From: Terje Rod-Larsen To: [email protected] <[email protected]> Subject: Fw: IPI Middle East Update - July 12, 2012 Date: Fri, 13 Jul 2012 14:54:50 +0000 From: Office of Te *e Rod-Larsen To: Sent: Thu Jul 12 15:08:14 2012 Subject: IPI Middle East Update - July 12, 2012 INTERNATIONAL PEACE INSTITUTE IPI Middle East Update July 12. 2012 Egypt: Egypt's stock market is serving as an accurate barometer of the level of political tension during the nation's historic political transition. On June 30, Muslim Brotherhood-backed candidate Mohamed Morsi was sworn in as Egypt's first freely-elected President. The stock market, when it reopened the following Monday, July 2, hit a nine-year high. Subsequently, when President Morsi ordered the Parliament --which was dissolved by the military based on a Constitutional Court ruling -- to reconvene on July 8, the market tumbled 4.2 percent to a three-week low. The International Monetary Fund (IMF) welcomed Morsi's election and once a government is formed is ready to finalize a $3.2 billion loan. To access this and other multilateral financing and close the estimated $12 billion funding gap, the Muslim Brotherhood will have no choice but to accept that these loans come with interest and will have to reconcile this fact with its position that interest on loans contradicts Islamic law. Egyptian foreign currency reserves stood at approximately $15.5 billion at the end of June compared to roughly $36 billion (before the January 2011 uprising). The Central Bank is expecting only 2 percent growth in 2012, down from 2.5 percent in 2011. Syria: Intense diplomatic maneuvering over the past few weeks has had little impact on the continuing violence in Syria. UN-Arab League Special Envoy Kofi Annan met with Syrian President Bashar al-Assad in Damascus on July 9. The focus is now on promoting dialogue between the regime and opposition groups. Russia's ongoing support of the Assad regime has been a major stumbl