The Egyptian Economy Needs to Get Out of Its Morass

This emboldens me to address this very important aspect of the developing ‘new democracy’ in Egypt. This article is written to the so-called ‘man of the Street’ and not to the leaders or high-power economists. They would run circles around it and disqualify it on scientific grounds. Nevertheless, I shall trudge on, even though the ‘man of the Street’ might need it deciphered in less complex language. I do not have all the answers, and invite others to contribute with comments, criticisms and additions to this overview.

Gross National Product (GNP), Gross Domestic Product (GDP), Foreign Reserves (FR) and all the other economic jargon notwithstanding, the fact of the matter is that the economy of nations and individuals boils down to assets and liabilities/expenditures. Before I am figuratively stoned to death for this minor heresy, I hasten to add that what the people are after, is the simple desire to work for a decent wage, to provide a respectable life style for their families, and not dependent on the State for handouts. Generally speaking, the Egyptian people are economically spread out in a broad spectrum from the filthy rich to the beggars, tilted more to the latter.

Before I address possible long-term solutions I shall explore the salient causes behind this overwhelming tragedy. As a starting point the 1952 revolution has to be singled out as the beginning of this morass. In 1952 and shortly thereafter, the Egyptian economy was strong with considerable FR. Having not participated in any meaningful way in WWII, the governing and economic system in place was well suited to the nature of the Egyptians, though the few in the high echelon of the society, monarchy, princess, Pashas, captains of industry were a large chasm above the farmers and other have-nots in more ways than one. However, they did not slay the goose which laid the golden egg, so to speak. This benign state was rudely interrupted by the creation of the State of Israel in 1948. Unwillingly, Egypt was embroiled in the Israeli/Palestinian problem and thus started the identification of Egypt as an Arab State. This was the forerunner of the Nasser dream/nightmare of Pan-Arabism.

The following are some of the factors which come in play when we consider what got us to the economic catastrophe where we are now in:

·         Runaway Overpopulation: right out front, one of the major reasons why the assets are insufficient is the runaway population explosion. This subject of zero population growth (ZPG) is almost a taboo. It is couched in religious beliefs and misbelieves that challenge rationality. The large agrarian population, whose historical innards call for large families as assets in tilling the soil, is hard to convince otherwise. Incidentally, their illiteracy rate is the highest in the land and thus their chance of economic improvement is marginal.

·         Waste of Natural Resources: despite harnessing the flooding of the Nile to expand the agrarian area of land, major drawbacks, including the loss of the alluvium which for millennia made the land fertile without chemical additives was disastrous, due to the high cost of the chemicals and their biological unfriendliness. Though full of fish Lake Nasser is a problem rather than an asset.

·         Tourism: has been one of the major contributors to the coffers of the nation, estimated at 15 to 20% of the GNP. In the current milieu of Islamization this source of income has virtually dried up. Restitution will come when the country is settled down to a more civil state.   

·         Unstable political systems with major destabilizing opponents: books have been written about this subject from many different angles. What we call today’s Egyptians, having escaped the yoke of the monarchy and the British occupation by the 1952 ‘free officers’ revolution, have been burdened for some six decades of quasi-military despotism. Revolutions in other countries, which were aided or totally accomplished by the military, made for a successful democracy by handing the reins of power to the civilians. This did not ensue and three successive military men held the people’s imagination and more importantly their fate in their hands. Thus no democracy and an advance-to-the-rear was the result. The agrarian reforms were catastrophic. Dividing the arable land into five fedaan lots apportioned to a farmer was disastrous.

·         Embroiled in several military misadventures: The misadventures of Nasser, an egomaniac, squandered the resources of the country in Yemen, the failed alliance with Syria which wiped the name of Egypt replacing it by the hapless United Arab Republic and finally the six day war in 1967 claimed a heavy toll on the country.

·         Gross interference from foreign nations. It is a fact that the Egyptians did not rule themselves since the conquest by Alexander the Great and for a short period before by the Persians. Another important milestone is the 1805 march of Muhammad Ali Pasha El-Kebeer heading an army of Ottomans into Egypt. The history of this dynasty’s accomplishments and drawbacks is well documented. Suffice it to say here that the pluses outweighed the minuses. In fact the contact with European cultures, though under occupation, was factorial in moving Egypt into the twentieth century along with other advanced nations. The building of the Suez Canal altered global trade, economics and politics. Egypt was caught between and betwixt. Previously, a dot on the map it suddenly became a desirable territory sought after by many and fought over by a few. The struggle between the Americans and the British for hegemony of the Middle East (ME) following WWII had a foregone conclusion. The Americans won. The repeated missteps, faulty decisions and intransigence in their unqualified support of Israel resulted in many problems for the region. Their continued misadventures are costing them and the countries in the region heavily. Egypt is surrounded by some antagonistic neighbors and others which are alleged well-wishers. Separating the wheat from the chaff is a tricky undertaking. Regardless, there will be a price to pay. What and when is another mystery. Lately, Qatar demanded payment of $2 billion rather than negotiate a more equitable long term easy back-payment. I wonder who is inciting Qatar to this antagonistic behavior! The League of Arab Nations is as useless as the United Nations. It has done nothing but encumber Egypt in misadventures it had no business or the means to engage in.

·         The January 25th. Uprising/revolution: the spark in Tunisia which started the so-called fateful Arab Spring eventuated in the ouster of Mubarak et al and, enters on the scene, the Muslim Brotherhood (MB), as vultures devouring a prey. Since the January 25 uprising/revolution Egypt has undergone many metamorphoses. The changes are so dramatic and rapid that the sages are at a loss to accurately predict more than days, if not hours, of what may befall the nation. The June 30, 2013 revolution was by the people across the land. The ouster of Mohammad Morsi was the will of the people, supported by invitation by the military. Without the backing of the military, opposing the heavily armed MB, the revolution was doomed to fail. The AF did not perform a coup. It and the police force safeguarded the will of the people in shaking off the clutches of the MB and other Islamist extremists. The roadmap agreed on by the leaders of the country on July 3, 2013 is being followed, though with minor but significant changes.

·         The new constitution: I am very fearful that it has fallen far short of the mark of a secular democracy for which a lot of blood was shed and still is. The ‘committee of fifty’ which was tasked with revising the earlier efforts of the ‘ten’ faced a humongous task. There is no accommodating all factions. Compromise will not do it. In the final analysis there are winners and losers. Unfortunately, the divider is the Islamic Shari’a.  The framing of the final draft was rushed. It took Tunisia two years to frame an equitable constitution with the marks of democracy and not Shari’a in it. There was no reason for submitting to the nation a divisive instrument for a referendum. The Islamists headed by the single Salafist Nour Party representative was able to maintain the dominance of the Shari’a. The future of the country depends on its new constitution. Simple as that.

·         Inefficient/insufficient industrialization: we have the know-how, but the wherewithal is lacking. Given the right political and economic atmosphere there are many countries and private concerns which have enough confidence in Egypt to provide the necessary assistance to industrialize, initially at a lower, steady pace and then allowing the markets to promote the process to progress to higher levels. that the military are heavily engaged in industries which by rights are the purview of the civilians.

·         Somnambulant work force: there is some truth in that, but the reasons are not inherent in the makeup of the Egyptians. Their productivity is averaged to be 15 to 20%. The Egyptians are mostly the butt of their own jokes. Jokingly, any worker whose productivity exceeded the 20% was given a bonus. Another one is that the estimate of productive work by the government employees was one and a half hours out of the proscribed seven hours work day. If his productivity exceeds the hour and a half he asks for overtime pay. Joking aside properly challenged and motivated the Egyptian worker will rise to the occasion and can and would perform in parity with the Egyptians in the Diaspora, who are known worldwide to be of a high caliber of intelligence, performance and achievement.    

·         The Armed Forces (AF), a state-within-a-state: circumstances created this situation. Having been engaged in conflicts in 1948, 1956, 1967 and 1973 at the behest of virtual dictators it has isolated itself into an entity not controlled from outside its ranks. Sad to say that there has been corruption and a small scale of empire building through several decades. The not-so-well kept secret is being freed from imminent conflict with Israel through the peace treaty, it is engaged in non-military pursuits like small scale industries which created revenues unaccounted for in the ‘official’ budget. At the present the AF are the darling of the people and if Field Marshal El-Sissi would disengage from the military and run for president he would win by a landslide.  

·         Illiteracy: is a chronic problem which has been addressed unsuccessfully by several administrations. There is no panacea which will solve this knotty problem. To achieve a respectable state of literacy will take generations. This is the one item in the yearly budget which should not be short changed rather it should be apportioned enough funds along with highly competent administrators. Literacy is the salvation of the coming generations. In his recent article titled ‘ Building a knowledge society in Egypt‘ Nader Fergani quite rightly pointed to the need for knowledge acquisition to improve the economy.

·          Faulty taxation: taxation is in such a state of disarray that it is unpredictable and the revenue is a mere fraction of what it should be. The only reliable source is what is withheld from the gross salaries of the government employees. The reason why unemployment is so high in Egypt is not that so many people are without jobs. Rather, a majority of the so-called unemployed are gainfully engaged in private sectors and undisclosed businesses which are under the radar of the Tax Revenue Department. Add to this the rampant corruption of those in this government revenue department and the equally corrupt people who avoid taxation by illegal means like bribery.

·         Corruption across the board: this is a very delicate and mysterious subject with so many intangibles that it is best described as a vicious circle. It is widespread up and down the different strata of the society. This, despite the alleged religiosity of the people. The real question is whether it is reversible. Unless and until the individual feels that he/she are part of the whole and the land belongs to them equally there will be no cure. Some believe that a socialist system is what is best for Egypt. While that might be true, it is too expensive and very difficult to keep on track.

·         Misapplication of religion: the intent of all religions is equality and balance between people regardless of physical and mental endowments, gender, age, race, ethnic origin or religious belief, to even include atheists. If any religion does not pass this test it is disqualified from being integrated in the holistic beliefs of the others which do. Religions are ephemeral, residing in the guts in most religious people not in their brains. I tread where angels fear to tread. Yet, seeing that the Egyptians were and are religious from ancient times their devotion cannot be ignored. It is part of their psyche. As such, the world revolves around their beliefs. To guide the people to the correct understanding and application of their religion is a major but highly desirable task.

I alluded earlier that I will suggest some solutions. This is an over-call on my part. However, if some attempt is made to rectify the problems outlined, I am cautiously optimistic that at least we will start on the right course to reverse this tragedy. Not unlike a huge ocean-liner which needs to make a U-turn, similarly our problematic economy needs a wide berth, a long time and favorable winds. I believe that there is enough goodwill towards us in store amongst the rich and industrialized nations, the European Union and others which have faith in the new, post-June 30, 2013 Egypt. It is not beyond reason to put our right foot forward and extend an invitation with guarantees of stability. The International Monetary Fund is waiting to see when and how stability will eventuate in Egypt before it release the $4.8 billion promised.

We all are well aware of the ongoing fight against the traitorous past regime and the MB who would burn the country to avenge their defeat. Our valiant AF and Police Force are doing their level best and more to win this war. With God’s will we shall overcome.

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Saba E. Demian, M.D.