Islamists in tune with west over economy

Posted on May 16, 2012

One of the significant realignments resulting from the Arab spring is the growing warmth between western policy makers and Egypt’s Muslim Brotherhood. This is born out of necessity, but strengthened by the surprising discovery that on economic issues, the west and the Islamists often see eye to eye.

Many of the discussions between these two groups are not about the veil, alcohol or even Camp David, but about business, investment and jobs.

    The Brotherhood, which has so far proved an astute reader of Egyptian public opinion, is trying to position itself as the party that can deliver on the economy. The first things cited in its election manifesto were not the Koran or the sharia, but unemployment, inequality and poor healthcare. This makes sense: grievances over joblessness, corruption and the near-collapse of state services played a crucial role in the country’s uprising.

    When it comes to the economy, the Brotherhood’s policy framework does not represent a radical change from the past, though there is more focus on social justice and fighting corruption: one reason Islamists are popular is because they are seen as untainted by the bribery and cronyism that bedevilled the former regime of Hosni Mubarak.

    Although some Egyptians distrust the private sector, Brotherhood representatives see it as the engine of growth. They are keen to reassure western investors that Egypt – by far the largest country in the Arab world with a population of 85m – remains a promising place for businesses. Their failure to take a clear stance on a proposed $3.2bn International Monetary Fund loan to Egypt seems to reflect internal politicking more than economic ideology; they want the cabinet to be replaced, and it is not in their interest to see funds roll in to support the current one.

    Ironically, much of the anti-western rhetoric now heard in Egypt emanates from the west’s old friends in the military and security establishment, who benefit from $1.2bn in US aid annually but are suspicious of the Americans’ new support for Egypt’s revolutionaries – and of the strings that might be attached to IMF support.

    In stark contrast to the 1979 Iranian revolution, the newly empowered Islamist politicians want to engage with the west; their concern is to be treated as equals, not as subservient. There are bound to be difficulties ahead over regional politics, but focusing on a shared understanding of Egypt’s economic challenges can be a fruitful way to build relations.

    Mainstream Islamists in Tunisia and Morocco have also emphasised free trade, and they hope international investors can help them create the jobs their constituents need. Leaders of Egypt’s Muslim Brotherhood have been welcoming western business delegations to the country, and their political party, Freedom and Justice, met senior British investors and policy makers in the UK in March.

    Some European countries, notably the Netherlands, remain wary of talking to Islamists. But British executives and parliamentarians are returning from Egypt pleasantly surprised, saying things such as “these are smart people we can do business with”.

    They are less sure of the more religiously conservative Salafis of the Al-Nour party, whose recently disqualified presidential candidate once told Egyptian television that Pepsi stands for “Pay Every Penny to Save Israel”.

    Yet Egypt’s presidential race is proving to be full of surprises. Many Salafists, lacking their own candidate, are now supporting a relatively liberal ex-Brotherhood member, Abdel Moneim Aboul Fotouh. This has left the Brotherhood’s less charismatic candidate, Mohammed Al Morsi, taking up more conservative and pious postures.

    The Salafists are developing their own ideas about the economy, and are doing more than most to flag the need to develop the neglected and insecure Sinai; one of their MPs said it could become a Dubai-style trade zone. An Al-Nour economic spokesman has said the party’s aims for “halal tourism” are to create a parallel, sharia-compliant market rather than banning alcohol or swapping bikinis for burkinis. Any smart politician would think twice before messing with an industry that attracted 14m visitors annually before the revolution.

    Islamists have worked hard to develop their economic policies, but they still have an enormous task ahead. Egypt has struggled to distribute the benefits of growth among the large and increasing population. Nearly half of the people earn less than $2 a day. Political uncertainty and security worries have hurt the economy, turning net foreign direct investment from an inflow of $6.4bn in 2010 to an outflow of $500m last year, and increasing the (underestimated) official unemployment rate from 9 per cent to 12.4 per cent.

    With a fiscal deficit nearing 10 per cent of gross domestic product, the state cannot absorb the 700,000 new job-seekers entering the labour market annually. Egypt has just introduced a private-sector minimum wage, but it is just E£700 ($116) a month – less than half that of Beijing. Most Egyptian workers will not even receive this amount because they work for businesses that operate informally to dodge mountains of red tape.

    Western policy makers have barely begun to revise their recommendations for Egypt’s economy, despite the large-scale dissatisfaction with the western-backed economic policies of Mubarak’s final years. Investors can help create jobs, but sustainable development will need to go far beyond boosting trade and investment to focus on issues such as decent working conditions, living wages, literacy, potable water and air pollution (the sixth worst in the world).

    If the Muslim Brotherhood’s private-sector focus fails to address these issues, there could be an angrier, hungrier uprising to come. Could the next Egyptian revolution be against a western-backed Muslim Brotherhood?

    Jane Kinninmont is a senior research fellow at Chatham House and author of Bread, Dignity and Social Justice: The Political Economy of Egypt’s Transition

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