Analysis: Egypt On The Road To Development

Egyptian policy makers sit down for a national dialogue to evaluate the country's current development trajectory.

By Ahmed Goher

Is there really a “cruel choice” between economic growth and political reform? Conversely, does the pursuit of economic and political reform need to be simultaneous? If not, which should come first, economic development or political reform?

These were among the tough questions asked at “Between Political Reform and Economic Development - Egypt the Future,” a national dialogue held by the Economic Research Forum (ERF) on September 30.

The relationship between political and economic reform in Egypt is a particularly complex one. To some extent, many in Egypt believe that there is a certain tradeoff between having political freedom and economic development. In this sense, political reform is many times construed as leading to instability and chaos. With the country having undergone two revolutions in the past few years, this idea has become even further ingrained in the minds of many.

It is within this context that the Cairo-based network of economists hosted political scientists, policy makers and journalists to debate the nature of the relationship between economic development and political reform in Egypt. The dialogue, held in Arabic, was moderated by ERF Managing Director Ahmed Galal and featured former Arab League head Amr Moussa, former Minister of International Cooperation Ziad Bahaa-Eldin, former Member of Parliament Amr El-Shobaki, and former Director of Research at the National Bank of Egypt Salwa el-Antary.

“The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist,” Galal said in his introductory remarks, quoting John Maynard Keynes.

Galal also stressed the importance of understanding that the diversity of opinions is valuable in itself. In this sense, he stressed that ERF’s national dialogue provides an open and independent platform through which different ideas can be discussed.

Moving on, the event kicked off with Antary identifying two conditions for economic development in Egypt that inherently involve political dimensions: combating monopolies and fighting corruption. Citing World Bank reports, Antary stressed that the main obstacle facing Egypt’s private sector manifests in politically well-connected monopolies that crowd out the market and ultimately lead to the economic challenges and disparities the country suffers from.

On the other hand, corruption, she said, places a huge burden on the Egyptian economy and results in billions of pounds, which could have gone toward development, being lost to a quagmire of venality.

She also pointed out that politics and economics are generally inseparable and that while people usually agree that economic problems exist, they disagree on how to solve them. In this sense, she noted that different solutions for economic problems entail different biases and different costs and benefits to different actors.

Speaking next, Shobaki underlined the concept of political development. He explained that while much has been said about the importance of political reform and economic development, little do people approach the topic of political development. According to Shobaki, political development is related to the capabilities and capacities of civil society and political parties and their ability to organize regardless of the political system in place. Without such political development, Shobaki noted that economic development cannot happen.

Shobaki added that one way to achieve political development is by capitalizing on the values of professionalism, integrity and efficiency that fueled mega projects in Egypt, like the new Suez Canal project. Such values he said, are a core gain from economic achievements that should be spread to all aspects of societal life so that they become reflected in reality.

In August 2015, Egypt had inaugurated a heavily publicized so-called ‘New Suez Canal.’ At the time, observes were mixed on the economic viability of the project, with many seeing it as an instrument to garner support for the president.

Shobaki also noted that in Egypt suffers from a lack of adequate political tools, explaining that while some have gone to “vilify the opposition,” protests have started erupting within the state (for instance against the Civil Service law). This, he said, highlights the need for the state to adopt the tools of compromise and negotiation when dealing with differing voices. In this way, a partnership between the state and society can be nourished, which would ultimately lead to political and economic development.

On his part, Bahaa-Eldin said that economic decisions are inherently political and agreed that “economic development can in no way take place in Egypt without adequate political reform that opens the way for political participation.”

In this context, Bahaa-Eldin identified five economic benefits that result from having a solid political foundation in Egypt, one characterized by stability and room for participation. The first such benefit is that it ensures the efficient formulation of economic policies by allowing for diverse perspectives to be taken into account. The second is that a good political system will guarantee that economic decisions promote social justice. Thirdly, political participation is conducive to less-corrupt economic policymaking since decisions are taken in a transparent manner that allows society to absorb them. Fourthly, political participation makes economic decisions more viable and more prone to actually being implemented. Finally, political participation ensures that governments have more opportunities to correct their mistakes. In this sense, Bahaa-Eldin said that the strength of a political system manifests in its ability to correct its mistakes and not simply cover them up.

Despite all of the aforementioned benefits, Bahaa-Eldin noted that in Egypt there is societal resistance to pursing political reform hand-in-hand with economic reform. He attributes this to a prevalent discourse in the media that political reform means less stability, which in turn hampers economic growth. In this framework, Bahaa-Eldin stressed the need for intellectuals to convince public opinion that political reform and participation are necessary, desirable and beneficial on all levels.

Finally, Moussa commented that Egypt is in dire need of a comprehensive project for reform. In this framework, he noted that such a project needs to encompass administrative reform alongside political and economic reform.

Moussa stressed the importance of the Constitution and the upcoming parliament in paving the path for both political and economic reform in Egypt. For instance, he noted that parliament is the best outlet for the political participation of Egyptian society and said that the constitution has clearly laid out the groundwork for achieving social justice by stipulating precise percentages to be spent on health and education while safeguarding the rights of women.

In terms of the challenges facing Egypt, Moussa identified “neglect, terrorism, corruption and hypocrisy” as the main ills afflicting the country and stressed the need to work to overcome them.

Moussa ended on a positive note, emphasizing that the road in front of Egypt is “clear” and that the country is “past the phase of experimentation.” He referenced India and Brazil as examples of countries that are on their way towards development and are now “knocking on the doors of great powers” to make their voices heard. This article is part of Egypt Today’s five-part series looking at the nation’s road to economic recovery. Despite the uncertainties, this past year has seen investors eyeing Egypt’s market quite favorably, predicting that in the long run the country’s economic outlook will turn positive. In this package, we ask investment gurus to weigh in on the current investment climate, including interviews with the MENA CEO of DHL in addition to Philips to get their take on the state of Egypt’s economy. We also spotlight one investment in the country’s attractive education sector: the scheduled opening of prestigious British school Malvern College.

Read the full series now in the December issue.