Two major Western news outlets have slammed the economic policies of Egyptian President Abdel Fattah al-Sisi in recent weeks, saying they rely too much on the "Gulf injection" of financial assistance, while repeating the oft-made claim that Egypt’s failing economy is the president's fault.
Both Bloomberg and The Economist have published articles deeply critical of Sisi's economic management, sparking angry responses from the Egyptian government. A reply from the Foreign Ministry spokesman accused The Economist of deliberate bias and a failure to consider Egypt's difficult social and political conditions.
Bloomberg posted an editorial on its website on Tuesday blaming Egypt's economic downturn on Sisi's poor management, saying that the current crisis cannot be blamed entirely on terrorist attacks that have wrecked the tourism industry.
With high unemployment and soaring inflation, Bloomberg said that the $12 billion loan package on offer from the International Monetary Fund (IMF), which is aimed at rescuing Egypt from an economic slump, is likely to be "good money thrown after bad."
The unemployment rate in Q2 of the fiscal year 2016 jumped to 12.5 percent of the labor force, while inflation reached 14.8 percent in July, according to official data.
In its editorial, Bloomberg claimed that, despite receiving billions of dollars Gulf aid, there had been no improvement in the Egyptian economy since Sisi came to power. It said the trade deficit had reached 7 percent, while the budget deficit was 12 percent of GDP. This last figure is huge compared to the 4.4 percent budget deficit in Tunisia, a country which experienced similar conditions since the Arab spring, said Bloomberg.
The Bloomberg report blamed Sisi for pouring money into into megaprojects of "‘dubious merit", including the expansion of the Suez Canal. It said the money had been "squandered", when it would have been better spent on vital basic infrastructure.
“Fortunately, his dream of building a brand-new, $45 billion capital city seems to have been set aside,” Bloomberg said, referring dismissively to the planned construction of a new administrative capital to the east of Cairo.
Backing Clinton, slamming Sisi
The US-based media group is owned by Michael Bloomberg, former mayor of New York City. He is reportedly the sixth richest man in the United States and eighth richest in the world, having made millions on Wall Street and providing financial information services.
The business and media tycoon was previously tipped as a possible US presidential candidate and has backed Hillary Clinton in the 2016 US presidential elections.
Tuesday's editorial acknowledged that some of Egypt's slump can be blamed on the collapse of tourism since the start of the Arab Spring, with the general slump compounded by the Russian plane crash in Sharm el-Sheikh in October 2015 and the mysterious crash of an EgyptAir plane in May 2016.
However, the article laid most of the blame on Sisi’s government, saying it had failed to keep various promises — including tax increases, reducing fuel and agriculture subsidies and a program to reduce red tape — saying the necessary changes had been started and then stopped.
Bloomberg also said the government's efforts at controlling the value of the Egyptian pound relative to the US dollar had been a failure.
“Now the IMF is asking Sisi again to devalue the Egyptian pound and to impose a value-added tax,” Bloomberg said.
The US-based news organization went on to list the apparent impact on living conditions in Egypt, saying that around a quarter of Egyptians live in poverty, while roughly the same number are illiterate. It also highlighted a likely water shortage within a decade due to population growth, poor agricultural practices and "a bad deal struck with neighbors upriver," an apparent reference to the Grand Ethiopian Renaissance Dam.
“The education system is atrocious,” the article said, claiming that Sisi announced in 2014 that the country needs 30,000 new teachers but did not provide the budget to hire them.
IMF loan 'mostly cosmetic'
Returning to the issue of the IMF loan, which is in the process of being given final approval, Bloomberg said that IMF officials "practically admitted that the new package is mostly cosmetic."
The Bloomberg report urged the IMF, along with the Gulf nations, to insist on "real reform".
"Egypt can once again be a place worth investing in — but before that happens, a lot will have to change,” the report said, urging more investment in basic infrastructure, such as roads, schools and water-supply systems, while facilitating loans for small and medium-sized enterprises.
The report also recommended the break-up of "military-industrial monopolies in everything from washing machines to olive oil," a reference to sectors in which the Egyptian military has investments.
“It also needs to end the crackdown on civil society, and move toward a free and fair presidential election,” the report said.
The Economist points the finger
Bloomberg is not the only major Western news source slamming Sisi's economic management. On August 6, The Economist, published an article with fewer nuances, stating that the Egyptian economy was dependent on “cash injections” from Gulf States as well as ongoing US aid.
The London-based current affairs magazine listed projects that Sisi had promised but allegedly not delivered on, among them the new administrative capital and the developement of the Suez Canal zone.
The Economist article sparked outrage from the Egyptian government.
Foreign Ministry Spokesman Ahmed Abu Zeid, published a blogpost on the ministry website titled “the Ruining of the Economist” — a pointed response to The Economist’s series of articles titled “The Ruining of Egypt”.
“I was shocked and surprised to read the latest issue of The Economist, which featured a series of articles about Egypt under the theme "The Ruining of Egypt”. As a leading magazine in economic and financial analysis, one would expect from The Economist to provide objective, informed analysis that focuses on evaluating and assessing the merits of Egypt’s economic policies over the past few months,” writes Abu Zeid.
Abu Zeid said that The Economist’s analysis of Egypt seemed to have been conducted in a vacuum, failing to take into consideration important factors that continue to affect the Egyptian economy. He points out that Egypt has been in a state of crisis since January 2011, a crisis that has proven itself very expensive indeed.
'Shallow' and 'biased' analysis
Abu Zeid said The Economist’s analysis of Egypt’s economy is shallow and that a “deep, credible analysis would have taken into consideration Egypt’s political turmoil.”
The ministry spokesman wrote, “President Sisi does not micro-manage Egypt’s institutions and does not create economic policy in a vacuum; he is surrounded by institutions and consultants, an independent central bank and a cabinet of professionals that are in charge of decision-making in this area.”
He went on to point out the government's new economic plan for Egypt, which was endorsed by Egypt’s parliament, and which Abu Zeid described as the most progressive economic plan in Egypt’s history.
Turning to the IMF loan, the spokesman said Egypt’s new deal with the IMF is itself evidence that the economy is on the right track and moving forward.
“It is important to understand that Egypt’s economic plan might not bear fruit overnight; its benefits go well beyond mere numerical economic returns. Social and political dimensions are taken into consideration. Lessons learned from the past are being applied to ensure that this time growth would benefit all Egyptians, and not just a few, so as to safeguard the political durability of the reform plan,” he wrote.
Abu Zeid heatedly defended the Egyptian government, saying that despite the political turmoil in the region and severe economic challenges, the government has been able to steer a suitable course through the dangers. He said the process is ongoing, expressing his optimism regarding Egypt’s economic success.
Abu Zeid ended his post by accusing The Economist of deliberate bias, saying that if their criticism was meant to be constructive, it would have been phrased differently and with better intentions.
“It is obvious that The Economist has chosen to take sides with those bent on undermining Egypt. We hope that in the interest of maintaining its credibility, reputation and professionalism, The Economist will be less reductionist and biased in the future,” he wrote
Abu Zeid finished by saying that Egyptians do not need to be patronized or insulted.