A Need for Aid, With No Strings Attached

A Need for Aid, With No Strings Attached

Egyptians ended a 30-year-long authoritarian regime that spawned mismanagement, corruption, inequality and poverty. The pro-democracy protests brought long-missed values of social justice, hard work and hope to the forefront. Yet, Egypt has been going through an uncertain and messy transition that has strained the country’s economy and affected its stability.

Over the past year, Egypt has had four governments and four finance ministers, all of whom lacked a clear economic vision. Deteriorating security conditions, the reluctance of the ruling military council to hand over power to a civilian authority, and the council’s use of brutal force against protesters have scared investors and tourists away and caused the economy to stagnate. Economic growth plummeted to 1.8 percent in 2011 from 4.8 percent in 2010; foreign reserves dwindled to $22 billion from $34 billion; and the Egyptian pound was devalued by 12 percent.

The Egyptian economy needs major reforms and austere measures that the current interim government cannot implement. It lacks legitimacy and popular support. Only a freely elected and popular government can take drastic measures to help the economy get back on its feet. These could include ending food and fuel subsidies and imposing progressive taxes.

Egypt’s neighbors and allies can help in the country’s economic recovery and stability. The Egyptian economy is already the fourth largest in the region. Being strategically located, the country has excellent potential to become even more of a leader in the near future. Noticeable recovery, however, will not be seen unless security is restored first and essential democratic institutions are in place (a constitution, a civilian president and a freely elected government).

In the meantime, Egypt’s neighbors and allies can help by returning the capital and assets that Hosni Mubarak and his family embezzled and deposited in foreign banks. These allies can also make available the promised financial assistance, with no strings attached, that they pledged following the downfall of Mubarak. Instead of exerting influence through conditioned loans and strangling debts, these countries can engage in strategic partnership and productives and job-creating investments in the agricultural, industrial, banking and tourism sectors, as well as in youth training and in increasing competitiveness.

This piece was originally published in The New York Times

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