Egypt's ultranationalist obsession with grand projects

Egypt's ultranationalist obsession with grand projects
Comment: After the new Suez Canal, Egypt is left without a cohesive plan for the future. Recycling state-centred and liberal development schemes won't serve the economy, writes Mohamed el-Meshad.
6 min read
31 Aug, 2015
Economic experts doubted the profitability of Sisi's recent Suez canal expansion (Getty)
Still hovering above most of Egypt's thoroughfares are signs commemorating the Suez Canal Expansion Project, usually with slogans detailing the economic benefits the canal is sure to bring to the entire country's economy and world trade more generally.

Assuming the state's optimistic projections are accurate and the canal's revenue's would more than double, this added revenue, while welcome, could barely be considered to be at all transformational and economically game-changing.

To put it into perspective, the additional $8bn annual income would barely cover one-third of the budget deficit of the 2014/2015 fiscal year.

From the state's perspective, what this canal episode does is create a template for further creating further mega "National Projects" as a rather dated and questionable developmental policy for the future.

Almost one month has passed since the over-the-top Suez Canal celebration extravaganza - and state media is still awash with the reverie of this "success" and, more importantly, how it is proof that "everything is possible".

Gesture politics

In the absence of any real, tangible economic policy, the state is going for grand gestures that are supposed to both propel growth and reassure the local and international communities that Egypt is safe for investment.

In one year, President Abdel Fattah al-Sisi took pages from the playbooks of both former Presidents Hosni Mubarak and Gamal Abdel-Nasser.

The Suez Canal expansion project and the patriotic fervour surrounding it seems akin to Nasser's High Dam project, which earned him a huge amount of domestic political capital and international clout.

It set the stage for his centralist state-capitalist model that enjoyed great success for a good five to seven years since construction began on the dam in 1960.

In the March 2015 "Economic Conference", the state mimicked Hosni Mubarak's numerous attempts in the 1990s to assure the international community that Egypt was safe for business and was ripe for the picking as a newly liberalised, market-friendly economy.
     Both the 'Economic' conference and the Suez Canal project... fell short in addressing the fundamental issues

Both the "Economic" conference and the Suez Canal project were well received on the domestic front. However, they both fell short in addressing the fundamental issues that led both Nasser and Mubarak's attempts at development to fail in achieving any long-term success in creating a stable economy.

History repeating

Nasser's overly optimistic developmental policies were not able to cope with both economic and political crises, and created enormous, poorly managed state institutions that could not bear the burden of propelling development on their own, but also held the only keys to growth.

Mubarak's later liberalisation policies seemed to benefit only a few connected individuals while driving standard of living for the rest of the country down, leading to more institutionalised corruption, crony-capitalism and huge disparity of income across the country.

Essentially, what Nasser and Mubarak did, and what Sisi is now doing - Morsi's economic policy did not differ that much from Mubarak's - is to focus on grand gestures and avoid the details, let alone the need for the complete fundamental restructuring and reorganisation of some of the state's principal institutions.

Without such reform, the prospect for long-term growth remains dim. Since his election campaign, Sisi has been remarkably vague and reticent when it came time to speak of a long-term vision for economic development.

On the contrary, he has been verbose and specific when speaking of particular deals, construction projects or individual business transactions. One would think the former to be the job of the president and the latter to be the job of government ministers or CEOs of major corporations.

Last week, Sisi boasted his government would build four major tunnels to the Sinai - without mentioning at what cost - after he inaccurately claimed that the government had already recouped the cost of the Suez Canal expansion project, and said Egypt would be establishing the largest fishery in the Middle East by October 2016.

News from the presidency on anti-corruption campaigns did not contain any similarly specified goals, accomplishments or milestones.

Prioritising the presidency

The socioeconomic and political conditions that played major parts in the outbreak of the revolution have been sidelined as priorities and replaced by a concerted state-centred campaign that pushes a proverbial "Yes we can!" slogan on Egyptian society by trying to instill trust in the presidency, - while neglecting to restore faith in state institutions to lead the charge.
     Without detailed goal-oriented campaigns to tackle problems, it is only reasonable to expect them to continue

The deployment of private capital and donations for some of the projects should have theoretically helped stave off inflation, however for numerous reasons prices continue to rise, especially as many welfare policies that kept down prices of certain commodities and staple goods are being abandoned.

Similarly, without detailed goal-oriented campaigns to tackle such problems, it is only reasonable to expect them to continue.

Nasser was able to close borders, nationalise companies and introduce agrarian reform to create an atmosphere where his policies seemed plausible and where he was able to maintain living standards and eventually offer an economic vision.

Sisi does not have the luxury of being able to introduce all of those reforms nor the executive ability to invoke immediate structural changes to the economy.

He was able to buy some time by bringing in billions in foreign aid and by executing two successful and distracting celebrations.

Since the presidential elections campaign, he has asked Egyptians to follow him to the promised land without offering a clear and coherent vision for the future.

Mega government projects like the Suez Canal project and others proposed in Upper Egypt are projects that are not politically controversial, and are remote enough from Cairo's mainstream commentators that they won't raise too many questions.

However, when it comes time to deliver on the promises of the project, the state must prove that it has the forward thinking and ability to live up to expectations that the state itself promised. There are far too many examples that cause reason to doubt they will.

They way to avoid this is to stop patronising the population by providing a detailed economic platform that entails a real plan to tackle the tangled institutional mess left behind by previous presidents - a mess that is the most potent antidote to any plans for development.

Mohamed ElMeshad is a journalist and a PhD candidate at SOAS, focused on the political economy of the media. He extensively worked in Egypt, Bahrain, West Africa, the UK and US. Recently, he contributed to the Committee to Protect Journalists’ book, Attacks on the Press (2015).

Opinions expressed in this article remain those of the author and do not necessarily represent those of al-Araby al-Jadeed, its editorial board or staff.