Abdel-Fattah al-Sisi has a flair for dramatic gestures. In his nine months in office, the Egyptian president has challenged the state’s Islamic establishment to reform the practice of its faith, interrupted Christmas mass at Cairo’s main cathedral to bless Egypt’s long-marginalized Copts, and announced plans for a new and improved Suez Canal to run alongside its aging predecessor. At an international economic conference Friday in Sharm el-Sheikh, Sisi’s government revealed its boldest plan yet: a new administrative capital east of Cairo that would extend the Middle East’s largest city to the edge of the Red Sea.
The plan for a new capital district is the centerpiece of the three-day Egypt Economic Development Conference, attended by dozens of Middle Eastern and African leaders as well as U.S. Secretary of State John Kerry. Sisi deems reviving Egypt’s economy – rocked by instability since the 2011 ouster of President Hosni Mubarak – as is his foremost domestic objective, alongside defeating the Islamists of the Muslim Brotherhood and the Islamic State affiliate in the Sinai Peninsula.
To regain its footing, however, Egypt’s economy will require more than theatrics. Between one quarter and one half of Egyptians live in poverty, a quarter cannot read, and only 10 percent have bank accounts. Half the population is under 25 and nearly 30 percent of those are unemployed (nationwide, unemployment stands at 13 percent). Corruption and cronyism are endemic, even after the removal of Mubarak. Egypt’s nanny-state subsidy system means that three-quarters of the government budget goes to subsidies, servicing foreign debt, and public-sector wages, leaving just $18 billion to cover the health, education, and social services for some 90 million people.
Still, Sisi’s personal popularity has enabled him to cut subsidies which analysts have long viewed as Egypt’s economic third rail – particularly those on fuel and wheat on which millions of Egyptians rely. Hoping to draw foreign investment, he has also confronted other traditional drags on Egypt’s economic functionality. Sisi has cut red tape around the country’s investment law, instructed the Central Bank to tackle the black market in foreign currency and vowed to bring unemployment under 10 percent.
Those economic reforms, however, are overshadowed by an Islamist insurgency in the Sinai that has cost the lives of at least 500 security and police personnel since the military’s ouster of Sisi’s Islamist predecessor Mohammed Morsi in July 2013. Meanwhile, terror attacks conducted by Morsi’s sympathizers and other Islamist groups are growing more frequent in Cairo and across Egypt’s populous heartland.
New cities, canals, and conferences may revive confidence among Egyptians and their potential investors shaken by four years of post-Mubarak volatility. Truly rehabilitating Egypt’s economy, however, will require that the country directly confront its two chief sources of instability: violent unrest that scares off investors and a ballooning young population with little to do.
Oren Kessler is deputy director for research at Foundation for Defense of Democracies, where he is also a research fellow focused on Egypt. Find him on Twitter: @OrenKessler