Airliner crash has devastating impact on Egypt’s economy

The likelihood that a bomb caused the crash of a Russian airliner flying from Sharm al-Sheikh to St Petersburg has already had a devastating impact on Egypt's economy and may have awakened the world to the danger of failing to deal with Islamic State (IS).

Egypt's tourism season, which had just begun, has been ruined, with the departure from Sharm al-Sheikh of some 45,000 Russians and 20,000 Britons, and bookings cancelled. In 2014, three million Russians and 250,000 Britons visited Egypt.

Last year Egypt received 6.6 million tourists, boosting revenues to €6.9 billion, 45.3 per cent over the previous year, but nowhere near 2010 earnings of €11.6 billion. Tourism employs one out of every nine Egyptians in a workforce of 28 million and accounts for 12 per cent of GDP. Job losses could impoverish millions in large families.

Until the crash, tourists had braved possible attacks and explosions in Cairo by Islamic State cells which had murdered the state prosecutor, bombed the Italian consulate, and beheaded Croatian engineer Tomislav Salopek.

Bombs on civilian aircraft are more frightening. Egypt’s stocks, and shares in the Commercial International Bank, Egypt’s largest private sector lender, fell in response to the disaster. Pressure rose on the Egyptian pound, giving rise to speculation that the currency could be devalued or allowed to float.

Egyptian, Arab and non-Arab investors have sold shares. Egypt is a major recipient of foreign investment, estimated at €82 million, from Europe and the US, two-thirds of it in the oil and gas industry.

Whether or not substantiated, Islamic State's claim to have destroyed the Russian aircraft has implications for air travel the world over. Egypt's Sinai region had already been declared a no-go zone by Emirates, Qatar, Lufthansa, and Air France-KLM airlines.

Due to the IS threat in Syria, Somalia, Yemen, Iraq, Libya, Afghanistan, Mali, and parts of Kenya, many airlines no longer overfly these countries, rerouting international traffic.

Since the plane was not shot down, the supposition is that a bomb was placed on board while it was on the ground. Screening of luggage and staff at airports will have to be stepped up dramatically, boosting costs that will be passed on to travellers.

IS-targeted Cairo, Damascus, and Baghdad have long warned of the threat posed by the cult’s rise, but the international community has done little to counter the terrorist group.

Instead, Saudi Arabia, Qatar, and Turkey have armed and funded IS while the US, Britain and France have tolerated it, as well as al-Qaeda's official branch Jabhat al-Nusra and other jihadi groups in expectation they would bring down the Syrian government of President Bashar al-Assad.

Politicians and pundits have ignored the fact that IS is a rogue off-shoot of al-Qaeda, which, having conducted a successful operation in 2001 in New York and Washington, tried and failed to blow up four civilian airliners using bombs not missiles.

IS was not seen as a serious danger to the world until 224 Russians died when their carrier exploded over Sinai. The US has since increased air strikes against IS targets in Syria and committed 50 special operations troops to the Arab-Kurdish offensive against IS in north east Syria. Pentagon chief Ashton Carter has suggested additional boots-on-the-ground could be needed to partner local forces – a reversal of US policy.

Regional analysts argue such efforts are bound to fail unless the Western powers join forces with Russia and Iran in the war against the jihadis and exert strong pressure on Saudi Arabia, Qatar and Turkey to stop reinforcing and arming these groups.