EIGHT months ago, Abdel Fattah al-Sisi hosted an investment conference more than 2,000 delegates from 112 countries at the Red Sea resort of Sharm el-Sheikh, intended to woo investors and show the world that Egypt was back on track after years of political turmoil.
The mood was bullish, pledges worth $40bn in aid and investment was promised by Kuwait, Saudi Arabia and the United Arab Emirates and others; the government even announced plans to build a brand new city a few kilometres east of Cairo, intended to ease congestion in the chaotic capital.
But this week Sisi returned to Sharm el-Sheikh, and the mood was decidedly darker.
Hundreds of tourists are lining up at the airport, waiting to be evacuated after 224 people died in a Russian plane crash in Sinai, that was claimed by the Islamic State’s affiliate in Egypt. Russia confirmed last week a bomb was responsible for the Metrojet Airbus A321’s fall out of the sky.
Tourism is among the country’s biggest foreign-currency earners along with the newly expanded Suez Canal, Sisi was anxious to reassure visitors that they would be safe.
But the jet crash is only the latest incident in a country whose economy is looking increasingly shaky, and highlights Sisi’s growing vulnerability and the limits of the authoritarian governance model – it only works when you have something tangible to give the people in exchange for narrowed political space.
A former army general, Sisi shot to prominence in a military-backed public uprising against Mohammed Morsi in 2013 and assumed power as the leader to reboot the economy and quash militants.
But today, cash is short, worsened by recent tourists cancellations. U.K. airline Easyjet said on Tuesday it extended the suspension of services to Sharm El-Sheikh until Jan. 6 in line with a rolling British government ban on flights to the resort.
Foreign currency reserves are less than half the levels before protesters flooded Cairo’s Tahrir Square in January 2011, calling the departure of long-serving ruler Hosni Mubarak.
A weakening Egyptian pound is spurring inflation already headed toward double figures in urban areas. The Cairo stock index is the worst performer in the world this quarter after battle-scarred Ukraine and is down 35% this year in dollar terms.
“Egypt is facing a very tough economic situation, partly because of the government’s own policies but also because of regional events outside its control,” said Mohamed Kamal, professor of political science at Cairo University. “The people need to be told that this is not going to be easy. Otherwise, we will find ourselves in a very risky situation.”
Unthinkable last year
The cracks are beginning to show. In the wake of the jet crash, there have been rare attacks on El-Sisi from mainstream media, something almost unthinkable last year when he won 97% of the vote in a presidential election.
In a televised speech to a packed auditorium in Cairo on Nov. 1, Sisi snapped, directing a tirade at a talk show host who had questioned the handling of recent flooding in the northern coastal city of Alexandria.
In a calmer performance 10 days later in Sharm El-Sheikh, he said the worst that could happen is that Egyptians go hungry for the sake of building their country. It didn’t play well.
“I don’t need someone to make light of what’s happening in the country,” said Ahmed Essam, a 31-year-old cook in Cairo. “What we need is real change and progress, not just talk of hunger. We’re already hungry.”
Roll back eight months, and the mood in Egypt was still one of optimism. While Sisi warned that he did not have a magic wand, expectations in the nation of almost 90 million ran high. Rallies in support of Sisi often resembled rock concerts after the toppling of the Muslim Brotherhood and Morsi, whose year in office was marked by street clashes between Islamists and secularists and an economy reliant on aid from Qatar.
To show progress, Sisi plowed on with several mega projects. Under the stewardship of the military, the expansion of the Suez Canal was completed in July, right on schedule. He also worked to lure back foreign investors. The March conference in Sharm-el-Sheikh yielded commitments from companies such as Siemens AG as well as Gulf Arab money.
Egyptian officials now blame the predicament on a conspiracy of events, with Britain and Russia both restricting tourists and raising questions over airport security. The travel and tourism industry contributed $36 billion to the country’s economy last year, about 13% of GDP, according to the World Travel and Tourism Council.
The government’s response “to these challenges has been one of denial and doubling down on failed policies,” said Yasser El- Shimy, a Boston University research fellow. “All of these factors undermine President Sisi’s ability to maintain his tight grip over government, his unrelenting crackdown on critics of all stripes and his costly ‘war on terror’ against Islamists.”
-Additional reporting by Alaa Shahine and M&G Africa Writer.