Why Egypt’s Economy Needs a Plan More Than Protests Now
With concentration focused on the protesters, the resignation of Mubarak and hopefully a peaceful transfer of power, few are talking about the economic impact of the protests and Mubarak’s resignation. With tourism accounting for 11 percent of GDP and the Big Three rating companies dropping the Egyptian bond rating, the nation’s citizens are being adversely exposed to a falling economy. Additionally, many foreign companies are exiting the country.
This latter point hit home to me recently as I spoke to one of my many cousins in Egypt. He explained that the Japanese company that he works for called to inform him it has “decided to abandon projects and leave Egypt.” Another relative mentioned that her bank had been burned to the ground. While the current topics of conversation in American media are correctly focused on the political aspects of the power transfer, we should remember that the economic impact of the transfer of power will be just as critical.
There are two potential transfer of power scenarios being discussed in much of the international community. In the first, Mubarak steps down in September per his recent statement; in the second, Mubarak steps down much sooner, possibly in the coming month. However, there are great risks to both approaches. Should Mubarak step down now, it could leave a political vacuum for the Muslim Brotherhood. If he were to stay in power and protests continued then the world may see the same sad violence that was observed on February 2.
Whichever scenario holds, Egypt’s economy will suffer loss and chaos will persist. Currently in Egypt, the financial market is crashing, banks are burning, capital investments inside and outside of Egypt are disappearing, tourism revenues have vanished and foreign companies are leaving projects behind. And that is the good news, at least compared to citizens in Egypt who are not working. What’s currently at stake is greater poverty which will lead to greater chaos in the streets and perhaps years of political and economic recovery at stake.
I propose a compromise that will ease the instability and tension that will likely continue until the day a peaceful exchange of power takes place. As it stands currently, the two most likely replacements at this point are Mohamed ElBaradei, former head of the IAEA, and Amr Moussa, current Secretary-General of the Arab League.
For an effective compromise to take place, Mubarak would need to take control one last time by helping to orchestrate the transfer of power to an interim government. Also, a leadership core must be established that will restore unity and order to Egypt while showing international governments, tourists and businesses that Egypt is, indeed, open to them. Over the next week, I believe a private meeting should be held between Mubarak, ElBaradei, and Moussa. Currently, two out of the three can provide value to Egyptians.
ElBaradei, though accused of being out-of-touch with the average Egyptian, has obtained international respect with his involvement in global equality, the International Atomic Energy Agency and being a Nobel Peace Prize winner in 2005. With this recognition, he would reinforce the prominence of Egypt in the Middle East and give hope of stability to international investors, companies and tourists. Domestically, Amr Moussa holds the respect of Egyptians and would be a formidable choice to orchestrate the domestic changes needed.
In this meeting, Mubarak should make Amr Moussa his “transition team” leader/interim president. Most of Egypt’s80 million citizens would approve of Moussa as the next leader and trust that he would rework the constitution. Several changes he would likely push for are installing inalienable human rights, providing more freedoms and ensuring protection against governmental corruption. At the same time ElBaradei would become a Vice President or a Senior Advisor managing all international relations. These two individuals would expedite the recovery of Egypt’s economy while also creating the democratic society that all Egyptians yearn for.
The success of Egypt and the new government is contingent upon the removal of the Mubarak regime now while recognizing the political and economic realities within the nation. Egypt literally cannot afford for Mubarak to wait until September. Even with a smooth transition of power capital investments, foreign companies and especially tourism may not return to pre-protest revenues for six months to a year after the Mubarak regime is out of office. If Mubarak truly wants the best for Egypt and Egyptians, as he said he did in his recent statement, than now is the time to step down.
February 2, 2011 was the first day that protesters lost sight of being a unified body. The ultimate removal of Mubarak, while creating a new interim government around Moussa and ElBaradei, would reunite Egyptian citizens while decreasing the likelihood that future generations would have to pay the economic price of today’s circumstances.