PIMCO CEO: Egypt needs stronger outside support
Egypt can deliver on its revolution. But building a new society also requires better and stronger support from its friends and allies.
In my first trip to Egypt since the fall of the Mubarak regime four months ago, I found a vibrant society dealing with the realities of deep national transformations and facing challenging headwinds. Based on interactions with a cross-section of society involved in building a "new Egypt," I came away with the hope that proper coordination and determination can deliver the revolution's central objective of a "better Egypt" for future generations; but the country also needs better and stronger support from outside.
Today's Egypt is an exciting place. Political debates rage. New political parties form. Institutions are restructured. The media is hyper active. And most important, Egyptian society is still energized by its ability to overcome fear and repression, and to take direct responsibility for a brighter future. This speaks to what New York Times columnist Tom Friedman characterized as a revolution “in Egypt, by Egypt, for Egypt.” It is most evident in the community service that has taken hold in Egypt.
Volunteers are adopting villages and city slums to make a difference on the ground. Individuals, such as the inspiring Google executive Wael Ghonim, are setting up new nongovernmental organizations to help the poor. And visionaries, such as Nobel Laureate Ahmed Zewail, are leading national projects to improve access to scientific education.
Why civil society engagement matters
In short, an newly engaged Egyptian civil society feels empowered and responsible to deliver a better tomorrow. This engagement is critical for the country’s future in three important ways.
First, it facilitates a gradual shift in balance, away from just pursuing those responsible for past failures and toward focusing more on the future. Once the perpetrators of past crimes are brought to justice, Egypt will get closer to the type of “truth and reconciliation” that was critical to South Africa’s smooth break with apartheid in the 1990s – thus delivering what Nelson Mandela brilliantly characterized as the ability “to forgive but not forget.” And the sooner Egypt draws a domestically-credible line under the old regime and looks to the future, the greater the probability of reducing capital flight and getting money flowing back into the country.
Second, it is a daily reminder to Egyptians that revolutions are not discrete events. They are transformational processes that take time and involve many steps. Indeed, the most visible part of a revolution (that of overthrowing the old regime) is a necessary and courageous step; but it needs to be reinforced with steadfast commitment to bold forward-looking initiatives.
Third, it is an anchor for navigating a series of economic, social, political, and institutional transitions fraught with challenges. These are a natural consequence of a revolution. And they need to be owned domestically, handled well, and properly supported by friends and allies outside Egypt (including Egyptians living abroad).
What Egypt needs to rebuild
In the months ahead, Egypt will fully restart an economy that was inevitably subjected to a “sudden stop” during the days of mass protest. In doing so, it must alter the economic structure to deliver inclusive growth that accelerates poverty alleviation, improves international competitiveness, and restores financial balances.
Better social justice is a key objective of the “new Egypt,” and rightly so. Yet in the immediate aftermath of the popular uprising, the poor are regrettably worse off. Tourism has declined, depriving many of income in the country’s informal sector. Lower economic activity has reduced other earnings. And prices have gone up due to supply disruptions and the surge in international commodity prices
Greater emphasis on basic social needs must accompany the establishment of an open political process, while also finalizing a new constitution and holding the first set of parliamentary and presidential elections that are truly fair and free.
And then there are the institutions. As Jean Monnet, the famous French father of European unity, once observed: “Nothing is possible without men and women, but nothing is lasting without institutions.”
Institutions in the public sector must overcome the capture by special interest that was so detrimental in the past. Those in the private sector must resist the cult of personalities that limit effectiveness. And all this must happen with countering the sense of insecurity that prevails, especially as the police are yet to return fully to neighborhoods and streets.
To be sure, none of these transformations are easy or automatic. But they can and, I believe will, be delivered by an Egyptian society that is committed to the objective of its revolution. In theory, they can also be facilitated by regional and global tailwinds. But this is not the case today.
The region is in the grips of uncertain change; and the global economy is undermined by sluggish growth and high unemployment in advanced countries and a debt crisis in Europe. Thus, rather than experience external tailwinds, Egypt faces headwinds. Yet the exceptional support received from its friends and allies has been timid, and far from commensurate with the systemic significance of Egypt’s revolution. This must also change if Egypt is to complete its successful revolution.
Mohamed el-Erian is the CEO of PIMCO, the world's largest bond fund.