History tells of many regimes that fell after the collapse of their national currency and hyperinflation, which is usually connected to it, especially in Latin America. There, shops would sometimes stop writing down the price of merchandise because they could not keep up with spiralling prices. They would only put an index on it or its price in another currency that is relatively stable, such as the dollar, which is known in economic terms as 'dollarisation,' or accept the dollar in transactions alongside or in place of the national currency.
This in effect ends all pretence of national economic independence, and, in the Arab region, Lebanon is an example of complete dollarisation.
Anyone who understands the priorities of the economy knows that Egypt’s economy and the fate of Egyptians are closely linked to the exchange rate of the Egyptian pound against foreign currencies, especially the dollar. One of the most catastrophic effects of the authoritarian regime on Egypt and its people is the transformation of the economy into a series of disconnected unregulated markets and monopolies that are excessively dependent on foreign economies, mostly of the West, without strong and growing production capabilities.
Thus, it traded in imported or locally produced goods that use up a large percentage of their end value in the cost of equipment, raw materials and other intermediary imported goods. This weakened the Egyptian pound against foreign currencies which directly raises the price of all goods and services in Egypt. Merchant greed, in the absence of a government capable of regulating the market dynamic, causes the price of goods to rise at rates higher than the value of foreign currencies.
Accordingly, the devaluation of the local currency stokes a ferocious inflationary rise causing the prices of goods and services to soar. Those with fixed income from wages or pensions are the worst affected by prohibitively high prices, and their misery is compounded when wages and pensions are already low. This means a sharp drop in their standard of living – which is already low.
A depreciation of the local currency is expected to increase the export of locally made goods if they are high quality or unique. But this advantage becomes irrelevant when the buying power of exports is less than the cost of imports, meaning that to acquire the same amount of imports this requires a larger volume of locally made exports.
Thus, the serious depreciation of the local currency in economies that are critically linked to the outside results in catastrophic repercussions on the soundness of the economic structure and the standard of living for citizens. It is no surprise that a drop in the value of the local currency and resulting catastrophes contribute to the fall of regimes that were unable to safeguard the economy and interests of their citizens.
As everyone is aware, the Egyptian pound today is quickly depreciating; the exchange rate is close to LE7 to one dollar. There have been no serious initiatives by governing bodies to take steps to end the economic slump through a genuine renaissance project or building production capabilities; rather, there is a strategy of borrowing, begging and selling assets to find resources for the regime's current spending that is mostly wasteful and sometimes foolish.
If this continues, it will be no surprise if the Egyptian pound easily disintegrates to half its value or LE12 to one dollar in 2013. This would be a sharp drop under an Islamic regime that has only been in power for a relatively short time. If this misfortune happens, it would be the second sharpest depreciation of the Egyptian pound in history during two decades.
The first sharp drop to half the value was about one decade ago when the criminal Gamal Mubarak issued orders by phone from the US capital to deposed Prime Minister Ahmed Nazif to lower the value of the Egyptian pound against the dollar by half, as per the request of the US Treasury and the IMF. Implementing these orders was equal to ordaining the son of the deposed tyrant as emperor over the Egyptian economy and heir to the senior despot.
Today, the second sharp drop in the value of the pitiful Egyptian pound is being carried out also at the behest of the close allies, the IMF and the US Treasury. It is being done in a gradual, twisted and sly manner under a regime that is addicted to pretending that it does not succumb to orders from overseas. But if it honestly didn't take orders from abroad, then its failure to manage the economy is an even greater sin and it should be removed from power.
The most that the Islamist prime minister says is 'God willing, the dollar value will drop soon,' as if he were putting a curse on the dollar and its people because his government has failed. Instead, the cabinet should adopt a series of policies and programmes capable of overcoming the current crisis and reviving the economy and country. When he bothered to talk about a programme to jumpstart the economy, he gave more ammunition to the people to joke about the government and regime that appointed it and insists on keeping it in place despite its clear and compounded failure.
He said that his cabinet had started working on a programme to jumpstart the economy based on seven pillars, and it has accomplished the first one. The New Year's surprise is that the first pillar was tourism – it is a sector that everyone knows is almost dead and unlikely to recover in the near future, as long as Islamists continue to divide the people and curtail their rights and freedoms, and in the absence of security while Salafist fanatics are making the lives of tourists hell.
If this is the condition of the first pillar that the honourable government has accomplished, then we beseech them to leave the economy and society alone and ask for God’s mercy under their rule.
While Egypt was already suffering unemployment and rampant chronic poverty to begin with, the inevitable outcome of this flagrant and growing economic failure is widespread poverty and social injustice. We should not forget that these ailments were the key causes of the first wave of the glorious people's revolution in January 2011. Other causes were restrictions on freedoms, civil and political rights and police brutality.
The Islamist regime has not improved the last two causes either, but made them worse through tyrannical and arrogant policies after reaching power. There is also mounting evidence that the Islamist regime insists on muting voices, restraining freedom of opinion and expression, and stifling opposition mass protests through policies that curb the right to assembly and peaceful protest.
It all seems similar to the signals of the regime which the people's revolution rose up against but has yet to eliminate completely, because the Islamist regime insists on maintaining the essence of this despicable regime including its institutions and methods – and even some of its figures.
All these reasons are enough cause to overthrow the Islamist regime in the next wave of the people's revolution. Judging by this regime's failures, it will not be long, and they have no one but themselves to blame.
