Egypt's Three Challenges

The country's future will be decided by the resolution of its legitimacy crisis, its economic crisis and its Nile crisis.

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As the immediate Egyptian political crisis deepens, three issues will determine the outcome: how to establish the legitimacy of any government when the general public appears to be equally divided between secularists and Islamists, how to resolve the economic crisis facing the country, and how to manage its abiding development challenge and that is the receding waters of the Nile River. If these issues are not resolved, Egypt could become a failed state which could in a worst case scenario shut down the Suez Canal, stop oil flows to western countries through the canal, spread the Muslim Brotherhood’s revolution to other relatively stable countries such as Jordan and Saudi Arabia, and endanger the already fragile peace agreement between Egypt and Israel.

Ultimately, it is the source of sovereignty and thus legitimacy in the Egyptian government which is what is at issue. The Islamist religious vision which drives the Muslim Brotherhood does not encourage political compromise on either issue. For the Islamists the only source of legitimacy must always be the Quran, and Allah’s revelation through His prophet, Muhammad. By definition the secularists deny any religious vision can be the legal and legitimate source of state sovereignty. At one point deposed President Mohammed Morsi had both democratic legitimacy (from his victory in elections last year) and Islamist legitimacy (from his leadership of the Muslim Brotherhood). Through technocratic incompetence and political arrogance he has lost both. The Islamist Nour Party joined the opposition to Morsi because he had been so dismissive of their interests and excluded them from active participation in the government. Morsi lost democratic legitimacy because he began harassing critics in the media, political opponents, and using his presidential authority to restrict individual rights, refusing to protect Coptic Christian from growing levels of violence from Islamist extremists, and ramming an Islamist constitution down the secularist throats. Democracy is not simply about having free and fair elections; it about what happens after elections to those in opposition. It is about the freedom of minorities, such as Coptic Christian, to live and worship without fear of violence by agents of the government or Islamist radicals.

[See a collection of editorial cartoons on the Middle East.]

The secularist business community, those who advocate a liberal democracy, and the Coptic Christian Pope, all endorsed the military take over. In supporting the coup the Muslim Brotherhood’s opponents took a calculated risk because many army officers, below the generals who organized the coup, are reportedly sympathetic to the Muslim Brotherhood. It was members of the Islamist underground in the Egyptian military who assassinated President Anwar Sadat. If the Brotherhood resists the takeover through mass mobilization and violence, which appears to be happening, and the civilian casualties rise, the lower ranks of the army may refuse to carry out orders to use force against the demonstrators. The political turmoil makes resolution of the country’s economic crisis more difficult because only a strong central government with broad public support can implement painful reforms need to set the country on a path to accelerated economic growth and job creation.

The long-term economic crisis is nearly as difficult to manage as the question of legitimacy. Unemployment has risen to over 13 percent, and basic food stuffs such flour and sugar have risen 50 percent over the past year. Hard currency reserves are severely depleted and tourism in steep decline which led some Gulf States and Saudi Arabia to loan billions to Egypt to prop up their economy. However, the nearly $5 billion in International Monetary Fund liquidity loans last November has had little impact. In some smaller cities strong support for the Muslim Brotherhood among young people rose because they had expected they would get jobs as a reward for their loyalty to the movement; instead they face higher unemployment. Their disappointment has mutated into anger and even rage on the streets against the military coup. Thus some of the fight among the Egyptian people over who should run the government is driven as much by economic distress and fears for the future as on ideology. Even if the new government temporarily resolves the economic crisis another more intractable one looms, and that is the risk of a water war over the Nile River.

The waters of the Nile, the life-blood of Egypt, are now threatened by a massive damn being constructed in Ethiopia which may be the most serious crisis facing the country. Without the Nile, Egypt would be one large desert and unable to support its teaming population of 80 million people who nearly all live in the Nile River Valley, one of the most densely populated areas on the planet. The Grand Ethiopian Renaissance dam, the largest in Africa when it is completed, will be a major boom to the Ethiopian economy, and a major threat to Egypt’s. When the dam is complete, it will take three years to fill the lake behind the dam which will reduce flows on the Nile River by between 20-30 percent.

Even now water flowing from the Nile trickles into the Mediterranean Sea from overuse, and within the next decade even without the Ethiopian dam project the stress on the water supply of Egypt will reach the crisis point. Six countries in East Africa with Nile River water interests at stake have signed a treaty ending Egypt’s long held right to veto any new dam project outside the country. Sudan and Egypt reportedly signed a secret military agreement to bomb the dam, they are so fearful of the Ethiopian project. Morsi in a speech June 10th weeks before his removal said “We will defend each drop of the Nile with our blood”, but then added that negotiation is the best way to resolve the water crisis. What is needed is new regional Nile water agreement, water metering to force more efficient usage, and the tapping of other new water sources such as desalinating Red Sea water, and fractured bedrock water along the Great Rift Valley aquifer. The widening Egyptian political crisis has weakened the government’s authority just when it is most needed to address the water crisis and avoid a regional war. U.S. foreign aid could play a role in addressing the water issue, but a debate is underway in the U.S. over whether or not to suspend the U.S. aid program because of the coup and it’s undermining of the nascent democratic experiment in Egypt.

[Read Pat Garofalo: Why Rand Paul's Right About Cutting Off Aid to Egypt]

Promoting democracy in Egypt and other Arab countries ought to be one component of American foreign and development policy in the region, but it is certainly not the only objective. If the U.S. government supports democracy in Egypt to the exclusion of all other equities we may end up with a failed state there which would not be in the interest of the Egyptian people, of democracy in the Arab world or of American interests in the region. Using a sledge hammer approach to ending all U.S. foreign aid to Egypt is the wrong approach; a surgical strategy makes much better sense. U.S. law requiring a cut off of aid to Egypt because of the military coup should not be ignored, but it can be interpreted.

The law says that aid must end to countries in which a democratically-elected government is overthrown by a military coup. But the word “country” may be interpreted to mean aid flowing to or through Egyptian government ministries, which would not include U.S. aid for the American University in Cairo and other Egyptian universities, civil society organizations, election support and political party development, free media training, and economic growth programs to support business development and job creation – as long as the funding does not go through government ministries. Nor would such an interpretation include scholarships funded through our aid programs to Egyptian students to study at U.S. universities. Many of the most competent technocrats in Egypt – needed now to rescue the country – learned first-hand about American democracy as recipients of aid-funded scholarships over the past three decades. We could use this crisis to start that program up again in much larger form. The government-to-government aid program should only be resumed if the country returns to a democratic system, and protects the rights of minorities such as the Copts, press freedom and civil society. U.S. government policy in Egypt should use the U.S. aid to program help the Egyptians to privatize the massive and decrepit state industrial sector (much of it run by the Egyptian military), to increase exports, and to help the Egyptians negotiate free trade agreements with the EU, Canada and the United States which is the fastest way to stimulate sustainable economic growth.

[Read the U.S. News debate: Should U.S. Foreign Aid to Egypt Be Cut?]

When the Turkish economy teetered near collapse a decade ago, the country turned to Kemal Dervish, a respected World Bank economist and technocrat with no political party baggage who implemented broad reforms to modernize the economy. Prime Minister Recep Tayyip Erdogan’s party which took over after Dervish had completed his work, had the good sense to leave in place his reforms and that has resulted in the decade-long economic miracle in Turkey. Egypt needs its own Kemal Dervish right now because without private sector led economic growth and sustainable jobs, the risk of collapse will grow.

Andrew Natsios is an executive professor at the George H.W. Bush School of Government and Public Service at Texas A&M University, a senior fellow at the Hudson Institute, and the author of "Sudan, South Sudan and Darfur: What Everyone Needs to Know." He served as administrator of the U.S. Agency for International Development and as President George W. Bush's special envoy to Sudan.

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