Freer markets but unfree minds in Egypt

Freer markets but unfree minds in Egypt

Egypt is a towering enigma – sometimes monstrous, sometimes magnificent – that hovers above the rest of the Arab world like storm clouds over a dry prairie, bringing both life and destruction. Egypt is kaleidoscopic, ever-changing, and dazzling, simultaneously wonderful and woeful. It remains the big riddle of modern Arab politics – the birthplace of constitutional democracy, the Muslim Brotherhood, and the modern police state – but also its most vaunted prize.

Efforts to paint the country in a single shade of color are common, but not very useful. Egypt is neither structurally diabolical nor genetically enlightened. I keep coming back to Egypt for visits and make it a point to speak to both critics and members of the ruling establishment, along with independent analysts and citizens, because Egypt continues to be so potentially important for the future of the entire Arab region. It is a barometer that measures the Arab political condition, but also a rudder that defines the direction in which other countries move.

At the regional level Egypt has been politically immobilized for the past quarter century, following its peace treaty with Israel and close reliance on the United States; but it has not been made irrelevant. Politically and economically, the domestic scene has been stirring again in recent years, and the imminent transition to a new president in the coming years might signal an opportunity for change. The problem is that this confounding land continues to send mixed signals on how it wants to change.

I experienced this again during my most recent visit to Cairo a few days ago, when a blisteringly critical report on political trends in the country by the US-based Freedom House coincided with fresh evidence that Egypt”s economic and investment reform program has been one of the most striking success stories in recent Arab history.

The question that fans, critics and analysts of Egypt must answer is clearer now than it was a few years ago: How do we reconcile an impressive capacity for real economic and administrative reform, including the creation of millions of new jobs, with a reinvigorated authoritarian political system?

The good news on the economic and reform front is real, despite its anchorage in the ever-perplexing context of a heavy-handed political system. The government that took office in 2004 has shown that it can implement serious economic reforms that generate results. Simultaneous reforms in areas like business registration, promoting foreign and domestic investment, tax codes, monetary policy, trade, and privatization seem to have convinced the business community that Egypt is serious about change – in commerce and administration, at least.

The results are striking. Registering a new company now takes three days in a single office, rather than the two or three months in dozens of offices. Direct foreign investment has increased from $2 billion in 2004 to an expected $11 billion this year, rising from under 2 percent to over 5 percent of Gross Domestic Product, with new investments mostly in the non-petroleum sectors. GDP growth has doubled in three years, to 7 percent annually. Unemployment has dropped from 11.6 percent to 9 percent, and inflation is under control.

These gains contrast sharply with the fact that most middle-class Egyptians can barely make ends meet, as reflected in growing labor unrest and large, persistent strikes throughout the country.

The Freedom House report states that “the Egyptian government supports the evolution of democracy in Egypt in its rhetoric but continues to quash it in practice.” In its annual governance performance survey entitled “Countries at the Crossroads,” the group has written that “the Egyptian government has become more authoritarian and repressive over the past two years, despite its language to the contrary. The freedom of political parties and civil society actors has become increasingly restricted, the judiciary is punished for seeking independence, and a long-term state of emergency has been largely institutionalized.”

The Egypt report”s detailed analysis is all the more useful because it was written by two respected independent authors, Denis J. Sullivan and Kimberly Jones of Northeastern University in Boston.

I do not know why a police- and army-dominated modern Arab security state can achieve brisk economic reforms, high growth rates, and massive job expansion in a manner that other Arab countries can only envy, without attempting any serious political reform. But I suspect that this is the right question to ask, as we continue to grapple with the enigma of an entire region of nearly 300 million Arabs who have not been able to achieve or sustain a single breakthrough to credible democracy.

One day soon – we are not there yet – some brave leader in some Arab land

will muster the courage and the confidence in his people to modernize politics and citizen rights, along with tax laws and trade protocols.