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Economy

Relative Optimism

The Nile River is just one of Egypt's great economic life-givers
The Nile River is just one of Egypt's great economic life-givers
The Nile River is just one of Egypt's great economic life-givers

Economist, Shir Hever, discusses potential economic shifts in the wake of regional unrest

In a discussion with The Majalla, the Israeli economist Shir Hever reflected upon some of the economic impacts of civil unrest and regime change in the Middle East. Although a specialist in the economics of Israel’s occupation of Palestinian territory, Hever speculated on the potential adjustment of the economic status quo in the region and how the United States may be forced to seek new strategies to exert continued influence. He touched upon the opportunity for Egypt to adopt an alternative economic system and imagines how potential changes in the tepid but otherwise stable relationship between Israel and Egypt may have grave consequences.

The typical economist does not have the reputation of an agitator; they are a breed who are seen to favor continued stability, only championing change in slight increments. Shir Hever is not a typical economist; he has made his reputation as a fierce critic and analyst of Israel’s oppressive policies in the West Bank and Gaza. So when faced with such radical change as the ouster of President Mubarak in Egypt, he does not take a pessimistic view. Indeed, it is the cause of eager interest “I am very excited,” he says honestly, “it seems to be the breakdown or at least the beginning of a breakdown of a system that has been setup in the Middle East and North Africa over decades. A system setup by the United States, or mostly by the United States, to separate so called moderate and radical regimes, by which any regime that receives aid from the United States and buys weapons from the United States is called moderate, and every regime that doesn’t is called radical—quite regardless of what they do to their own populations and how democratic they are internally. I think this kind of awakening that we see now is bringing a lot of hope of a new arrangement.”

Cutting to the heart of the matter, Hever raises the issue of the enormous military aid that Egypt customarily receives from the US. In his view, Egypt does not face a credible foreign threat, and reasons that this military might has, until now, been leveled at its own population. The US was essentially party to Mubarak’s military regime, but with the current military government publicly committing to speedy transition, the US may have to tread a new path, according to Hever: “Now that the people of Egypt have risen up against that system it might force the United States to find a new strategy.”

Despite a widespread and pessimistic view that the rash of civil unrest throughout the Middle East may exacerbate a burgeoning economic crisis—with unemployment figures reaching frightening levels—Hever is optimistic for the future, and considers so-called stability a relative term. For him “what is often termed as economic stability and economic prosperity—especially in recent decades—has been a monopoly over capital and capital accumulation by a certain group of the population. As long as their profits are stable they call the economy stable.” Around the world—especially in Iceland, Ireland and Greece—we have witnessed a refusal to stick to these rules and a subsequent withdrawal of foreign investments leading to devastating economic crises. But it need not be this way, in the case of Egypt there is vast economic potential—particularly in the form of the Suez Canal, the Aswan Dam and the Nile—as well as a great reserve of human capital—an educated population and vibrant university system that puts Egypt on a good footing for trade opportunities. It is this situation that Hever finds encouraging, saying: “There is an alternative economic system—more than one—and it is really up to the people in Egypt to choose what kind of economic system would represent them best, and would be the best way to ensure that prosperity and wealth would be distributed fairly and justly.”

Fairness and justice can all too often be over-looked in the arid world of economics, but ultimately—behind the numbers and data—the lives of real men and women are much affected by the vicissitudes of the economy. Hever points out that one likely policy to come under scrutiny in the new Egyptian administration is the lopsided trade relationship with Israel. “For example,” he says “they could resume selling natural gas to Israel at an extremely reduced price like they did before—which was part of Mubarak’s strategy to ingratiate himself with Israel. But if they would do that they would be losing a lot of money that could be used for the sake of public services.”

Sadly, and paradoxically, the economic consequences of a potentially populist administration in Egypt may not be wholly worth celebrating just yet. While it is still premature to venture beyond speculation, Hever posits two distinctly different outlooks for the besieged people of Gaza should a new Egyptian administration end the country’s complicity with the siege of the strip. In the first scenario, Israel could be forced to completely re-think its strategy towards Gaza, given that a break in the siege at the Egyptian border would render Israel’s customs and security measures impotent. In the best case, this would include a re-negotiation of economic terms with the Palestinians and a much more open border control. Unfortunately, the usually hopeful economist is uncharacteristically gloomy on this point, suggesting that the more likely outcome “is the less optimistic scenario—which Israel already threatened to do if the Rafa border is opened—where Israel will simply cut off Gaza completely from the West Bank and from Israel, and would just present an impermeable border. And that would be devastating to the Gaza population.”

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Majalla: The Leading Arab Magazine
Since it was first published in 1980 from its head office in London, Majalla has been considered one of the leading political affairs magazines in the Arab world. We offer a wide array of articles addressing the most significant political, economic and social issues facing the Middle East today, as well as the evolving cultural scene in the region. Majalla prides itself in being an ideas-driven publication that goes beyond reporting and headlines to provide original analysis.

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