Egypt witnessed a massacre of its own people this morning.
At least 42 people died at a pro-Morsi gathering near the Republican Guard headquarters, and 300 more are injured. The protesters were conducting a sit-in and had just finished morning prayers when the military littered the crowd with gunfire. A majority of those killed suffered gunshots to the head. While many parts of this story remain ambiguous—whether a terrorist organization played a role or if a protester sparked the attack—it is clear that Egypt is far from the United States’ calls for “all parties to work together peacefully to address the many legitimate concerns and needs of the people and to ensure Egypt has a government that is responsive to the aspirations of the millions of Egyptians who have taken to the streets to demand a better future.”
While the United States does not formally support either Morsi or the military, we must remember that the US gives “aid” to Egypt, and by aid I mean $1.5 billion a year to the Egyptian military. Who do you think our sunk costs would dictate we support?
In fact, no matter what happens in Egypt, we must remember that the Arab Spring protests originated over jobs, particularly youth unemployment. Now, one major reason for ousting Morsi is because Egypt’s economy has been in free fall. With a fattened state and weakened private sector, someone has to be the benefactor for most of Egyptian salaries. That someone is still us.
In the past, Egypt has turned to Gulf States for financial aid. However, it looks like that cashflow isn’t coming. Borzou Daragahi reports, “The central bank announced on Sunday that the country’s foreign currency and gold reserves had dropped to $14.9 billion at the end of June, down from $16 billion a month earlier and $36 billion at the start of the January 2011 uprising against Hosni Mubarak.” Egypt is in desperate need of a patron. However, the United Arab Emirates promised Egypt $3 billion but never followed through. Saudi Arabia had been a huge backer, but will likely decline to do so again given the kind of street violence seen this morning. Qatar has pledged $8 billion, but those funds have “likely dried up.”
Where is Egypt to turn? The International Monetary Fund.
No matter who ends up in power, Egypt will need aid or a loan to survive. The IMF is set to give Egypt a $4.8 billion credit line once the coup is over. After that, Washington has promised an additional $1.55 billion, but “under U.S. law, the administration can’t loan money to countries where the military is involved in an unconstitutional change in government.” In other words, no matter what happens, Egypt will belong to the IMF.
It is no secret that the United States has the IMF in its back pocket. The US controls such a majority of the vote that it has veto power. Businessweek reports, “The U.S. has a 16.75 percent voting share, giving it veto power over major IMF decisions, which require a supermajority of 85 percent.” Washington controls the IMF, which will, in turn, control Egypt.
The calls for intervention in Egypt are laughable. The United States should sit this one out. It does not matter who ends up in power in Egypt because, no matter what, we hold the purse strings. Like any good mobster, we can enforce our worldview on our debtors—in this case, specifically, “This [democratic] process must also ensure that the rights of all Egyptian men and women are protected, including the right to peaceful assembly, due process, and free and fair trials in civilian courts.”
The United States should sit back and allow the events in Egypt play out because our influence in the region will remain unchanged. Hell, it might even be a good thing to pull money from Egypt’s military, but Congress isn’t quite ready for that yet. We might want the world to have democracy, but it’s not something that the US can do with military aid. However, we can spur it along with our coin.