The Muslim Brotherhood’s Hassan Malek and Egypt’s dollar crisis
The recent arrest of the group’s leading figure and business tycoon Hassan Malek revived speculation over another wave of arrests
After relative calm in the campaign against the Muslim Brotherhood following their removal from power in June 2013, the recent arrest of the group’s leading figure and business tycoon Hassan Malek revived speculation over another wave of arrests, the timing of such a move, and how far it is linked to the remarkable hike in the exchange rate of the U.S. dollar.
The Interior Ministry said Malek was arrested for “undermining the Egyptian economy” by smuggling foreign currency abroad. “Leaders of the Muslim Brotherhood outside Egypt agreed on a plan to find alternative sources of funding while at the same time take advantage of the fluctuating exchange rate of the American dollar in order to destabilize the economy in Egypt,” the ministry said in a statement. Malek was able to carry out the plan through currency-exchange bureaus whose owners are affiliated to the Brotherhood, the statement added.
Journalist and blogger Azza Sedky said Malek’s position during President Mohamed Mursi’s rule could be the main reason why he came up with such a plan. “Malek was so influential during Mursi’s year in office that he was assigned the task of forming the economic delegations that escorted Mursi on his trips abroad. Indeed, the marriage of power and capital had provided Malek with the wider spectrum he, and other MB members, craved,” she wrote, adding that it was expected for someone in his place to do whatever it took to regain at least some of the power he had lost.
Sedky said while it seemed far-fetched that one person could threaten the economy of an entire country, the influence of the Brotherhood had turned out to be much stronger than expected, which makes it possible that Malek and several of his aides took part in the plot.
“Their ability to render regions unsafe and others charged for many months, to have their followers dominate key governmental offices and cause shortages and malfunctions, to be invited as peaceful delegates to the White House, and to have offices and affiliates across the world breathing life in a dying breed, all this tells us that the Muslim Brotherhood organization is capable of much even if Egyptians were unaware of this power.”
Former Brotherhood member Gamal Abdel Sattar expressed surprise that the state had not arrested Malek earlier. “Malek is a hardcore Brotherhood member and joined the group immediately after he graduated,” he said. When asked about Malek’s role during Mursi’s presidency, Abdel Sattar said he was not active in politics even then, and only focused on business.
Abdel Sattar, however, refuted claims that Malek’s influence could extend to destabilizing the economy. “The government is just trying to cover up its failure to handle the rising dollar, and Malek was most likely the scapegoat,” he said, adding that Malek remains innocent until proven guilty.
Economic analyst Ahmed Fouad said Malek was not influential in the Egyptian economy, and did not even have any registered companies in the Egyptian stock market. “Malek was arrested for political reasons,” he said, adding that it would not be possible to solve the dollar problem without an economic analysis of the whole situation.
Economic expert Islam Abdel Aati said businessmen who want to smuggle money abroad resort to more sophisticated methods that do not involve dealing with currency-exchange bureaus. “They, for example, establish companies abroad, then make these companies buy their companies in Egypt,” he said.
“This doesn’t, however, mean that currency-exchange bureaus shouldn’t be monitored by the government.” Abdel Aati said the recent resignation of the governor of the Central Bank proved that the crisis went way beyond specific persons, and is due to problems in the economy itself.
Journalist Adel al-Sanhouri said Malek’s plan was the cause of the crisis that took place at the Central Bank. “Through purchasing huge amounts of dollars from the Egyptian market, Malek managed to control the exchange rate, thus embarrassing the Central Bank and rendering it incapable of regulating foreign currency,” he said. “He also wanted to cause people to mistrust state institutions’ ability to manage the economy.”
Moatasem Rashed, the economic advisor of the General Union for Investors’ Associations, said holding one person or group of people responsible for the dollar crisis is an insult to the Egyptian economy. “Egypt isn’t a small state so that its economy can be controlled by a bunch of people,” he said.
“On accusing Malek of causing this crisis, the government is in fact condemning itself and admitting laxity on the part of its institutions. If Malek was actually doing this, how could the government allow it to happen?”
Rashed said the dollar crisis was due to several economic factors. “One of the main reasons... is the receding amount of foreign currency because exports have been decreasing for the past six months, which led to an increase in the balance of trade deficit to reach 26.3 billion Egyptian pounds in 2015, compared to 16.2 billion in 2014.” He added that such problems could be gradually voided through government policies.
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