Egypt offered $12 billion in aid, but money seen as temporary solution to long-term problems
CAIRO (AP) — A promise of $12 billion in aid from wealthy Arab Gulf nations would give Egypt's new military-backed leadership breathing room by paying for vital food and fuel imports. But the benefits would be only temporary, because Egypt's broken economy remains unrepaired.
More than two years of political turmoil, violence and deterioration in security have frightened away tourists and foreign investors. Just as harmful, badly structured subsidies on food and fuel eat up almost a third of Egypt's strained budget.
The most recent round of violence, when more than 50 supporters of ousted Islamist President Mohammed Morsi died in clashes with the military on Monday, is likely to ripple through the economy, spreading doubts over the new leadership's ability to provide stability.
A key demand among millions of people who demonstrated against Morsi was better living conditions. Little improved when he took office a year ago, after poverty, rampant corruption and crony capitalism propelled millions to join the youth-led uprising against President Hosni Mubarak in 2011.
Morsi inherited critical economic problems, and the economy deteriorated further under his one-year rule. The Egyptian currency lost more than 10 percent of its value against the dollar this year, unemployment rose to 13 percent and his government relied on handouts from sympathetic neighboring countries to survive.
Copyright 2013 The Associated Press.
Posted on Fri, July 12, 2013