For much of the presidency of Hosni Mubarak, Egypt seemed one of the most stable countries in the Middle East. The situation in the country changed literally overnight when in early 2011 mass protests led to the downfall of the Mubarak regime and initiated the first free elections in the country in several decades.
While the pursuit of liberty was a visible symbol of the revolution, it—like many other revolutions that have preceded and accompanied it in the world—was substantially driven by economic grievances. Young Egyptians, many of them students—and, of course, not only the young––had experienced problems common to many developing countries. Many of them had received an education, even a university degree, and had been increasingly exposed to images of the good life in the West. The fact that these images might have little connection to reality is of no importance. What is important is that the students’ expectations and reality are miles apart. These youngsters with their middle class education, if not background, were the leaders of the revolution, and have “mounting expectations.” They are catalysts for a broad segment of the lower classes living in abject poverty. According to the United Nations, “some 40 percent of Egyptians live below the poverty line; 14 million people subsist on less than $1 a day.” While these economic problems were fundamental to the revolution, they will not disappear and most likely will become worse in the future. This is what will most probably create permanent instability in Egypt. It will in various degrees affect the masses, the new emerging elite, and the military leftovers from the Mubarak regime.
While the economic condition of Egyptians was hardly glamorous during Mubarak’s rule, it has become worse as a result of political upheaval, for a variety of reasons. Tourism, a major source of employment and hard currency, has plummeted, and there is a fear that it could fall even more in case of a ban on alcohol and the enforcement of a strong dress code. Labor strikes and extensive draining of hard currency reserves have continued, and the reserves are now approximately 40 percent of what they were in January 2011. Even an IMF loan of $3.2 billion would only amount to just two months of lost hard currency reserves. Consequently, $1 billion provided by the Saudi-based Islamic Development Bank (IDB) to fund energy and food imports is just a drop in the ocean and raises fears that prices could rise with possible shortages. These fears are justified by the fact that the government engaged in extensive purchases of grain in order to prevent the rise in the price of bread, which could radicalize the masses much more than rising oil prices. The government might not be able to continue purchasing enough grain and similar essential commodities for Egypt’s foreign reserves, which, at currently $15.5 billion, are only enough to cover three months of imports. In addition, Egyptians suffer from horrific unemployment, which is currently above 12 percent and nearly 30 percent among young people. Meanwhile, job growth is projected at 1.5 percent this fiscal year, not nearly high enough to provide a young and rapidly growing population with jobs. There is also a fear that the government will not be able to subsidize gas as before, which would lead to increasing prices, although the government has said it will not raise fuel prices or impose new taxes.
There is absolutely no way any Egyptian regime can improve the economic situation in the near future, especially in any marked manner by relying on Egyptian resources. There is only one hope, that of international aid, and Cairo did appeal to Washington and the West in general for financial help. Some help was promised and could be delivered. Still, Cairo stretched out its hand to its allies at the wrong time. The entire picture for the Western economy—both for the United States and the EU—looks bleak, with no easy way out of the predicament without the most drastic changes. Cairo, then, must be self-reliant. Such an emergency would usually imply an increasing role for government in socioeconomic life. Still, Morsi’s people, despite his supposedly radical credentials, have proclaimed that his government will move in the opposite direction. “They clearly subscribe to a free market economy, and they clearly appreciate private ownership,” said Magda Kandi, executive director of the Egyptian Center for Economic Studies. They even want to dismantle those sections of the Egyptian economy that are controlled by the military despite the fact that, according to Kandi, “the military has proved itself efficient in terms of meeting deadlines, effective management, and prices for ordinary Egyptians.” The Muslim Brotherhood’s plan is to fashion a market economy for the poor in order to bring them into the mainstream. While this project sounds morally upright, it is actually utopian in the present-day conditions of the Egyptian economy.
Egypt’s economic problems most likely will increase in the future, creating a permanent background either for instability or, at most, potential stability. Those who belong either to the new or old elite must respond to this instability. It appears that the revolutionary process need not be Islamized and Egypt dominated by the Muslim Brotherhood and the more radical Salafis. At the moment, there is no sign that the army will relinquish control. In a recent move, the generals made it clear that they are the real king makers and will challenge a president who interferes with their economic interests. The military thus still feels comparatively secure while demonstrating no desire to grant real power to the civilian government, at least at the present.
The fact that the military is currently still in control indicates that Egypt will continue to be mostly pro-Western. The military, like the Muslim Brotherhood, will feel external pressure, and U.S. neoliberal economic policy will affect the generals’ internal and foreign decision-making. While it is true that the generals had a part in sending the aged Mubarak to trial and, implicitly, to death in prison, they undoubtedly have quite a negative impression of the revolutionaries and of the revolution as a whole. They believe that the revolution itself was, in a way, orchestrated from abroad and that Washington might well use pro-Western forces and NGOs to replace them with more pliable alternatives; this suspicion led to the raid of some pro-Western NGOs. It is this distrust of Washington that has also led the generals to engage in negotiations with Iraq with its increasingly pro-Iranian government and Iran. Still, all of these steps are cautious and discreet.
In conclusion, the revolution in Egypt was caused not so much by the drive for political liberty but, as is the case with most revolutions, by economic problems that such revolutions actually worsen. Still, one should not assume that the revolution is destined to radicalize despite the political victories of the Islamists. As long as the generals, who represent the upper echelon of the economic/social elite, maintain control over the army and, in a way, the civilian government, Egypt most likely will evolve along the road of a revised neo-Mubarakism. The situation, however, could change dramatically if the military top brass loses its grip over the army and society.
Dmitry Shlapentokh is Associate Professor of History at Indiana University South Bend. He holds an M.A. from Moscow State University, an M.A. from Michigan State University, and a Ph.D. from the University of Chicago. He has taught and had research appointments at Harvard University’s Russian Research Center and Stanford University’s Hoover Institution. Dr. Shlapentokh is also the author or editor of several books, including The Proto-totalitarian State: Punishment and Control in Absolutist Regimes (2007) and Russia between East and West: Scholarly Debates on Eurasianism (2006).
 Ibrahim Saif, “How will Morsi Rise to Meet Egypt’s Economic Challenges?” Al-Monitor, 3 July 2012.
 Lauren E. Bohn and Tim Lister, “The Key to Liberating Egyptians? The Economy,” CNN.com, 29 June 2012.
 Viktoria Kleber, “Egypt’s Tourism Industry Fears for Future,” DW, 7 June 2012.
 “Metro Workers Begin Open-ended Sit-in,” Egypt News, 4 July 2012.
 Ibrahim Saif, op cit.
 “Saudi Feeds Egypt’s Economy in Billion-dollar Deal,” Al Bawaba, 3 July 2012.
 Carina Kamel, “Egypt Open to IMF Deal, but Terms Could Change: Advisor to President Morsi,” Al Arabiya, 3 July 2012.
 Lauren E. Bohn and Tim Lister, op. cit.
 “Former Finance Minister: New Budget will not Meet Growth Demands,” Al-Masry Al-Youm, 4 June 2012.
 Cited in Elizabeth Arrott, “Transforming Egypt’s Economy, Military Daunt Morsi,” Voice of America, 2 July 2012.
 Lauren E. Bohn and Tim Lister, op. cit.