CAIRO (AP) -- Egypt's Central Bank paid back $2 billion in aid to Qatar despite its faltering economy and refused a request by Qatari airlines to increase flights, authorities said Thursday, marking a new low in relations between the two countries.
Over the past year, Qatar gave the government of Egypt's former President Mohammed Morsi some $8 billion in aid as it suffered through an economic slowdown. But since a popularly backed July 3 military coup in Egypt, relations have soured with the tiny Gulf nation, a main backer of Morsi's Muslim Brotherhood group in the region.
On Thursday, Hesham Ramez, the head of Egypt's Central Bank, said $2 billion in aid money was returned to Qatar after its government asked Egyptian officials to postpone the conversion of the funds to bonds as earlier agreed. Ramez spoke to the Youm 7 news website. An official at Ramez's office later confirmed the comments.
Meanwhile, Egypt's civil aviation ministry turned down a request by its Qatari counterpart to increase the number of flights between Egypt and Qatar from 28 to 42 weekly flights via its national career, Qatar Airways. The decision comes even after a sharp drop in passengers coming into Egypt following the unrest that followed Morsi's overthrow. Tourism, which accounts for nearly 20 percent of Egypt's foreign currency revenues, also tumbled.
As far as aid, Qatar has been sidelined in Egypt by Saudi Arabia, Kuwait and the United Arab Emirates. Those nations, which view the Brotherhood as a threat to Gulf monarchies, have promised $12 billion in aid for Egypt. The aid, in a mix of grants, cash deposits and oil and gas products, have been used to avert gas and electricity shortages and shore up Egypt's foreign reserves.
Egypt's central bank recently reported that the country's foreign reserves had reached $18.8 billion, their highest level in almost two years. Still, the country's military-backed interim government faces increasing unemployment, widespread poverty and a burdensome and ill-distributed subsidy system.
The pressure Egypt's government has placed on Qatar isn't just economic, however. Authorities also have targeted the Qatar-based Al-Jazeera satellite news network and its affiliates in Egypt by storming offices, detaining staffers, deporting correspondents and giving orders to take it off air. The government repeatedly cites what it sees as coverage biased toward the Muslim Brotherhood and Morsi's supporters as a reason for its actions.
Farag Abdel-Fatah, an economics professor at Cairo University, described the Central Bank's decision as "politically motivated."
"It's meant to reflect how Egypt has confidence in its ability to give up aid seen as means to support a certain group," he said.