By Una Galani / Reuters
DUBAI: The Arab revolutions have altered perceptions of the region. The new regimes may have democratic foundations but they won’t look like anything the West or liberals may hope for, especially in Egypt. Still, even if they end up being governed or dominated by Islamist parties, the new regimes that have sprung up along the Mediterranean may look more like Turkey than Iran.
The new governments, chosen by popular vote, will find it a struggle to shake off the deposed autocrats’ legacies. Several months of protests, and elections, can’t eliminate decades of corruption. Nor can they consign still-powerful armies to their barracks. Even if elections are free and fair, protesters in varying numbers and of different stripes will keep coming to Egypt’s Tahrir Square. Meanwhile, exacerbated tribal differences will delay Libya’s transition.
It will be a painful adjustment for business. Dictators provided relatively safe and stable investment climates. Economic growth flourished while rampant cronyism ensured riches were held by a lucky few. True, private enterprise was stifled in Libya, but foreign oil companies were kept happy enough. The discrepancy between rich and poor will continue to widen in 2012 and cause more unrest. But it should narrow over time as politicians set policies that will help meet, at least partially, the economic aspirations of the poor that were at the heart of the revolution.
Education, wealth and demographics will decide how that is achieved. Libya’s riches will enable the country to open itself up to foreign investment and maintain a generous social net for citizens. In Egypt, new and higher taxes will help government finances, some privatizations will be reversed, but reform of subsidies could remove market distortions and present new business opportunities. Tunisia will come closest to the Western concept of a free market.
The rise of political Islam will be a source of concern for some but shouldn’t undermine the economy. Egypt will continue to welcome foreign investments. Islamic finance will boom alongside conventional banking. But hard line Islamists should be kept in check by the unlikely alliance of liberals and the army.
The idea of an Islamist democratic free-market government may run counter to usual assumptions – but it could be one of the ultimate surprises of the 2011 Arab Spring.
