PIMCO CEO: Egypt needs stronger outside support
Egypt can deliver on its revolution. But building a new society also requires better and stronger support from its friends and allies.
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Third, it is an anchor for navigating a series of economic, social, political, and institutional transitions fraught with challenges. These are a natural consequence of a revolution. And they need to be owned domestically, handled well, and properly supported by friends and allies outside Egypt (including Egyptians living abroad).Skip to next paragraph
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What Egypt needs to rebuild
In the months ahead, Egypt will fully restart an economy that was inevitably subjected to a “sudden stop” during the days of mass protest. In doing so, it must alter the economic structure to deliver inclusive growth that accelerates poverty alleviation, improves international competitiveness, and restores financial balances.
Better social justice is a key objective of the “new Egypt,” and rightly so. Yet in the immediate aftermath of the popular uprising, the poor are regrettably worse off. Tourism has declined, depriving many of income in the country’s informal sector. Lower economic activity has reduced other earnings. And prices have gone up due to supply disruptions and the surge in international commodity prices
Greater emphasis on basic social needs must accompany the establishment of an open political process, while also finalizing a new constitution and holding the first set of parliamentary and presidential elections that are truly fair and free.
And then there are the institutions. As Jean Monnet, the famous French father of European unity, once observed: “Nothing is possible without men and women, but nothing is lasting without institutions.”
Institutions in the public sector must overcome the capture by special interest that was so detrimental in the past. Those in the private sector must resist the cult of personalities that limit effectiveness. And all this must happen with countering the sense of insecurity that prevails, especially as the police are yet to return fully to neighborhoods and streets.
To be sure, none of these transformations are easy or automatic. But they can and, I believe will, be delivered by an Egyptian society that is committed to the objective of its revolution. In theory, they can also be facilitated by regional and global tailwinds. But this is not the case today.
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The region is in the grips of uncertain change; and the global economy is undermined by sluggish growth and high unemployment in advanced countries and a debt crisis in Europe. Thus, rather than experience external tailwinds, Egypt faces headwinds. Yet the exceptional support received from its friends and allies has been timid, and far from commensurate with the systemic significance of Egypt’s revolution. This must also change if Egypt is to complete its successful revolution.
Mohamed el-Erian is the CEO of PIMCO, the world's largest bond fund.