Wednesday 27 June 2012

Analysis: Politics hinders aid to Arab Spring economies | Reuters

When Saudi Arabia withdrew its ambassador to Cairo in late April, yields on Egyptian Treasury bills rose and stock prices slipped as investors feared Egypt would be cut off from billions of dollars of Saudi financial aid.

The diplomatic row, triggered by street protests in Cairo against Saudi Arabia's arrest of an Egyptian lawyer, was quickly patched up. The ambassador returned to Cairo within a week and a few days later, Saudi Arabia placed a $1 billion, eight-year deposit in Egypt's central bank.

But more than a year after the start of the Arab Spring uprisings around the Middle East, the incident showed how countries hit by the unrest face uncertain prospects for obtaining foreign aid, which is badly needed to rebuild their economies and ease social tensions.

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