As Mubarak clings to power, Egypt suffers
Saturday, February 5, 2011; 9:53 PM
CAIRO - Nearly two weeks of political turmoil has taken a toll on Egypt's infrastructure and economy, with most businesses shuttered, banks closed and tourists avoiding the country as the crisis drags on.
Before the turmoil began, Tahrir Square was the busy center of this capital. But pro-Mubarak forces and anti-government demonstrators have turned the famed plaza into their battleground, as a global audience watches.
The district that includes Cairo's famous pyramids, an area usually bustling with nightclubs, casinos and shops, was ransacked by vandals and looters, who set fire to some of the establishments.
Egyptians have not been paid, and many are in need of cash.
While foreign investment is rising, the demonstrators took to the streets because many could not afford food in a country where opportunities are reserved for the elite. Almost half of Egyptians live at or below the poverty line.
But analysts say President Hosni Mubarak's strategy relies on allowing chaos to continue so that Egyptians will yearn for the stability that his iron-fisted and sometimes brutal style brought.
"The longer the demonstrations go, the bigger the risk that regime elements will undermine the revolution," said Shadi Hamid, an Egypt expert at the Brookings Doha Center. "They have total momentum, but they can't keep it up indefinitely."
In a small deli in the upper-class neighborhood of Zamalek, a group of friends debated what comes next for Egypt. This island in the Nile River has been largely untouched by the chaos taking place on the other side of the bridges that connect it to downtown.
"I'm really lost. I don't know what's wrong and what's right," said Nada Nassar, 25, who works in advertising and hasn't been paid since the crisis started. "I wanted [Mubarak] to leave, but now I don't know if things will be worse if he does."
"After 30 years of oppression, this is just a small price to pay," added Karim Khater, 30, wearing an argyle sweater and eating french fries. Mubarak "has a divide and conquer strategy. He managed to split the people's opinions."
The economic fallout may start to become clear Sunday when banks reopen for the first time in a week. Analysts said the country could face a flight of capital as investors and others pull money out of an unsteady system. The country has about $35 billionin foreign reserves, probably enough to keep the value of the Egyptian pound from falling too far, too fast - at least in the short term.
But protracted political paralysis or further violence could alienate foreign investors. Egypt attracted close to $10 billion in foreign direct investment last year and had based its economic plans on receiving a similar amount in 2011 and the years ahead.