We're easily distracted as a nation, especially by violence and intrigue. And so, for the past week, the very serious macroeconomic crisis mounting in Egypt—where the most important political transition since the collapse of the Soviet Union is unfolding—is being pushed out of the headlines by a diplomatic dispute over NGO activities and now an explosion of soccer hooliganism that could have happened as easily in Mexico or Russia or Britain as in Egypt.
So refocus, people. As a follow-up to this conversation on whether it makes sense at this point to put the Egyptian military on the spot to devote the yearly $1.3 million in aid to national priorities (i.e., the economy) rather than its own coffers (which I discussed in this post earlier this week), the Times has a smart, varied conversation in Room for Debate today along the same lines.
This is worth a look—four serious experts on the topic, each with a slightly different take. I particularly like the stress Khaled Fahmy, the American University of Cairo historian, puts on accountability: precisely what will not happen if we continue to shovel aid unencumbered by conditions down the gullet of the autocratic military.
"Egypt’s western allies could help by insisting that the economic aid they provide be subjected to close parliamentary scrutiny. They should be aware that without transparency and accountability, financial assistance can end up breeding corruption and cronyism, and thus undermine the very system it was intended to help."
Meanwhile, both the EU and the IMF look like they may move more quickly than usual to shore up the dwindling Egyptian treasury. This is good news, of course—as the Journal pointed out recently, one more round of downgrades, and Egypt will lose all access to international markets. You think the soccer riots were ugly? Wait until the new government runs out of money to subsidize bread.
In the long run, Egypt should wean itself from such practices, of course. But history holds few good examples of newly established democracies that thrive as the nation teeters on bankruptcy. Such times breed false "saviors," military, religious, and otherwise.
The good news: Egypt's stock market is showing life, its recent history of macroeconomic stewardship is good, and many around the world wish it well, particularly in the MENA region, where an Egyptian collapse would have serious economic and political ramifications. As Fahmy says:
Egypt’s economic prospects are bright. With a large market, an expanding middle class, a cheap and skilled labor force, and a healthy financial sector, the country has great economic potential.
If a stable transition can be made, global capital will follow.
Michael Moran is Director and Editor-Chief of Renaissance Insight, a new division of the global investment bank Renaissance Capital. Follow him on Twitter, subscribe to his Facebook feed, or preorder his book, The Reckoning: Debt, Democracy and the Future of American Power,coming in April from Palgrave Macmillan.