Beyond Leadership Issues, Egypt Has Deep Economic Troubles

Robert Siegel talks to Egyptian economist Samir Radwan. He was one of the people being considered as interim Prime Minister of Egypt and served as the Finance Minister after the fall of Hosni Mubarak. He talked about options to remedy Egypt's deep economic troubles.

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ROBERT SIEGEL, HOST:

As Egypt inches closer to forming an interim government, at the top of the agenda is economic reform. The Egyptian economy today is dismal. Foreign currency reserves have shriveled. Tourism is way down, unemployment way up.

The recently appointed prime minister is Hazem el-Beblawi, who served briefly as the country's finance minister after Hosni Mubarak's ouster, as did Samir Radwan, who was also mentioned as a possible interim prime minister and who joins us now from Geneva. And Mr. Radwan, I said you were mentioned as a possible prime minister. Do I understand that you were actually interested in the job, but somebody else tweeted your rejection of an offer?

SAMIR RADWAN: That is exactly what happened. I was contacted by the presidency, and they asked me to accept the job and start thinking about forming the government. And while we were doing some negotiations and consultation because they needed a consensus, the revolutionaries of Tamarod declared their support. Even the Salafists declared their support. But suddenly there was this turn, funny turn, of a tweet which said that I rejected the job, and they opted for Dr. el-Beblawi.

SIEGEL: Egypt is under some pressure to cut its budget deficit to reduce subsidies to people to buy fuel and to buy food. You take a very Keynesian view of these things. You say, no, before you do anything of that, you should stimulate the economy. You should have an expansionary budget. Can that Keynesian approach actually be accepted nowadays in the political environment in Cairo?

RADWAN: Yes, I think it can. But what I am saying is not you do one after the other sequencing. What I am saying is you have to go on parallel tracks. First of all, get the economy working, and you cannot get the economy working without getting back security so tourists can come back. You have 4,500 enterprises that have shut down. So try to help those to reopen. That's what I mean. It's a bailout like what happened in the West after the 2008 crisis.

SIEGEL: The other day, you told the online service of Al-Ahram, the big Egyptian state-controlled newspaper...

RADWAN: Yes.

SIEGEL: ...and I'm quoting now, "A minimum wage is a must. If businessmen do not listen to the workers, they will suffer the same fate as the Muslim Brotherhood." What fate is that?

RADWAN: Yes. Well, I think they - there will be another revolt, and I - because I hear now, even from the interim proposed prime minister, that an austerity budget is in order. And I think that would be disastrous, in a sense, because you have to have some sort of a social contract. You give the minimum wage to the workers and to the government officials - these are the majority of the working population - and in return, no demonstrations, no work stoppage for a year.

That is my recipe: to have a social contract brokered by the ILO or brokered by international agencies. This is, I think, the only way to get out of it. But to ignore the demands of these people, especially in view of the fact that inflation has been rampant in the last year, this will lead to social unrest.

SIEGEL: Egypt has experienced a population explosion, a shortage of jobs for an increasingly educated young population.

RADWAN: Yes.

SIEGEL: The recent political instability has put off a lot of tourism.

RADWAN: Yes.

SIEGEL: It is said that Egypt has just two months of wheat imports in reserve and there are environmental threats to the Nile River Valley.

RADWAN: Yes.

SIEGEL: That sounds like perhaps a crisis that is not amenable to any solution. It sounds as though you might have a country on your hands that simply cannot be rescued economically.

RADWAN: You know, I don't underestimate the problems you have counted. They are real, and I'm acutely aware of them. But I don't think it is beyond solution. There are other countries that had more difficult problems.

I have lived through the transition in Eastern Europe after the collapse of the Soviet Union. And you should have seen what happened in Ukraine and Poland and so on. But these countries were able to get out of the crisis fairly rapidly by just adopting the EU standards and trying to work for them. And they could see a light at the end of the tunnel.

One of the major mistakes of Morsi's regime is that people couldn't even see a vision. And if the present government, the new government does not offer such a vision, this will lead to acute problems. So short-term economic policies like what happened after the Great Depression in America and Western Europe is what should be followed. But if we sit and face this mountain of problems, of course, psychologically, you will be locked up in a self-defeating attitude.

SIEGEL: I'm just curious. During that comedy of errors involving the tweet when you were offered the prime ministership and somebody tweeted on your behalf and said, no, he doesn't want it, did those discussions get so far as asking would you bring a Keynesian expansionary program to the economy, or would you address the deficit reduction or was it just, let's find Radwan; he used to be finance minister?

RADWAN: No. You see, they said, you are a guy who enjoys very good reputation, the people like you, the young people in Tahrir Square like you, they like your views, and therefore we would like you to take over. They never discussed, as you and I are discussing now, what is your program and tell us your program compared to somebody else's program.

SIEGEL: You're saying I'm giving you a tougher job interview right now than they did when they were offering you the prime ministership of Egypt?

RADWAN: No. I am enjoying it, of course.

SIEGEL: Dr. Radwan, thank you very much for talking with us. And I should say that Samir Radwan, who is speaking to us from Geneva, where for many years he worked at the International Labour Organization, was a former interim finance minister in Egypt, and perhaps - but for a tweet - might have been the prime minister now. A tweet that wasn't from your account if I have it right.

RADWAN: No, no. It was from the account of Dr. Ziad Bahaa-Eldin, who was...

SIEGEL: Also a candidate for prime minister.

RADWAN: ...who was also a candidate. Yes.

SIEGEL: I'll leave that between the two of you.

RADWAN: Yes.

SIEGEL: Thank you very much for talking with us.

RADWAN: Thank you very much indeed, a pleasure.

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