Monday, June 6, 2011

Egypt: Good News And Bad

This is of course good news, but the poll contains some less positive opinions as well. The vast majority say they supported the protests that overthrew President Mubarak for economic reasons:poor living standards and lack of jobs. Just under 20% said they backed the protests due to a lack of democracy.

The danger here is real, for the coming year or two is very unlikely to show much of an improvement in the economy. Tourism and foreign investment are way down, and will stay there until the political situation stabilizes. The amounts being offered in aid to Egypt by the IMF and World Bank, the EU, United States, and Saudi Arabia, are in the billions—but Egypt is a country of 80 million and it will run through those amounts in months. (“Egypt’s economy is in free fall,” one columnist wrote here.) Moreover, the experience of Eastern Europe and the former Soviet states shows that economic policy is the key determinant of success. In Egypt, many of the leaders who championed a more open economy are now in jail, in exile, or under indictment. Pro-market economic policy seems to be tainted by association with the late Mubarak period, and Egypt may end up throwing out not just the repression of the Mubarak period but the economic opening the regime engineered in its final years.

If public frustration grows because the economy does not, the leaders Egypt elects in the next year or two may face the kind of populist protests we have seen in Latin America. Indeed, the apparent Humalla victory yesterday in Peru shows that even substantial economic growth can be jettisoned by voters if they do not believe they are sharing in the increased wealth. The question would then become whether Egypt’s new democracy can survive such strains, and how its newly elected leaders and its Army would react to them. The Muslim Brotherhood is only one of the challenges facing Egypt. If poor economic policies are adopted, the loans from foreign governments and international financial institutions will soon enough run out and the frustrations and protests that economic stagnation and decline can produce will truly test Egyptian society–and test just how much Egyptians are committed to democracy.

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