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Egypt’s “dream revolution” still looks distant
The new government doesn't seem to know where it's going, and the economy is sinking slowly.
November 21, 2012 2:39 by Reuters
It also provides some hope that the government will start to tackle the country’s twin deficits. The current account deficit is hovering around 3 percent of GDP and the fiscal shortfall stands at 11 percent. But other than vague talk about tax reforms there are still few details about the specific measures being considered, especially on the politically thorny reform of the country’s wasteful energy subsidies.
Subsidy reform is what could make or break the economy and the Brotherhood’s reputation, argues a Western diplomat. The majority of the 80 million population rely on subsidies that account for one quarter of the state’s budget and which must be overhauled to allow an increase in priority areas such as education and healthcare. Confidence that the government can execute these reforms is low.
The Brotherhood could soon destroy the business-friendly reputation it acquired by showing moderation in the wake of the revolution. Already, a plan to force shops to close at 2200 hours local to save on the government’s electricity bill has provoked widespread ridicule and had to be postponed.
The government’s sloppy efforts and mixed-messages are a deterrent to long-term investment, says a senior analyst. Investors were promised that contracts would be honoured. Yet President Mursi announced last month that Egypt would seek to recover around $16 billion from unnamed firms that allegedly benefited from corruption.
Senior executives think that the Brotherhood is on a money hunt after failing to find the Mubarak family’s billions, long presented as the pot of gold that would help return the nation to prosperity. But even those who accept the government must review some deals struck under the previous regime long for an approach that doesn’t add to confusion.
The need for more predictability is also a key reason why the Brotherhood needs to find ways to shore up the competence and independence of the judiciary, discredited under the old regime, in order to remove the cloud of suspicion and uncertainty hanging over its rulings.
The Brotherhood faces a major challenge to overhaul the economy in the chaotic post-Mubarak era and hasn’t proven up to the job yet. Even if the movement can afford to lose a few votes without threatening the wider Islamists’ majority, losing the support of big business would be a major blow to the Brotherhood’s credibility.
Amidst such weak leadership, day-to-day tensions are mounting on the street. The fear of increasing violence is a major source of worry, especially for women.
If the expectations of the country’s “dream revolution” are left unfulfilled, investors hoping to profit from Egypt’s favourable long-term demographics may have to endure another major crisis. As the chairman of a big financial firm puts it, “I wouldn’t be surprised if we had another revolution in the next eighteen months.”
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