Bear a Burden

Egypt still owes the Soviet Union $3 billion for military goods and $4.5 billion for other kinds of aid. Last week President Anwar Sadat announced that he was imposing a ten-year moratorium on the military-debt payments. That in itself was scarcely news. Piqued at Soviet refusal to resupply his army after the 1973 war, Sadat has not been making payments on those Soviet military obligations anyhow. So why the announcement?

The apparent answer is that Sadat wanted to stress how dependent he is on the U.S. and oil-rich Arab states for help since cutting himself off from Moscow. In addition to its Soviet debts, Egypt also owes $8.2 billion elsewhere and annually runs a staggering balance of payments deficit of $1.5 billion. The U.S., Saudi Arabia and other Persian Gulf states helped this year with a $5.4 billion package that allowed Egypt to pay off some short-term obligations and thus save $200 million in service charges. But even with this assistance the Egyptian economy is in terrible shape. To placate his citizens, Sadat has kept the price of food staples artificially low by putting up government subsidies of nearly $1 billion annually. If Egyptians were forced to pay nonsubsi-dized prices, Sadat might be ousted by a repetition of the food riots that rocked Cairo last January. With his we-won't-pay announcement to the Russians, Sadat is reminding Western creditors that they either have to bear a burden or risk losing a friend.

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