On June 24 Mohamed Morsi of the Muslim Brotherhood was finally anointed the elected president of Egypt. His installation came after almost a week of suspense during which the country teetered on the edge of chaos when his rival Ahmed Shafik, Mubarak’s last Prime Minister, also claimed a win. Despite Morsi’s small margin of victory - 52% to Shafik’s 48% - the latter did not challenge the verdict. What probably won Morsi the day were backroom deals with the powerful Supreme Council of the Armed Forces (SCAF), which just days earlier carried out a soft coup through a pliant judiciary, annulling the parliamentary election and enacting a hated Emergency law to give itself the authority to appoint a Constitution-writing body.
A year ago the Muslim Brotherhood had decided not to contest the presidential election or dominate Parliament. Yet, today it has won the presidency and over 50% seats in the annulled Parliament. An Islamic orientation then, is both expected and feared. There is no doubt that the Brotherhood will challenge, probably in stages, the emasculation of the powers of the president and the effort by the SCAF to entrench a constitutionally-guaranteed superior position for the military. The next few months or years will witness a struggle between the Muslim Brotherhood and the Egyptian armed forces, but for now, attention has shifted to the economic and social policies of the new government. At play within the tussle will be the 30% of the Egyptian economy owned and operated by the armed forces.
The Brotherhood has been at pains to project itself as holding moderate and liberal economic and social policies. Although there is a group within attracted to intervention and support for unspecified “prime sectors,” the majority argue for a “liberal market economy with a business friendly climate.” The Brotherhood’s economic and social policies are set out in a document entitled the Nahada (Renaissance) Project. Its implementation will be led by the Brotherhood’s previously disqualified presidential candidate, the conservative successful businessman Khairat Al Shater, who remains the most powerful member of the Brotherhood. This is important for a government that will soon need support from the International Monetary Fund and indirectly the U.S., to address its $190 billion deficit.
While the Nahada manifesto is rich in generalizations, it is short on specifics. It “aims to build a state that provides people access to education, health care, jobs, investment, and business-building opportunities; and protects their rights and dignity within and outside the country.” It does not, however, name any specific sectors other than a reform of the banking sector and a focus on education for which it hopes to raise the allocation from the existing 3.3% to 5.2% of the budget. This is being interpreted to mean that there will be no wholesale move of the nearly $200 billion banking sector towards Islamic (interest-free) practice. That should reassure foreign banks like our State Bank of India. Less reassuring have been the hints about making Zakat, the 2.5%of wealth that Muslims traditionally contribute to charity, compulsory (this possibly has resonance with the Indian government’s own discussion on making a 1% Corporate Social Responsibility contribution compulsory for its companies).
In order to achieve a transition from a “rentier economy to a value added economy,” the Nahada plans “100 national projects, each exceeding a billion U.S. dollars within the boundaries of an information and production society, guaranteeing the multiplication of Gross Domestic Product in five years at an annual growth rate of 6.5-7%.” While no further details can be found, at the very least this means rich potential for Indian IT companies like Wipro and Mahindra Satyam, already in Egypt, and others like NIIT, as the country has a large pool of educated and tech-savy but unemployed youth.
Although not a major oil exporter, the Brotherhood’s Freedom and Justice Party (FJP) has speculated about a review of oil and gas export deals to raise some $18 billion for its depleted state coffers. This has huge political implications as the most important deal will be the continued supply of gas to Israel at the old heavily discounted rates. It is unlikely that Israel (or the U.S.) would be willing to re-open any old agreements.
Tourism, which employs 1 in 9 Egyptians, has suffered but can revive quickly if the new government’s focus on infrastructure fructifies, as does a softer attitude towards alcohol and beachwear. While this is good news for India’s Oberoi hotel group and Air India, some forward and backward movement must be anticipated in an environment where conservative religious forces come up against the pushback of more hard-headed and powerful businessmen.
There are already 100 Indian companies operating in Egypt, in sectors from steel to transport, paints and beauty products. Notwithstanding early nervousness, most of them have continued to function throughout the volatile last year. The high-level exchanges between the two governments, including the March 2 visit of India’s foreign minister to Cairo, have discussed active Indian engagement in the revival and growth of the economy.
The Nahada document has, refreshingly, referred to both diversity and equality as an objective. It has sought, in particular, women’s participation in “society, politics, and priorities of national development.” An advisor to President Morsi announced that in a first for Egypt, a woman and a Coptic Christian would be appointed as vice presidents; brooding beneath the surface have also been hints that Sharia and the Koran could be the source of legal practice. And the Brotherhood’s intent to defer to the Salafists on religious matters has naturally generated concerns for maintaining the rights of women. While the manifesto has reassured the roughly 10%minority Coptic Christians that it intends to respect “all our fellow Copts’ rights of citizenship and realizing their full legal equality as Egyptian citizens while maintaining their right to appeal to their religious strictures on matters pertaining to personal status and their religious affairs.” Sadly, a more likely scenario is a slow seepage of Christian emigration - as has already occurred in other Arab nations, including Iraq.
Unsurprisingly the Brotherhood, which has been banned for most of its 75 years of existence, has a commitment to the strengthening of civil society institutions to safeguard democracy and prevent state control through “acknowledgement of the judiciary as the governing reference.” But faith in the judiciary has already received a rude shock given its meek compliance with the military in dissolving parliament.
Egypt will face many “unknown unknowns” from the military and how it handles them will have significance for the awakening in the whole Arab world.