Gulf states step in with billion-dollar lifeline for Egypt

Egyptian source: UAE agrees on $1 billion in aid, $2 billion in loans; Saudi Arabia may lend a further $2 billion.

By REUTERS
July 9, 2013 17:01
3 minute read.
Saudi Arabia's Abdullah welcomes Egypt's Morsi

Saudi Arabia's Abdullah welcomes Egypt's Morsi. (photo credit: reuters)

The United Arab Emirates has agreed to grant Egypt $1 billion and lend it another $2 billion, an Egyptian source said on Tuesday, throwing it a financial lifeline after the army ousted the country's Islamist president last week.


The source also said Saudi Arabia may lend Egypt another $2 billion, which he expected to be confirmed within two days.

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Egypt's finances have been devastated by political and economic instability since the popular uprising that pushed Hosni Mubarak out of the presidency two and a half years ago.

The UAE's $3 billion was expected to be part of a larger financial package from the Gulf emirate, said the source close to the talks. The loan would be in the form of a deposit at Egypt's central bank, although the interest rate and maturity had yet to be finalized.

UAE Foreign Minister Sheikh Abdullah bin Zayed and National Security Adviser Sheikh Hazza bin Zayed flew to Cairo on Tuesday morning at the head of the most senior foreign delegation to visit Egypt since the overthrow on Wednesday of Mohamed Mursi.

He became president a year ago in Egypt's first freely contested election.
The delegation was coming to "show full support to the people of Egypt - political support, economic support," Egypt's foreign ministry spokesman Badr Abdelatty said earlier.

With turmoil driving away foreign investors and tourists, Egypt is running dangerously short of cash to provide the subsidized bread and fuel that its 84 million people rely on. Egyptian newspapers, mainly controlled by the state or by Morsi's opponents, described Monday's violence as the result of terrorism by Morsi's supporters.

Meanwhile, Egypt's interim rulers issued a faster than expected timetable for elections to try to drag the country out of crisis, a day after 51 people were killed when troops fired on a crowd supporting Morsi.


The streets of Cairo were quiet on Tuesday but Morsi's Muslim Brotherhood movement called for more protests later in the day, raising the risk of further violence.


Under pressure to restore democracy quickly, Adli Mansour, the judge named head of state by the army when it brought down Mursi last week, decreed overnight that a parliamentary vote would be held in about six months. That would be followed by a presidential election.


In an important positive signal for the transitional authorities, the ultra-orthodox Islamist Nour Party said it would accept ex-finance minister Samir Radwan as prime minister, potentially paving the way for an interim cabinet. The stakes were raised dramatically by the bloodshed on Monday, the worst since Morsi was toppled by the military. The army opened fire outside Cairo's Republican Guard barracks where the deposed leader is believed to be held.


The bloodshed has also raised alarm among key donors such as the United States and the European Union, as well as in Israel, with which Egypt has had a US-backed peace treaty since 1979. Officials said troops fired in response to an attack by armed assailants. The protesters disputed that account, insisting they were conducting peaceful dawn prayers.


Mansour decreed that Egypt will hold new parliamentary elections once amendments to its suspended constitution are approved in a referendum. In what appeared to be an olive branch to Islamists, the decree included controversial language put into the constitution last year that defined the principles of Islamic sharia law.

The UAE - long skeptical of the Brotherhood - had pledged billions in aid to Egypt after the fall of Mubarak but held the money back during Morsi's year in power. 

The West has had a harder time formulating a public response, after years of pushing Arab leaders towards democracy while at the same time nervous about the Brotherhood's rise. Demonstrators on both sides in Egypt have chanted anti-American slogans, accusing Washington of backing their enemies.

Washington has refrained from calling the military intervention a "coup" - a label that under US law would require it to halt aid. It called on Egypt's army to exercise "maximum restraint" but has said it is not about to halt funding for Egypt, including the $1.3 billion it gives the military.



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