Geopolitics

Egypt Suspicious Of U.S. Meddling In Transition To Democracy

Egyptions are wary that US financial aid to government and civil society programs is Washington's way of whitewashing its past support for Mubarak – and laying the groundwork for future meddling.

Max Strasser

CAIRO - As Egypt prepares for its first free and fair parliamentary elections in decades, the United States is keen to play a role in -- and help finance -- the transition to democracy. But some Egyptians are growing increasingly critical of such open American support for building political parties and civil society.

"There are development partners that have for some time now been pushing the democracy and human rights agenda," says Talaat Abdel Malek, an advisor to the Ministry of International Cooperation, which overseas foreign aid. "And I understand the need for it, but there comes a point when there is something that is called national sovereignty that has to be respected."

The United States Agency for International Development (USAID) is leading the campaign. It recently gave about 40 percent of its $155 million aid budget for Egypt to so-called "democracy and governance" programs. Part of the money money will go directly to Egyptian civil society groups, while the rest will be delivered to US democracy-promotion organizations.

The program for political parties includes training sessions covering topics like political messaging, volunteer recruitment, the use of polling data, and political mobilization.

Nonetheless, some worry the program is a way for Washington to push its foreign policy agenda in Egypt and maintain close ties with Cairo even after their ally, former President Hosni Mubarak, was ousted.

Influential Islamist columnist Fahmy Howeidy wrote that the U.S. administration has been pouring millions of dollars into Egypt every month to "buy off" allegiances of certain political parties and pro-democracy NGOs.

"US democracy funding is designed to serve a specific political agenda which has nothing to do with supporting real democracy in Egypt," Howeidy wrote on June 25 in his column in the independent Shorouk newspaper.

"I think it is unfortunate that those perceptions are as pervasive as they are in Egyptian society," Steven McInerny, executive director of the U.S.-based NGO Project on Middle East Democracy told Al-Masry Al-Youm by phone from Washington. "I think that one of the best ways to deal with that is to be open and transparent about the activities, so that it is not something that is secretive and clandestine that encourages suspicion."

While US organizations are quick to dismiss claims that they have an agenda, an October 2007 diplomatic cable from the US Embassy in Cairo to the State Department shed light on the view of democracy and governance programming at the time.

The cable, which was published by the whistleblower website WikiLeaks in June, says: "we will sustain successful programs and create additional on-shore initiatives to optimize American influence through the looming leadership succession."

But these suspicions are only part of the problem. USAID faces considerable challenges in navigating Egypt's restrictive NGO laws when it comes to financing democracy and governance programming.

The National Democratic Institute and the International Republican Institute, two of the biggest players in democracy and governance programming, are not legally registered with the Ministry of International Cooperation, which is a requirement if they are to legally obtain funding.

Minister of International Cooperation Fayza Aboul Naga, one of the few members of Mubarak's cabinet who remains in power, has been highly critical of USAID's efforts. "I am not sure at this stage we still need somebody to tell us what is or is not good for us — or worse, to force it on us," Aboul Naga told the The Wall Street Journal in June.

The US official, however, contested the notion that USAID or other programs are working behind the Egyptian government's back. "We do tell them everything," the official said.

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Photo - Gigi Ibrahim

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money but the simplest of errors exposed the scam and limited the damage to investors.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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