It's the Egyptian Economy, Stupid

January 24, 2013 Topic: Economics Region: Egypt

It's the Egyptian Economy, Stupid

The media is closely following every political move in Cairo, yet the key to the crisis is the ordinary man's empty pocketbook.

The Western media faithfully reports every twist and turn in the evolution of the Egyptian democracy: President Morsi decreed today . . . The supreme court ruled that . . . Parliament resolved . . . Demonstrators demanded, and so on. But the main dynamic in Egypt at this stage is an economic one. Unemployment is rampant, the economy is in the doldrums, tourists are avoiding the country, foreign-currency reserves are being depleted and funds promised by various Arab and Western supporters are at best trickling in. 40 percent of the Egyptian people live on fewer than two dollars a day. 25 percent survive on less than one.

The dominant narrative that the Western media has imposed on Egypt and other Arab Awakenings is the same conception of political regime change embraced by neoconservatives. It is a tempting narrative that makes for big screen blockbusters, one that will warm the heart of any well-fed Westerner on his way home from a steady job: After thirty years of dictatorship—in a Middle Eastern nation with very little democratic experience in its 5,000 year history—the people took their fate into their own hands. They overthrew the dictatorship without firing a shot, by putting their bodies on the line or at least into the square. New leaders were elected and they are on their way to make a Western-style democracy. True, some hiccups are acknowledged. The voters gave an edge to groups that seek to impose some version of Sharia on their nation, but all good narratives have some setbacks. Soon, the narrative continues, the people will tire of the Muslim Brotherhood and get—what the Western media assume they “really” want— a secular, Western-minted democracy.

Unfortunately, this story has some deep flaws. Screaming masses in the streets, which the media equates with prodemocracy forces, are much better at wrecking hollowed out, defunct authoritarian regimes than at institution building. This is especially the case given that a half valid democracy requires much more than elections and a constitution. Most importantly, at this stage the Egyptian people expect a better economic future and—a story buried in the Western media—and there is no sign that the new Egyptian government has what it takes to bring about the needed economic reforms. Nor are there indications that a Marshall Plan financed by the United States, Saudi Arabia or anyone else is forthcoming.

In the short run, what Egypt needs is to reassure tourists and investors that their money can flow again to the country, which requires restoring a measure of stability and security. This, in turn, requires that the government find ways to work out its differences with the various opposition groups, not in the streets, but in the Parliament and via political give and take. It must support the police and other security forces as they are being reformed and make it clear that various Islamist dictates will be reinterpreted in ways that reassure tourists (they will be allowed to bathe topless, drink booze and share rooms without showing a marriage license) and investors (they will be allowed to charge interest and feel confident that their property rights will be respected). Keeping the peace with Egypt’s neighbors will also help.

Even more serious are the longer run challenges. Egypt has few natural resources and a very large population with little advanced education. Large segments of its economy are owned by the military, which is not rushing to give up its privileges. Bureaucracy is swollen and corruption is rampant. And Egypt is close to southern Europe, which suffering a major economic crisis of its own.

I am not arguing for some kind of economic determinism. In effect, Egyptian economic problems are rising because of difficulties in its political transformation. But the economic difficulties of Egypt deserve at least as much attention when reporting about this key nation in the Middle East—as say the fiscal cliff in the United States or the Euro crisis in Greece.

The most difficult question remains to unanswered. Will Egypt, and other nations in the region that have no major natural resources (I speak of the many that have no major oil wells), be able to provide their people with the kind of economic growth that exposure to the worldwide media has led them to expect? And if not, could some form of moderate religious devotion provide a source of dignity and contentment—not instead of jobs and rising income—but in the face of rather slow economic improvements? Many people in places far away from Egypt, in countries such as Japan and Spain—and arguably even in the United States—face a similar question. Can the gold goose lay ever more golden eggs? Can we expect a return to a high-growth pathway? Or must we find solace in some other quarters—beyond politics and economics? Now there is a story worth reporting.

Amitai Etzioni served as a senior advisor to the Carter White House; taught at Columbia University, Harvard and The University of California at Berkeley; and is a university professor and professor of international relations at The George Washington University. His latest book is Hot Spots: American Foreign Policy in a Post-Human-Rights World.

Image: Wikimedia Commons/B. Simpson. CC BY 3.0.