Will liberal parties be able to influence economic policy?

Despite their modest gains in the first round of elections, liberal parties could still play an influential role in setting economic policy in the coming parliament, though this will largely depend on what alliances the Muslim Brotherhood’s Freedom and Justice Party (FJP) decides to make in a future parliament that it looks set to dominate, analysts say.

“I think the liberal parties will act as a buffer against extremism in any future coalition. The FJP has not subscribed to tough rhetoric, while the Salafis have,” said Magda Kandil, head of the Egyptian Center for Economic Studies.

Amr Hashem Rabee, a political analyst at the Al-Ahram Centre for Political and Strategic Studies, agrees. “I see the FJP coalescing with the liberals rather than the Salafis, because the Muslim Brotherhood is more liberal than the Salafis.”

But, not all analysts are ready to jump to such conclusions. Samer Soliman, assistant professor of political economy at the American University of Cairo and a member of the Egyptian Social Democratic Party, is more cautious.

“We’re seeing polarization based on identity politics… The FJP will either ally with the liberals or be pushed into a more extremist position — what happens will be the outcome of these two forces,” he said. 

Liberal parties are still debating on a campaign strategy for the second and third rounds of elections, which start on 14 December. So far, Islamist parties have dominated first-round results, with the FJP taking the lead and the Salafi Nour Party coming in second.

The liberal-led alliance, the Egyptian Bloc, is in third place with an estimated 14 seats, compared to 69 seats for the FJP and 31 seats for Nour, according to the independent daily Al-Shorouk.

The Bloc is composed of three parties in a united list: the liberal Freedom Egypt Party (FEP), founded by billionaire businessman Naguib Sawiris, which occupies 50 percent of the list, the center-left Egyptian Social Democratic Party (ESDP), which occupies 40 percent, and the center-left Tagammu, which occupies 10 percent. 

The remaining liberal parties are trailing behind in the election results. Wafd, which is not running on any list, has garnered 11 seats so far. The Completing the Revolution list, which includes the liberal-social Masr Al-Huriya Party set up by political scientist Amr Hamzawy, has four seats. The Ghad Party is in the FJP-led Democratic Alliance, but appears not to have gained any seats independently so far.

Points of agreement

When it comes to specifics, liberal parties have fairly diverse suggestions about how to solve Egypt’s problems, but generally they would all like to maintain the principles of a free-market economy, which encourages the development of a strong private sector, without the corruption that became synonymous with the Mubarak regime.

“We believe in a free market economy that is efficiently regulated by the state. This is different from the neoliberal policies of the Mubarak regime, in which corruption and monopolistic practices took place,” said Mohamed Menza, a founding member of Masr Al-Huriya.

Anecdotal evidence suggests that many people voted for Islamist parties in response to corruption. Given their religious mandates, the FJP and Nour are seen as being cleaner, and less likely to be corrupt.

On the need for cleaning up corruption, then, the Islamist and liberal parties might find they have something in common.

Developing the private sector

The FJP is also in support of the private sector, especially given that some of its leading figures are wealthy upper- to middle-class businessmen, such as the Brotherhood’s deputy chairman and FJP strategist Khairat Al-Shater.

Al-Shater owns an array of trading and industrial companies, and was keen to tell the Financial Times in an October interview that the Islamists favor a free-market economy and would keep the country open for business.

Kandil, who has studied the FJP and Nour Party manifestos, says that “liberals and Islamists agree on the principles for creating employment, developing the private sector, reforming the public sector, and free trade. Only the socialist parties would differ in the fact that they want a bigger role for the state.”  

Ghad’s position, which is aligned with that of the FJP, is a case in point. “We are interested in looking more at the Turkish experience over the last 10 years,” said Shady Taha, the party’s deputy chairman.

Turkey’s economy has grown steadily in recent years, and has become a major textile exporter, particularly of garments such as jeans. Its ruling Justice and Development Party, whose roots are in Turkey’s Islamist movement, is also seen as a model for integrating Islam and democracy in the region.

Taha recalled seeing an advertisement to promote foreign investment in Turkey. The advertisement said: It is a country of 47 million people with 50 percent of the population under the age of 22; there are 500,000 graduates from Turkish universities every year, and Turkey offers a low tax rate.

“I don’t see what Egypt has that is different from what the Turkish ad says. The only difference is that Turkey sees it as an advantage, while we see our high level of young, unemployed graduates as a disadvantage,” Taha added.

He would therefore like to see more advertisements abroad about the benefits of investing in Egypt. He thinks they would attract foreign investment in industries such as tourism, which is a significant employer in the country and a critical source of foreign currency.

Reforming the public sector

Both liberals and Islamists would like to reduce the size of bloated public institutions, such as ministries. Ghad even sees this as a way to free up money to fund its ambitious social projects, as set out in its manifesto “Saving Egypt.”

Setting a maximum wage for public sector employees, including the president, at LE30,000 per month would be one way to reduce over-spending by the state, Taha said.  

He also said there needs to be incentives in place to prevent ministries from “burning the budget,” a habit which incentivizes a ministry to spend its given budget just so it is not awarded less money the following year.

Ghad also wants to get rid of the Information Ministry, and restructure state radio, television and newspapers, to generate added cash.

“For the last few years, the budget of the Information Ministry has not been legally provided to members of parliament, it is a secret budget, like that of the military. We only get a final number,” Taha said. “Why is the budget so secret?”

A potential difference

Liberals and Islamists might differ, however, on one point: development of the financial sector.

“The FJP and Nour would like to implement Islamic banking, a model talked about as having been able to mitigate the effects of the financial crisis in some countries,” Kandil said.

Islamic finance is based on religious principles, such as banning interest and pure monetary speculation. It is a small but growing market with US$1 trillion in assets globally, compared to the tens of trillions of dollars held in conventional finance.

Its enthusiasts say that Islamic banking provides an alternative to the debt-laden Western model of finance, while its critics say that Islamic financial products merely mimic their conventional counterparts.

Either way, the FJP and Nour would like to see a gradual change in finance, as they both support strong regulation to accompany any potential transformation, according to Kandil.

And, in the mean time, the liberals might have their say.

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