Shortly after the January 25 revolution in Egypt, prominent Egyptian investor Ahmed Heikal said: “If we get things right, we could be Turkey in ten years. If we get them wrong, we could be Pakistan in 18 months.”
Today, almost two years after this statement, Egypt’s economy looks a lot more like Pakistan’s than Turkey’s. Unemployment is on the rise. Factories are closing down by the thousands. Eighty percent of university graduates are unable to find work. Foreign exchange reserves have dropped by almost two-thirds, hitting dangerously low levels. The Egyptian pound is falling. Tourism revenues and foreign direct investment are down dramatically, while inflation ticks ever upward. As prices rise, Egyptian hopes fall.
The January 25 revolution has not been good to Egypt’s economy. The Muslim Brotherhood leadership has demonstrated little skill in managing the economy. The president of Egypt—a proud nation with a proud past—has been reduced to supplicant, traveling the world asking for aid. On a trip last week to Russia, President Mohamed Mursi’s request for a USD 2 billion loan and a wheat package was rejected.
This is not how it should be for Egypt, a country with tremendous potential and fortunate economic geography. Egypt sits at the intersection of Africa, Asia, and Europe. Its ports can connect the world. Its large and young population could be leveraged to become the next “tiger economy.” Instead, Egypt’s economy resembles a Cairo street cat, diseased and weak and scavenging for handouts.
To be sure, revolutions are rarely good for an economy. Capital is a coward, and runs away at the inevitable riots and political crises that revolutions bring. Rising insecurity, street battles and political uncertainty are all bad for business. Still, the Muslim Brotherhood-led government has done little to allay the fears of Egyptian and foreign investors, and has yet to lay out a coherent strategy for a 21st century Egyptian economy.
A little over a decade ago, another Muslim country with a large population and an old, sophisticated civilization elected a neophyte government amid a time of political turmoil and entrenched establishment resistance. That country, Turkey, saw the rise of Recep Tayyip Erdoğan and the Justice and Development Party (AKP) with an election victory in 2002. The Turkish military distrusted Erdoğan, as did the Istanbul business elite, the European Union and many others.
Erdoğan, who was once jailed for a militant Islamist poem he wrote, took immediate steps to quell any concerns after the election. In every interview, he stressed his belief in practical management of the economy. Turkey was coming off a devastating financial crisis. The days of ideology were over, Erdoğan signalled. He was a new man, not one who writes militant poems, but one who spurs economic growth.
Asked about his past in 2002, he said bluntly: “That period is over…. We have opened a new page with a new group of people, a brand new party.” Erdoğan even signalled a major policy shift in the simplest of manners, saying, “We were anti-European. Now, we’re pro-European.” He robustly supported Turkey’s accession to the EU. To show he meant business, Erdoğan appointed Ali Babacan, a member of the new generation who studied business in the United States, as the first finance minister. Babacan was only 35 years old.
Asked about his economic ideology, Erdoğan did not use buzz words such as “social justice” or attack the previous policies that sent Turkey into economic crisis. “We just want to increase the happiness of the people,” Erdoğan said at the time. He appointed smart technocrats and empowered them.
He has succeeded. In the 11 years since Erdoğan became the leading man of Turkish politics, the country’s GDP has nearly quadrupled. It will likely enter the exclusive club of USD 1 trillion economies by 2014 and could hit USD 2 trillion by 2023, the 100th anniversary of the Turkish republic. While Europe flounders, Turkey continues to rise, and Turks can be forgiven for wondering why they ever wanted to be a member of the European Union in the first place.
Erdoğan is a populist leader with the right instincts. He knows that slogans and chest-thumping can only last so long. What the people really want are results, not ideologies. In those early days, he reached out to his opponents, chose not to fight battles over sensitive issues such as women’s hijab, and supported the growth of “Turkish tiger” companies through incentives and free market policies. This, in turn, led to two straight re-elections, most recently in 2011.
There is a lot of talk in Islamist circles about the Turkish model. The Turkish model, like beauty, is in the eyes of the beholder. It means many things to many people, but many modern Islamists speak of the model as a synthesis of modern technocratic management fused with a religious identity.
The reality is that what Erdoğan has achieved is neither uniquely Turkish nor Islamic. It is simply good politics. In their book, Arab Society in Revolt: The West’s Mediterranean Challenge, European scholars Olivier Roy and Cesare Merlini astutely pointed out that in the Arab world “people have become more individualistic. They tend to ask for good governance and citizenship rather than ideology.”
I would also add that they are hungry for results and the leaders that bring them those results—a growing economy, good governance, a respected voice, and dignity—will receive support, regardless of their ideology. This is true in the Arab world, as well as in Europe, the United States, and just about everywhere else. Tony Blair was right when he said: “All the ‘isms are ‘wasms.”
So, what of Ahmed Heikal’s Turkey–Pakistan comparison? Last month, Moody’s Investors Service downgraded Egypt’s sovereign debt for the sixth time since the revolution. Egypt’s credit rating is now equal to Pakistan’s.