Week: Partner Insights

Just a few months ago, no one would have imagined that at the beginning of April a delegation of Egyptian Muslim Brothers would visit Washington — let alone be warmly welcomed inside the White House and the State Department. Even more surprising, it now appears that the Egyptian Salafis — the Muslim Brotherhood’s more conservative Islamist counterparts in Parliament — have grown jealous of the Brotherhood’s warm reception in America’s capital. A credible source close to the Salafis confirmed that they, too, now desire a visit to Washington.

The main Salafi political party, al-Nour, captured approximately 24 percent of the Parliament’s seats in last winter’s election. An inaugural Salafi visit to the U.S. is likely to occur as part of a larger delegation of Egyptian parliamentarians that includes representatives of all political parties. A trip under these circumstances would be acceptable to both the Salafis and the Obama administration, and could be justified as a step towards bridging the substantial cultural and political gap between the two sides.

Egypt’s economy has suffered short-term pain from the uncertainty over its political transition – but there’s a chance for confidence to pick up after the presidential elections.
Since the uprising, inward investment and tourism revenues have fallen, growth has slowed, unemployment has risen and the fiscal deficit has widened.

But the fundamentals of Egypt’s economy have not changed. The country has by far the largest population in the Middle East and is one of the Arab world’s most diversified economies. It has oil and gas, world-class tourist attractions and a strategic trading location at the nexus of Europe, the Middle East and Africa. These assets explain why no major investors have pulled out of Egypt since January. There is a chance, though an uncertain one, that Egypt’s economic prospects could be improved if the new regime proves to be less corrupt and more meritocratic.

Of course, the country has deep-seated economic problems. Its demographics are a double-edged sword: the fast-growing, young population of 85m or more can be an engine of growth, but too many are stuck in poverty and unemployment, and state services and infrastructure have been unable to cope with the rising numbers. All the new presidential candidates are under pressure to promise to spread the country’s wealth more evenly – and to create jobs. Whoever wins will face a difficult task. But the possibility of greater clarity over government policy may help to provide a more conducive environment for investment.

The wave of protests and social unrest affecting several countries in the Middle East and North African (MENA) region is to a large extent the result of the failure of the region’s economies to provide decent living conditions for their citizens, especially the youth. The MENA region is specifically confronted with a double burden, both demographic and economic: it is the youngest region in the world, with more than 60% of its 380 million population under 29, but this ‘‘youth bulge’’ is confronted with the highest youth unemployment rate in the world, standing at 25%, compared to an average of 14% internationally.

The large number of youth in the region (100 million between the ages of 15 and 29) puts significant pressure on the region’s health and education systems, especially at the secondary and tertiary educational levels, as more and better schooling opportunities need to be created. Moreover, the “youth bulge” poses major challenges to the region’s labour markets, as new jobs need to be created to absorb the large number of workforce entrants. The World Bank estimates that 40-50 million new jobs need to be created in MENA countries over the next decade.