Mohamed Morsi's presidency in Egypt was brought down by his failure to turn the country's ailing economy around after a year in office. But turning Egypt's foreign-aid and foreign-investment dependent economy around in the context of a global economic crisis and on the back of a revolution was never going to be easy. Regardless, for him and the Muslim Brotherhood this failure was the main reason for their undoing, illustrating the extent to which weak economies throughout the Global South continue to exist at the mercy of global institutions such as the IMF.
The Egyptian economy under the Mubarak dictatorship had been heavily reliant on tourism, which as part of a services sector comprising shipping, banking, and trade accounted for around 50 percent of GDP in 2012. Agriculture accounted for 14.7 percent and industry 37.4 percent.
Mubarak had implemented aggressive economic reforms to make the country an attractive home for foreign investment throughout the first decade of the 21st Century. But along with Egypt's tourism industry this was contingent on the maintenance of stability and security in the most important and populous Arab country in the region - a region commonly perceived to lack both. The corollary to this, of course, was that Egypt's stability and security under Mubarak was the product of a decades-long brutal dictatorship under which dissent was mercilessly crushed and torture was commonplace. The role of the western powers and businesses in propping up this dictatorship was key to its ability to survive for so long, another example of the rank hypocrisy of our so-called champions of liberal democracy.
By the time Morsi came to power as the nation's first ever democratically elected president, Egypt had experienced a drastic fall in both foreign investment and tourism revenues, leading to a 60% drop in foreign exchange reserves, a 3% drop in growth, and a rapid devaluation of the Egyptian pound. All this led to mushrooming food prices, ballooning unemployment and a shortage of fuel and cooking gas..
In order to arrest the slide towards complete economic collapse, Morsi needed to obtain loans and sources of investment as a matter of urgency. His first port of call was the IMF, who'd been in the process of negotiating a $3.2billion loan request from the previous regime before it was swept from power in 2011. Morsi wanted this loan increased to $4.8billion. However the IMF predicated the granting of any such loan on spending cuts, specifically cuts to the food and fuel subsidies to the poor, which still account for 3% of Egypt's GDP. In addition Egypt's massive state sector - which absorbs a further 40% of GDP - was also in the sights of the IMF, an institution whose neoliberal nostrums have wrought havoc throughout the Global South since the 1970s, eloquently documented by Canadian journalist Naomi Klein in her peerless work - The Shock Doctrine.
Morsi and the Muslim Brotherhood - a president and an organisation identified with the needs of the poor - refused to countenance cuts that would worsen their plight, though no doubt also anticipating an eruption of anger throughout the country if they had. In turn the IMF loan was stalled and Morsi was forced to try elsewhere. Loan requests to Germany and Russia were turned down, which left Egypt's regional allies as the only remaining source of desperately needed funds.
Qatar and Saudi Arabia loaned around $3billion each over the year of his presidency, Turkey loaned $1billion, and Libya $2billion, while Washington continued its annual subvention to the country of $1.5billion, much of which goes to the military in an arrangement that Morsi, for tactical reasons of trying to keep the generals mollified, did not interfere with.
But this was not enough to halt the growing crisis. Egypt's currency had fallen 12% against the dollar since December 2012, making the importation of wheat, fertiliser, fuel and animal feed upon which the country depends more expensive. The result was a spike in food prices and a contraction in consumption of everything except basic foods and necessities in a country in which over 43% are living in poverty. Egypt's central bank had been relying on its foreign currency reserves to plug the gaps in the economy since the Mubarak era, but those had shrunk by 60% since the revolution and this was abandoned. With unemployment officially standing at just over 13% but thought to be closer to 20%, including 82% of young people aged 15-29, Egypt's economic crisis had turned into a social and political time-bomb.
It exploded on June 30 with the start of mass protests, leading to the military coup that deposed Morsi a few days later.
The point is that events in Egypt have to be understood in the context of a global economic crisis that has hit nations of the Global South particularly hard. These are societies in which poverty is endemic and where millions exist on a day to day basis. Mass protests in Turkey and Brazil are part of the same crisis of neoliberalism - an economic model that is no longer sustainable. Morsi's crime when it came to Egypt's economy was not so much mismanagement as his refusal to administer austerity on Egypt's subsidy-dependent poor, as prescribed by the IMF and the international community, at the beginning of his presidency.
There are reports that towards the end of his time in office he had been about to engage in further negotiations with the IMF and may have been willing to accede to its demands for cuts in spending. But if so it was too late, as by then even many of his supporters had abandoned him and the Muslim Brotherhood to its fate. The irony is that even though Morsi's government had tried to protect Egypt's poor from the austerity demands of the IMF, global economic factors ensured that their plight - rising prices, shortages, and deepening poverty - grew steadily worse under its leadership.
In sum, the lesson to be drawn from the fate of Mohamed Morsi's presidency is an old one, articulated by none other than Napoleon Bonaparte over two centuries before: 'When a government is dependent upon bankers for money, they and not the leaders of the government control the situation'.