Spotlight: Egypt has long way to go to revive economy amid security challenges

Almost six years after political turmoil hit the most populous Arab country, Egypt still struggles and has a long way to go to revive its ailing economy amid security challenges represented in the country's "war against terrorism."

Economic recession in Egypt started with the 2011 uprising that ousted long-time president Hosni Mubarak, which was followed by a military-backed uprising in 2013 that overthrew former Islamist president Mohamed Morsi and blacklisted his Muslim Brotherhood group as a terrorist organization.

Since then, the new leadership of former army chief and current President Abdel-Fattah al-Sisi has been battling a rising wave of anti-government terrorism that added recession to the country's already bleeding economy.

SECURITY CHALLENGES

Most of the anti-government terrorist attacks that took place over the past three years were claimed by a major self-proclaimed Islamist militant group in restive North Sinai province, which changed its name from "Ansar Bayt al-Maqdis" (Jerusalem Supporters) to "Sinai State" and announced loyalty to the Islamic State (IS) regional terrorist group.

Since Morsi's removal, security crackdown killed over a couple of thousands of Islamists, whether Brotherhood followers mostly in Cairo and Giza or militants mostly in Sinai, while anti-security terrorist attacks killed several hundreds of police and military men.

On Monday, a blast killed two military conscripts and injured three others in Sheikh Zuweid city of North Sinai. Earlier on Friday, a bomb attack killed six policemen in Giza province near the capital Cairo.

However, between the two blasts, a third explosion that killed 24 in a church in Cairo on Sunday took the confrontation to another level, as it is the first over the past three years to target civilians, particularly those of the country's Coptic minority.

It is the security challenge that plays the most part in Egypt's economic situation, which further deteriorated after a Russian plane crash in Sinai that killed over 200 mostly Russians in October 2015, an Italian student's mysterious death in Cairo in early February 2016 and a tragic fall of an EgyptAir flight in May 2016 that killed all 66 people on board including 15 French nationals.

Since economy and security are interrelated, as a country's healthy security condition is a major incentive to lure foreign investors and tourists, when the dust of Egypt's ongoing anti-terror war settles the country's economic conditions are expected to get way better. Yet, top officials including President Sisi and Prime Minister Sherif Ismail recurrently stated that Egypt has "a long way" to go to battle terrorism.

STRUCTURAL REFORM

Egypt's economy is mainly interest-based rather than export-based. The country relies on non-productive sectors as basic sources of its national income and foreign currency reserves, such as tourism revenues, the Suez Canal traffic fees, the remittance of Egyptian expatriates, foreign investments and finally exports.

Economists believe that the order needs to be reversed to restructure Egypt's economy into a stronger, export-based one while other sources of hard currency should come next to exports.

Egypt's current annual exports reach about 25 billion U.S. dollars while its imports are about 77 billion, so the country needs to reach from 140 to 150 billion dollars in exports to create an actual balance of trade, bearing in mind that about 75 percent of the components of Egypt's future exports are expected to be imported.

The structural reform still needs some time to start, take effect and then bear fruits, as it has to be preceded by large infrastructural projects, thorough study of the country's industrial qualifications and the needs of the world market, establishment of factories and industrial zones and eventually finding a place in the fierce regional and international competition as an exporter.

Over the past six years, Egypt's foreign currency reserves at the central bank declined from 36 billion dollars in early 2011 to 23 billion as of December 2016 after it was 19 billion in October 2016. Tourism that brought the country 13 billion dollars in 2010 less than halved in 2016.

Dollar shortage in the financial market negatively affected a lot of import-based businesses, leading several factories to shut down and others to continue with price hikes.

Egypt in early November decided to devaluate its local currency to overcome the dollar shortage and hike, a move encouraged by the International Monetary Fund (IMF) that delivered later in November 2.75 billion dollars to Egypt as the first batch of a 12-billion-dollar loan to finance the country's three-year economic reform program.

To achieve an economic shift, the Egyptian government is currently working hard on multiple mega national projects, including the establishment of a new administrative capital city, the development of the Suez Canal corridor, the construction of power plants and several others.

A senior official from the Suez Canal Authority said Tuesday that Egypt will establish a vast trade zone for automobile manufacture and another large city for pharmaceutical production in the Suez Canal region.

Although they will take time, the ongoing strict economic reform program, the structural reform into an export-based economy and the improvement of security conditions to attract foreign businessmen and tourists represent hopes for Egypt to start 2017 with a clear plan for future economic recovery. Endit