Egypt has enough foreign exchange on hand to cover six weeks’ of its imports (US$7.8 billion in liquid reserves, against a $5.5 billion monthly import bill). It would have run out of cash in June except for emergency loans from Saudi Arabia, which backs the Egyptian military but abhors the Muslim Brotherhood, whose candidate Mohammed Morsi won Egypt’s presidential election last month. Total reserves are listed at $15 billion, but this includes gold, International Monetary Fund (IMF) drawing rights and other non-liquid items. The economic context is necessary to make sense of Egypt’s politics: it points to an important conclusion,...
