Despite turmoil, major lending effort aims to boost Egypt, Arab neighbors The United States and a coalition of international lenders are pushing ahead with billions of dollars in loans and other help for Egypt and neighboring states despite the region's sometimes violent political turmoil, in hopes of heading off a destabilizing economic collapse. The risks involved in the effort have been on sharp display in Egypt in the clashes between protesters and forces loyal to President Mohamed Morsi, whose Islamist government must be trusted by the United States, the International Monetary Fund, the World Bank and others to deliver on commitments made in return for international support. Diplomats and others involved in crafting the IMF program acknowledge that they are dealing with an unpredictable situation. Although agencies such as the IMF and the World Bank officially eschew politics in evaluating loans and projects, conditions in the Arab Spring states are particularly volatile. The uprisings in the region have produced grass-roots democratic movements applauded by the United States, strengthened Islamist parties and led to incidents such as the September attack on the U.S. diplomatic outpost in Benghazi, Libya. Egypt, in particular, remains a mystery. Morsi is seeking to maintain a moderate stance internationally while remaining aligned with the country's formerly outlawed Muslim Brotherhood. Over the past three weeks, he won praise for helping broker a cease-fire between Israel and Hamas, unnerved potential lenders with his move to seize powers from the judiciary and resorted to martial law ahead of a referendum on a proposed constitution. The IMF had hoped to move forward this month on a $4.8 billion loan that Egypt desperately needs, as its foreign currency reserves dwindle and international investors pull money from the country. That loan may be delayed after Morsi, over the weekend, reneged on imposing tax increases that the IMF had expected, seeking to bring down the country's budget deficit. Egypt's potential creditors say the situation has left them with a difficult choice: take a chance on Morsi, or leave the country without a lifeline and surrender the ability to influence his direction. Are these guys ready to change? The previous models . . . are not delivering anymore," said Adnan Mazarei, deputy director of the IMF's Middle East, North Africa and Central Asia Department. The countries need to make drastic changes. . . . It means sectors don't get set aside for connected people. It means banks don't give favors. The fund recognizes it has to do something. Maybe in the past we should have pushed harder. The World Bank and the IMF have written extensively on the problems in the region: non-oil exports that collectively are smaller than Switzerland's; a dearth of jobs for young people; closed and often state-dominated economies in which rulers dole out perks to favored allies. Because leaders, including now-ousted Egyptian president Hosni Mubarak, have used food and fuel subsidies to make up for the lack of opportunity among the poor and middle class, governments in those countries must finance what have become unaffordable benefits or risk political backlash if they are cut. Efforts to reduce fuel subsidies in Jordan have rocked that usually stable monarchy in recent months.