Which way will Egypt’s economy go?

Egypt is at a crossroads 18 months after the fall of Mubarak between heading down the path of a more socialist economy or reforming its free market approach.

The former favours a grassroots framework (one that might be adopted by the Muslim Brotherhood if Mohamed Morsi get’s his act together and does more than 1/100 of the Renaissance plan) and the second reverts to the Infitah (openness in Arabic) policy of former Egyptian president Anwar Sadat that ushered in an era of privatisation and a throughly free-market.

I wrote about this first in The National  back when the presidential elections were getting started and the two main contenders appeared to be Amr Moussa, a former foreign minister who spent the last 10 years in the Arab League, and Abdel Moneim Aboul Fotouh, once a leader of the powerful Muslim Brotherhood.

Despite the fact both these men were knocked out in the first round, this thinking still applies; except now it’s Mohamed Morsi versus the military council and top businessmen that still wield a lot of power in Egypt’s economy (just look at all chief executives of the companies that have been impacted by ongoing labour strikes).

Morsi’s Renaissance plan focuses on five main themes: security, traffic, fuel, bread, sanitation (Arabic version of the platform here, but the Morsi Meter, created by independent youth to monitor the program’s success, is available in English).  But his plan heavily leans towards on-the-ground small changes in society, and by and large ignores top-level economic problems that he will have to address soon before Egypt descends into a balance of payments crisis.  That is, the extremely wasteful energy subsidy system that drains two thirds of Egypt’s total subsidy bill of 150 billion Egyptian pounds, signing for a $3.2 billion loan with the International Monetary Fund and getting foreign investors back to Egypt.

But as Jane Kinninmont has told me, this will be harder to achieve in the absence of a grand vision.

“The new president is unlikely to adopt a Nasserite style of leadership with a grand vision of restructuring the economy.

Instead “the new president may well follow the same path of delegating a lot of economic policy while focusing on the political transition and Egypt’s international relations”, said Jane Kinninmont, a senior research fellow at Chatham House, a London think tank.”




Post a Comment

Your email is kept private. Required fields are marked *