Restricted Restricted Robert Mason Dr. Mason is a lecturer in the political science department at the British University in Egypt. The Egyptian state has accumulated a number of obstacles over the last three decades that have affected its ability to maintain a leadership position in the Middle East and North Africa (MENA). Egypt retains some characteristics of a regional power, although it is questionable whether any MENA state possesses the combination of military, economic and demographic resources to project power effectively.1 This paper identifies some significant domestic impediments that may need to be addressed before Egypt can improve state capabilities, harness substantial domestic resources and realize its human and economic potential. Some of the issues relate to the political uncertainty caused by the revolution of 2011 and the ousting of President Morsi in 2013, the inability of Western-backed civil-society groups during the Mubarak era to advance a good-governance agenda,2 and the social fracture and security threat posed by groups such as the Muslim Brotherhood (MB) and its supporters. Unrest in Sinai and events in Libya should also be factored into the security equation. The domestic challenge from Islamist groups has been evident in Egypt since the 1950s; and, throughout the 1980s and 1990s, groups such as Al-Jamaa Al-Islamiya and Al-Jihad tried to usurp President Mubarak's legitimacy. This challenge led him to rely on his military background and remain security centric in policy making.3 Egypt became ostracized in the Arab world after President Sadat signed a peace treaty with Israel in 1982. Then Saddam Hussein's miscalculation during the Iran-Iraq War removed Iraq's chance to become a new Arab leader to the benefit of Egypt, making Iraq dependent on Egyptian technical and military assistance, and led Baghdad to resume links with Cairo — which quickly became a trend among Arab states.4 Since then, apart from responding to urgent external threats, the Egyptian elite has remained preoccupied with internal problems. This has impeded its ability to lay out either an ambitious economic-development agenda or a proactive foreign policy. Egypt's economic infitah (opening), implemented under President Sadat in 1974, led to the establishment of a class of "crony capitalists," linking businessmen closely to bureaucrats for their mutual interest. This may have been a step towards greater liberalization, as outlined by the so-called "Washington Consensus," but the national economy has not moved beyond that stage. President Mubarak rolled back both the welfare system and elements of food security in favor of further liberalization. By the mid-1990s, the economy was firmly on the privatization track, including the privatization of many state-owned enterprises (SOEs), but this exacerbated the increasing social divide between the haves and have-nots.5 By the mid-2000s, a new social movement called Kifaya (enough) was established by the Egyptian Movement for Change, which cut across the political spectrum from Islamists to nationalists. Its broad message included ending dictatorship and nepotism (President Mubarak was trying to maneuver his son Gamal to succeed him), ending the emergency laws that restricted freedom of the press and association, and releasing thousands of political prisoners.6 It was clear President Mubarak was not going far enough in his political reforms. However, a small part of the protest was also about what was seen to be the impunity that the elite, including Gulf elites, enjoyed in Egypt. For example, in 2005 there was a car race between a Qatari national and Egyptian national on the main road to the Cairo airport. In the crash, including the deaths of five pedestrians, and poor medical and police responses that followed, much of the Egyptian anger focused on the police, who allowed the Qatari driver, a prince, to flee back to his country without answering to charges.7 After the ouster of President Mubarak in 2011, the United States, Iran and Turkey all agreed that what had happened in Egypt would affect the whole region.8 Qatar welcomed the MB's rise in Egypt with open arms; the other GCC states, Saudi Arabia and the UAE in particular, perceived the organization as a direct threat to their governing systems. Qatar was able to leverage its pre-existing relationship with the MB when they took power in 2011 and capitalize on it, primarily through the facilitation of investments. The alliance was relatively unimpeded due to the speed at which Mubarak was forced to depart from the presidency and the frailty of King Abdullah of Saudi Arabia at the time. However, the rewriting of the Egyptian constitution in 2012 to favor the MB's own ends did nothing to extinguish growing public suspicion of its motives.