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."
Rather than passing real economic reforms -- measures that would genuinely re-distribute resources or raise new revenues (Egypt is in dire need of tax reform) -- the government has been focused (one might say obsessed) with the creation of Islamically-branded financial tools, which, while they may appeal to certain religiously-minded investors, aren't fundamentally different from existing ones.
The Islamic bonds, which would allow private investors to finance public projects with revenue streams, are reminiscent of the Mubarak government's Private Public Partnerships schemes. There has been concern that they will lead to privatization of public resources or services -- a concern that lead Al Azhar (which the Brothehood and Salafis just made the "reference" on all Sharia matters) to, embarrassingly enough, reject the bond idea.
At the end of this rather dispiriting talk, one economist pointed out that Egypt could be doing much better economically -- that it was recently classified among developing economies with significant potential. Why, then, the Egyptian journalists in attendance asked, aren't things better? Is it corruption? A lack of qualified cadres?
Galal Amin stepped in again, with a short history of Egypt's recent economic crises: In 1967, after the war with Israel (which was solved by help from the oil-rich Arab countries, in exchange for Nasser abandoning pan-Arabism); in 1975, under Sadat (wihch was solved by US aid and assistance after making peace with Israel); in the late 80s, under Mubarak (which was solved by the Western nations and in particular the US forgiving half of Egypt's debts after Mubark supported the invasion of Iraq and accepted IMF "structural adjustments"). Basically, Amin's arguments goes, Egypt runs on the knowledge that it's "too big to fail" and that someone will always step in to save the day -- and always at a significant political price. "What are we expecting now?" He said. "Saudi Arabia, Qatar, the US to rescue us. I wonder what they'll ask from us this time?"
As for why there aren't better people in government, Amin -- who had really gotten into his groove -- had this to say: "It's because in Egypt we look for the person best suited for the job and then we keep him away. The truth is our country has been ruled from outside forever and still is, so the most inconvenient people to have in government are وطنيين (watanyeen, or patriots). If you're not watani, then here you go, you can be a minister. But if you start to care about your country, you've got to go. Solving the economy is not a technical problem; it's a political problem. Nobody wants to do what's in the country's interest."