x Abu Dhabi, UAEThursday 27 July 2017

Uncertainty still plagues Egypt's ailing economy

Yes, Egypt has a new president. But it's still not at all clear how much power he will have. The real issue remains unsettled.

One question has been settled: Mohammed Morsi will be the new president of Egypt. The symbolic importance of the Muslim Brotherhood's achievement, after decades as a suppressed opposition, is not to be underestimated. Still to be answered, however, is the more complicated matter of who will really manage the government that is supposed to serve the interests of more than 80 million Egyptians.

The announcement on Sunday triggered jubilation among Brotherhood supporters across the country - and concern in some other corridors. Despite the past week of uncertainty and behind-the-scenes negotiations, this historic event is in a sense something for all Egyptians to celebrate: an election has replaced the stagecraft of sham votes that returned military men to the presidential office in the past.

But a new era of governance is far from certain. Mr Morsi does not know what powers he will have, or even how long his term in office will be. The parliament has been suspended. The judiciary is opaque. The Supreme Council of the Armed Forces (Scaf) is still making the rules, including those on the writing of a new constitution.

Meanwhile, the economy has never recovered from the 2011 uprising. Egypt's debt rating has been cut repeatedly, stocks are down 20 per cent, the pound is at a seven-year low, foreign investment is a memory, tourism has dried up …

Ideally, all factions in Egypt would turn their attention to these problems, but the uncertainty created by Scaf and the courts makes that improbable for now. The generals retain their vast commercial interests and their power over their own budget (and military aid from the US). Setting aside the incoming government's technical ability to set things right, its powers to do so will be severely circumscribed.

We hope this does not end in another stalemate. Ideally, many factions would now work together to start whittling patiently away at Scaf's hegemony, through a series of modest measures and compromises. Something roughly similar in Turkey, over recent years, has delivered change without crippling crisis.

Egypt can ill afford more turmoil. But without action to restore confidence in the economy, address agricultural productivity, and - gradually - introduce market reforms, the outlook is bleak.

Stability in governance and economics are inseparable: the two always depend on each other. After all that Egyptians have been through, they now must wait to see if Mr Morsi wants to live up to his promise to govern for all, if he is capable of doing so, and if the military will allow him to do his job.