Leftist leader Sabahi says Egypt should refuse IMF loan

CAIRO - Egypt should refuse a $4.8 billion (3 billion pounds) loan from the International Monetary Fund rather than submit to terms that would further impoverish the poor and could spark a revolution of the hungry, leftist leader Hamdeen Sabahi said on Monday.

Sabahi, 58, who came third in a presidential election last year after the 2011 uprising that toppled autocratic President Hosni Mubarak, told Reuters that neither the global lender nor Egypt's Islamist-led government had told the public the truth about austerity conditions attached to the proposed loan.

The firebrand leader of the Popular Current movement met an IMF team that visited Cairo this month for talks which ended without an agreement partly due to a lack of political consensus to support the accompanying economic reform programme.

Asked whether he would agree to the IMF's conditions, Sabahi said: "No. I would not agree to them."

"If you look at any country the IMF has gone into, you will find that poverty has increased," he said in an interview in his modest 13th-floor apartment in a middle-class district of the capital. "Talk about plugging a budget deficit does not get food to the people."

The conditions for an IMF loan have not been made public but Egypt, battling economic stagnation, rising inflation and unemployment, has twice balked at raising sales tax on all goods and services and slashing fuel and food subsidies.

"If the political situation remains unchanged, the January 25 (anti-Mubarak) revolution will be followed by a new wave that could erupt due to poverty once the IMF conditions are implemented and there will be a revolution of the hungry," Sabahi said.

The only political memento on his living room walls was a painting of Gamal Abdel Nasser, the swashbuckling nationalist colonel who led a 1952 coup that overthrew King Farouk and ran Egypt as an ally of the Soviet Union until his death in 1970.

Sabahi, a charismatic former student leader, models himself on Nasser, who carried out a major land reform, nationalised the Suez Canal, build the Aswan Dam but also waged a relentless crackdown on the Muslim Brotherhood, which now rules Egypt.

Critics say his economic outlook is stuck in a Nasserite time warp. In his presidential campaign, Sabahi advocated state ownership of big industrial projects, minimum and maximum wages and a one-off wealth tax to fund development.

In the interview he rejected fears that he would nationalise private businesses, as Nasser had done, saying his goal was to make poor people richer rather than rich people poorer.

Jailed several times for dissent and pro-democracy activism under Mubarak and former President Anwar El-Sadat, Sabahi often defended the Brotherhood under their autocratic rule, and he campaigned alongside them in Mubarak-era parliament elections.

He now accuses Islamist President Mohamed Mursi and his Brotherhood group of trying to monopolise power and sideline all opposition.

"The main reason for the severe political polarization that Egypt has suffered for a long time is the insistence of Dr Mursi and the Brotherhood to control all state powers and their refusal of any serious cooperation with civil society or other political forces," he said.

"Egypt is paying a high price for this roadblock."

The Brotherhood were losing popularity fast because of their power grabs and failures in government, but public support was turning not to the democratic opposition but to the army, with many hoping for military intervention to restore order, he said.

"Many who abandon the Brotherhood do not have enough faith in the ability of the National Salvation Front to oust the Brotherhood and the force that has benefited most from that is the Egyptian army," Sabahi said. The National Salvation Front is a loose alliance of secular, liberal and left-wing opposition parties, including Sabahi's Popular Current movement.