To Beat ISIS, Focus on Economic Reforms

To Beat ISIS, Focus on Economic Reforms

The following is a guest post from Nathan Field, an entrepreneur and commentator on Middle Eastern politics. While Western governments weigh which military actions to take against ISIS, Field looks at the long-term economic reforms that could introduce greater employment, development and therefore stability to Arab countries, and weaken the appeal of extremist ideologies. 

The ultimate outcome of the military struggle against the Islamic State in Iraq and Syria is certain. ISIS will land some blows but has too many enemies. Eventually, it will lose a war of attrition. The territory it controls in those countries will be reclaimed.   

The bigger, long-term challenge is the spread of Islamic State’s ideology in the broader Middle East, as opposed to the presence of the group in Syria and Iraq. This ideology of extreme utopian populism is caused at a most fundamental level by the socioeconomic stratification of Middle Eastern societies, a problem that is aggravated by the weakness of Arab economies in the global marketplace.

This has created a division between roughly the top 20% of societies, which is in a position to thrive and obtain status, and the vast majority that can mostly only hope to achieve the same. While such gaps have always existed, they are now being amplified by the explosion of the internet, social media and smartphones. For a growing number of young men, Islamic State’s utopianism offers a sense of purpose, meaning and masculinity that they don’t believe they can obtain by playing according to the conventional rules of society.

Economic reform, therefore, will be the key to undermining the group’s broader ideological appeal throughout the Muslim world-- with one major caveat. To succeed, it must not be a mere intensification of the neoliberal reforms that have transformed Arab economies since the 1980s. Those efforts generated unprecedented macro-economic growth, but failed to distribute the gains to different segments of society in a socially optimal way. Socioeconomic stratification increased, and that has directly contributed to the ongoing surge of radicalism.   

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In Translation: A modest proposal to fix Egypt's economy

Economist, former government minister and rare voice of reason Ziad Bahaa Eddin presents a list of sensible suggestions for what Egypt should do, undo, and not do to right its sinking economic ship. Pity that they will almost certainly fall on deaf ears. This installment of our In Translation series is brought to you as always by the professional translation team at Industry Arabic

Recommendations for Dealing with the Economic Crisis

El Shorouk newspaper, October 20 1015

Ziad Bahaa-Eldin

One cannot describe the current economic situation as only a minor bump, one that we can deal with using the same tools and methods the state has grown accustomed to using over the past years, and which exacerbated the crisis in the first place. I am not referring here to the disturbances in the exchange market that recently grabbed the media’s attention: they are a symptom of an underlying sickness, the expression of deeper problems in the management of the economy. The principle of these problems are weak levels of investment, exports and employment and the rise in both internal and external public debt. The most important of these problems, though, is the government’s lack of clarity in its economic policy and the direction it intends to pursue. For citizens, the steady price increases, especially in food, the continuing decline in public services and the scarcity of employment opportunities are the real indicators of the Egyptian economy’s performance. For them, these issues are more important than figures for growth, reserves and the public debt. 

We can, of course, blame the slowdown in world trade, global conspiracies, or the regional situation. None of these, though, are sufficient to explain the rapid worsening of the economic situation over the past few months. We can also demand that minister after minister step down or cabinet after cabinet be replaced every time there seems to be a slowdown or a failure or every time the media calls for an immediate change. However, the gravity of the current situation requires us to stop and reassess our position and to build a minimum of consensus around certain important priorities instead of searching for a scapegoat or trying to satisfy the media’s thirst for a new victim. Here is what I propose:

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Selling the world on Egypt

Jack Shenker gives a great run-down of the economic conference to tout Egypt's prospects. 

Christine Lagarde, head of the IMF, was among the first to pay homage to the reform-minded credentials of a man responsible for what Human Rights Watch (whose website was blocked on the conference WiFi network) has labelled one of the largest state massacres of demonstrators in modern history; John Kerry, the US secretary of state, Philip Hammond, the UK foreign secretary, and Blair all followed suit as the weekend progressed.
But memories are short. A foreign-investment led, GDP-growth orientated economic model was the hallmark of Mubarak’s dictatorship and received glowing approval from the IMF. The outcome was epic corruption, eye-watering riches for a crony capitalist class at the top and immiseration for everyone else; Bread, Freedom, Social Justice was the revolution’s slogan, though none of Egypt’s post-Mubarak regimes – from the junta that took power immediately after the January 2011 uprising, to the short-lived, aggressively free-market government of Mohamed Morsi and the Muslim Brotherhood, to the new military autocracy – have bothered to take the latter demand seriously. The Brotherhood declared last week that Egypt is not for sale, forgetting that exactly the same multinational corporations currently signing deals in Sharm el-Sheikh were fawned over and flogged to by Morsi as well. At Egypt’s economic summit, the more things change, the more they stay the same.
In reality, the conference is about the Egyptian military showcasing a business-as-usual vision for the future, one in which Gulf and western capital works in partnership with senior generals to carve up and commodify the country, and where Egypt’s identity – contested so dramatically in the streets over recent years – is curated solely and safely from the top. But Sisi could not pull off such a feat on his own. Enter an interconnected grid of international consultancies and high-level public relations agencies that specialise in subtly repositioning a nation’s image.

"Nobody wants to do what's in the country's interest"

Yesterday afternoon I found myself crossing the increasingly bedraggled expanse of Tahrir Square (where a permanent encampment of protesters has lived since last month's confrontation with Morsi and where a mild Mad Max vibe now prevails) to go hear about how the Egyptian ecomony is doomed.

At a media roundtable on the Egyptian economy at the American Univerity in Cairo's downtown campus, professors from the university predicted that the pound will fall to 7LE to the dollar; that growth will be no more than 2% of GDP; that foreign and domestic investment will remain low (private investment is currently 16% of GDP, whereas to promote growth it should be at 20-25%) and that inflation and social tension will rise. 

The economic policies of the current government were treated with ridicule -- starting with a recent announcement that they will create 800,000 jobs this year (most jobs "created" since the revolution by the government have meant giving permanent posts to functionaries on temporary contracts -- and we all know how the Egyptian bureaucracy needs to be strenghtened) and ending with their promise that new Sharia-compliant Islamic bonds will raise $200 million. Economics professor and disgruntled social observer Galal Amin, in particular, eschewed economic jargon and tore into the situation with refreshing candor and avuncular charm. "I don't see why we even need to have conferences to discuss fixing the economy, guys" he said, "when they can raise $200 million by creating a new kind of bond." 

According to Amin -- although the economy wasn' t great before the revolution -- the basis of Egypt's economic crisis is political, caused by "a lack of security and a lack of trust," which the prevailing political discourse does not help. Investors, Christians, tourists -- none of them are confident in Egypt anymore. And the Islamist government obfuscates. "They don't just not tell the truth," about the economy, he said. "They say the opposite of the truth." 

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How Egypt Can Learn from Iran’s Subsidy Mistakes

Breakfast Wrap: How Egypt Can Learn from Iran’s Subsidy Mistakes

Good post asking the right questions about Egypt  subsidy-busting plan. The biggest question I have is, considering that the approach is introducing quotas per family (all income levels having the same quota), is how quickly can this system be implemented? Sounds like a plan for in a  year or two at best, not something you can implement now to deal with an urgent budget deficit.


Issandr El Amrani

Issandr El Amrani is a Cairo-based writer and consultant. His reporting and commentary on the Middle East and North Africa has appeared in The Economist, London Review of Books, Financial Times, The National, The Guardian, Time and other publications. He also publishes one of the longest-running blog in the region,

Great new anti-army video calling for Egypt general strike

This video, put out by Aalam Wassef, is one of the most daring and well-made I've seen yet by the anti-SCAF movement. The basic narrative is that the SCAF represents a military that has run Egypt into the ground for some sixty years, while enjoying the fruits of its economic empire, luxury hospitals, clubs etc. It calls for a boycott of military-produced products and a general strike on February 11.

Links for 08.08.09 to 08.09.09

Middle East Report Online: Rachel Corrie in Palestine…and in San Francisco | Joel Beinin on the hysterical reaction to the screening of French-Israeli filmmaker Simone Bitton's film on Rachel Corrie at the San Francisco Film Festival. Israeli agents to screen judges before appointment - Middle East, World - The Independent | Israel - just another Middle Eastern autocracy: "Israel's internal security service has been given a de facto veto over the appointment of judges in an unprecedented decision that has the country's embattled liberals up in arms. The move by the Judges Selection Committee on Friday is likely to make it harder for members of Israel's Arab minority and others with views that are not mainstream to become judges, according to the Association for Civil Rights in Israel (Acri)." Obama's letter to Assad .... | FLC: "According to the Lebanese daily Al Akhbar, President Obama heeded a "french advice" and transferred the Lebanon-Syria file (s) to the White House, away from the tractions and the oversight of such officials as Jeffrey Feltman... Moreover, and always according to Al Akhbar, a senior Arab diplomat in Beirut said that President Obama sent a "three pages letter" to President Assad asking him to "turn a new page in the bilateral relations between the US and Syria" ... and outlining ways to move forward. " Typhoid outbreak in Egypt | In Qaloubiya governorate, due to water sanitation issues. There are increasing water sanitation and distribution problems in Egypt, a sign that the government is not sufficiently investing in infrastructure. Central Bank: Egypt's remittances drop 26 percent (AP via Yahoo! Finance) | The crisis hits. Al-Ahram Weekly | Living | Obituary: Fayza Hassan, 1938-2009: Life interrupted | Very sad to hear about the death of this wonderful writer. Egypt's National Security Threatened By Sorcery: Psychiatrist | Mountain = molehill. EGYPT: Anwar Sadat's daughter sues information minister over Hollywood movie | Babylon & Beyond | Los Angeles Times | Because of the film "I love you, man." Which isn't very good anyway (and the dog does not resemble Sadat). Reptile wreaks havoc on Cairo-bound flight | Funny: "A “small crocodile” running up and down the aisle of a Cairo-bound flight recently sent passengers into a frenzy. No one claimed ownership of the creature, which turned out to be a lizard." Israeli settlement freeze 'not enough for Saudis' (AFP) | I almost hate to praise Saudi Arabia, but they have this right.
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Links for November 28th

Automatically posted links for November 27-28th:
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