via Lobe Log

The economy is clearly the most important problem facing Egypt today. Unemployment and underemployment are vast. Tourism has been shattered by recent events and may take a long time to get back on track. Foreign investments have dropped and have even turned to a net outflow from the country rather than a net inflow into the country. Many domestic investors have also become quite wary and are considering leaving Egypt. This is especially true of some of the major Coptic Egyptian and conservative Muslim investors who are anxious about what the future may hold with the rise of the Muslim Brotherhood. The liberal and “secular” investors are about as wary and anxious as some of the Copts. There are some younger investors who see this as an opportunity. Some of the Muslim Brotherhood people are considerable business people and view the anxiety of some as an opportunity.

Even so, foreign exchange reserves are hemorrhaging from the treasury. Most of the government run factories and firms are in dire need of reform, refitting or even shutting down. The economy in general is in need of great reform toward more international competitiveness. If this is not done, Egypt will be in even worse shape in the future. The privatization and structural adjustment programs of the 1990s are looked down upon by many in Egypt due to the massive corruption that was brought along with these programs. However, the last thing Egypt needs now is to go back to the time of Nasser, nationalizations, 95 percent tax rates and the destruction of the business and landowning classes.

Egypt has to find its way to a more prosperous future and the United States and others could be of some help if they become more practical partners for this change. The focus should be on jobs, investment, education, technological change, and the practicalities of getting things done – not on the misty and often unproductive goals of “good governance”.  This term has a bad reputation amongst many Egyptians I met during my recent 6 week trip because, they say, the US talked about helping with good governance and really did nothing as Hosni Mubarak and company robbed and oppressed the country. Many Egyptians are also quite suspicious of non-governmental organization (NGOs) in general and governance NGOs in particular.

The US will need to try to develop some sort of relations with the new leadership of the country. In the past, there was little real contact at the strategic or any other level with the Brotherhood. Now the president of Egypt is from the Muslim Brotherhood, even if he said that he quit after he was elected. The new parliament and some of the new cabinet members – and even some of the future military leaders – could be Muslim Brotherhood or at least sensitive to the Brotherhood’s ideas and goals. Improving relations with the Brotherhood should be seen as a practical calculation, not as an acceptance of their principals. Egypt is an important country. We need to keep our relations going. President Mohamed Morsi is an example of the changes that are occurring in Egypt.

Building relations with the Salafists is another story altogether. I would be very careful with this. Their views of the US are dangerous, radical and extremist. Building relations with them should be geared more toward keeping potential enemies close to understand them better. I see very little hope in any real improvement in our relations with the Salafists.

The liberals, “secularists”, Nasserists and many others think we dropped them. Many also blame us for bringing the Muslim Brotherhood to power. Why, they ask, did we not help them more during the most difficult times? This is a tough question that our diplomats and others need to work on to develop future relations with these groups. They are splintered and weak compared to the much better organized Brotherhood, Salafis and others. However, they will be involved with Egyptian politics for some time and should not be discounted as potential future leaders.

The Egyptian revolution and the political churn from it are far from over.

The US has had very good relations with the Egyptian military. Friendships and long term understandings have been developed. The strongest relations we have with Egypt are still with the military even after the changes that lead to the retiring of many senior officers. The military needs to be handled in a more nuanced manner now given the power of the Brotherhood overall. However, the tensions and chess game between the Muslim Brotherhood and the military are not over. Those who think that President Mohamed Morsi checkmated the military with the recent retirements are clearly and plainly wrong. There will be a lot more to this story.

The most important relation that the US needs to develop in Egypt is with ordinary Egyptian people. Our diplomats, business people, professors and others need to reach out more to the regular folks. We need to understand them better and they could understand us a lot better. The farmers in the countryside, the tea people in Cairo and Alexandria, and the TukTuk drivers from all over are Egypt’s backbone.

Regular Egyptians could become very important arbiters for the future of Egypt, especially if a potential “Revolution of the Hungry and Poor” breaks out. If the economy is not fixed quickly, there is a good chance for this. There is another important reason to reach out more to the regular folks: they are mostly decent, good people. The US could help them and help itself at the same time by building more small clinics in the poor areas, building school houses, helping with infrastructure repairs, giving scholarships to poor Egyptians to US schools and colleges, developing cultural exchanges and more. We cannot distance ourselves from average Egyptians anymore.

Egypt is likely going to take on new roles for regional and global issues. Egypt’s relations with Israel are likely to change. This will depend on how the politics of the revolution and bread work out. Egypt’s relations with Hamas, Hezbollah, Iran, Sudan, and many other places and groups that the US considers problematic could also change. We need to understand these changes as they happen and respond in more nuanced and strategic ways than how I think we will.

Egypt will also likely reach out more to China, India, Russia, Brazil, the Gulf Cooperation Council and others to diversify its support. It will likely rely much less on the US than at any time since Anwar Sadat if the Muslim Brotherhood acquires even greater power. President Morsi’s visits to China, Saudi Arabia and more are not just to get frequent flier points and to meet and greet. Morsi’s trips are mostly about diversifying Egypt’s international relations and its sources of economic and political support. The Chinese seem quite happy to oblige and I expect that the Chinese military’s relations with the Egyptian military will also change.

We need to be very careful as changes in the international relations of Egypt develop.

Egypt is an important country in overall US-Islamic and US-Arab relations. We need to move with great care and consideration of not just the first, but also the second, third and fourth order effects of any new moves Egypt makes – and what moves we might make in response. The building of Sunni-Shia tensions may also work into this situation.

Egypt is a relatively poor country with big ambitions. Maybe it is time for the US to rethink its posture towards Egypt as well. Many Egyptians in leadership and others I have met during the 20 years I have been associated with the country have told me about the condescension they have sometimes felt from visiting Americans. The perception becomes the reality no matter what may actually be occurring. Building relations is complex. Rebuilding them during a time of great political and revolutionary flux is even more complex and fraught with risks. We need to send the best, brightest and most intelligent people to represent us.

It is hard to tell where Egypt’s new path is going. What US relations with Egypt will be like in the years to come is anyone’s guess. There will be lots of internal changes in Egypt. There will be many changes across the region as the inherent instabilities and tensions work themselves out or get worse while US politics also evolve.

Fluid and complex situations require nuanced strategic thinking. This is an area where Americans can stand to improve with respect to the Middle East. It is time to develop these skills and understanding in our people or pay the much heavier prices that could be coming our way if we don’t.