Egypt returns Qatar aid as relationship plummets

Mohammed Morsi's government received US $8bn in aid from Qatar.

Egypt’s Central Bank paid back US$2bn (€1.5bn) in aid to Qatar despite its faltering economy and refused a request by Qatari airlines to increase flights, authorities said today, marking a new low in relations between the two countries.

Over the past year, Qatar gave the government of Egypt’s former President Mohammed Morsi some eight billion US dollars (€6bn) in aid as it suffered through an economic slowdown.

But since a popularly backed July 3 military coup in Egypt, relations have soured with the tiny Gulf nation, a main backer of Mr Morsi’s Muslim Brotherhood group in the region.

Today, Hesham Ramez, the head of Egypt’s Central Bank, said two billion US dollars in aid money was returned to Qatar after its government asked Egyptian officials to postpone the conversion of the funds to bonds as earlier agreed.

Mr Ramez spoke to the Youm 7 news website. An official at Mr Ramez’s office later confirmed the comments.

Meanwhile, Egypt’s civil aviation ministry turned down a request by its Qatari counterpart to increase the number of flights between Egypt and Qatar from 28 to 42 weekly flights via its national career, Qatar Airways.

The decision comes even after a sharp drop in passengers coming into Egypt following the unrest that followed Mr Morsi’s overthrow. Tourism, which accounts for nearly 20% of Egypt’s foreign currency revenues, also tumbled.

As far as aid, Qatar has been sidelined in Egypt by Saudi Arabia, Kuwait and the United Arab Emirates. Those nations, which view the Brotherhood as a threat to Gulf monarchies, have promised 12 billion US dollars in aid for Egypt. The aid, in a mix of grants, cash deposits and oil and gas products, have been used to avert gas and electricity shortages and shore up Egypt’s foreign reserves.

Egypt’s central bank recently reported that the country’s foreign reserves had reached 18.8 billion US dollars, their highest level in almost two years. Still, the country’s military-backed interim government faces increasing unemployment, widespread poverty and a burdensome and ill-distributed subsidy system.

The pressure Egypt’s government has placed on Qatar is not just economic, however.

Authorities also have targeted the Qatar-based Al-Jazeera satellite news network and its affiliates in Egypt by storming offices, detaining staffers, deporting correspondents and giving orders to take it off air.

The government repeatedly cites what it sees as coverage biased toward the Muslim Brotherhood and Mr Morsi’s supporters as a reason for its actions.

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