First Fighting Islamists, Now the Free Market

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CAIRO -- Hamdeen Sabahi was the most popular leader in the fight against Egypt's new Islamist-backed constitution. Now he is preparing for his next battle: against Islamist leaders' plans for Western-style free-market reforms.

Do not listen to your allies in the Muslim Brotherhood, Mr. Sabahi said he warned President Mohamed Morsi, of the Brotherhood's political arm, in a private meeting a few weeks ago. "Because the Brotherhood's economic and social thought is the same as Mubarak's: the law of the markets," Mr. Sabahi said he had told Mr. Morsi, referring to Hosni Mubarak, the former president. "You will just make the poor poorer, and they will be angry with you just as they were with Mubarak."

Mr. Sabahi, 58, a leftist in the style of another former president, Gamal Abdel Nasser, frightens most economists. He is an outspoken opponent of free-market economic moves in general as well as of a pending $4.5 billion loan from the International Monetary Fund that economists say is urgently needed to avert a catastrophic currency collapse.

But to the dismay of some Western diplomats, Mr. Sabahi is emerging as an increasingly salient voice in Egyptian politics, in part because of the bruising race to ratify the Islamist-backed charter. Both sides now expect the anti-Islamist opposition to reap big gains in the coming parliamentary vote, set to be held in two months against the backdrop of a simultaneous debate over the I.M.F. loan.

Among Egypt's opposition figures, Mr. Sabahi has the biggest base of support in the streets. After campaigning as a dark horse in the spring's presidential election, he missed the runoff by fewer than a million votes, finishing the first round almost neck and neck with Mr. Morsi.

Economic overhaul now poses a critical test of Egypt's fragile democracy. Without enough trust in government, the changes to the systems of taxes or subsidies needed to reduce the deficit could easily stir new unrest in the streets, just as such moves have in the past. But if Mr. Morsi expects his opponents to hold their fire just because economists say the need is dire, Mr. Sabahi said, the president should think again.

"Why support him, for what?" Mr. Sabahi said in an interview in the borrowed offices of an Egyptian film director, decorated with pictures of President Nasser but also of Che Guevara. "Is he a democratic ruler, is he a revolutionary? Is he a model of a president, so I want him to succeed?"

Mr. Sabahi, 58, known for writing poetry and quoting Arab literature and for his blow-dried hair, was one of the few non-Islamist politicians willing to endure imprisonment alongside the members of the Muslim Brotherhood in the struggle against Egypt's autocracy, giving him a unique credibility among more secular leaders.

But after missing the presidential runoff this year, Mr. Sabahi declined to endorse either Mr. Morsi or his opponent, Ahmed Shafik, a former Mubarak prime minister. It was a choice between "tyranny in the name of the state" and "tyranny in the name of religion," Mr. Sabahi said at the time in a television interview.

Mr. Sabahi argued in the interview that although Mr. Morsi won election democratically, he has failed to govern as a democrat. "He is kicking away the ladder he climbed," Mr. Sabahi said, arguing that Mr. Morsi's decree setting his authority above the courts, if only for a month, ended his credibility as a democrat.

The resulting discord between the Islamists and their opponents has postponed the I.M.F. loan and helped bring Egypt closer than ever to economic collapse. State media on Tuesday described a "dollarization frenzy" gripping the country as people raced to sell Egyptian pounds. The currency is at its lowest level in the past eight years.

Since Mr. Mubarak's ouster, Egypt's hard currency reserves have fallen to $15 billion from $43 billion as it has struggled to prop up the pound, and economists say the government now urgently needs a cash infusion of about $14 billion in order to stay afloat. The $4.5 billion I.M.F. loan is expected to act as a seal of approval for others, after the I.M.F. concludes Egypt is at least on a path to greater balance.

If that loan does not come through soon, "the risk is a disaster," said Heba Handoussa of the Economic Research Forum. "We can't afford to wait."

There are other more Western-friendly faces of the opposition, like Mohamed ElBaradei, the former United Nations diplomat, and Amr Moussa, the former foreign minister. But neither has Mr. Sabahi's following at the grass roots, and he speaks for a segment of the Egyptian public deeply suspicious of free markets and, especially, the I.M.F. A popular singer, El Manawahly, has even recorded a song and music video opposing the loan. "Oh monetary fund / Show me how to industrialize, plant and kneel."

Mr. Sabahi insists the I.M.F. loan would be unnecessary if the country followed his radical prescriptions to turn away from Western economic orthodoxy. In addition to steeper annual taxes on the rich, Mr. Sabahi is calling for Egypt to meet its deficit with a one-time 20 percent tax on the wealth of anyone with more than about $17 million, which he says is about 1 percent of Egyptians.

He is calling for a ban on all exports of raw materials, including the important commodities of natural gas and cotton, so they can be used for domestic production. He proposes to increase fees on businesses that use natural resources as well as on real estate and stock market transactions. And at the same time he wants to expand Egypt's already bloated public sector to create more jobs for the poor.

Like others who came together to oppose the Islamist-backed constitution, Mr. Sabahi said the coalition would now work through all peaceful means to bring it down. Election regulators on Tuesday night confirmed the results of the referendum approving the new charter, with 64 percent voting yes. Mr. Sabahi said his main complaint with the document was the failure to guarantee "binding social and economic rights" for the poor.

Although he acknowledged strong disagreements with some business-friendly parties in the coalition, he said he hoped that it would campaign as a bloc for Parliament and reverse the Brotherhood's majority there.

"Then it will all be good: the president from the Brotherhood, and the Parliament and cabinet from the democratic and national forces," Mr. Sabahi said. "Then the country will be fixed."

Mr. Morsi, he argued, does not know how to appeal to Egyptian populism. "Egypt needs a president who inspires Egyptians, who tells them, 'Tomorrow will be beautiful, just be patient with me today,' " he said. "Why do the poor endure? They endure because of hope. But Morsi doesn't understand the story, and he doesn't know how to do it."

He added: "He only gives sermons after Friday prayers. After 14 centuries as Muslims, he teaches us religion! Uncle, we want to eat, we want jobs. But no, his mind is elsewhere."

Mayy El Sheikh contributed reporting.

world

This article originally appeared in The New York Times.


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