U.S. officials expressed "serious concern" yesterday about the impact of security police riots on the government of Egyptian President Hosni Mubarak, whom they described as already facing "very tough" decisions to reverse a "bleak" economic situation.
Officially, State Department spokesmen continue to express "full confidence" in Mubarak's government and its ability to handle the immediate crisis, widely regarded here and in Egypt as the toughest challenge for an Egyptian leader since bread riots erupted in Cairo in January 1977.
Privately, however, they voiced deep concern about Mubarak's ability to come to terms with Egypt's deteriorating economic situation caused by sharply falling revenues from oil exports, tourism, Suez Canal traffic tolls and remittances from Egyptians working abroad.
Even before this week's police riots, apparently spurred by rumors that the three-year terms of duty will be extended a year, intelligence analysts were sounding the alarm about general trends in Egypt.
They cited increasing danger to Mubarak from renewed Islamic fundamentalist activity, a bolder leftist opposition, recent setbacks in foreign policy and his government's failure for four years to master economic and financial problems.
U.S. officials said the current crisis is likely to make Mubarak even more cautious about tough decision-making on economic policy issues, a stance that would aggravate the situation.
"We do feel the situation is quite bleak," one official said. "At the highest level, there doesn't seem to be an appreciation of the seriousness of the problem or of what the solution should be."
About the only way the United States can help, the officials said, is to expedite release of the last $150 million of $500 million in supplementary aid approved for Egypt last year. That sum is in addition to the regular appropriation of $2.1 billion for this fiscal year.
The Mubarak government has been talking with the International Monetary Fund about obtaining a standby loan. But U.S. officials questioned whether Mubarak, in the wake of this week's difficulties, will be willing to take the risks inherent in imposing the stringent economic reforms demanded by the IMF as a condition of such a loan.
Complicating the Egyptian internal economic and political situation, they said, has been Prime Minister Ali Lotfi's absence from the country for most of the last two months.
Appointed last September, Lotfi went to London in early January for medical treatment of a slipped disk, returning only two weeks ago. His health problems sparked press reports abroad that he might be replaced and that the government was heading for a political crisis.
Egypt has a $32.5 billion foreign debt and is about $450 million and 11 months in arrears on its $4.5 billion military debt to the United States. The recent collapse of oil prices has hit Egypt particularly hard, forcing a production cutback of 200,000 barrels a day from 870,000 and halving its export of crude oil to a little more than 100,000 barrels a day.
One U.S. official estimated that Egypt's oil revenue, its main source of hard currency income together with workers' remittances, may drop this year by $700 million to $800 million from last year's $2.1 billion earnings. Income from tourism has also decreased sharply.