Mohamed Morsi

Egypt squeezed between need for reforms and fear of backlash

Inside the glitzy Nile Ritz-Carlton hotel off Tahrir Square, Cairo's business elite were eager to put years of tumult and lost opportunities behind them.

Hundreds gathered this week for an event organized by the American Chamber of Commerce, chaperoned by a State Department official and aiming to show support for Egypt's government as it readies austerity measures and economic reforms. While the moves are a much-needed salve to years of state excess, they're also likely to bring at least short-term pain on the street.

Most observers and assume the government will go through with it — the question is when. With Egypt deep in debt and no more easy money coming from...