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:

Over the short-term, the government must make decisions on various issues that remain unclear and that cause persistent anxiety within the investment community. Most importantly, the government must explain what taxes and fees it intends to impose in the short and medium term, the future of energy pricing, what the forthcoming agreement with the World Bank contains and, last but not least, what measures it plans to adopt to deal with the exchange rate. Even if some of these are hard choices with a high social cost, lack of clarity is, in all cases, is more damaging than decisiveness. Lack of clarity leads one to imagine the worst possibilities and paralyzes investment and production. Furthermore, it is necessary for there to be complete agreement on a shared position among members of the government. Contradictory statements made by officials causes the government to lose credibility. As for the exchange rate, no statements or forecasts should be made, except by the Central Bank, as it is an issue that is negatively effected by any rumor or poorly thought-out statement.

In the short-term, as well, there is a great need to review many recent faulty decisions and to courageously acknowledge their shortcomings rather than stubbornly persisting in them. It is no longer up for debate that the Investment Law issued at the Sharm el-Sheikh conference was a big mistake. It further complicated the investment environment, opened up space for corruption and manipulation of land allocation and promised investors things that it could not guarantee. There is agreement among experts in law, economy and business that this law set us back ten years. So why do we not repeal it? The same applies to the policy of promoting global investment without giving sufficient, let alone similar, weight to small and medium-sized national ventures, older industrial zones and local investors’ associations that represent tens of thousands of small producers.

In the long-term, it will be useful to reexamine the utility of large national projects in light of the continuing lack of clarity and of contradictory statements made by officials about their cost, economic impact, funding and mechanisms of implementation. No one hates the idea of a new capital for Egypt, nor of adding millions of acres to the available agricultural land. Yet, due to the scarcity of resources, urgent needs in all areas of social expenditure and the need to upgrade existing public utilities, we must reconsider our priorities. There must also be dialogue within the community about the utility of such projects: which should be implemented now and which should be delayed or even set aside entirely.

Likewise, we must return to the issue of social justice, which has been neglected recently despite remaining, over the past four years, the Egyptian people’s clear, repeated demand. Though it represented for a time the core concern of the entire state, social justice has become again an overlooked issue, only pursued by the Ministries of Social Solidarity and Supply through the tools available to them. These tools -- pensions and social security through the Ministry of Social Solidarity, and ration cards and food subsidies through the Ministry of Supply -- are not enough to achieve the prosperity that people seek. We must transition from a concept of “social solidarity,” achieved by means of granting additional pensions and subsidized food supplies, to a concept of “comprehensive social protection” that gives all citizens proper education, the chance to become qualified for the labor market, healthcare and the opportunity to compete and advance. After this comes the role of social security: to protect the weak and those who cannot compete in the work market. Successive governments have made substantial efforts in this area, but a political decision needs to be taken to reinvigorate interest in completing this process, begun many years ago.

Finally, both in the short and long-term, there is a need to broaden the circle of discussion surrounding decision makers both in the Presidential Palace and the Cabinet. I speak here not only of the need to ask for assistance from Egyptian experts both inside and outside the country who could make valuable additions. More importantly than that, there must be an institutional dialogue. Economic policy should not be set solely by the group of people that surround the president, no matter how competent they are. Instead, it should be set through dialogue between the government, the Federation of Egyptian Industries, the Federation of Egyptian Chambers of Commerce, investors’ associations, professional associations, workers’ unions, political parties and civil society organizations. Each of these bodies represents a force in society and an interest that we must listen to and involve in the decision-making process so that they do not become spectators waiting to see what surprises the government throws their way. A sound economic policy should be designed with their support and participation and should represent a balance between their various interests.

In the last few weeks, we at The Arabist have been sharing our dismay over the slap-dash preparation of the Egyptian parliamentary elections, and our fears that they are so poorly and confusingly organized as to seriously undermine the democratic process. After the violence in Tahrir in the last 24 hours, we're not even sure if they will happen. If they do go ahead, they will take place among great logistical, security and legal shortcomings and confusion.

For this week's translation -- courtesy our friends at Industry Arabic, as usual -- we have selected a column by legal expert, economic and political analyst and parliamentary candidate Ziad Bahaa-Eldin that appeared in the November 15 issue of the privately owned El Shorouk newspaper that clearly sets out some of the problems:

How Will the Elections Be Held Amid This Legal Chaos?

My enthusiasm for the elections and for holding them on time has not yet died, due to my firm belief that they are the only means to emerge from this transitional period we are going through. Otherwise, the alternative is for the current chaos to continue and for people to become reluctant to continue the transition to democracy. Although there is a security vacuum, unstable economic situation and a serious disruption in basic materials and supplies, the only way to get out of this bind and achieve even incremental progress is to persevere and hold elections as scheduled.

Despite my enthusiasm, I find it hard to comprehend the legal chaos that has begun to envelop this whole matter and threaten its entire legitimacy. I will not reiterate the defects and shortcomings of the election law, which was issued piecemeal and with numerous modifications over the course of a few weeks, and which is as flimsy and confused as can be, since it has already gotten its fair share of criticism from a number of legal experts and politicians -- we just have to deal with it. The problem now is that the legal chaos is not limited to the election law, but continues to spread even though we are only two weeks away from the first round of voting. Four major problems exacerbate this chaos:

The first is that the performance of the Supreme Committee for Elections and its branches in the governorates has been extremely mediocre. The party lists and party symbols [ed. that allow illiterate voters to identify candidates and parties] were only determined at the last minute; the paperwork required of candidates differs from one governorate to another; the decisions of the subcommittees in the governorates contradict each other; criteria are unclear and the vacations taken by the committees are too long. In short, the situation is critical and does not reflect the seriousness of the issue, even though we are only a few days away from the most important elections in the history of modern Egypt.

The second problem is that the government has kept saying it would review the [ed. anti-corruption] Treachery Law and the Political Isolation Law [ed. banning political participation of former regime members], and then in the end did nothing until a ruling came down from the Administrative Judiciary Court in Mansoura banning some candidates from standing for election. Yet no one knows what effects this will have on the rest of the electoral districts in Egypt. Does this ruling have authority outside of the case in which it was issued? Will other similar rulings be issued, and what will we do if other rulings come down in other electoral districts in contradiction with this one? [ed. This has already happened, and the Mansoura ruling has been overturned] If the ruling is applied to all of Egypt, does this mean that there will be incomplete election lists, or that the registration window will be reopened to fill them? I expect that all these are legitimate, crucial questions that will have an impact on the elections that will take place in two weeks’ time. All this chaos is because the government decided to be content with merely studying the various laws and did not take the trouble to issue a law determining who is allowed to run in the elections and who cannot, and so left us scratching our heads in confusion. How can there be an election law that does not include provisions concerning who is allowed to run or not? Why didn’t the government settle this matter by drafting a law to settle the issue of political isolation in a clear and decisive manner from the start?

The third problem is that the government has not taken seriously the right of Egyptians abroad to participate in elections, as it decided to completely disregard and ignore this issue when national and political forces were raising it and when there was still time to put in place the necessary arrangements. Then the government was taken by surprise by a ruling handed down from the Administrative Judiciary granting Egyptians abroad the right to vote in elections, so it began to take measures that superficially appear to be enough. However, I doubt that they are applicable in practice or that they will really allow millions of Egyptians to participate in elections set to take place several days from now. Will several million Egyptians in dozens of countries really be able to participate in a vote on dozens of party lists and electoral districts, and on thousands of candidates? Have diplomats been granted proper judicial authority from a legal standpoint? Will Arab countries – where most Egyptian expatriates reside – agree to cooperate in organizing elections even as they deny their own citizens the right to vote?

Finally, the fourth problem lies in the basic constitutional principles document, which has been under consideration for months and was supposed to be a document that national forces agree upon and which paves the way for the drafting of a consensus constitution. Now here it is in a form acceptable to no one (while it has gone from a national consensus document to a document of national discord), it has come at an unreasonable time, and in a form that is legally ambiguous, where it is unclear whether these are just general ideas or if they are binding on the signatories -- or if this is merely the latest waste of time. All of this creates more legal uncertainty and confusion.

Why is organizing elections straightforward, simple and easy in Tunisia, while here in the country of legal heritage and legislative experience we are unable to succeed at the same task? The issue is not that complicated, and organizing elections doesn’t require us to reinvent the wheel. I ask you, the government and the Elections Committee, to do what is necessary to save the legitimacy and credibility of the upcoming elections. There are four things that need to be done before the end of the week: the government and the Military Council must decide the legal repercussions of the ruling to bar candidates in Mansoura by issuing immediate legislation specifying who may run and who is excluded; the Supreme Elections Committee has to settle the remaining challenges, complaints and requests regarding the candidates and party lists; the Ministry of Justice has to honestly admit what can and cannot be done in terms of granting the vote to Egyptians abroad; and I ask you, Dr. Ali al-Selmi, to forget the document and let the people elect and decide what they want, because the proposed document is inappropriate both in content and timing.

It is not important who will win and who will lose the upcoming elections; the important thing is for Egypt to succeed in holding fair, safe and legal elections, just as all the other nations who have gone through similar experiences have done. So work together to salvage the credibility of the upcoming elections. Otherwise, the damage will be serious.