1. A new situation Since the fall of the iron curtain some twenty years ago, no popular uprising has met with so unanimous global sympathy as that in Egypt at the beginning of 2011. For nearly two months Cairo's Tahrir Square was the focus of Arabian democratization – a process that started with the fall of Tunisia's Ben Ali regime, and continues to shake the region until today. Egyptian President Mubarak was certainly not the most ruthless among Arab dictators. However, he obviously was the one with a great talent for diverting public resources into his private coffers. Estimates of assets stolen by himself and his family reach up to US-$ 70 bn.1 Much faster than usual, financial centres, including Switzerland, froze identified assets of the former president. The amounts discussed in relation to the former dictator's private properties, represent nearly one third of Egypt's annual GNI. Thus, those numbers reveal the economic risks, which are associated with the transformation to democracy, but also the huge potential for an economic take-off, which a "democratisation dividend" may provide to the Egyptian people. Additionally Egypt faces economic risks through democratisation, which are unrelated to the ex-dictator’s private fortunes:
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inevitably the weeks of social turmoil have implied disruptions in economic activity, as well as (more limited) destruction through the fighting between demonstrators and the regime's security forces;
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disruption to tourism, which is one of the most important hard currency earners in the Egyptian economy.
Politically, the breathtaking changes in Egypt itself were followed by equally fast changes in the behaviour of the traditional donors and creditors of the Mubarak regime: The friendship with the guarantor of a relative stability in the conflictive Middle East disappeared practically over night and gave way to a wide-spread enthusiasm among European leaders for the Egyptian people, who so bravely fought for their freedom. That ultimately raises the question whether this U-turn will also imply that the newly democratising society can also expect a comparable or even enhanced material support from their admirers. Given the huge amounts spent by Mubarak on an exorbitant military and on his personal well-being, there may indeed result a considerable fiscal space for Egypt's development if external support continues to come in and can be spent on more worthwhile purposes. The treatment of Egypt's foreign debt is one important sub-item of this crucial question. 1. Data and Indicators At first sight, it does not look particularly important, however. The most important debt indicators, which the World Bank has made available for end-2009, as the latest year with coherent data, do not look very alarming. The three most common indicators "total external debt to gross national income" (EDT/GNI), "total external debt to annual export earnings" (EDT/XGS) and "total external debt service to annual export earnings" (TDS/XGS) are considerably below commonly applied thresholds for critical debt levels.2 Indicator
Egypt
Threshold
EDT/GNI
17,6%
40%
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http://www.jubileedebtcampaign.org.uk/Nick%20Dearden%20blogs%20from%20the%20World%20Social%20For um+6744.twl 2
Data from World Bank: Global Development Finance 2011. Regarding the logic of threshold indicators applied see: erlassjahr.de: Schuldenreport 2011, S. 6-18
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