Can Abdel-Fattah al-Sisi Save the Egyptian Economy?
Some call him the Egyptian de Gaulle. Others refer to him as a Mubarak strongman with a cult of personality. Whatever the case, Abdel-Fattah al-Sisi's elevation to president in the upcoming election seems assured. He already has the blessing of the Supreme Council of the Armed Forces and, with support from "people in the streets," he seems primed to ascend to the position.
But before we go popping champagne and celebrating the newest government of many in Egypt, let's make sure the comparison is warranted. Charles de Gaulle was able to completely revive the French economy after its decimation during the Second World War. He was able to make France a prominent political player in an international system dominated by the USA and the USSR. Although his tenure of leadership was occasionally spotted with retreats from the center of French politics, the modern state could not exist without the foundation he helped establish.
On the face of it, al-Sisi's experience on both sides of state politics may be what Egypt needs to completely stabilize a decaying domestic situation. Then again, portions of the Muslim Brotherhood will likely see his elevation to president as a sign to begin a new round of demonstrations and protests. If this comparison with Charles de Gaulle is to have any staying power, al-Sisi's economic policies must reflect his spiritual predecessor in a meaningful way as well as his looks. Does al-Sisi have de Gaulle's ability to get Egypt's economy back on track, or is he only "a handsome man" on a swell of popularity?
Assuming al-Sisi is de Gaulle reincarnate...
Under de Gaulle, post World War II France called for a dirigisme economy. Founded upon the notion of capitalism with a state-determined directive, dirigisme calls for the establishment of state-owned enterprise in strategic sectors of the Egyptian economy, as well as a more firm hand taken in regional spatial planning efforts. In France, this allowed for areas devastated by the war to be resurrected through foreign investment.
The spatial planning idea espoused by Gaullists also has some staying power in al-Sisi. Under this idea, localities in Egypt will see a great deal of administrative restructuring to give more efficient access to services currently provided by portions of the Muslim Brotherhood. If applied correctly, this may allow for diversification of markets beyond the strategic sectors that would, under dirigisme, be controlled by the government.
Unfortunately, spatial planning is a highly intensive process, calling for a state bureaucracy that already is seen as bloated and corrupt. It is unlikely al-Sisi will be able to institute the structural reforms necessary that will encourage a diverse market.
Additionally, while the state-owned enterprise allows for increased stability in an ailing market, this is already the case in Egyptian domestic policy. Under Mubarak, high-ranking military officials were usually captains of industry, a trend that has little movement toward a free market economy in the three years since Mubarak's ejection. Given al-Sisi's current popularity with the military, this will likely be easily accomplished. With estimates of military (and thus state) economic control varying between 15% and 40%, state apparatus seem already primed to direct Egypt's economy in a real and lasting way.
The return on such an idea is less certain. De Gaulle's France saw unprecedented growth, but with a state-directed economy already in place, the result in Egyptian economics may be far more underwhelming. With a meager 2.2% growth last year, there is little state officials can do to encourage a stagnated economy without large injections of foreign investment.
Maybe a handsome face after all...
While there are vague comparisons that can be made between de Gaulle and al-Sisi, the latter's prospective elevation to president might be nothing but the newest face on an increasingly fractured state. Although his election to president could mean an end to the political fighting between military and executive branches, al-Sisi may want to avoid any more of his supporters making the claim he evokes de Gaulle in style and temperament. While he may be "reluctantly" be moving into the political limelight and to the presidency, it seems de Gaulle's ghost is haunting al-Sisi instead of blessing him.
If he is to have any attempt at redefining the Egyptian state, then it might be time for the general to redefine his spiritual predecessor into someone whose economic are slightly more applicable to Egypt's future growth.
The next step
Want to figure out how to profit on business analysis like this? The key is to learn how to turn business insights into portfolio gold by taking your first steps as an investor. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal-finance experts show you what you need to get started, and even gives you access to some stocks to buy first. Click here to get your copy today -- it's absolutely free.
The article Can Abdel-Fattah al-Sisi Save the Egyptian Economy? originally appeared on Fool.com.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
