Egypt on edge after first anti-Sisi protest for years

FILE PHOTO: Small groups of protesters gather in central Cairo shouting anti-government slogans in Cairo

CAIRO (Reuters) - Scattered protests in Egypt in the past few days highlight the risk that President Abdel Fattah al-Sisi could face broader dissent, driven by grievances over economic austerity and allegations of official corruption.

Just a few hundred took to the streets in Cairo and other cities last Friday, shouting "Leave, Sisi", after a series of videos by an activist accusing the government of corruption gained traction online.

The rare outburst of anger was enough to damage Egypt's image of stability under Sisi, who took power after removing President Mohamed Mursi in 2013 following mass demonstrations against the Islamist leader.

Investors have been unnerved by a call for further protests on Friday, with Egypt's dollar bonds falling and the main stock index wiping out its 2019 gains in just three days.

Authorities have meanwhile rounded up hundreds of suspects. Security forces have stepped up their presence in major cities and have been conducting spot checks of mobile phones for political content.

Sisi, in New York for the U.N. General Assembly, indirectly accused the outlawed Muslim Brotherhood of stirring up the protests, saying "political Islam" was to blame.

Analysts say it won't be easy to curb dissent without addressing its economic and political causes. Many Egyptians distrust government promises after three years of austerity agreed with the International Monetary Fund in exchange for a $12 billion loan.

Since then, Egypt has introduced valued-added tax, devalued the currency and raised the prices of electricity and fuel.


TURMOIL

Sisi remains popular among many ordinary people for stabilizing Egypt after the fall of Hosni Mubarak in 2011 led to turmoil that scared away tourists and foreign investors, and brought the public finances close to collapse.

But the austerity measures, which were accompanied by a crackdown on dissent, heaped pressure on many. The number of Egyptians living below the poverty line rose to 32.5% in the 2017/18 financial year from 27.8% two years earlier.

"What happened is a very serious warning, the situation is not totally under control," said Mohamed Zaree of the non-governmental Cairo Institute for Human Rights Studies.

He said most people who took to the streets were not members of organized political parties "which shows that there is public anger".

The protesters lack leaders, political affiliations and coordination, analysts said. The crowds were spontaneous, making the protests difficult to control.

"It's not clear whether protests will escalate or fizzle right now," said Michele Dunne, director of the Middle East Program at the Carnegie Endowment for International Peace. "But if not this week, protests are likely to return in the coming weeks and months."

Several Cairo residents said hardship was driving the protests, and they might join in if they could be sure of safety in numbers.

"It depends on the size of the protest. If many people join, I might too," said a driver who gave his name only as Abdallah.

"If numbers are too small it is too unsafe," he said before adding: "People are fed up."

A 40-year-old engineer who used to support Sisi until austerity started to bite said: "I will take part in Friday's protests. I'm unhappy with where the country is going."


VIDEOS

The protests came after videos posted from Spain by Mohamed Ali, a hitherto little-known actor and building contractor, were widely shared online. He accused Sisi and parts of the military of corruption and squandering funds on projects such as new presidential palaces.

Sisi denied the claims. State media have tried to discredit Ali's motives, and have broadcast pro-Sisi songs and reports on his achievements, while also warning against destabilisation.

This has not stopped other dissidents uploading videos discussing the security crackdown, corruption and poverty.

Ahdaf Soueif, an Egyptian novelist, said Ali's videos had struck a chord because he casts himself as a self-made man with a modest background.

"He is what the millions of young Egyptian men with brains and ambition and a sense that the dice are loaded against them would wish to be," she said. "The system has no idea how to deal with him."

The fact that protesters managed to gather at all has prompted some to suggest that officials were unsure on how to respond.

"This is a much more serious issue for President Sisi than foreign investors because the protests suggest there's a division behind the scenes in the Egyptian deep state as much as unrest in the society," said Hasnain Malik, managing director, frontier markets equity strategy at investment firm Tellimer in Dubai.

To address grievances, authorities could increase cash handouts, pensions and insurance for the poor and create low-income housing, with which the IMF would agree, said Allen Sandeep, head of research at Egypt's Naeem Brokerage, adding that he does not expect protests to escalate.

While the reforms and the 2016 devaluation have stabilized the currency, Egypt has not been able to create jobs by boosting non-oil foreign direct investment, which fell in the first three months of 2019 to its lowest for at least five years.

Egypt's Capital Economics said authorities should improve the business environment, make the labor market more flexible and make more land available, but questioned whether this would happen.


(Reporting by Amina Ismail, Mahmoud Mourad, Aidan Lewis, Lena Masri, Ulf Laessing, Yousef Saba, Tom Arnold; Writing by Ulf Laessing; Editing by Giles Elgood)