How The US Ambassador Cut Egypt Down to Size

A number of you may have already read the speech from the US Ambassador to Egypt, Anne Patterson, on Egypt’s political and economic woes.

What she said was not particularly surprising or profound – much of it has already been argued by economists, analysts and journalists. But Ambassador Patterson’s speech eloquently and authoritatively wraps up Egypt’s complex issues in a neat package everyone can understand.

It is difficult to find another example of this from an official outside Egypt, including from Patterson herself.

This time, she clearly spelled out what has gone wrong within the Morsi administration and what must change.  Unsurprisingly, that mostly involves addressing economic problems:

The most catastrophic path is for the government and the political leadership of the country – whether in power or in opposition – to avoid decisions, to show no leadership, to ignore the economic situation of the country. 

When management of the economy is treated as a by-product of political disputes instead of a core function of political leadership, the business community is left trying to protect itself instead of investing and growing.

So what path should Egypt take? Here are her top three priorities:

  • 1) Egypt needs to conclude a credible agreement with the IMF.  Reaching agreement will unlock IMF funds and financing from other sources, including the U.S. Government, and more importantly will send a strong signal to the investment community that Egypt is committed to reforming its economy.  The IMF agreement’s biggest impact will be as a catalyst, encouraging additional lending, and sparking interest from short-term portfolio investors, then perhaps longer-term portfolio investors, and then eventually a return of badly-needed Foreign Direct Investment.
  • 2) Egypt needs to fix its energy sector, fundamentally overhauling a simply unsustainable subsidy program that costs billions of dollars every year.  The money saved can repay its arrears and once again secure the credit terms it needs for imports.  And in the longer term, Egypt will be able to make critical infrastructure improvements, expansions, and modernizations that will lead to greater efficiency and cost-savings while ensuring the country can meet the energy needs of a growing population.
  • 3) Egypt needs to make peace with its past.  It needs to provide clear public assurances that investors are safe from arbitrary acts.  Contracts no matter when signed or under what circumstances will be honored except when they are found illegal by a due process of law in an impartial judicial system.  A framework of law must be in place making clear that contracts will behonored.  Those who invested in Egypt in the past cannot be threatened with jail or severe financial penalties years later because that forces investors to invest elsewhere.  When investors are confident they will be treated fairly, they will return to the opportunities Egypt presents in droves.  New investment is the foundation for economic growth; it must be nurtured, not disciplined.

As I said, it’s not something we haven’t heard before. However, if we heard this speech from Mohammed Morsi or his prime minister Hisham Qandil, it would be a complete breakthrough.

Quite simply, Ambassador Patterson showed Egypt how to deliver difficult news with the hope for change and reform. 

The Morsi administration’s track record for communicating these issues with the public is abysmal.  Either the Muslim Brotherhood enrol themselves in some public speech lessons quickly, or they can be more inclusive and relax their tight circle to allow experts with experience to help lead the way to recovery.


  • Posted February 16, 2013 at 9:48 pm | Permalink

    Reblogged this on Thinking politics and commented:
    How to get Egypt back on track.

  • Nasser Gamal Eddin
    Posted February 17, 2013 at 11:42 am | Permalink

    Yep, she sure showed them how it is done. However, her remarks should not be taken for granted, after all she works for the interests of HER country. We should listen, understand and take what we need to complement our own “national reconstruction project” which should have sections for economics, education, industry, agriculture, health…etc

    I don’t think basing our entire plan solely on economics and on the sole assumption that once we get the loan investments will pour in in buckets will work, not only because of corruption, lack of vision/leadership..etc..etc.but consider a scenario where we get the loan then unrest breaks out again (and it most probably will–take what’s happening now and we haven’t even started implementing the austerity measures)…all we will end up with then are piles of unpaid debt. Right now we don’t have a national project nor do we even have a plan B for when things go wrong.

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