Interesting blog on post-Arab Spring economies

My Arab Economies professor required my class to read this blog covering the post-revolution Egyptian economy and I found it fairly interesting so I thought I'd share it with the class.

After reading most of the posts from the last couple of months the main points I got were as follows:

1) a) The paradox of Morsi's rule: The Muslim Brotherhood's electoral success was predicated on its populist message of improving the welfare for the average Egyptian. However, the political instability of the revolution has caused tremendous economic instability which has depleted Egypt's foreign reserves (largely from the precipitous decline of tourism revenue as well as foreign investment.) This in turn has necessitated economic reform to the already existing welfare services (particularly food and energy subsidies. Also Egypt is the world largest importer of wheat so its currency devaluation has significantly raised the cost of these imports.) This means that the politicians who were elected to improve welfare services to the poor are now the ones who have to negotiate some sort of reform of the current programs. As expected from economists, the blog argues subsidy reform is essential to economic reform, especially particular energy subsidies that go primarily to the upper class.

This chart visualizes the economic crisis that Egypt faces (from the blog.) If Egypt cannot figure out a long-term solution to its deficit problem, the social unrest that it has experienced will be exacerbated greatly through the need for some kind of structure adjustment.

 

b) Many international leaders have expressed that they will only assist Egypt when it is political stable, however, this ignores the fact that increasing joblessness and general economic instability will increase political instability.

2) Morsi's lack of a coherent economic policy: She argues that the current government is taking a reactionary, myopic approach to economic policies, highlighted by announced policies that have been quickly rescinded days later. Instead of a gradualist, long-term economic plan, Morsi's government has taken an ad-hoc approach based on short-term considerations.