For example Egypt’s foreign currency reserves in January 2011 were $ 36 billion. They now amount only to $ 15.2 billion.
In March alone the reserves decreased by $ 600 million, mainly as a result of the absence of tourists.
Saudi Arabia and the Arab Emirates, who financially supported Egypt during the Mubarak regime, are now putting up political conditions in return for their financial aid. As a result tensions between Saudi Arabia and Egypt have increased as well, resulting in a full fledged crisis when Saudi Arabia arrested an Egyptian lawyer on his arrival in Ryad. Following demonstrations at its embassy in Cairo Saudi Arabia closed down its diplomatic missions in Egypt and recalled its ambassador
The recent attempts by the International Monetary Fund (IMF) to lend Egypt $ 3.2 billion have failed because the Egyptians were not able to agree among themselves on the IMF’s conditions for providing the loan.
After discussing the conditions of the loan for about two and a half weeks, the IMF delegation returned to Washington empty handed.
A spokesman for the IMF said afterwards that Cairo should first mobilize broad political support before the loan could be approved.
In the absence of sufficient foreign aid, the Egyptian army, which owns a conglomerate of companies and factories, was forced to step in and provide emergency aid to the people as well as the government.
Recent polls show that a majority of the Egyptian people are against the IMF loan, mainly because of misunderstandings about the financial reserves of the state.
It is generally believed that Mubarak and his family have stacked away more than $ 70 billion in foreign banks, and that Egypt therefore doesn’t need any external financial help. However, so far there has been no evidence for this theory.
At present, Egypt has less than $ 9 billion dollars in current reserves, which equals two months of imports of essential necessities for the population.
IMF president Lagarde has already made it clear that the loan of $3.2 billion will no longer be enough to solve the worst problems.
Israel
In Israel, developments in Egypt are being followed with great concern. Israel not only worries about the political developments in Egypt but also about the increasing terror threat from the Sinai desert.
Recently the gas pipeline to Israel was blown up for the fourteenth time since January 2011. Shortly before that terror attack two Grad rockets were fired at Eilat from the Sinai desert (even though the Egyptian government denied this).
This was followed by an Egyptian announcement that the gas supply treaty with Israel had been canceled.
At this moment there is still coordination between the Egyptian army and the IDF on issues that are related to controlling anarchy and terrorism in the Sinai desert.
The fear is, however, that this situation will change after the transfer of power by the SCAF.
At the moment the Muslim Brotherhood seems not to be interested in a direct change of the status quo with Israel. This mainly has to do with the internal crisis in Egypt.
The Brotherhood is aware that Egypt is currently unable to risk a conflict with the international community if Egypt were to cancel the Camp David peace agreement with Israel.
However, Amos Gilad, the director of the political and strategic affairs department of the Israeli Defense Ministry, recently warned against wishful thinking and made clear that the Muslim Brotherhood sees Israel as part of Islamic property (Waqf).
He also pointed out that the Egyptian parliament already wanted to break ties with Israel when Israel responded to rocket attacks on southern Israeli towns from Gaza.
Furthermore, only two months ago the Muslim Brotherhood threatened to cancel the peace agreement with Israel. This happened when the U.S. considered cutting its aid to Egypt when 43 Western activists were not allowed to leave Egypt on grounds that they received illegal foreign funding for their activities in Egypt.
With two leading Islamist presidential candidates that are backed by the Muslim Brotherhood, chances are high that Egypt will vote an Islamist into the office of president. This will undoubtedly be followed by an Islamist constitution.
All this means that Egypt could rapidly replace Iran as the biggest threat to Israel and Middle East peace in general. As Middle East expert professor Barry Rubin recently wrote: ‘the situation in Egypt is a world-class crisis in the making’.
