Is Qatar abandoning Egypt?

After promising $5 billion in soft loans and grants to help curb the Egyptian pound’s recent slide against the dollar, the tiny but vastly wealthy Gulf nation of Qatar is now backing off pledges of any further funding for the cash-strapped nation.

Observers saw Qatar and its royal family as initial backers of the Muslim Brotherhood government and its president, Mohamed Morsi, providing substantial funds and deposits to Egypt’s Central Bank. But earlier this month, the Qatari finance minister said there were no plans to inject more cash into Egypt’s flagging economy — crippled by a massive budget deficit. The finance minister did not give a reason.

The apparent about-face suggests that even countries with a seemingly unwavering commitment to Egypt’s economic and political recovery are having second thoughts about deepening their involvement with the increasingly unstable nation.

Morsi’s authority is under threat as sporadic violence chips away at law and order and parliamentary elections are stalled. Rising prices and fuel shortages are contributing to ongoing unrest, and the government has yet to put forth a comprehensive economic program.

“On the Qatari side, they are putting their money into a bit of a black hole,” Michael Stephens, a researcher at the Royal United Services Institute think-tank in Qatar, said of the country’s aid to Egypt. “What we don’t know is whether or not they [the Qataris] have allocated a specific budget for Egypt — how long they are willing to keep funding. They will stay in Egypt, but they will also be looking for other allies.”