Most observers have been paying close attention to the exciting dynamics of Egypt's ongoing political crisis, which unfolded following the president's constitutional declaration last month. The Muslim Brotherhood seemed anxious to finish the transitional period at any cost. The short-lived declaration pitted the president against the judiciary, the secular bloc and revolutionary groups, together with considerable segments of old-regime loyalists. The president's choice of calling for a referendum on the finalized draft constitution just added to the clash with those political forces. Hence, Egypt appeared to be facing the severest-ever political crisis in the post-Hosni Mubarak era. Many questions were raised about future arrangements with the military, the security forces and the US, and whether Mohamed Morsy — the country's first freely elected president — would eventually face Mubarak's fate. The crisis is still on despite the president's second constitutional declaration and the affirmation of the referendum date within less than a week. The Brothers are likely to pass the contested draft constitution using religious propaganda, as they hope this will bring stability to the country and thus enable them to close their grip on the state. The problem with all that is that it doesn't seem to be logical enough. The Brotherhood's decision to finalize the transitional period at any cost has a lot to do with the country's deteriorating economy and the dire need to put the country back on the path of economic recovery. This year has been the second year without growth in a row. Egypt's growing balance of payments and budget deficits and its ever dwindling foreign reserves are all quite alarming to the new ruling alliance of the Brothers and old military and civilian bureaucratic circles. There is a conviction among these that the drafting of a constitution and election of parliament are prerequisites for economic recovery via attracting foreign investment and credit. Morsy's economic team has stated that Egypt's recovery depends on injecting about US$14 billion into the economy in the coming year or two. Strikes and other forms of socio-economic and political protest have to come to an end. Egypt's loan with the International Monetary Fund (IMF) is expected to be concluded in the not very far future. Accordingly, the treasury is to disburse the first tranche (about $1 billion) in January. The government has handed in its economic program to the IMF, which contains very clear austerity measures. According to the program, the country's fiscal and financial readjustment will depend mainly on higher indirect taxes, lower subsidies and local currency devaluation. Morsy has already issued a host of laws and decrees that raise the prices of electricity, natural gas and gasoline, in addition to a new scheme to rationalize the distribution of butane gas canisters — though he has at least temporarily backed out of those decisions. The pound was considerably devalued before the dollar in the last three months from about LE6 to about LE6.11. The exchange rate is likely to be 6.25 by the end of December. All measures indicate that Egypt is about to witness one of the harshest austerity programs in its contemporary history, which happens, ironically, to coincide with one of its deepest political crises and the breakdown of its long-standing police state. Harsh austerity measures are often associated with military coups or dictatorships. It is unlikely that a newly elected majority with a democracy that is still in the making could politically afford the imposition of such measures. The Brothers have one of two options: Either they opt for oppressive measures to overcome the political reaction to austerity, or form a broad conservative coalition that can lend them support. The problem with the first option is that the Brothers' main asset lies in an open political system in which their electoral machine can spin. Moreover, they don't possess enough power to repress all forms of protest, and such a role can be performed only by the military. Hence, the only option that the Brothers had was to forge a broad, middle-class, conservative coalition that may adopt austerity measures and invest in making the poorer classes pay for the price of the economy's readjustment. According to that immaterializing scenario, the Brothers should have reached out to their liberal rivals and definitely to the elements of law enforcement within the state, including the judiciary. However, this did not happen. Rather, the Brothers are in the middle of a big fight with these very particular groups that share the same rather neo-liberal stance with them over the terms on which the transitional period is to end. As Egypt's economic and fiscal crisis tightens, more austerity measures will be taken in the short term, with a high political cost for the Brothers. The Brotherhood's middle class and equally conservative rivals will try to make the best out of these looming crises to improve their lot in the approaching elections and to bleed more popularity from the Brothers. The scene looks too messy, and it suggests that the political representatives of the upper and middle classes in Egypt have decided to commit collective suicide. Amr Adly is director of the Social and Economic Justice Unit at the Egyptian Initiative for Personal Rights. He has a PhD in political economy. This piece was originally published in Egypt Independent's weekly print edition.
