Last Update 10:43
Tuesday, 12 November 2019

Egypt's five concentrations of risk

Post-revolution Egypt faces five deadly-serious challenges: declining economic growth; depletion of the middle class; flagging democratic transformation; political polarisation; and unprecedented regional change

Tarek Osman , Saturday 23 Mar 2013
Share/Bookmark
Views: 4834
Share/Bookmark
Views: 4834

First, the slow but steady reduction in foreign reserves and the pressures it is putting on the country’s monetary situation are threatening Egypt’s economic foundations. Short term management of the reserves becomes very tricky; inflation on basic goods start to rise; and various corresponding social challenges materialize. But the key risk here lies in getting entangled in stop-gap measures that are very detached from an environment of economic growth.

The measures to avert financial Armageddon could also become a vicious cycle that increases the risk of stagflation. In this scenario, Egypt would lose the results of the financial adjustment and growth measures it had taken in the period from the early 1990s to the early 2000s. And the sacrifices that the Egyptian society had endured in that period, and especially in the first half of the 90s, would go to vain.

The loss of growth drivers, even without the costs entailed in a stagflation, would shrink the market, erode competitiveness, and drive away any investment, local or international. The first casualty would be value-generating jobs, the ones that nurture talent, enhance knowledge dissemination, and create wealth. And if such situation continues, the entire job market, including low-end jobs and the grey economy, would suffer. These factors clearly worsen youth unemployment, the key socioeconomic ill facing the country; the working environment of small and medium sized enterprises; the availability of capital; and all the industrial and services value chains that evolve in growing economies. The ensuing risk here would be the impact on the middle class. This vicious cycle would certainly weaken the economic underpinnings upon which the Egyptian middle class have been growing in the past two decades. The deeper and longer the economic stagnation, the larger the fall of some segments from the middle class.

And this would give rise to the third risk: a serious weakening of the evolution towards genuine democracy. Amidst deteriorating economic conditions and increasingly difficult social circumstances, the coming of age of the 40-million Egyptians under 30-years old will become a tough experience – for them and for their society. Instead of the potential that such young and huge demographic segment can generate, big swaths of them could become angry and bent on change through any means. With poor education and vanishing economic opportunities, the anger could become explosive. Such milieu could bring about change, but that would be neither smooth, nor conducive to plurality, liberalism, or tolerance.

Control is the fourth risk. Since Mohamed Ali pasha had given rise to the process of creating modern Egypt in the first decade of the nineteenth century and until the first decade of the twenty first century, decision making in Egypt has been highly concentrated at the centre: the upper echelons of power in Cairo. The current political polarisation and the haphazard transition Egypt is witnessing are acutely weakening the solidity of key state institutions, of the normal interactions between these institutions, of the notion of rule of law, and of command over the country. This dilution of centralisation, in theory, could benefit the country: the more decentralised decision making is, the more empowered the different regions, the less the red tape, and the more the representation of various communities. But amidst highly unstable social, economic, and political circumstances, the weakening of authority and the gradual undermining of key state institutions is perilous.

The fifth risk is for the region. The Middle East is currently undergoing the largest socio-political change it has witnessed in over half a century. The rise of political Islam, the acute polarisation over social frames of reference, and the immense fluidity we are seeing in North Arica, the eastern Mediterranean, and that inevitably will reach the Gulf, are symptoms – and results – of the social pressures that accompany the generation change going on across the entire Arab world (in which over 190million people are under 30 years old). These tensions are the products of the lost opportunities – in education, research and development, exposure to the world, gender equality, and even in social refinement – in five or six decades. During such difficult transitions, nations benefit from the maturity of its traditional centres of culture and art: its reservoirs of civilisation. In the Arab world, Egypt, with the heritage of its liberal age, should have been that reservoir. Instead, it is now an economic, and potentially social, drag on the region. If Egypt loses this decade, the entire Arab world would pay a heavy cost.

Mitigating these risks is a function of avoiding the economic vicious cycle, reigniting growth, and resuscitating the potential of a huge segment of young people. Paying the price today of serious – and difficult – reforms, and entrenching the values of plurality and tolerate (despite populist tendencies) is much better for the Egyptian society than letting these concentrations of risks fester.

Short link:

 

Email
 
Name
 
Comment's
Title
 
Comment
Ahram Online welcomes readers' comments on all issues covered by the site, along with any criticisms and/or corrections. Readers are asked to limit their feedback to a maximum of 1000 characters (roughly 200 words). All comments/criticisms will, however, be subject to the following code
  • We will not publish comments which contain rude or abusive language, libelous statements, slander and personal attacks against any person/s.
  • We will not publish comments which contain racist remarks or any kind of racial or religious incitement against any group of people, in Egypt or outside it.
  • We welcome criticism of our reports and articles but we will not publish personal attacks, slander or fabrications directed against our reporters and contributing writers.
  • We reserve the right to correct, when at all possible, obvious errors in spelling and grammar. However, due to time and staffing constraints such corrections will not be made across the board or on a regular basis.
4



Democracia
25-03-2013 10:43am
1-
4+
Overpopulation
You forgot one of the biggest risks for the future of Egypt: Overpopulation! In 20 years there will be 40 million more Egyptians if people don't start with a responsible family planing NOW instead of just increasing the number of children like rabbits. There is already not enough now (Food, work, healthcare, proper water, schooling etc.) so what in 20 years? Where are the politicians speaking about this subject? Or is it not suitable for all the religious leaders and politicians to speak about family planning and about the fact, that sooner or later people will starve in this country and will kill each other for a piece of bread? Will all the Sheiks who tell people family planning is forbidden by islam pay for the children later??? Or will the food fall from the sky??? This only happens in fairy tales....
Email
 
Name
 
Comment's Title
 
Comment
3



Hani booz
24-03-2013 11:46am
1-
2+
Econimcal Revolution
A step in the right direction.We need decentralization, competition and the will and sincerity which we lack.
Email
 
Name
 
Comment's Title
 
Comment
2



Ahmed M Ibrahim
24-03-2013 11:29am
0-
1+
Economic Prospects for Egypt
For more than two centuries, Egypt's economic problems have been under constant investigation and review. Once in the distant past, Egypt was solely dependent on long staple cotton. However after the nationalization of Suez Canal attempts were made to broaden its base. Economic and financial experts like Abdel Moneim al Qaissouny were able to rescue the Egyptian economy and put it on a sound footing. However in the aftermaths of the two Suez Wars, Sadat opened the Door for Foreign investment. In the Mubarak era, under the expert advice of eminent financial and economic experts Egypt was finally able to re emerge as a viable economic power based on four eminent sources of income, namely the Suez Canal, oil exports, Tourism and worker's remunerations from abroad. Yet Egypt for all practical purposes is a desert country and only trade and commerce could rescue it from any eventual crisis. Consequently Egypt should aspire to become the Dubai, HongKong and Singapore of the Mediterranean r
Email
 
Name
 
Comment's Title
 
Comment
1



Democracia
24-03-2013 12:21am
1-
1+
The biggest risk
Dear Sir! There is another risk which is much more dangerous than all what you are writing about(and what is right without any doubt). This risk will beat everything. This risk is called OVERPOPULATION. In only 20 years there will be 40 million more Egyptians, Egypt will be around 130 million people. You can solve all the problems and risks in a short distance, it will help the country nothing in a long distance if you don't stop this "children producing madness" in this country. Already now there is not enough (work, food, housing, schooling, health care etc.) for all, what in 20 years? Where is the politician to talk honestly about this??? Egypt will implode, that's for sure, if there is no responsibility on the field of family planning! And it must start NOW!!!Tomorrow it is too late...
Email
 
Name
 
Comment's Title
 
Comment
Latest

© 2010 Ahram Online.