25 July 2012
As Egyptians Google the name of their unknown Prime Minister to find out more about him, the economic ills of the country are well-known to all.
"That awkward moment when you have to Google the name of your Prime Minister to find out who the heck he is!!," tweeted Rasha Abdullah, an associate professor at The American University of Cairo.
Perhaps that was the plan: for once Egyptians were at a loss for words to describe a local politician because they had never heard of him before.
No matter. From Googling his name. Egyptians will very quickly have his name on the tip of their tongues, as Mr. Qandil goes through the rapid cycle of instant fame on social media.
President Mohammed Morsi of the Muslim Brotherhood handpicked the unknown independent Hisham Qandil who had earned his stripes as the minister of irrigation and water resources in the governments of Essam Sharaf and Kamal El-Ganzouri.
An engineer with a PhD in water and irrigation, Mr. Qandil has been propelled to centre-stage and charged with the task of fixing the economy and social order, while the President and the Supreme Council of Armed Forces (SCAF) lock horns on a whole host of political issues.
Mr. Qandil has promised to assemble a technocratic government "in days" in collaboration with the President. It's unclear how much power the new prime minister will wield.
The western media was quickly impressed that the new prime minister was 'U.S.-educated' - Mr. Qandil had earned master's and doctoral degrees at the University of North Carolina - and the secular media noted with suspicion that he had a light beard even if he was not aligned with Muslim Brotherhood. Meanwhile, the pro-Muslim Brotherhood media noted with some satisfaction that he had a light beard.
It could well be that the unknown 'patriotic and independent figure' was picked for his middle-of-the-road outlook.
"New Prime Minister Hisham Qandil is a career technocrat who will find favour among Egypt's political forces as a neutral figure with the necessary government experience," said Oxford Analytica in a note. "Divisions will instead arise over distribution of the cabinet posts between the military and the Muslim Brotherhood, which will demonstrate the extent to which the military is prepared to step back from power."
The political machinations have distracted policymakers from focusing on the economy and led to rising frustration among Egyptians.
And there is probably more dismay to come as the stand-off between the military and Morsi's Muslim Brotherhood complicates the formation of the new government, say analysts. The Brotherhood expects half of cabinet seats, while the military is seeking to retain control over the ministries of defence, interior and justice.
Bank of America Merrill Lynch says the Muslim Brotherhood and SCAF will continue to fight over three key issues: the constitution, presidential powers and future parliamentary elections.
"This is already been seen in the standoff regarding the possibility of reinstating the parliament," said Turker Hamzaoglu and Jean-Michel Saliba, analysts at BAML. "Egypt is unlikely to have a functioning parliament, Constitution and president before year-end, in our view. Also, note that courts are looking into the Constituent Assembly and MB's dissolution, though the decisions are being pushed back recurrently."
ECONOMIC WORRIES
The Egyptian stock market didn't take kindly to the appointment of the new Prime Minister either, falling by a full per cent, in sharp contrast to Mr. Morsi's election when it had soared.
While the politics has taken centrestage, there are great pressing issues for the new prime minister to contend with. An Associated Pres report focused on the lawlessness and breakdown of service that has angered Egyptians.
That's just a part of greater macroeconomic challenges facing the country.
"The second half of 2012 will be decisive for the US$/EGP and domestic interest rates as meaningful financial support continues to hinge on the IMF loan and on international acceptance of Morsi's leadership," notes a report from Cairo-based Pharos Research. "Indeed, the longer the period of power struggle with limited or no foreign capital inflows, the more likely is the move towards a tighter monetary policy and import controls and the higher the probability of a disorderly EGP depreciation, if all tools are exhausted."
Time is not on Egypt's side due to its weak external balance and the low level of foreign exchange reserves, warns BAML. While the Central Bank of Egypt can hold the fort till the fourth quarter if Saudi Arabia continues it support, it may not be sustainable in the midst of political paralysis.
The country's 12-month trailing current account deficit had risen to USD6.7-billion by March 2012, and with the tourism still not firing on all cylinders, that figure is likely to have increased since then.
Net international reserves stood unchanged at USD15.5-billion in June due to revaluation of gold (conducted annually in June) and the issuance of a USD 500-million in USD-denominated Treasury bills. Meanwhile, foreign exchange reserves (excluding gold) fell by USD500-million to an all-time low of USD12.2-billion, equivalent to 2.3 months of import cover.
"With Dr. Morsi as president, the MB is likely to drop its opposition to the [USD3.2-billion] IMF package, which was largely due to political reasons, and open the door to IMF negotiations," say BAML analysts. "However, the constitutional vacuum, potential political standoffs and the lack of parliament or clearly defined presidential powers could likely delay the program further. On GCC aid, MB's diplomatic engagement would be needed to release the pledges."
Mr. Qandil, who reportedly briefly worked at the African Development Bank until 2011, was part of a team that wrote a report on Food Security in Africa.
Read the report here:
That encouragingly suggests he has expertise in key social and economic issues facing resource-scarce countries. He may not have name-recognition just yet, but he could quickly earn a good name for himself by helping resource-scarce Egyptians. © alifarabia.com 2012
