The cost of a coup

Amidst tragedy, there's also an economic cost.

Consequences of Egypt’s summer coup will be, and already have been, devastating. That is one thing most people, apart from the Egyptian military, agree on. However, while commentators view consequences through the lens of religious clashes, political views and death tolls, a thought must be given to the economic consequences because, after all, a coup isn’t cheap.

Take a quick look at the figures:  A graph showing Egypt’s stock market looks like the course of a turbulent plane. Before it was forcibly closed under a state of emergency, the plane was about to crash – it was down 1.7 per cent. The Egyptian pound has also fallen 2.35 per cent since Morsi was over thrown.

Things look even worse according to the FT: General Motors, Toyota, royal Dutch Shell and Electolux have closed their factories. "Yesterday we just felt it was a bit too messy in the streets" commented Electolux. Banks are also closed, including Citigroup and HSBC as they express concern over a "further significant deterioration in the security situation".

Things look bad now, but will be even worse if the game of political check-mate continues, and blacker still if the US cuts all aid to Egypt, as argued by Senator John McCain. "The law is very clear that if there is a coup that aid is cut off", he said to the BBC.

So who will pay the bill for the 3 July coup? There are more lenders than you may think. Critically, $12bn has already been secured by the military backed government from coup-supportive Gulf countries, notably Saudi Arabia. Then there are always the Wonga’s of the world: the IMF and World Bank.

But a third source of funding has opened up: China. Trade volume between China and Arab countries has surged from less than $36bn in 2004 to nearly $200bn in 2011. An article this week in Your Middle East explains how: "The ravages of unrest in MENA [Middle East and North Africa] have enabled China to tap into major infrastructure projects because supply routes have been disrupted and electrical installations have been dilapidated".

The consequences of Egypt’s summer coup could well be shaped by economic choices as much as political.

The Egyptian pound has also fallen 2.35 per cent since Morsi was over thrown. Photograph: Getty Images

Oliver Williams is an analyst at WealthInsight and writes for VRL Financial News

Photo: Getty
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Who will win the Copeland by-election?

Labour face a tricky task in holding onto the seat. 

What’s the Copeland by-election about? That’s the question that will decide who wins it.

The Conservatives want it to be about the nuclear industry, which is the seat’s biggest employer, and Jeremy Corbyn’s long history of opposition to nuclear power.

Labour want it to be about the difficulties of the NHS in Cumbria in general and the future of West Cumberland Hospital in particular.

Who’s winning? Neither party is confident of victory but both sides think it will be close. That Theresa May has visited is a sign of the confidence in Conservative headquarters that, win or lose, Labour will not increase its majority from the six-point lead it held over the Conservatives in May 2015. (It’s always more instructive to talk about vote share rather than raw numbers, in by-elections in particular.)

But her visit may have been counterproductive. Yes, she is the most popular politician in Britain according to all the polls, but in visiting she has added fuel to the fire of Labour’s message that the Conservatives are keeping an anxious eye on the outcome.

Labour strategists feared that “the oxygen” would come out of the campaign if May used her visit to offer a guarantee about West Cumberland Hospital. Instead, she refused to answer, merely hyping up the issue further.

The party is nervous that opposition to Corbyn is going to supress turnout among their voters, but on the Conservative side, there is considerable irritation that May’s visit has made their task harder, too.

Voters know the difference between a by-election and a general election and my hunch is that people will get they can have a free hit on the health question without risking the future of the nuclear factory. That Corbyn has U-Turned on nuclear power only helps.

I said last week that if I knew what the local paper would look like between now and then I would be able to call the outcome. Today the West Cumbria News & Star leads with Downing Street’s refusal to answer questions about West Cumberland Hospital. All the signs favour Labour. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.