CAIRO: How will the economic crisis reshape the global economic order? That’s been the question to mull over in the past months as the financial fallout sent world markets tumbling.Hanaa Kheir El-Din, executive director of the Egyptian Center for Economic Studies (ECES), told Daily News Egypt in an interview that when the dust clears, the first thing the world will notice is a decline in the United States’ economic supremacy. The financial turmoil began with the US credit crisis and went on to affect the rest of world, she said, so in the future, every country will want to have a say. This will mean a more active role for countries such as China, Japan, Germany and France, who will demand a greater role in monitoring the global financial sector. One lesson to be learned is how little supervision there was over the global financial system, she added, which is the first thing that needs to be addressed by strengthening governance, transparency and accountability – otherwise, the current crisis will be replicated in the future.
A deeper lookThe ECES was established in 1992 as an independent non-profit think tank with the mission of promoting economic development in Egypt. The center was ranked in 2008 as the second top think tank in Egypt and 13th in the Middle East by US magazine Foreign Affairs.Executive Director Kheir El-Din sat down with Daily News Egypt to describe her vision of a new order for the financial world. The role of institutions such as the World Bank, the International Monetary Fund and the International Finance Corporation has to be revised. Their projections regarding the current crisis were not accurate, particularly the IMF, Kheir El-Din said, and their solutions for getting out of the crisis did not work, which shows their weakness.One noticeable trend in the new financial order taking shape is an increase in protectionism, particularly in the West. “This affects the role of the World Trade Organization, which [promotes] free trade, but now has to revise its position in this new [financial order], Kheir El-Din said.”There is a saying that goes: ‘The West tells the developing world do as we say, not as we do,’ she said, “they give us instructions and then do something else.
Closer to homeIn Egypt, a different crisis began when inflation rates skyrocketed in early 2008 after a Presidential decree to raise public sector wages by 30 percent, which sent food prices soaring and resulted in bread riots.”This was funded by real resources, which means the government started to impose taxes, remove tax exemptions on free zones and impose taxes on treasury bills, which affected the stock market and sent it declining well before the [global economic] crisis in May 2008, Kheir El-Din said.She stressed that before talking about external shocks, Egypt has to work on its internal financial system. Egypt should direct its attention to other African and Arab countries, she said, “We should look on all fronts, including opening up with the US, and we should not depend on only one block of countries. This will require increased competitiveness and improved production. Enhancing the education system is a prerequisite to improving productivity, she said, but “very little has been done to this end – “a lot of talk and very little action.
Local think tanks Egypt does not have enough think thanks, Kheir El-Din said, but what worries her more is “the quality of research. “Economic research in Egypt is below global standards, she said, pointing to Israel as the top in the region.Foreign Affair’s survey results show that among the Middle East’s top 25 think tanks, eight are Israeli, three are Turkish, two are Egyptian, two are Palestinian, and two are Emirati, in addition to one in Morocco, Lebanon and Jordan. Al-Ahram Center for Political and Strategic Studies topped the list, followed by the ECES. The center currently has five senior and five junior researchers, and while there are vacancies, “it’s difficult to find the right caliber.