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French Version

Will Egypt take advantage of its golden opportunity to regain its leading role in the region?

The presidential election that took place in Egypt this Wednesday may have been only a symbolic value. The potential for change in this country resides in an interlinked equation between political and economic reforms.

Democracy, often associated with less abuse and greater sensitivity by governments to the true priorities of its citizens, can be plagued by populism and struggles for redistribution of wealth, if not preceded by accountable forms of government that make economic reforms possible and effective.

The candidate, President Hosni Mubarak, chose to present himself to the people as the "man of change and reform" after having promoted his reign of 24 years as the "era of stability."

By July 2004, it was becoming clear that 24 years of stability had not brought about prosperity to Egypt despite the support of the U.S. that translated into $60 billion since the signing of a peace treaty with Israel in 1979, in addition to a yearly military subsidy to the tune of $1.3 billion. The International Monetary Fund was strongly advising Egypt to speed up structural reforms and most importantly to reduce a compounding net public debt that was expected to reach $8.4 billion for the fiscal year 2004-05.

Mubarak responded then by a Cabinet reshuffle. He did not leave room for speculation as to the purpose of his decision. Addressing his new ministers in July 2004 he stressed "your task is to improve the quality of life for Egyptians, increase their earnings, and modernize the performance of the bureaucracy."

The reforms came at an impressive pace and gave results that can be measured. Egypt became one the top-performing equity markets; its major index rose 216 percent in the last 12 months driven in large part by Arab and foreign funds. Privatization raised $1 billion in the first months of 2005, the number of private-sector jobs tripled over the last 12 months according to governmental data.

However, despite a forecasted growth rate of 4.8 percent for 2005, the rate of unemployment remains at around 20 percent and there are almost no signs of economic revival in Cairo's poor areas. Conditions seem to be worsening and the benefits of growth are not filtering down to many of Egypt's 73 million people. According to the World Bank's World Development Report 2005, 43.9 percent of Egyptians live on less than $2 a day.

These observations give credit to the doubts expressed by more than 300 Egyptian artists, intellectuals, and trade unionists in a communique published last year in the wake of the ministerial reshuffle. The communique expressed their belief that economic change cannot happen without political reforms and that "the monopoly of power leads to a monopoly of riches, generating corruption, social injustice, unemployment and price hikes."

This brings us back to the dialectic relation between economic success and democracy.

Liberalization and privatization are the ABC of economic reform for 1950s- socialist type regimes such as Egypt. Autocratic regimes in our part of the world are controlled by ruling families or tribal style parties where accountability is nonexistent and corruption rampant. Hence any possible gain from the process of open markets is diminished and the positive dynamism of competition and market forces is neutralized.

In order to create a successful market system, the state must respect the rule of law, and the enforcement of justice. These rights are part and parcel of democratic governments and when it comes to economic development, they are more important than other purely political aspects of democracy, such as genuine and fair elections.

Egypt today has a golden opportunity to regain its leading role in the region.

Its economy has benefited from the regional boom. The Egyptian pound is rising and the trade surplus is growing. Restructuring the administration is under way, and a lot is being done on the level of human resources development. A lot still needs to be done on the level of curbing a culture of nepotism and corruption found at all levels of government and even in the private sector.

Now that the genie of democracy is out of the bottle, the role of the civil society becomes more important than ever. The onus falls on their shoulders to move the struggle forward and set in motion a proper system of checks and balances on government practices to insure accountability.

Beirut,09 12 2005
khatoum Haidar
The Daily Star
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