Egyptian stock market, Cairo, March 23, 2011. Mohamed Omar/EPA/Corbis
Most Egyptians are
impatient, and understandably so. They are eager to see their revolution
achieve its goals of social justice, democracy and a better livelihood for all
their countrymen and women. They are suspicious of forces seeking to hijack it.
They are tired of waiting for security to be restored to their streets and
neighborhoods. And they are looking
for an immediate lifting of the other impediments to growth, jobs and financial
stability.
I too wish to see
all this happen, and happen very quickly in the context of a vibrant and inclusive
post-revolutionary Egypt. And, like many others, I worry that the longer it
takes to materialize, the higher the risk that the revolution may fall victim
to narrow vested interests, thus undermining one of the most inspirational and
impressive popular uprisings in history.
The challenge for
Egyptian society is to reconcile these genuine feelings and legitimate aspirations
with the post-revolutionary realities on the ground and, more broadly, in the
global economy. This requires four conditions to be met: a better all-around understanding
of Egypt’s transition and the historic pivots facing the country; a clearer
vision of the country’s medium-term economic destination; immediate steps to
restore the country’s growth and employment engines, and to stabilize its
finances; and steady progress in the multi-year efforts to establish strong,
more transparent and highly accountable institutions.
The Context
After an impressive
popular uprising and a remarkable overthrow of President Mubarak, Egypt has
faced difficulties in transitioning to the next phase of historic revolutionary
change – namely, pivoting from dismantling the past to the even more challenging
phase of putting in place sustainable drivers of a better future.
While both disappointing
and frustrating, these difficulties should not come as a great surprise judging
from the experience of many other major revolutionary movements. Indeed, history
reminds us that the process of positive change takes time and effort,
especially as countries and societies emerge from repressive regimes that
co-opted both public and private institutions, distorted resource allocation
and removed accountability and transparency.
It is not easy to instantaneously
set up institutions that are both credible and effective – and especially if
the effort de facto starts from scratch. Strong political leadership is
required, and one that is able and willing to secure legitimate broad-based
support. And the population must buy into a medium-term vision that,
preferably, also includes some early and visible wins.
In the immediate aftermath
of overthrowing President Mubarak, Egypt had these challenges in droves. Years
of repressive governance sucked awareness, responsiveness and inclusiveness out
of the country’s key institutions. Post-revolutionary political leaderships –
on a standalone manner and in what was feasible collaboratively – did not have
the organization and standing to, using the famous South African example of
Nelson Mandela, urge citizens to move forward by “forgiving but not forgetting
the past.” And the population experienced few early gains beyond the greater
ability for self-expression and freer organization – a critical step but one
that does not feed stomachs and provide greater assurances about future
wellbeing.
Post-revolutionary
Egypt was also encumbered by the circumstances of entities looking to fill the
new political vacuums. For example, aspirants started with very different
initial conditions with respect to networks and coordination – from the
grass-root organization of the Muslim Brotherhood and the traditional dominance
of the armed forces, to the scramble among new youth and secular movements to organize
in time into effective political parties. Many also questioned the extent to
which, after having served an important transitional role, the armed forces
would go back to the barracks – and under what conditions.
Egypt’s relatively
peaceful revolution would not have materialized without the decisions taken by
the armed forces in the initial phases. These decisions earned them respect and
admiration among citizens from all socio-economic backgrounds, religions, and
ages – and rightly so. Yet the longer the bumpy and uncertain transition
persisted under the rule of the SCAF, the greater the questions that arose
about the armed forces’ ultimate objectives and political aspirations.
All these differences
in “initial conditions” inevitably contributed to an uneven playing field – in
both reality and perception – for the range of political forces competing for
influence in the new Egypt. As such, the format and timing of every important
political step involved distinct winners and losers. With that, suspicions inescapably
arise. And all this made the critical historic transition and pivots even more
challenging
Then there are the
everyday realities of the economic and financial dislocations. Many months after
the overthrow of President Mubarak, Egypt lacked a properly functioning economy
and strong finances.
Production and
income generation were well below the country’s potential, let alone what is
required to address the acute problems of poverty and unemployment. Domestic
and foreign domestic investments slumped, withdrawing even more oxygen from the
economy. Meanwhile, the recovery of tourism was painfully slow while the risk
of disruptive capital flight remained uncomfortably high.
With high income
and wealth inequality, Egypt’s poor economic conditions quickly translated into
worrisome social problems – and this a time when already millions of citizens were
already poor and had no financial cushions to speak of (of their own or through
government-supplied safety nets).
Lastly, we must not
forget the highly unsettled global environment. Europe’s deepening debt crisis,
along with America’s sluggish economic growth, translated into even less trade
and tourism for Egypt. Growth also slowed in systemically important emerging
countries, such as Brazil, China and India. All this made it more difficult for
Egypt to export, and to attract external aid and secure the debt forgiveness
needed to provide the country with financial breathing space.
Looking Forward
These are all
legitimate reasons why the revolution had and is having difficulties pivoting
from overthrowing former President Mubarak to building an inclusive future for
the many. And inescapably, this fuels
concerns that the revolution could be hijacked and/or derailed.
Yet there are reasons
to remain hopeful. And this starts with the recognition that Egypt has embarked
on a multiyear process that less than two years ago was deemed improbable if
not unthinkable.
It is not just a
multi-year process. It is also a multi-staged and multi-faceted one that involves
individual and collective learning and adaptation.
Judging from its
important attributes and areas of agility, Egypt will continue to move forward.
Yes it will be bumpy, uneven, and, at times, even messy. But good governance will steadily
increase. Better institutions will continue to emerge. New networks and
organizations will form. Alliances will be established and re-established. And
the economic and financial situation will improve.
All this takes us
to the four major conditions that could facilitate the quicker emergence of a
stable destination for the country, and help avoid some of the potholes in the
journey.
First, it is
critical for the political process to be more open with the population about
the challenges of Egypt’s historic transition and pivots. Understandably, all political
forces are eager to use the excesses of the past to legitimize their claim to
influence and power in the new Egypt. They must also be open about the real challenges
of the immediate future, through continuous and frank communication and a
better assessment of the inevitable difficulties.
Second, political
leaderships have an obligation to set out a concrete and realistic economic
vision for the next 3-5 years. This goes well beyond slogans that no reasonable
person can disagree with. It is also about a detailed and coherent medium-term
plan that specifically answers questions like: How many jobs can and will be
created? How quickly it will take to stabilize the internal financial situation?
How effectively can public spending be oriented to provide better services and
support for the many (as opposed to the few)? What does subsidy reform looks
like? What is the role of external donors and creditors?
Third, Egypt must
take immediate steps to stabilize its economic and financial situation. Key
impediments to regaining pre-revolutionary production and employment levels
must and can be removed. Legal and operational uncertainties, many of which
have been associated with the abuse of existing procedures, should and can be
minimized. Also, and notwithstanding the admirable and correct aspiration for
self-reliance, the country needs to consider whether and how to quickly mobilize
sufficient external financing on appropriate terms.
Finally, none of
all this will be fully effective without properly functioning institutions that
are legitimate and accountable. This is the only way to create a durable
counter to the corruption that, for so many years, has eaten away at the
integrity and vibrancy of Egypt, as well as its international standing and
reputation.
After a bumpy
start, the country has recorded some important gains in this respect, starting
with the holding of relatively free and fair elections, including for Egypt’s
first civilian president. This must and can be used as a building block for
reforming moribund institutions of state, and those that were co-opted by
privileged minority interests.
Bottom Line
This is not an easy
list. Will it prove too demanding for an Egyptian society that was repressed
for so long and functions in an increasingly unstable global economic environment?
It is certainly a
risk, and one that must be managed carefully especially in light of the
country’s initial economic, financial, political and social conditions. I
strongly believe that Egypt has both the ability and willingness to move
forward and realize the objectives of the revolution.
I say this not in a
naïve and idealistic fashion but as an individual who, through both personal experiences
and a professional career, has been exposed to change in countries around the
world. Observing closely developments in Egypt, I cannot but be really
impressed by the multitude of people who feel – and strongly believe – that finally
they now "own" their country.
You see this
admirable trait in the robustness of the political discourse, and in the willingness
to get involved. You also see it in the sprouting of civic engagement and
volunteerism all over this proud country.
Many Egyptians
citizens, and the youth in particular, also feel that after many decades, they
again have a legitimate and effective claim on the street. They have the
organizational ability to maintain it and the inspirational drive to persevere.
That alone will
provide a set of checks and balances that pre-revolutionary Egypt sorely lacked;
and while it is not a guarantee of a specific outcome in a precise timeframe,
it is an important pushback against the minority of vested interests that seeks
to disrupt a revolution that has rightly earned the admiration and respect of
millions around the world.
Mohamed A. El-Erian is Chief
Executive Officer and co-Chief Investment Officer of PIMCO, the global
investment management firm. He is author of When Markets Collide, a New York Times and Wall Street Journal best
seller that was named as the Financial Times Goldman Sachs best business book of 2008, a book of the year by the Economist, and one of the best business books of all
time by the Independent.