Muslim Brotherhood candidate Mohammed Morsi, a US-educated engineer, won Egypt’s presidential elections, thus becoming the first popularly elected president in the Arab world. The 60-year-old candidate was elected with 51.7% of the vote.
How did the markets react to Morsi’s election? The Egyptian EGX100 stock index’s 6.7% jump would lead us to believe that they reacted positively.
The new president is likely to adopt free-market-centric economic policies instead of the Muslim Brotherhood’s traditional policy of upholding solidarity with the poor. However, the Egyptian economy’s real problem is the way the elite class blocks free entrepreneurship.
Some hopeful business owners have been waiting for ten years for official permission to open a bakery. If you were not close to the Mubarak administration, it was virtually impossible to receive a permit to launch a business, which explains why so many people were dependent on government and Brotherhood handouts. The Egyptian economy during that time could be compared to that of Turkey’s during our own era of military tutelage, when nobody outside of Istanbul, the country’s economic hub, were offered opportunities.
Now, Morsi will try to reconfigure the elite-dominated economy for the benefit of the masses. Whether he will be authorized to go through with such reforms, seing as how the military substantially curbed presidential authority before the elections took place, is something else altogether.
Morsi and the Muslim Brotherhood will attempt to emulate two countries in devising Egypt’s economic roadmap: Turkey and Malaysia.
They are aware of the benefits that free-market economics brought to these two countries, and how it made them stronger. This has given Morsi and the Brotherhood a clear sense of direction.
Another question on people’s minds is whether the Muslim Brotherhood will transform Egypt into an Islamic society. Brotherhood members have responded to such inquiries by saying that those who ask such questions do not understand Islam, and that Islam does not use force to impose anything. The Brotherhood has affirmed that people will be able to freely choose their religion on their own.
Another question is whether the Muslim Brotherhood will ban alcohol and revealing clothing, such as bikinis. They responded that it is up to Egyptians since Egypt is a democratic country.
Now for a few figures on Turkey’s trade with Egypt. Egypt’s national income is roughly $290 billion. Its population is 87.7 million, meaning that its per-capita income is $3,300. In the first four months of this year Turkey boosted its exports to Egypt by 68%, to $1.2 billion. Imports from Egypt during the same period totaled $442 million. Last year’s total exports to Egypt were $2.7 billion, and total imports were $1.4 billion.
In sum, a freely elected government in Egypt, in the aftermath of the Arab Spring, is very important for Turkey. Every free election and free-market economy in the region will contribute to increasing Turkey’s trade volume. Although we are now going through a serious crisis with Syria, the Arab Spring will end up being truly beneficial for Turkey’s economy.