THE NANNY HEGEMON. The legacy THE NANNY HEGEMON. The legacy of
socialism, the problem of foreign aid, and the appeal of fundamentalism to
young, educated and ambitious people stuck marking time in the stagnant Egyptian
economy, are explored in this WaPo article. On the negative effects of aid:

Thanks largely to Egypt's willingness to make peace with Israel and ally itself with the United States, the country has received more than $55 billion in aid over the past quarter-century from Western governments, international lending organizations such as the World Bank, and oil-rich Arab neighbors. Only India has gotten more. Ironically, this aid -- motivated by a desire for stability in the Middle East -- helped the Egyptian government maintain a system whose failings are now recognized as a source of the alienation that may stir unrest worldwide. The problem is not that the system generates widespread deprivation; on the contrary, poverty rates are relatively low in Egypt and other Arab countries as well. But the lack of opportunities for the young and educated translates into deeply frustrated aspirations. [...] Economic problems like these can't always be fixed with foreign aid. On the contrary, aid can sometimes enable a government to hold on too long to outdated policies. Ask World Bank economists why they didn't use their leverage to induce Egypt to drastically change its ways, as they do in many other countries, and the answer is almost invariably the same: The World Bank lacks such leverage in Egypt, having been essentially "marginalized" because Cairo can rely on other donors, notably the United States and European countries, for the funds it needs. Ask if that means the billions of dollars showered on Egypt by the U.S. Agency for International Development have been wasted, and the answer is an emphatic "no." World Bank economists credit USAID with bankrolling well-designed, well-implemented projects, such as an investment in a power system that supplies electricity to 95 percent of Egyptian homes. But the aid has not served as a catalyst for the sort of business investment Egypt requires to ignite its economy. That level of success would entail much more ambitious economic reforms than Cairo has yet undertaken -- and, privately, World Bank economists contend that Washington's largesse has kept the Egyptians from feeling pressured to do so. Khalid Ikram, who retired a few months ago as the World Bank's resident representative in Cairo, cited a conversation he had with a senior U.S. diplomat during the late 1970s. When the diplomat exhorted the World Bank topress Egypt for economic reform, Ikram responded by noting that USAID's disbursements to Cairo dwarfed those of the bank, and he asked whether Washington might conceivably withhold its money. The diplomat paused, Ikram recalled, and referred to Egypt's then-president Anwar Sadat, who made peace with Israel and was later assassinated. The diplomat said: "We believe President Sadat is a force for moderation in the Middle East, and as long as he continues to be a force for moderation, he deserves our support."

Posted by Moira Breen at January 26, 2002 09:02 AM