Egypt’s new president has a window of opportunity to pull the economy from the brink of disaster, but he will have to chart a careful path to convince a host of deeply sceptical players at home and abroad that his is a government they can trust.
After winning the country’s first freely contested election for head of state, the Muslim Brotherhood’s Mohamed Mursi, 60, brings with him strongly free-market policies that would delight investors were it not for Egypt’s daunting economic challenges and fraught politics. He also brings a detailed economic plan meticulously drawn up over the course of a year, supported by the Brotherhood’s well organised political machine. However, to spur growth and win over investors to trust Egypt for the long term, Mursi will have to restore stability to a country rocked by sometimes violent political turmoil in the 16 months since an uprising forced Hosni Mubarak from power. To do this, he will have to build up a working relationship with generals who stripped the presidency of many of its powers in the week before the result of the presidential election was announced on Sunday.
He also faces the prospect of a new constitution to replace the current interim constitution which is vague on the full extent of presidential powers. But analysts say the popular mandate handed to Mursi in the election makes it harder for political opponents to obstruct reforms he initiates. “There is definitely a window of opportunity. I think there is goodwill out there because of the nature of the result, because it was a clear result,” said one Western diplomat. “If we get a cabinet that is broad based and brings in good economic expertise as well as people who have credibility outside Egypt, then ... it’s probably quite good news in the short term,” the diplomat said.
Egypt’s uprising hammered the economy by chasing away tourists and foreign investors and prompting government employees to strike for higher wages. The economy contracted by 4.3 percent in the first quarter of 2011 and stagnated in the following three quarters. The Brotherhood’s economic plan relies on private Egyptian and foreign investors and the group has pledged to move fast to negotiate a loan from the International Monetary Fund (IMF) once it forms a government. “We trust Egypt but, with no security, investors will flee. Change is very hard and bumpy,” said Adnan Ahmed Yousef, president of the Union of Arab Banks and chief executive of Bahrain-based Albaraka Banking Group.