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Egyptian Military, Opposition Clash as Economic Outlook Grim
December 11, 2011

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Heading into the second of three rounds of parliamentary elections, Egypt is no closer to showing a clear picture of what is to come, with disputes between the military and expected members of the parliament trading accusations while outside analysts fret over the economic potential of the country.

During the weekend, the ruling military council sent out conflicting messages regarding the future of the government. The Supreme Council of the Armed Forces at first reiterated its role as the ultimate arbiter of a president and government, an announcement that drew the ire of many opposition leaders, including spokesman for the Muslim Brotherhood, the political party scoring highest in the first round of parliamentary elections. A second statement from the generals came later during the weekend and was the reverse of the first, saying that the generals would not interfere with the makeup of the new government, which is not expected to be finalized until June 2012, after the presidential election.

The Muslim Brotherhood won 36 percent of the votes in the first round of elections. Coming in second, with 24 percent, was the Al-Nur Party, a very conservative political party whose main goals include a more strict interpretation of Islamic law within Egypt's legal structure. Among the things that some Al-Nur leaders have talked about banning are normal beach clothing such as bikinis and swim trunks and even co-ed beaches, meaning that men and women (including children) couldn't be on the same beach at the same time. 

It is that kind of signal that has foreign economic investors worried because the tourism industry in Egypt brings in nearly 10 percent of the country's income. Tourism revenues have fallen precipitously since the unrest that led to Mubarak's resignation and have been slow to resume. Egypt, which depends as well on a lot of foreign investment, could well be in for a drop in that as well, analysts fear. About 15 million tourists visited Egypt last year.

The nine provinces voting in the first round of parliamentary elections included Cairo, Alexandria, and some of the more urban areas. The remaining 18 provinces include some large cities, such as Suez, but also include some of the most conservative areas in the country. Members of Al-Nur and other conservative political parties are expected to do even better in the last two rounds of elections. So far, the Muslim Brotherhood has promised a more moderate approach to new laws, with an eye toward retaining revenues.

Already, Egypt is facing hard times. The country, the world's biggest wheat importer, recently borrowed $1 billion from the army. The energy sector is in disarray after years of suspect money management, and the country's overall budget features a very large deficit. Facing that set of economic problems, including a rapidly shrinking level of foreign reserves, a newly elected president and parliament would presumably be very reluctant to pursue revenue-gaining measures such as tax increases.



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