Fragile Egypt economy overshadows Mursi's vote win

Mon Dec 24, 2012 2:13am EST
 

By Edmund Blair

CAIRO (Reuters) - Egyptian President Mohamed Mursi will have little time to savor victory in pushing through a new constitution as it may have cost the Islamist leader broader support for urgent austerity measures needed to fix the creaking economy.

By fast-tracking the constitution through to a referendum that the opposition said was divisive, he may have squandered any chance of building a consensus on tax rises and spending cuts that are essential to rein in a crushing budget deficit.

Unofficial tallies from Mursi's Muslim Brotherhood showed the charter was approved by a 64 percent majority. But opponents said he lost the vote in much of the capital, while across the nation he alienated liberals, Christians and others worried by the text that was drafted by an Islamist-dominated assembly.

Opponents say such divisions will fuel more unrest in a nation whose economy has been pummeled by turbulence since Hosni Mubarak was overthrown almost two years ago, scaring off investors and tourists that are both vital sources of capital.

Without broad support, Mursi's government will find it harder to implement reforms needed to secure a $4.8 billion loan from the International Monetary Fund. The Muslim Brotherhood's party, which propelled Mursi to office, may also face a tougher fight in a parliamentary election expected in about two months.

"For austerity measures to be made at a time when the political system is being opened and millions of people are being enfranchised, you need political consensus within the political class," said Amr Adly, an expert on the economy.

Yet, even though there is broad acceptance of the urgency of fixing the battered economy, Adly said Mursi's approach in pushing through a constitution that angered opponents would encourage his rivals to capitalize on any public backlash against austerity rather than help sell reforms to the nation.

"His political rivals are already dealing with these problems on a very opportunistic basis," said Adly, head of the social and economic justice unit at the Egyptian Initiative for Personal Rights. "There won't be any prospect of ending ... violence in the streets or very deep political divisions."   Continued...

 
Policemen stand guard near a banner outside the constitutional court put up by supporters of Egyptian President Mohamed Mursi as they stage a sit-in, in Cairo December 23, 2012. Mursi will have little time to savour victory in pushing through a new constitution as it may have cost the Islamist leader broader support for urgent austerity measures needed to fix the creaking economy. The banner reads, "We support you against corruption!" REUTERS/Khaled Abdullah