identified burgeoning Islamist parties — from Ennahda in Tunisia to Al-Watan in Libya — as the most effective vehicle to achieve its geopolitical agenda. Though the traditional Wahabbi Islam practiced in the kingdom, as in much of the Gulf, has historically shunned the activist Islam championed by Islamist groups like the aforementions, Qatar’s support is grounded in a pragmatic assessment of their political viability, rather than ideological affinity.
The kingdom’s support for Islamist politics has endeared it neither to secularists within the relevant countries nor to its own neighbors. And the rising influence of the tiny Gulf state, which has a population of about 2 million, has had regional players uneasy for some time. (Visiting Al Jazeera’s Doha headquarters in 2001, Egypt’s former ruler Hosni Mubarak famously remarked “All that noise from this little matchbox?”) Qatar’s staggering oil wealth and its international reach through Al Jazeera (along with less ostensibly-political enterprises, such as its successful bid to host the 2022 World Cup) has allowed Prime Minister Hamad bin-Jassim al-Thani to play a disproportionally large role on the international stage, especially in the wake of the Arab Spring. But despite the suspicion and worry with which liberals around the Arab world have eyed Qatar’s support for Islamists, the nation’s other international commitments — which range from from hosting a U.S. military command center for operations in Iraq and Afghanistan as well as the Taliban and Hamas’ regional offices, to sponsoring everything from the Syrian opposition to the Barcelona football club, to high-profile real estate around Europe, including London’s famous Harrod’s department store — reveal a wide-ranging generalist effort to cultivate global soft and hard power.
Thus, it is Qatar’s interest in expanding the breadth of its influence — along with a naked pragmatism about the most successful means of achieving this purpose — that should have Morsi on guard. While Qatar’s name is now uttered in the same scornful tone once reserved for the U.S. in Egypt, the nation’s support could nonetheless make or break an administration in the country. Unlike the U.S., the kingdom’s funding decisions are not beholden to political fights in a legislature — one of the benefits of a family-run autocracy — and therefore guided almost exclusively by the al-Thanis’ assessment of the viability of a particular enterprise. Or, more to the point, a government. Should the crisis in Egypt intensify and the Brotherhood’s political strength become seriously called into question — and with no sign of the current standoff over upcoming parliamentary elections being resolved, this is not a remote possibility — Morsi may have an even bigger problem facing him down the line than his current IMF quandary. Qatar is going to disburse its politically tinted regional aid somewhere, and there’s always Hamas. Or Egypt’s own Salafi Al-Nour, for that matter.
