Is Egypt Ready for an Economic Reboot?

Middle East Policy Council

In an effort to lure much-needed foreign investment in the country, the Egyptian government held an international economic conference last week in Sharm el-Sheikh. Some consider the Egypt Economic Development Conference (EEDC) a sign that Egypt was ready to move past its Arab Spring stage and all of the political and social instability it carried with it. Many, however, believe that if the re-emergence of Egypt as a stable and secure country in the region is to be long-lasting, the Egyptian government needs to be more serious about economic and political reforms.

Commenting on the conference proceedings, the National’s editorial staff struck a note of caution, while agreeing that “There is much to applaud about this new project, with some caveats. It is bold, a statement of intent. It also ties Egypt closer to the Gulf states that have been most supportive of the post-Morsi era. But most of all, it suggests a willingness to think big, an essential component in fixing Egypt’s many woes. A city like Cairo, so vast, so sprawling, cannot easily be turned around. It takes bold thinking to reinvent the city…. Developing a new city must be done in tandem with developing Cairo itself and forging close transport links between the two; it cannot be merely a property development for rich Cairenes and foreign speculators. Building New Cairo is only the first step: the real challenge will be building a new Egypt.”

The Daily News Egypt commentator, Mohamed Fouad, expressed some level of optimism in the aftermath of the conference, not least because as he puts it “for the first time in the past five years, Egypt seems to have a medium term economic strategy….One has to be a true pessimist to ignore all the good signs coming out of the Egyptian economy. However solid execution is must for this turnaround to continue. With the right policies and execution in place, Egypt may just be able to balance the difficult formula, which is to restore economic stability all the same time while improving the standards of living for its people.”

But many observers have cautioned that unless the Egyptian government’s appetite for international investment is matched by an equal desire for social policy change, it is unlikely the current efforts will yield any sustainable results. Al Ahram’s Ziad Bahaa-Eldin feels that social welfare programs must be strengthened for any long-lasting success: “Before the January revolution, Egypt successfully improved national economic indicators, increased growth, employment, and currency reserves, opened new fields to foreign investment, and raised the country’s credit rating. But in the absence of a clear social policy and instruments to fairly distribute the fruits of growth, the poverty rate increased, public services collapsed, and income, opportunities, and resources become more inequitably distributed….The priority seems once more to encourage investment while offering palliatives and aid to the poor, instead of a vision that frames social welfare as the right of every citizen to a share of national wealth, resources, services, and opportunities. And although the audience at Sharm al-Sheikh is large investors and global corporations, it is necessary to affirm the state’s adherence to a clearly defined social policy because all of Egypt is a party to the conference, even if few Egyptians are  present.”

But social policy change is not the only challenge facing the Egyptian government. In an op-ed for Arab Times, Ahmed Al-Jarallah argues in favor of structural reforms which, in his view, would have a positive effect on the desire of international investors to come to Egypt: “For the success of the revolution, President Field Marshal Abdulfattah el-Sisi needs to clear the forest of laws and decisions which was the reason why investors lost their trust in Egypt….El-Sisi was able to bring back this trust through the successful organization of EEDC in coordination with the Saudi Minister of Finance Ibrahim Al-Assaf and the Emirati Minister of State Nasser Al-Jaber since all GCC States have realized that a stable and strong Egypt — economically — forms the basis for stability in the entire region…After the conference is ended and the guests returned to their homes, we place these observations in front of the Egyptian leadership since the EEDC in Sharm el-Sheikh was not a temporary event but the greatest gathering for international economic support for Egypt since 1952. It is time for hard work.”

The Jordan Times editorial is hopeful that the economic conference will have the desired effect on economic growth in Egypt, suggesting that the region stands to benefit from a strong Egypt: “This outpouring of support is meant to both promote stability and development in Egypt and to buttress this Arab country’s central role in the fight against radicalism in the region….In order to regain its status, the country needs to enjoy political stability and, more importantly, sustainable economic development that would help it tackle its woes….Egypt, this most populous Arab country, has great potential, but for it to be unleashed, it needs to restore security and stability, and secure growth. Investing in Egypt, therefore, is tantamount to investing in the stability and progress of the Middle East….Arab support for Egypt’s quest for prosperity and political stability will be instrumental to bringing this country to the forefront of nations fighting the forces of evil and  destruction.”

Since much of the funding that is expected to pour into Egypt is likely to come from the Gulf countries, many observers commented on the effect that increased investment in the Egyptian economy would have on their relationship. The National’s editorial staff recognizes this possibility and celebrates it by highlighting Egypt’s importance, both “politically and economically. But it is also vital religiously. Egypt’s Al Azhar University is the heart of moderate Sunni Islamic scholarship. Its role as a counterweight to the extremist misinterpretations of the faith espoused by ISIL and other militant groups is vital for peace in the region….But what Sheikh Mohammed and other Gulf leaders recognise is that Egypt can once again become that relevant, leading nation. With the help of the Gulf and the endeavours of its own people, it will. For the wider region, it must.”

Writing for Khaleej Times, Ahmed Mokhtar expresses pride in the new-found spirit of cooperation among the various Arab countries, arguing that investing in the Egyptian economy “is not about fast returns needed for the Egyptian economy, but it is an investment in the future of our Arab nation….Speeches of the Arab leaders during the conference, and their apparent appreciation to Egypt’s role in the region and its importance to the Arab nation, were received with a warm welcome by the Egyptian people who value so lovingly the stances of their Arab brothers….What Egypt’s President Abdul Fattah El Sisi mentioned about gratitude and appreciation to all the support, during his speech at the conference, is a clear message that expressed the feelings of all Egyptians…. The Egypt Economic Development Conference is over, but the logical question here remains; is Egypt capable of benefiting from the outcomes of the event? I say yes, Egypt can. And its people have the needed ambition and determination to do so. Yes, Egypt can return to its rightful position as long as the support is there — shared stances for the benefit of the Arab region’s future, and that a true reconciliation must be achieved between all the Arab states.”

Arab News’ Abdulrahman Al-Rashed is equally optimistic and pleased that Egypt is slowly finding its way back toward stability and economic growth, but cautions that the Egyptian government must continue to do more to prevent the bureaucracy and corruption from stifling investments: “The conference held at Sharm El-Sheikh did not present a particular message, but several commitments….There’s no doubt that if these great promises are fulfilled, there will be another Egypt emerging — a great country that deserves its status and place in history — and one which will be an aid to the region instead of a burden….With this determination, enthusiasm and optimism of Egyptians, and that of their allies, we expect the Egyptian government to protect the promised projects from administrative bureaucracy and corruption, which in the past succeeded at intimidating Egyptian and foreign supporters and investors.”

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