Egyptians protest El-Sisi as living standards plummet

Dubai — It took an unlikely trigger to get Egyptians back on the streets of Cairo to protest against President Abdel-Fattah El-Sisi’s government.

More than eight years after Egypt’s uprising against then-leader Hosni Mubarak, and reeling under worsening living standards, hundreds of people defied a ban on demonstrations in several major cities late Friday. The apparent inspiration: a series of online videos by a fledgling actor and former government contractor alleging corruption all the way to the top.

While small, the very existence of the protests was a stark reminder of simmering disquiet in the country of 100-million that’s seen a crackdown on political freedoms since the 2011 uprising. The Arabic Network for Human Rights Information said on Monday that at least 370 people have been detained in the aftermath. El-Sisi, an ally of US President Donald Trump, has dismissed the allegations as baseless.

Any instability could mean further turmoil for Egypt’s economy and its reputation among emerging-market investors. The benchmark EGX 30 index fell 1.1% as of 1.54pm in Cairo. That extended a slump of 5.3% on Sunday, the most in a session since June 2016.

“It’s not so much the size of the demonstrations, it’s that they are happening at all,” said Mohammad Darwazah, a director at Medley Global Advisors. “It’s significant because this regime has a zero-tolerance policy for dissent. But when you shut down all institutions that can provide a release valve, frustration will inevitably grow.”

El-Sisi, who was elected after overthrowing and jailing an Islamist president amid mass demonstrations in 2013, is the latest leader in North Africa to face street anger. In nearby Algeria, demonstrators are demanding regime change long after the ouster of veteran leader Abdelaziz Bouteflika, and in April Omar Al-Bashir was overthrown by Sudan’s military amid widespread discontent.

The protests, which were eventually broken up by tear gas, took many by surprise, including activists who participated in the 2011 revolt, as well as state-run media, though there’s little indication whether the action will snowball into further unrest.

In a video from self-imposed exile in Spain, Mohamed Ali, who’s appeared in Egyptian films and says he owns a construction firm with links to the military, hailed the protests he’s been urging. He has called for more on Friday.

“Didn’t Sisi see what happened yesterday?” he said in a dispatch posted Saturday on social media, the latest in a series that has gone viral. He speculated that the Egyptian leader “must be confused now and doesn’t know what to do.”

Stability in the Middle East

Egypt, the most populous country in the Arab world, has long been seen as key to stability in the broader Middle East. The 2011 downfall of Mubarak rippled across the region, bringing turmoil in its wake. After the army’s overthrow of an elected president from the Muslim Brotherhood, Gulf Arab nations poured in money to assist a government that had routed one of the region’s major forces of political Islam.

A 2016 devaluation of the Egyptian pound was a precursor to the sweeping economic programme that helped seal a $12bn International Monetary Fund (IMF) loan. Egypt has since became an emerging-markets darling for bond investors chasing high yields. But there was a price.

Egyptians increasingly complained about soaring living costs, with the poverty rate climbing to 32% in 2018 from 28% in 2015. Meanwhile, the government slashed fuel and electricity subsidies and looked for more tax revenue to plug the budget gap. Real incomes, adjusted for inflation, fell compared to 2015 levels.

Goldman Sachs said on Monday that the weekend’s events may cause investors to reprice near-term political risks in Egypt, though it didn’t believe the demonstrations presaged unrest such as that seen in 2011 and 2013.

The protests “serve as a reminder of the potential risks to social stability emanating from the decline in living standards among a large proportion of Egyptians in recent years, combined with widely reported allegations of corruption in the ruling political and military elite,” Goldman economist Farouk Soussa said in a note. Should political and economic uncertainties rise, then the central bank may have reason to hold interest rates on Thursday, he said.

El-Sisi has repeatedly called for patience and said he appreciates the economic stress Egyptians are under. At the same time, he’s warned there’s no room for anyone to try undercut the “new country” he’s trying to build.

In his videos, Ali addresses issues such as shortfalls in education and healthcare, but in the process, he breaks many taboos linked to Egyptian politics. In his latest, he described the protests that followed a widely watched soccer match on Friday as a “revolution”.

Punctuating almost every sentence with insults directed at El-Sisi, he alleges the waste of billions of pounds in building palaces, hotels and other projects, either for his family or benefiting his backers. Similar claims were among the drivers of the protests that saw Mubarak booted from office after nearly 30 years in power.

El-Sisi has addressed the claims directly, saying such buildings are for the nation, not for him. He’s accused people of trying to reverse the gains made by Egypt since he took power.

“For the time being, investors and the international community are likely to wait and see what happens this week and next Friday, in terms of protests,” said HA Hellyer, senior associate fellow at the Royal United Services Institute and the Carnegie Endowment. “Few will be assuming radical change, but will still keep a close eye for the next few days.”

Bloomberg