Earlier this week, IMF Managing Director Christine Lagarde told a news conference that the $3.2 billion lending program for Egypt “will not be sufficient, and everybody knows that, so it will require other donors, other participants to also come to the table to help Egypt”.
Christine Lagarde (c) World Economic Forum
By ‘other’ donors, she was of course alluding to Saudi Arabia, who has announced that it will deposit $1 billion at the Egyptian central bank and buy T-bonds worth $750 million by the end of April as part of a $2.7 billion package to support Egypt’s battered finances.
An Egyptian official said the package includes $250 million of support to buy fuel and $500 million in project finance with an additional $200 million going to small – and medium – sized enterprises.
Saudi Arabia’s offer came two days after the United States president Barack Obama’s announcement that the US will relieve up to $1 billion of Egypt’s debt. Magda Qandil, executive director of the Egyptian Centre for Economic Studies (ECES), does not think the timing is a coincidence and he, too, believes that there was a push for Saudi involvement.
He said: “Regardless of what purposes the Kingdom might have, what’s really interesting for me is the fact that the aid announcement followed the US debt swap announcement.
“Despite omitting Saudi Arabia from his speech, Obama asked for some economic powers to support the Egyptian and Tunisian economies in the post-revolution era…I think the Kingdom was what he meant by that”.
Saudi Arabia plays a prominent role in the International Monetary Fund and the World Bank. This billion-dollar package will come with certain conditions attached to it: you scratch my back and I’ll scratch yours.
The Kingdom is well-known not only for suppressing its own people, but also for spreading its oil wealth to radical groups across the world which, for many decades, included Egypt’s very own – the Muslim Brotherhood.
According to LIGNET.com sources, Saudi Arabia and Qatar spent tens of millions of dollars on the Egyptian elections last week to ensure a big win for the Muslim Brotherhood.
The Muslim Brotherhood reportedly used the funds to host rallies and other events to drum up support and to lure voters to the polls with sugar and cooking oil.
Saudi leaders invested the money out of a fear that the uprising in Egypt could empower both secular liberal and Salafi radical Islamist movements that could affect stability in Saudi Arabia. And this is without taking into account the stranglehold the military has on the country.
There is hypocrisy in the media and among Western governments when it comes to Saudi Arabia.
The Kingdom (whose clerics announced that if women were allowed to drive in their country, it would lead to “no more virgins” in the Kingdom) can crush democratic protests in Bahrain, execute 76 people in 2011 (including a woman accused of “sorcery”), threaten to execute a blogger who posted an imaginary conversation with the Prophet on Twitter, sentence thieves to amputation, announce that rape, sodomy, adultery, homosexuality, drug trafficking and apostasy are to carry the death penalty, and no one bats an eyelid.
Christine Lagarde recently visited Riyadh and expressed her appreciation of the kingdom’s “important role” in supporting the global economy. It truly is astounding.
Even this week British Prime Minister David Cameron, when asked about the situation in Bahrain, claimed that it was ‘nothing like Syria’ as there is a “process of reform under way in Bahrain”, despite the fact that the opposite is the case.
Imagine if the Formula One was to take place in Syria – would Cameron insist that sport is not political and reforms are ‘under way’? I doubt it.
The change in Saudi Arabia is striking. Riyadh’s old practice was to keep its head down but now is more open and vocal in pressing its interests, especially with US influence waning. This influence can be seen in Syria, where Saudi, along with Qatar, is arming the rebels.
Egypt accepted a loan from the IMF only last summer, yet that was not enough – one can only guess as to where the money is going. With the economy in shambles and the Egyptian elections around the corner, it looks like the long arm of the Saudis is going nowhere.
