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Egypt Investment Collapsing as Citizens Turn Into Vigilantes

By Tarek El-Tablawy, Mariam Fam and Salma El Wardany

Egypt Arms With Bootleg Guns as Vigilante Justice Replaces Law 

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.

Hashish to Tramadol

A few miles from Hussein’s workshop, the glassy stare in Abdel-Rahman’s eyes reveals some of that despair.

At 24, he looks a decade older, his skin sallow from the Tramadol painkillers he pops, his shirt reeking of the hashish he says dulls the boredom. A year ago, he was working in a Cairo gift shop, selling souvenirs. He said he had a fiancée, “but she left me for someone with hope.” Now he snatches the occasional purse to fuel his habits.

Egyptians who had expressed hope for food and jobs during the uprising, are instead confronted with unemployment and rising prices. Lines for subsidized fuel have triggered protests and strikes, as well as brawls.

Hardship heightens the sense of breakdown, and the woes confronting the $257 billion economy add to the potential for violence. That, in turn, has a “massive and very serious chilling effect” on investors, said Michael Hanna, a senior fellow at the Century Foundation research group in New York.

‘All Interlinked’

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.

‘Create a Bubble’

The economic slump has eroded optimism that the uprising would mark a new beginning. In the months after the revolution, officials saw an increase in treatment being sought by Cairo’s drug users, said Amr Othman, head of Egypt’s Fund for Drug Control and Addiction Treatment.

“They used to say they believed there’s hope and the country is changing,” Othman said.

Now, the number of addicts is growing and Othman said he’s seeing a decrease in the age of users, with some as young as nine. “Everyone is trying to create a bubble” to escape reality, he said.

Decay in Tahrir

The decay is clear in Tahrir Square, the center of the 2011 revolt. It morphed into a tent-camp and finally an area of ill-repute with reports of theft, assault and drug use, which Mursi’s backers blame on the opposition.

On Jan. 25, the second anniversary of the uprising, 29 women were reported to have been sexually assaulted during rallies there, including one vaginally raped with a knife.

Government officials stress that security is a top priority, with Mursi vowing a tough line against lawbreakers and noting the difference between peaceful protests and demonstrations that descend into violence or undercut the nation’s interests.