Magda Kandi, Egyptian
Center for Economic Studies: Egyptian Economy may not be as bad as some
would make it out to be
July 02, 2012
Two of the biggest challenges facing Egyptian President Mohamed Morsi
are improving the economy and countering the entrenched interests of the
nation's military. The two are deeply entwined.
Morsi is under pressure to move quickly to create some tangible
improvement in the daily lives of his fellow Egyptians, who are
suffering from high unemployment, rising prices and shortages in basic
Economists have been encouraged by the economic platform pushed by Morsi,
based on the Muslim Brotherhood's Renaissance Project.
"They clearly subscribe to a free market economy and they clearly
appreciate private ownership," said Magda Kandi, executive director of
the Egyptian Center for Economic Studies. "But they would like to
complement this with the kind of rules and regulations that would
streamline the operations, so we would not be running into problems
similar to what we had before the revolution when the fruits of the
growth were not well distributed."
As uneven as the distribution of wealth was under the old government,
the interim period of military rule may have been even worse.
Uncertainty and unrest kept both foreign tourists and investment at bay,
hurting millions who relied on related industries.
"We actually suffered under the military rule because of lack of
stability, we were hoping that under a military regime, in the
transitional period, that stability would be better enforced, and
security would be better enforced such that the economy would do better
than what we did," said economist Kandil.
The election of Morsi boosted Egypt's economic prospects, with the stock
market rising on news of his victory and the prospect that, for now,
protests will subside.
But tensions remain between the elected government and the military,
which has claimed for itself considerable new powers including oversight
of defense and the budget.
Those two powers go to the heart of the military's concerns. Estimates
vary on the extent of the military's economic enterprises, which range
from mining to microwaves, pavement to pasta. There are no official
figures, but former diplomat and presidential candidate Abdullah al-Ashaal
puts it as high as 40 percent of the Egyptian economy.
economic institution inside the army is making the army another state
within the state itself. So we have virtual state which is called Egypt,
we have a real state that is called army. So this cancer has to be
removed. Otherwise I don't think any democracy can be established," said
This backbone of the economy may not be as bad as some would make it
out. Economist Kandil says that over the decades, the military has
proved itself efficient in terms of meeting deadlines, effective
management, and affordable prices for ordinary Egyptians. But as the
nation moves forward, some people are questioning this decades-long
"They are concerned about the implications of this share, the large
share owned by the military, and if the military is to be squeezed out
of the political process, which one would expect in a democratic
environment, what are the implications for their shares in the economy
and whether they would be willing to yield to the democratic process,"
From the actions of the military so far in this transition, it would
seem Egypt is destined to remain a mixed economy for some time.