Yearender: Egypt to receive new year with remaining economic, security challenges

As the countdown is ticking for receiving the new year 2017, Egypt bids farewell to 2016 with remaining economic and security challenges in addition to ups and downs in its foreign relations, particularly with its leading oil-rich Gulf ally Saudi Arabia.

While Egypt is adopting tough measures to implement a three-year economic reform program, assisted by a 12-billion-dollar loan from the International Monetary Fund (IMF), the country is struggling to combat a terrorist wave that has recently hit a Coptic church in Cairo and killed so far 28 of its worshippers.

ECONOMIC STRUGGLE

Egypt has been suffering economic recession due to political turmoil over the past six years that witnessed the ouster of two heads of state: the 2011 uprising that ousted long-time president Hosni Mubarak and the 2013 military-backed uprising that toppled former Islamist president Mohamed Morsi and blacklisted his Muslim Brotherhood group as a terrorist organization.

As a result, Egypt's foreign currency reserves at the central bank declined from 36 billion U.S. dollars in early 2011 to 23 billion as of December 2016 after it was 19 billion in October 2016. In addition, tourism that brought the country 13 billion dollars in 2010 less than halved in 2016. Foreign investments sharply declined as well.

Dollar shortage in the financial market negatively affected a lot of import-based businesses, which led Egypt in early November to devaluate its local currency, a move encouraged by the IMF that delivered later in November 2.75 billion dollars to Egypt as the first batch of the 12-billion-dollar loan.

The one dollar that used to be officially exchanged for 8.8 pounds approached 20 pounds in banks now, which led to price hikes in commodities, besides fuel and energy subsidy cuts and austerity as part of the economic reform plan.

"The foreign currency crisis in Egypt will remain as long as demand for dollar is larger than offer in the market, and instability of the local currency is worse than its floatation," Ahmed al-Sayed al-Naggar, economist and chief of state-run Al-Ahram foundation and newspaper, said in a recent article.

Economists believe that Egypt needs to move its economy from interest-based to export-based. It needs to not rely only on the revenues of tourism and the Suez Canal as main sources of foreign currency but to focus on industrialization and exportation although they have a long way to go.

Egypt's current annual exports amount to about 25 billion dollars while its imports are about 77 billion, so the country needs six times increase of exports to create an actual balance of trade, for about 75 percent of the components of future exports will mostly be imported.

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

SECURITY CHALLENGES

Since Morsi's military removal in July 2013 and the later crackdown on his supporters that left about 1,000 of them killed and thousands arrested, anti-government terrorist attacks killed hundreds of police and military men, hitting the country's tourism and foreign investments.

The security conditions further deteriorated after a Russian plane crash in Sinai that killed over 200 Russians in October 2015 and a tragic fall of an EgyptAir flight in May 2016 that killed all 66 people on board including 15 French.

A Sinai-based militant group loyal to the regional Islamic State (IS) terrorist group claimed responsibility for most of the terror attacks in Egypt, including the Russian plane crash, while the December 11 church blast was claimed by the main IS group itself.

The attacks mostly target military and police personnel in checkpoints or on duty, as in the recent bomb attack that killed six policemen in Giza province near the capital Cairo.

Carried out by a suicide bomber at Saint Peter and Saint Paul Church adjacent to Saint Mark's Cathedral in Cairo, the church bombing marks a qualitative change of terrorist tactics from targeting security personnel to a civilian minority, taking Egypt's anti-terror war to another level.

To limit terrorism, the Egyptian leadership detained most Brotherhood leaders and loyalists who did not flee the country, considering them the source of terror that has been hitting Egypt since Morsi's overthrow.

In October, Egypt's highest court, the Court of Cassation, rejected Morsi's appeal and confirmed his 20-year prison sentence over inciting clashes between his supporters and opponents outside the presidential palace in late 2012 that left 10 people dead.

Later on, and one day before the church bombing, the same court confirmed the death sentence of Islamist extremist Adel Habbara over a 2013 anti-military attack that killed at least 25 soldiers in restive North Sinai province. His execution was carried out later on Dec. 14.

While Egypt is going through an anti-terrorism war declared by President Abdel-Fattah al-Sisi after he as then-military chief removed Morsi, sporadic terrorist attacks are growing worldwide including the recent cold-blooded assassination of Russian ambassador in Ankara, Turkey, and the simultaneous deadly truck attack on a Christmas market in Berlin, Germany, that killed 12 people.

FOREIGN RELATIONS

During 2016, Egypt's economic and cultural ties with China grew even stronger as the year was referred to as the Egyptian-Chinese Cultural Year. The two countries already have "comprehensive strategic partnership" and they continue investment and economic cooperation as instructed by their two leaders. Their annual trade volume increased from 6.8 billion dollars in 2011 to 12.9 billion in 2015.

In early December, the Central Bank of Egypt (CBE) and the People's Bank of China (PBC) signed a deal that is worth 18 billion yuan (about 2.6 billion dollars) to bolster Egyptian economic growth amid dollar hike.

Despite the Russian terrorist plane crash in Egypt's Sinai, strategic relations between Moscow and Cairo have not been affected. Egypt hosted in October its first joint paratroopers' military exercise with Russia dubbed "Friendship Protectors 2016." Russia also plans to build Egypt's first nuclear plant as per an agreement signed in late 2015.

However, Egypt's relations with Arab fellow Qatar and regional power Turkey remained tense in 2016 due to the two countries' host of fleeing Brotherhood loyalists as well as their support of Morsi and criticism of Sisi.

As for Iran, Cairo refrains from normalizing ties with Tehran that have been severed since 1979 despite recent warm statements of Iranian officials. Still, they both share support for the Syrian regime against armed rebels they refer to as terrorists.

Egypt's clear position on Syria and support for President Bashar al-Assad angered its strong oil-rich Gulf ally Saudi Arabia, which led Gulf states excluding Qatar to support Sisi with billions of dollars and tons of oil supplies since Morsi's removal.

Riyadh criticized Cairo's vote in October for two rival Syria-related United Nations Security Council (UNSC) draft resolutions including one proposed by Russia, whose troops are currently assisting Assad's army in Syria. A sign of tension later appeared when a Saudi national oil company suspended its fuel shipments to Egypt.

Having a U.S.-sponsored peace treaty since 1979, ties between Egypt and Israel, the U.S. number one ally in the Middle East, are seen at best under Sisi, with the two states coordinating security measures at the border lines of the restive northern part of Egypt's Sinai Peninsula.

On Friday, the UNSC massively endorsed a resolution demanding immediate and complete halt of Israeli settlement activities on occupied Palestinian territories.

Egypt, which initially proposed the draft resolution, attempted to delay the whole vote, which was seen as response to a bid from the U.S. President-elect Donald Trump, yet the Egyptian foreign ministry later explained that the requested delay was only meant to make sure veto right will not be exercised against the resolution.

As for relations with the United States, the mutual praise between President Sisi and Trump indicates closer ties between Cairo and Washington when the American business tycoon takes over the White House in January. Endit