MidnightWatcher – Prophecy in Motion

By Tarek El-Tablawy, Mariam Fam and Salma El Wardany, Bloomberg – “In a dimly lit Cairo workshop, Hussein spins a metal pipe on a lathe, sending sparks flying. In a few minutes, it’ll become the barrel of a gun. Sometime after that it will join the growing arsenal of illegal weapons on the streets of Egypt.

Artisans who make machine parts by day are turning into bootleg gunmakers at night, says Hussein, 54, who asked not to be identified by his full name for fear of prosecution. He only sells to a middleman because ‘trust the wrong person and you’re going to jail.’ He can make as much as 3,000 pounds ($435) per gun — about 20 percent of what a legally licensed one costs.

‘Fear is big business nowadays,’ Hussein said. ‘People buy the guns because they’re afraid. People buy the guns because they want to scare others. We’re in a jungle now.’

More than two years after the fall of President Hosni Mubarak, the proliferation of weapons and a spate of vigilante killings, violence and sexual attacks are eclipsing the hope born from the revolt. Fueled by political deadlock and economic stagnation, the security breakdown threatens to put solutions beyond the reach of President Mohamed Mursi.

A growing number of Egyptians think that ‘you can actually achieve your goals using violence,’ said Ezzedine Choukri Fishere, a political scientist at the American University in Cairo. Beneath that lies the ‘dashed expectation and hope of the youth,’ he said…

Net foreign direct investment was negative for the first time in 2011, according to the World Bank. Investment will be 15.5 percent of gross domestic product in 2013, the lowest since records began in 1980, according to the International Monetary Fund, which is in talks with Egypt for a $4.8 billion loan.

Foreign portfolio investors have also fled, driving a slump in Egypt’s stocks and bonds. The benchmark equity index, the EGX 30 (EGX30), is down about 20 percent since the uprising, after climbing 85 percent in the preceding two years.

The yield on benchmark dollar bonds due in 2020, which was below 5 percent in late 2010, was at 7.17 percent on May 7. The Egyptian pound has weakened 11 percent to a record low since the central bank started limiting access to U.S. dollars in December to shield reserves, which dropped more than 60 percent since the uprising.

‘The emerging security deterioration is going to dissuade potential investors,’ Hanna said. Egypt’s political, economic and security crises are ‘all interlinked,’ he said.” Read more.