Friday, September 20, 2013

Egypt returns $2 billion to Qatar in sign of growing tensions: Reuters analysis Relations between both Arab states Egypt and Qatar are souring in the wake of crackdown on Muslim Brotherhood in the North African country

Egypt returns $2 billion to Qatar in sign of growing tensions: Reuters analysis
Relations between both Arab states Egypt and Qatar are souring in the wake of crackdown on Muslim Brotherhood in the North African country
Reuters , Friday 20 Sep 2013
CBE governor
Egypt Central Bank's governor, Hisham Ramez (Photo: Al-Ahram)
Egypt has returned $2 billion that Qatar had deposited with its central bank, after talks to convert the funds into three-year bonds broke down, central bank Governor Hisham Ramez said on Thursday.
Egypt authorities have also refused a Qatari request to increase the number of flights between the two states, according to Egyptian airport sources, in a further sign of rising tension between the two Arab Muslim states.
Cairo's relations with Qatar deteriorated after the Egyptian army deposed Islamist President Mohamed Morsi on July 3 following massive uprisings flocked to the streets nationwide demanded the Islamist President to leave.
Qatar had been a firm backer of Morsi's Muslim Brotherhood and lent or gave Egypt $7.5 billion during the year he was in power.
Qatar had sent Egypt $3 billion in May, of which it converted $1 billion into three-year bonds.
Ramez told Reuters in a telephone interview that the Qatari authorities had agreed to convert the entire remaining $2 billion but then changed their minds.
"They wanted to postpone it, then they said they would do it like they announced last time, and then they came back with some amendments, doing part and postponing the other part for a time, which we found not suitable for us," he said.
"So we just repaid the deposit."
On July 1, Egypt converted the $1 billion into three-year bonds at 3.5 percent interest and in May it converted another $2.5 billion of Qatari loans into 18-month bonds at 4.25 percent interest. The bonds were listed on the Irish stock exchange.
Since Morsi's ouster, Saudi Arabia, Kuwait and the United Arab Emirates have pledged Egypt $12 billion in grants and interest-free loans.
"I would assume they are fairly relaxed about their short-term finances and they can rely on aid from other Arab countries," said Simon Kitchen, a Cairo-based strategist with EFG Hermes.
Egyptian officials have said that the loss of the Qatari funds would not affect the country's financial situation during the budgetary year that began on July 1.
An official in the Qatari finance ministry said it respected Egypt's decision, according to the state news agency. It also said negotiations had failed after Egypt asked for the full amount to be changed into bonds in one move while Qatar wanted this to be done in stages.
Egyptian-Qatari relations
Egypt's refusal on Thursday to increase the number of flights between the two states "came in reaction to the recent escalations between Egypt and Qatar after Egypt returned the $2 billion deposit of Qatar," one airport official said.
The official said that during Morsi's rule the Qatari airlines had run more flights but not EgyptAir, harming the Egyptian company's profits.
"This deal is expected to be scrapped soon as well," the source added.
Qatar condemned last month's attack by Egyptian security forces on Muslim Brotherhood supporters camps in Cairo in which hundreds were killed and has asked for the release of jailed Muslim Brotherhood leaders. At least 2,000 Islamist activists, mostly from the Brotherhood, have been arrested in the past two months.
Egypt called Qatar's pro-Morsi comments clear interference in its affairs. Local media accused Qatar of seeking to take over Egypt's historic regional leadership role.
Egyptian authorities have closed the Cairo offices of Qatar's Al Jazeera news channel, accusing it of siding with Morsi, and two Al Jazeera journalists have been detained for over a month.
Obama: Raising The Debt Ceiling Will Not “Promote Profligacy” Posted By Philip Hodges on Sep 20, 2013 | 6 Comments Obama used to think that raising the debt ceiling was irresponsible and unpatriotic. That’s what he said when he was a Senator and when he was campaigning for President the first time around. Now, his position is the opposite. It’s irresponsible and unpatriotic for the GOP not to agree to raise the debt ceiling. Not agreeing to raise the debt ceiling must mean that you’re in favor of defaulting on our debts. Try using that argument with your own bank regarding your credit card. Just call them up and tell them that you know that you’ve gone past your credit limit, but that they really have no choice but to raise it so that you can continue to borrow and spend. Tell them it’s not open to debate. Besides, you’ve promised lots of people and businesses money, and you have an obligation to make due on your debts. They wouldn’t want you to default, would they? That would be immoral of them to force you to default on your debts to others. And you could add that raising your credit limit wasn’t going to cause you to spend more. And besides, it’s been done so many times in the past; what’s one more time? It’s not going to “promote profligacy,” as Obama put it recently at a Business Roundtable speech with regards to the national debt limit: “Now, this debt ceiling — I just want to remind people in case you haven’t been keeping up — raising the debt ceiling, which has been done over a hundred times, does not increase our debt; it does not somehow promote profligacy. All it does is it says you got to pay the bills that you’ve already racked up, Congress. It’s a basic function of making sure that the full faith and credit of the United States is preserved. It’s always a tough vote because the average person thinks raising the debt ceiling must mean that we’re running up our debt, so people don’t like to vote on it, and, typically, there’s some gamesmanship in terms of making the President’s party shoulder the burden of raising the — taking the vote.” Who’s he trying to fool? Raising the debt limit won’t “promote profligacy?” (Profligacy…that’s a big word for you, Obama.) Profligate government spending would’ve never been possible without always resorting to raising the debt ceiling. That and depending on endless “money from nothing” from the Federal Reserve. Raising the debt limit in and of itself doesn’t increase spending. That’s technically true. But it’s what allows the government to spend how ever much it wants to fund bigger and bigger departments and programs. It’s what allows the government to buy large voting blocs. It does indeed promote profligacy.

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