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Will They Be Devoured?

The children of Egypt’s revolution versus the military establishment in Cairo

Apr 25, 2011, Vol. 16, No. 31 • By LEE SMITH
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Gamal Mubarak

Gamal Mubarak

World Economic Forum

It’s more than two months since the fall of the man who ruled Egypt for thirty years, and there are still demonstrators out at Tahrir Square, ground zero of Egypt’s latest revolution. Yet it’s unclear whether these young activists, galvanized by social media, are pressing a demand for accountability and democratic reform or pushing Egypt in a different, more dangerous, direction.

Tahrir turned violent again on April 8 when two demonstrators were killed during protests calling for the country’s interim government, the Supreme Council of the Armed Forces, to bring former president Hosni Mubarak and others to justice on charges of corruption. Last week Mubarak released a statement promising to prove his innocence. Nonetheless, to mollify the demonstrators and avoid further bloodshed, the army detained an ailing Mubarak in his hospital room in Sharm el Sheikh and put his two sons, Gamal, 47, and Alaa, 49, in jail.

So who is ruling Egypt? If the army is moving to placate the activists, how far will it go? As it turns out, the January 25 revolution raised more questions than it answered: With the authoritarian ruler gone, will Egypt turn into a genuine democracy or tilt toward populism? Will the Muslim Brotherhood come to power? Will the peace treaty with Israel survive? And what’s the lesson for American policymakers? In short, what has the revolution sown and what will it reap?

Right now, all I know for sure is that my friend Hala Mustafa is radiant. She’s sitting in a coffee shop smoking a water pipe and smiling broadly. “This is a great time for us, for Egypt,” she says. Mubarak’s regime made life miserable for her. The editor of Democracy, a quarterly journal published by the government-affiliated Al Ahram Center, Mustafa suffered constant harassment from the old regime. Last year, when she met with the Israeli ambassador to Egypt, she was reprimanded by the press syndicate—even though regime officials and her own colleagues had also met with him, and Egypt has had diplomatic relations with Israel for three decades. Like the millions of Egyptians who exulted at Mubarak’s exit on February 11, she couldn’t be happier to see his regime pass into history. Particularly unlamented are the younger set, the businessmen and financiers associated with Mubarak’s hand-picked successor, his younger son, Gamal, a former banker in London.

Like all those demanding that the pillars of the late regime face their accusers, Mustafa is unimpressed with the supposed economic reformers around Gamal. After it adopted measures to open the economy in 2004, the Mubarak government got high marks from the World Bank and International Monetary Fund, but Mustafa argues that the wealth created by the technocrats stayed in their hands and did not trickle down. After all, 40 percent of the country still lives on less than $2 a day. “The regime practiced a distorted form of capitalism,” Mustafa tells me. “It was an oligarchy at the top of the ruling party that was stealing land, while the president himself was getting commissions from foreign companies.”

My own impression is different. I was struck immediately upon touching down in Cairo by how much things have changed since my last visit in 2005. Perhaps to keep up with the influx of foreign investors who came looking for business opportunities in recent years, the airport has acquired several new terminals, as well as a large shopping mall and food courts, bringing hundreds of jobs for middle-class Egyptians. 

In 2007, Egypt came in first in the World Bank Group survey “Doing Business,” which evaluates business-friendly reforms. Since 2004, explains Egyptian economics researcher Karim Badr, “Cairo has consistently won high praise from the World Bank and IMF for the better investment climate. A supply-side change in the tax law reduced the tax rate from 40 percent to 20 percent and increased tax revenues.” Badr recites a list of accomplishments bringing international recognition: “There’s the increase in foreign direct investment, the surge in exports, an increase in tourism revenues, higher economic growth, a decline in debts, more room for the private sector, banking restructuring, productivity growth, a lower budget deficit, property registration, and better basic services like water and sanitation.”

Mustafa thinks the economy will stay safely on track once the political situation becomes clearer, and a recent poll shows that 82 percent of Egyptians want their government to continue to liberalize the economy. Still, in the near term, the economy may be in for hard times. 

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