Lending to Repression, Again

By Cam McGrath

"CAIRO, Jan 18, 2012 (IPS) - For three decades Western governments and lending institutions bankrolled a corrupt regime in Egypt that trampled human rights and stifled democracy. Now they appear ready to do it again, say critics of the military council that has ruled since removing president Hosni Mubarak last February.

"Foreign aid should not be used to support a repressive regime," says Amr Adly, political economist at the Egyptian Initiative for Personal Rights (EIPR). "It’s in nobody’s interest to throw Egypt’s economy into a deeper crisis, but international creditors have to be quite strict when it comes to transparency."

Western governments and development banks provided billions of dollars in loans and grants to Egypt during Mubarak’s 30-year rule while paying lip service to the financial corruption and human rights abuses attributed to his regime. Watchdog groups say a large portion of this aid lined the pockets of regime cronies or funded economic and development programmes that stripped the country of its resources and drove disenfranchised Egyptians deeper into poverty....

The generals have authorised Fayza Aboul Naga, the Mubarak-appointed minister of planning and international cooperation, to resume negotiations with the IMF on a 3.2 billion dollar loan facility. An IMF delegation was in Cairo this week to discuss the terms.

Many Egyptians are deeply concerned about the impact foreign lending will have on the country’s heavy debt servicing burden. Central bank records show that Egypt must pay nearly 3.4 billion dollars a year just to cover the interest on the 35 billion dollars in external debt run up during Mubarak’s rule. ...."