The New Egypt: Transition towards a difficult new dawn

At the recent Egyptian elections, the lines of voters waiting to vote stretched for hundreds of metres, but this didn’t deter the Egyptians who had come from their different homes to vote from voting at the polls. Many of them were casting their votes for the very first time. The elderly among the voters came with chairs and most who didn’t come with chairs were given or offered chairs to sit on while they waited. The general mood and atmosphere was one of excitement as many people turned out to vote in what would be a historic election, the first parliamentary poll since the revolt that toppled the regime of Hosni Mubarak in February of 2011. Elderly people who had turned out to vote believed that this was an important period for their country and for the people of Egypt. Many didn’t care who was elected, Islamists or others, it didn’t matter to them, all that mattered was that they did their part in the elections. It was clear that after several years of dictatorship and military regimes and countless rigged elections, the people where very enthusiastic as they went to the polls in the hope that they could bring to an end the chaos of the past year and the rule of the Supreme Council of the Armed Forces (SCAF)
 The multi-stage election in Egypt began on November 28, by which time it was evident that the Egyptians hard won confidence in how much they could influence change in their own government had all but evaporated. It had given way to frustration because over the past year the country has been torn by one crisis after the other. Political drift, demonstrations, labour strikes and frequent eruptions of sectarian violence between muslims and Christians have driven away investors and tourists, causing the economy to grind to a halt and as a result, life has increasing become hard for millions of poor people. The most disturbing part of the story in recent days has been the fracturing of the unity of purpose that prevailed during the protests. Basically, the people of Egypt seem to have become divided politically. There is a widening gap between the younger generation of people who started the revolt earlier in the year and the army generals who assisted to oust Mr Mubarak. This widening gap has also added to the tensions in the political scene. The military has accused activist and critics of working for foreign powers. There is a lack of trust between the activists and the military because the military has intimidated the people.
 The manner in which the military has handled the transition of power, has been at best, erratic. In the beginning, the military favored the muslim brotherhood because it was the biggest and the most organized political force. However, over the summer period, the generals have realized that islamists would dominate both the assembly and the drafting process and as a result, the military will have little control over the way the country was shaped. Having considered this, the military changed tactics and tried without success to get political forces to agree in advance to certain constitutional principles that shield the military from civilian scrutiny. Many Egyptians feel that the military are part of the old structure and have been fighting to preserve their status under the new structure. The Muslim brotherhood is proceeding cautiously in attempts to minimize confrontations with the military and also maintain a stable relationship with its key foreign partners like the United States. Despite leading in the elections, the Muslim brotherhood insists that it wants to share power with other political forces and it doesn’t plan to monopolize the drafting process. However, many businessmen and Egyptians believe that the problems facing Egypt are just too many and that any government formed is bound to fall short in the short term.

The Risk that Arab Spring Countries must Manage

Expectations of more jobs and growing prosperity need to be handled with care, says Henry Azzam
When young Arabs took to the streets of Cairo, Tunis, Damascus, Tripoli and Sana this year they hoped that bringing down autocratic regimes would not only end corruption and restore dignity but also generate employment and pave the way for a more prosperous future. Their expectations have not been met. On the contrary, conditions have worsened as businesses have retrenched and labour intensive sectors such as tourism, services and transport have been harmed by civil strife. Uncertainty and instability are to be expected during transition periods. Economic conditions in countries experiencing revolts are likely to worsen before they improve. During these transitions there are several risk elements that need to be managed:
• Peoples Expectations: Transition governments should send a clear message that reforms will be implemented and measures introduced to create jobs. However, such steps will be effective over a longer period rather than immediately. Managing peoples expectations requires presenting a clear road map of reforms and a specific time frame as to when their results will become visible.
• Credibility of Private Sectors: Private sector businesses have lost credibility in countries that have seen uprisings. Corruption and Nepotism are the results of cozy relationships between previous regimes and businessmen. Governments should resist the urge to treat all businesses that dealt with past regimes as necessarily corrupt. On the other hand, the private sector businesses have a role to play in convincing young people that they are willing and able to provide the finances and the support that they need to break the cycles of poverty and unemployment.
• The Rise of Political Islam: It is easy to say that the more organized Islamic parties will gain ground in the first round of elections, as we have seen in Tunisia. The Nahda party won the largest block in recent poll. In countries such as Turkey, Indonesia and Malaysia, political Islam and democracy have been cohabiting fairly comfortably. There is no reason why the Arab world cannot emulate the Turkish model of governance.
• Macroeconomic Stability: With the first sign of a revolt and discontent, several governments laid out generous packages including more jobs and pay in the public sector, and increased subsidies. The Measures announced amounted to 5 percent of GDP in Jordan, 10 percent in Egypt and 25 percent in Saudi Arabia and Algeria. Such fiscal policy is needed to maintain social cohesion and mitigate the impact of the downturn, however, these policies are known for their high level of instability and are known to fuel inflationary pressures and add to budgetary deficits and lead to higher government debt in oil exporting countries.
• Dependence on Foreign borrowing: The global economy is headed into a period of weaker growth.  The US, Europe and the emerging countries all plan to cut budgets in the next year. This is more likely to affect the oil prices negatively. It will also affect tourism, trade and foreign direct investment negatively. Large European banks are under pressure to improve their capital adequacy ratios, forcing them to deleverage. This will make it more challenging for highly indebted companies and countries to refinance maturing debt