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CIVETS Watch: US Dollar Is Popular in Egypt, but US Is Not


Greenbacks are in demand throughout the region, as Arab Spring hope turns to an insecure present.

The US dollar is in demand in Egypt, where people are still struggling to survive the economic crisis caused by its political turmoil, now stretching into a second year.

In fact, it seems that dollars are prized, and even hoarded, throughout the countries that have experienced Arab Spring uprisings, whether the result has been promising, as in Tunisia, or catastrophic, as in Syria. According to Bloomberg News, people are trading in dollars, and lining up to buy them, in many of the countries that have seen popular unrest in the past year.

The reason is that unrest has, at least for the present, caused economic uncertainty if not outright disaster. In Egypt, gross domestic product was 0.2% in late 2011, compared with 5.5% a year before.

But Egyptians, though hit hard economically, apparently don't want US dollars when they come straight from the source, in the form of American aid.

A Gallup poll released Monday says more than 70% of Egyptians are opposed to US aid to Egypt, and almost as many oppose US aid to nongovernmental organizations. But 68% approve of accepting aid from other Arab nations, and 50% would accept it from an international institution such as the International Monetary Fund.

The US Congress has approved $1.3 billion in military aid and $250 million in economic aid to Egypt for the current fiscal year. Congress and President Barack Obama are now threatening to withhold that aid if Egypt does not demonstrate that it is moving in a pro-democracy direction.

Relations between the two countries have grown more strained since Egypt ordered 19 Americans and 24 others to stand trial on charges of using foreign funds to influence parliamentary elections there. Sponsored by groups like Freedom House and the International Republican Institute, the Americans were in Egypt to promote democracy and human rights during the parliamentary election season.

Only six of the Americans charged are believed to be still in Egypt, and several of those have taken refuge in the American Embassy, according to The New York Times.

It is unclear why Egypt's interim military rulers are permitting the trial to proceed. But public opinion, and their own fragile hold on power, appear to be factors.

The reasons Egyptians look upon US money with distrust are complicated. Americans are seen as anti-Muslim. The US supported the regime of ousted dictator Hosni Mubarak, so its later support of the Arab Spring movement is viewed as dubious. They don't trust their own interim government, either, and with good reason: The military discloses little about how American aid, or any other money it takes in, is spent.

CIVETS In Brief:

PriceSmart Sales Up 20.5%
PriceSmart (PSMT), the warehouse chain often called "the Costco of the Caribbean," announced a 20.5% net sales increase in January, to $157.5 million from its sales a year earlier.

The company also said its net sales had increased 23%, to $863 million from $693 million, in the four months ended January 31.

The San Diego-based retailer operates 29 warehouse stores in Latin America and the Caribbean. In December, it announced that it had acquired land for a new store in Cali, its second in Colombia.

After its earnings release, the company's stock rose more than 3% to close at $68.52. PriceSmart was one of Barron's best-performing stock picks for 2011.

Indonesia Shows Impressive Growth
Indonesia's economy grew 6.5% last year, its strongest showing since the 1997-1998 Asian financial crisis, according to government statistics announced this week.

So far, strong domestic spending has cushioned Indonesia from some of the effects of the rest of the world's economic troubles. Per capita income rose 18% to the equivalent of $3,560, and household spending rose 4.6%.

The strongest sectors were communications and transportation, at 10.7%, followed by trade, hotels, and restaurants, at 9.2%, The Jakarta Globe reported. Manufacturing grew 6.2%.

Foreign direct investment grew 20% to a record $20 billion in 2011, according to The Wall Street Journal.

Turkish Pharma Draws Foreign Interest
A raft of Western pharmaceutical names have expressed interest in buying a stake in Turkish drugmaker Mustafa Nevzat Ilac Sanayii AS, also known as MN Pharmaceuticals.

Eli Lilly (LLY) may have inspired MN to explore its options. According to FiercePharma, the American company wants access to low-cost manufacturing and distribution in the region, and has been negotiating with the Turkish drug maker since late last year. Abbott Labs (ABT), GlaxoSmithKline (GSK), Mylan (MYL), and Pfizer (PFE) are among the other names considering the proposed offering, according to Bloomberg News.

The family-owned firm has retained Bank of America Merrill Lynch to advise it on the sale. It has not decided whether a minority or majority stake will be offered.

The sale reportedly could value the company at $1 billion. MN Pharmaceuticals makes generic drugs and active pharmaceutical ingredients.

The Turkish company already has a strategic partnership with generic drugmaker Mylan, according to the MN site.
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