Published in the New York Times on February 1, 2012
The economy has always been the Achilles’ heel of the Egyptian revolution. “Bread, freedom and social justice” has been one of the slogans of the revolution, but the revolutionaries failed to translate this slogan into specific proposals that could rejuvenate the economy and improve the lot of Egyptians. Indeed, since the revolution broke out on Jan. 25, 2011, millions have been suffering economically. As a result of the precarious security situation, foreign investors have been wary of coming to Egypt, local businesses have been reluctant to pump in more money, unemployment has soared, and tourism has been reduced to a trickle.
Without transparency, financial assistance can breed corruption and cronyism, undermining progress.
Nevertheless, Egypt’s economic prospects are bright. With a large market, an expanding middle class, a cheap and skilled labor force, and a healthy financial sector, the country has great economic potential.
While the main responsibility to jump-start the economy falls naturally on the shoulders of the Egyptian government and the newly democratically elected parliament, there is much that Egypt’s neighbors and allies can do. To the west two countries, Libya and Tunisia, have also felt the effects of the Arab Spring, and there is a potential for a solid economic union of these three countries. This union could bring the free movement of labor and capital and a more integrated trade policy, one that would be critical of the global corporatist trend that breeds corruption — the sort of approach that fueled the revolutions in these three countries.
To the east, the picture looks bleaker. The revolutions in Bahrain, Yemen and Syria have run into trouble, and the financial power of Saudi Arabia and other Gulf states has played a very reactionary role in preserving local tyrannies and in maintaining the status quo. Although these Gulf states have pledged large sums of money to Egypt, this financial assistance has also come with strings attached. It is widely believed, for example, that it was Gulf pressure that led to the removal of Nabil el-Araby as foreign minister. He advocated a strong, independent foreign policy for post-Mubarak Egypt.
Egypt’s western allies could help by insisting that the economic aid they provide be subjected to close parliamentary scrutiny. They should be aware that without transparency and accountability, financial assistance can end up breeding corruption and cronyism, and thus undermine the very system it was intended to help.