Despite the growing crisis, Egypt may be better resisting the temptation to do too much too soon
In the discussion over the worsening economic crisis facing Egypt, there has been at times an implicit attitude towards Egypt’s future: the country needs only to get back on the horse. A few decisive moves to reduce the deficit, recover tourism, and increase foreign investment, possibly secure an International Monetary Fund (IMF) loan in the process, and then we’ll be back in the right direction. Save some of the more experimental conditional cash transfer programmes proposed, these “reforms” point to a future that seems all too similar to Egypt’s past. At the risk of making myself a heretic, it seems to me that the now commonplace litany of reforms offers not much more than a return to Mubarak-era economics.
On the surface, the economy under Mubarak was a model for the developing world. As such, the tendency to return is in some ways understandable. Before the revolution, if you squinted at the right reports, Egypt appeared to be getting everything right: strong growth rates in the face of a crippling global crisis, solid FDI levels, increasing economic liberalism, a stable tourism sector, solid foreign reserves, and bright long-term outlooks. These also seem to be what the bulk of the current proposals are striving for. This begs the question, if we can have such a rosy economic situation without the autocratic rule of an aging megalomaniac, why wouldn’t we strive back towards this?
The answer lies in small but crucial bit of data. In 2007, the UN released a report concluding that despite five-year cumulative growth of 21%, the poverty rate had risen by nearly three percent to 19.6% over the same period. This growing economic inequality under Mubarak is well known, but the fact cannot be overemphasised given the sort of talk prevailing now. In its emphasis, it draws questions over the potential efficacy of proposed measures. Bluntly, there are no easy answers for Egypt.
The situation was captured perfectly by Galal Amin, the American University in Cairo professor of economics quoted earlier this week in the Guardian commenting on the growing debate over the pending IMF loan, simply, “[it] is neither necessary nor sufficient”. The same could be said about much of the other proposed reforms, and it should be apparent that even taken all together, the reforms would likely move Egypt no further than back to square one.
It may be argued that the reforms would be effective if only we could root out lingering inefficiencies and corruption. Moreover, the severity of the economic situation has rightly caused a sense of urgency, and the reforms would help, at least in the short run. The urgency brings to mind the work of the relatively well-known Slovene philosopher, Slavoj Žižek, writing in the wake of the 2008 financial crisis in his book, First as Tragedy, Then as Farce. He argued then against the compulsive move to do something, equating such compulsion to a meaningless gesture in the face of a something we have no actual control over, advocating instead for deliberate contemplation.
Such claims would be somewhat over-the-top in Egypt’s case. The situation is not so uncontrollable, and given the rapidly rising strain much of the population, it does command some sort of immediacy. However, Žižek’s key point here is that in times of crises, we often act too quickly, “instead of reflecting on how [the problem] arose in the first place”.
The contributing factors to Egypt’s current economic state are of course many. It seems safe to say that at least one was the exploitative method of attracting foreign investors that Mubarak’s administration employed including highlighting poor wages, minimal workers’ rights, and massive tax exemptions (a theme I have touched on before). This is not to say that FDI’s or anything should be off the table. Only that if jumpstarting FDI levels is to be part of larger continued reforms, it must be based in providing more Egyptians with the tools they need to be meaningful partners with foreign investors rather than hired hands. Moreover, reforms must be aimed at the roots of economic inequity as to avoid another period of explosive growth rendered useless by a complete stagnation of poverty levels.
This is precisely what is at risk right now. Indeed, the continued suffering amongst Egypt’s poorest is a cost too high to ignore and requires immediate, short-term remedy. But the task now must also be to understand the economy’s malady, not simply treating its symptoms. The fleeting efficacy of proposed reform must not be forgotten. If it is, Egypt’s economic stability and wider prosperity will remain elusive for another generation.
Rasheed Hammouda is an Egyptian-American researcher based in London with a focus on MENA economics and contemporary philosophy