In the interim, the Brotherhood appears unlikely to abandon exclusivist rule. Morsi's latest round of cabinet appointments further expanded the number of Brotherhood-affiliated ministers without adding any from non-Islamist parties, and he has rebuffed opposition demands to remove the interior and information ministers. Moreover, the officials who will lead the negotiations with the International Monetary Fund (IMF) for a $4.8 billion loan are all Muslim Brothers.
This polarization will significantly inhibit Egypt's economic recovery for the foreseeable future. Morsi's apparent focus on consolidating the Brotherhood's power is contrary to the IMF's insistence on more inclusive governance, which the agency views as necessary for ensuring broad political support for any loan. In addition, persistent political tension and civil strife will deter foreign investment and keep tourists away, leaving Egypt reliant on petrodollar infusions (e.g., from Qatar and Libya) that are unlikely to continue flowing indefinitely. The cash crunch will also complicate government efforts to restore security, further compounding lawlessness and economic woes.
Meanwhile, the military does not appear willing or able to steer the country in a more positive direction. Although the armed forces are generally considered Egypt's strongest institution, the generals have repeatedly signaled their lack of interest in returning to power. They recognize that they performed poorly when they ran the country prior to Morsi's election, and they seem to know they are no more likely to succeed in governing than the Brotherhood given the extent of Egypt's challenges. In addition, the military's undemocratic nature makes it incapable of engendering the kind of broad consensus needed for reform.
U.S. POLICY RECOMMENDATIONS
Egypt's worsening economic and political frustrations, coupled with the state's declining ability to maintain order, make upheaval a strong possibility this summer and beyond. Washington should therefore focus on two goals.
First, it should continue encouraging Egypt's political actors to dial down the tension. This means telling the opposition not to give up on politics, since participation in the current system provides a more likely path to power sharing than calling for a "rebellion" against Morsi, which would only exacerbate the country's instability and further damage the economy. As for the Muslim Brotherhood, Washington should tell Cairo that the painful choices required by necessary economic reform (e.g., tax increases and subsidy cuts) make including the opposition and forging political consensus vital. U.S. officials should also point out that Egypt cannot rely on petrodollar infusions to sustain its shrinking cash reserves indefinitely, and that failure to institute vital reforms will ultimately lead its benefactors to view it as a bad investment.
Second, Washington should prepare for the likelihood that the Brotherhood and opposition will reject this advice, and plan for potential instability. In particular, the administration should focus on the three strategic interests that could be jeopardized:
1. The Egyptian-Israeli peace treaty, which may come under pressure if turmoil leads to greater violence from Sinai or more hostile populist politics from Cairo
2. The security of the Suez Canal, which recent civil unrest has already put at risk
3. Counterterrorism cooperation, given the recent emergence of Salafist jihadists in Egypt
Since the Egyptian military is primarily responsible for each of these items, the Obama administration should work with the generals to ensure that contingency plans are in place if the country's summer of discontent boils over.
