Author Archives: Nate Grubman

The Youth Struggle to Participate in Egypt’s Transition

Seif El Khawanky was a youth activist in Tahrir Square during the revolution.

Watch a video of Seif discussing the motivations of the youth revolution and Egypt’s future.

Nearly 14 months after the resignation of Hosni Mubarak, Egypt has reached a point of reckoning. Over the next few months, Egyptians are scheduled to write and adopt a constitution and elect their first post-revolutionary president. These Herculean undertakings will only be as successful as the consensus that backs them, and yet Egyptian society shows a troubling degree of polarization.

Among those who express frustration with their country’s post-revolutionary transition are the youth activists who sparked it. Egypt’s youth unquestionably played a leading role in organizing their countrymen and outmaneuvering the leaders who had long failed to provide opportunities to participate politically and economically. Yet, youth have complained that they have been sidelined from the post-revolutionary transition.

Speaking at a recent CIPE brownbag lunch about the role of youth in Egypt’s transition and their difficulty securing a role in it, CIPE Junior Program Officer and Egyptian youth activist Seif El Khawanky used an analogy that for me brought back some painful memories.

According to Khawanky, the Egyptian political scene currently comprises a series of informal checks and balances between the Egyptian Parliament; the interim government and the Supreme Council of the Armed Forces (SCAF); and the Egyptian Street, a group that includes the youth activists who drove Egypt’s revolution. According to Khawanky, the hierarchical nature of organizations like the SCAF, Muslim Brotherhood, and political parties has simultaneously made it easier for them to negotiate with each other and harder to conduct dialogue with youth who have eschewed hierarchical organization.

“We are playing soccer. They are playing basketball. So, we cannot go to the same playground,” Khawanky said. Unfortunately, the time I spent living in Cairo taught me just how painful it can be when these two games intersect.

In a soccer-crazed city that offers approximately a footprint of green space per person, basketball courts can be hard to find. Among the few refuges to play basketball was a strip of dusty tiles under the 6th of October Bridge. With two ends of the strip featuring basketball hoops and the other two featuring soccer goals, however, the space was contested. It became commonplace to find myself in an argument about which game should take precedence.

The most common resolution to that argument was that while far from ideal, the two could take place simultaneously. Unfortunately for the soccer players, my Derrick Rose-like drives to the basket would sometimes serve as an obstruction to the path of their ball. And unfortunately for my face, soccer balls don’t avoid obstructions; they smash into them.

Egypt’s transition has often resembled this confused situation, and the results have at times been far more painful than a soccer ball to the face. In playing basketball, as Khawanky put it, Egypt’s generals and political leaders have largely organized themselves into hierarchical organizations with clear leaders. They have scored baskets by securing widespread compliance or support for their political roles. In playing soccer, Egypt’s youth activists have organized themselves in a more amorphous fashion. They have scored goals largely by exposing injustices or building pressure for change.

The two games have often intersected and impacted each other. As Egyptian activists have realized that both the military and some political parties enjoy some level of popular support, they have broadened their tactics from mass gatherings in Tahrir Square. Likewise, as the generals and politicians have realized the potential of youth to mobilize around a goal, they have often had to change the composition of the government or the timeline of their transition plan. Khawanky pointed out that in the past month protests successfully pressured the government to try police officers who bore some responsibility for the deadly clashes earlier this year in Port Said.

Many youth have tried to carve out a role in the game played by the generals and politicians, volunteering their time and energy to the many campaigns for the politicians who might be able to change the system from within. Street activism, however, continues to be perceived by many as the most effective means of forcing change, at least in accomplishing limited goals. Yet, it comes with a cost. To Egyptians tired of the destabilizing effect of their revolution on their daily lives, continued protests, despite their effectiveness, have reinforced the misperception, according to Khawanky, that youth are “irresponsible, intolerant, inexperienced, and radical,” furthering their marginalization.

This state of affairs, in which Egyptian policymakers exclude youth from the policymaking process but expect them to swallow their frustration like they did before the revolution, is a recipe for continued crisis. In a country that badly needs a modicum of stability, Egyptian policymakers need to find a way to capitalize on the energy and ideas of this generation of revolutionary youth.

Egyptian youth can help themselves, however, as well. According to Khawanky, part of the reason for the marginalization of youth has been their failure to present a clear vision and the fact that their idealism has made it hard to compromise. A movement that so ingeniously organized itself into a leaderless movement united in purpose during the uprising has struggled to organize itself to maximize its impact following Mubarak’s fall.

By building organizations such as NGOs, think tanks, newspapers, and magazines capable of not only highlighting problems but also positing solutions that adhere both to the principles of their revolution and to the challenges Egyptians face, youth activists might find that not only can they play the generals’ and politicians’ game, but they can win it. And they can do so while building the trust of their countrymen. This will not be easy in the difficult political environment in which Egypt is mired. Yet, Egyptian youth have proven that it is a mistake to underestimate their potential.

In the meantime, while it’s possible to play basketball and soccer simultaneously on the same court, it can make for a painful game.

Egypt, One Year Later

Sunset prayers in Tahrir Square, January 25, 2012. (Photo: CIPE Staff)

One year ago today, millions of Egyptians risked their lives to make their country a better place in which to live. Unlike in Tunisia, where the degree of consensus on how the country should be governed has been remarkable, the year that has followed the Egyptian uprising has been contentious and pocked by crises, in some ways making elusive that better life that Egyptians seek. By agreeing that delivering a better life to the average person should be the top priority, however, Egyptians may find ground for consensus that could make their transition smoother.

Thus far, the flourishing of political party formation and the largely free and fair elections that accompanied it have yet to deliver better lives to the average Egyptian, as an economy that was hardly robust to begin with struggled to heal from the dislocation of revolution. The continued struggles to find consensus regarding the country’s direction have exacerbated this dislocation by creating instability. Uncertainty and crises have made Egyptians and foreigners alike skittish about spending their money in Egypt.

Rather than delivering a better life to the average Egyptian, the revolution has thus far made daily life trickier. Jobs are evaporating, food is becoming more expensive, and fuel is becoming scarce. According to an article posted yesterday by The New York Times, many Egyptians can no longer afford to get married. In a recent Reuters article titled “Uprising leaves Egyptians freer, poorer,” Ahmed Abdel-Khaleq, the 48-year-old owner of a ceramics workshop summed up the frustration that many feel: “People are getting laid off, sitting around with nothing to do. A revolution should make life easier. It should rebuild. Ever since the revolution happened, I can’t get my loaf of bread.”

The success of Egypt’s revolution may depend on the ability of Egyptian political and civil society leaders to not only restore confidence in the country’s economy, but to reform it so that it delivers more robustly for average Egyptians. Recently, Egyptian political parties have been moving towards a consensus response to economic challenges that would entail securing loans from the IMF and other donors, strengthening financial markets, investing in small- and medium-sized enterprises, and trimming the budget deficit, potentially by cutting subsidies, which Ahmed Heikal of Citadel Capital recently wrote would free up $58 billion a year for the government to invest in other areas that need it. If Egyptians can come to consensus on these issues, it could infuse confidence in their transition and make future challenges less imposing.

For their part, many Egyptians project confidence in their ability to come together and handle the challenges that confront their country one year into their revolution. Dalia Mogahed, director and senior analyst at the Abu Dhabi Gallup Center, recently wrote that according to Gallup polls conducted throughout the year, the “real revolution” is that “Egyptians are more optimistic than they have been in years.”

Mohamed El-Erian, who as the CEO of the investment fund PIMCO, probably has a decent grasp of the magnitude of the challenges to Egypt’s economy, recently wrote confidently of Egypt’s prospects. Referring to the country’s economic challenges as “headwinds that can and will be overcome,” El-Erian wrote that “Egyptians are committed to completing their impressive revolution, and they will.”

Egyptians came together on January 25, 2011, and the 18 days that followed it, showing a resolve and unity of purpose that continues to provide confidence to Egyptians today. Rediscovering that unity of purpose to focus on the problems confronting the average Egyptian could serve to bring Egyptians together again, making the challenges of building a workable democracy a little less challenging.

One Year Later: Cause for Hope in Tunisia

Tunisians celebrate Ben Ali's departure.

Tunisians celebrate Ben Ali's departure. (Photo: AP)

One year ago on January 14, Zine el-Abidine Ben Ali, who had ruled his country for nearly two and a half decades, boarded a plane to Saudi Arabia, fleeing a people who had overcome their fear of him. Despite little personal experience in their history to justify their faith, broad segments of Tunisian society responded to the pervasive uncertainty that followed by remaining committed to democracy. While enormous challenges remain, that commitment is ample reason for optimism.

Upon his flight, Ben Ali left more questions than answers. On the day he departed, the presidency changed hands twice. When police withdrew from the streets of Tunis, rioting and looting ensued. The newly minted “national unity” government fractured in days. Weeks passed and Rachid Gannouchi, founder of an-Nahda, Tunisia’s largest political party, remained in exile. Members of Ben Ali’s Democratic Constitutional Rally (RCD) party lingered in the halls of power for a month before protests pushed them out. It took two months before the RCD was killed by the stroke of a pen.

As it became increasingly apparent that an-Nahda would fare well in elections, some feared that the party would roll back civil liberties. Some warned that while Tunisian military officers initially shied away from political power, a difficult transition, or perhaps one that empowered Islamists, might change their minds. Some criticized the transition for proceeding too slowly. Some criticized it for moving too fast. Protests, demonstrations, and strikes continued, challenging an economy that had underperformed even when the going was good. Throughout, the question remained: if not Ben Ali, then what?

Facing myriad challenges, Tunisians have been remarkably consistent in their answer. Broad segments of society have remained steadfast in their commitment to establishing a democracy. Despite being hailed as national heroes, Tunisian generals have largely left politics and policymaking to civilians. Thousands of Tunisians ran for office. Millions went to the polls.

When an-Nahda earned 40 percent of the vote, the other 60 percent did not incite revolt. Rather than taking its electoral mandate and running roughshod over its defeated opponents, an-Nahda, apparently conscious that its mandate will expire in one year, appears to prefer compromise and consensus-building. While points of contention abound, Tunisians seem committed to the idea that democracy offers them the best system in which to resolve them.

While this is cause for optimism, celebration would be premature. This year will bring a set of challenges that could shake the resolve of Tunisians. The recently elected Constituent Assembly has one year to draft a constitution and ensure that it enjoys robust support. The high stakes surrounding this process could certainly pose a challenge. Furthermore, reconciling the corruption that plagued many of Tunisia’s government institutions with a newfound focus on transparency, accountability, and the rule of law could be painful.

Perhaps just as importantly, Tunisia’s new leaders must resuscitate the country’s stagnant economy. A recent string of self-immolations has highlighted the urgent nature of the problem. Three weeks ago, Tunisia’s new president warned that if the country cannot revive its economy, it may be headed for “collective suicide.”

According to a recent paper written by economist Lahcen Achy and published by the Carnegie Endowment, Tunisia has long suffered “because of political interference in business, many administrative and regulatory barriers, and ineffective social and regional redistribution mechanisms.” Achy called on Tunisia’s new government to “devise a consistent package of policies, relying on a credible discourse, concrete goals, a timetable to achieve them, and accountability to the population.”

Building consensus among an evolving group of nascent democratic forces to draft a constitution that garners widespread support, while simultaneously reforming and jumpstarting a struggling economy in a post-revolutionary environment, would be challenging in a good year. In 2012, with its neighbors to the north struggling economically and its neighbor to the southeast trying to recover from a civil war, it will be more so. Still, with the faith Tunisians have shown in democracy to this point, there are plenty of reasons to be optimistic.

Hope from Hopelessness: The Legacy of Mohammed Bouazizi

People gather in Sidi Bouzid during a ceremony marking the first anniversary of the Tunisian Revolution. (Reuters)

On Saturday, tens of thousands of Tunisians descended upon the main square of a small town credited with giving birth to a big movement with the potential to change the world.

In Sidi Bouzid, a city now known for its protests, they gathered to celebrate, waving flags and listening to music. Moncef Marzouki, Tunisia’s brand new president, spoke at the celebration, crediting the city with “restor[ing] the dignity of all Tunisians.”

One year before, a 26-year-old vendor, who had sold fruit for 14 years in order to support his family of seven, committed suicide. On that morning, local officials had accused him of evading an arbitrary fine, confiscated six crates of his fruit and his electronic scale, slapped him in the face, and denied him any appeal. Mohammed Bouazizi doused himself in paint thinner, took his place in front of a local government office, and lit himself on fire.

A recent article by Peruvian economist Hernando de Soto, president of the Institute for Liberty and Democracy (ILD), sheds light on the roots of a frustration in Bouazizi that many would find inconceivable. According to de Soto, Bouazizi was a “repressed entrepreneur” who dreamed of accumulating the capital to buy a truck that would allow him to purchase and transport his fruit directly from farmers and secure a permanent place in the wholesale fruit market.

For years, Bouazizi’s dream was consistently thwarted. Lacking collateral, he could not secure the loan he needed to buy a truck and grow his business. Worse, absent formal recognition by the state, Bouazizi’s business remained ever vulnerable, relying on an informal agreement in which Bouazizi paid three dinars a day and submitted to a continual demand for bribes from local officials in exchange for a spot on the street in which to park his fruit cart.

According to de Soto, had Bouazizi tried to formalize and secure his business by establishing a sole proprietorship, he would have had to spend 142 days completing 55 administrative steps at a cost of $3,233, or 12 times his monthly income. When local officials confiscated Bouazizi’s goods and capital and challenged the informal agreement that allowed him access to consumers, they not only crushed his dream of prospering but also threatened his ability to survive and provide for his family.

That the anniversary of this gruesome act is cause for celebration in Tunisia and much of the Arab world is a testament to the remarkable promise of the year that has transpired. After nearly a quarter of a century in the position, Zine El Abidine Ben Ali is no longer president of Tunisia. For perhaps the first time in its history, the country’s citizens have chosen their leaders in elections widely regarded as both free and fair.

In Egypt and Libya, longtime leaders Hosni Mubarak and Muammar Gaddhafi rule their people no more. In Yemen, President Saleh has signed an agreement that may make his departure from power imminent. In Jordan and Morocco, monarchs have pledged to share power more generously through programs of constitutional reform. In Syria and Bahrain, longtime leaders have been challenged. Even in the Arab Gulf, where prosperity often insulates leaders from political pressure, some have taken tentative steps to reform. Despite the challenges posed by the so-called Arab Spring, it appears that Arab nations have never been closer to realizing the freedom, dignity, and opportunity that they seek.

Still, it remains to be seen whether nascent institutions and emerging leaders will be able to deliver better lives for people with whom Bouazizi’s frustrations resonated so deeply. Many in the Arab world have shared and continue to share Bouazizi’s precarious position. The ILD estimates that 50 percent of entrepreneurs in the region operate outside the formal economy. A 2004 ILD study estimated that in Egypt the informal sector employs more people than the legal private sector or the public sector and that the value of these informal businesses exceeds that of the Cairo Stock Exchange by 30 times.

 

Unfortunately, elections alone cannot deliver these millions from stagnation, indignity, and vulnerability. Rather, comprehensive governance and regulatory reform is needed to grant millions of people an opportunity to do better than survive. A good starting point may be creating incentives and lowering the barriers to participation in formal economies for the millions of entrepreneurs that have sympathized with Bouazizi’s hopelessness.

The dividend to increased formal economic participation can be substantial and immediate. In the 1980s, de Soto and the ILD launched a program of economic reform agenda-setting and advocacy in Peru. As a result of their efforts and the more inviting regulatory environment that was created, the number of days needed to navigate the bureaucratic obstacles to starting a formal business dropped from nearly 300 to less than one. More importantly, 380,000 businesses entered the formal economy, offering more than 500,000 Peruvians a clearer path to prosperity.

Similar reform in the Arab world could alleviate frustration, create desperately needed jobs, and instill confidence in transitions to democracy. One year into the Arab Spring, there are certainly many reasons to celebrate. Yet, until Arab societies can create an environment that extends entrepreneurs an opportunity to transcend the vulnerability and frustration that plagued Bouazizi, there will remain large segments of the population in no position to celebrate.

Energy Sector Short-Circuiting Economic Growth in Lebanon

Panel on energy reform. (Photo: Wilson Center)

Yesterday, CIPE, in partnership with the Safadi Foundation, Stanford’s Center on Democracy, Development, and the Rule of Law, and the Woodrow Wilson International Center for Scholars, held a conference entitled “In the Middle of the Storm: Development and Governance in the Arab World.” As part of the conference, CIPE Executive Director John D. Sullivan moderated a panel on energy reform and economic development in the Arab world.

During the panel, Safadi Scholar of the Year Katarina Uherova Hasbani presented a paper on electricity sector reform in Lebanon. Hasbani described electricity provision in Lebanon as woefully inefficient. According to Hasbani, due to an inefficient state electricity monopoly, Lebanese households and businesses deal with blackouts that average six hours a day. With a quarter of their needs unmet by the state, those who can afford them employ generators to fill the gap.

This arrangement causes significant social and economic harm to the country. Businesses and households must pay more for poorer service. Aside from the harmful environmental impact of generators, their high cost widens socioeconomic inequality by making consistent electricity a privilege of the wealthy and “well connected.” Finally, subsidies to the state-owned Electricite du Liban, which absorb 20% of the annual state budget, drive up interest rates on loans that could otherwise finance job-creating enterprises.

This status quo is unsustainable. According to Hasbani, Lebanon needs to form a broad-based coalition that includes members of government, the private sector, and civil society to develop a more efficient national energy strategy and implement it.

Lebanon is not alone in its energy sector shortcomings. Panel member Inger Andersen, vice president of the Middle East and North Africa division of the World Bank, painted a dire picture of the dampening effect of shoddy service provision on the ability of people throughout the region to open businesses and grow them to create jobs.

According to Andersen, the average business in the Arab world must wait nearly two months to be connected to the power grid and spend an exorbitant amount of money for electricity that is frequently and often unpredictably interrupted. The cost to the average business in the Arab world of this shoddy service is about 4.3 percent a year.

Poor energy sector governance is symptomatic of larger governance shortcomings in the region. During the panel, Under Secretary of State for Economic, Energy and Agricultural Affairs Robert D. Hormats pointed to a heavy state role in the economy as a major factor hindering entrepreneurship throughout the region. According to Hormats, longstanding economic problems coupled with the dislocation of transition have produced stagnation that could threaten transitions to democracy.

Throughout the Arab world this year, people have called for a change far deeper than a reshuffling of leaders. Rather, in calling for freedom, dignity, and opportunity, people in Arab countries have demanded a new social contract. While energy sector reform may not grab the headlines that national elections and the formation of new political parties can, it is nonetheless a key piece of rewriting the social contract in the Arab world.

Under the old contract, Arab governments controlled the allocation of services and jobs in order to co-opt support. This social contract produced shoddy services and economies incapable of delivering widespread dignity.

Under a new social contract, citizens will most likely hold governments more accountable for their ability to protect their political rights. They will also demand that those governments allow them the opportunity to prosper, too. Better governance is essential for creating that environment and honoring that contract.

Beyond Elections: The Need for an Economic Vision for Egypt

Egyptians vote

Record numbers of Egyptians turned out yesterday and today for the country's first democratic elections in decades. (Photo: CIPE Staff)

When Egyptians headed to the polls yesterday to begin the process of electing a parliament, the transition of their country to democracy remained uncertain. Political instability, which has dampened investment, consumer confidence, and tourism, has made many Egyptians wary of what the future may hold for them.

Last week, Egypt’s stock market dipped to its lowest point in over two and a half years. Egypt’s foreign reserves had already dwindled, potentially heralding an impending financial crisis. The Egyptian pound had depreciated, making many goods more expensive for Egyptians. Fearful of an uncertain future, Egyptian consumers have cut down on their spending. Tourists, who were once so ubiquitous in Cairo, Luxor, and Aswan, have been spooked by scenes of violence and have stayed away.

On Monday, Gallup released a poll showing that the number of Egyptians who believe that their conditions will improve as a result of the resignation of their former president has declined steadily. In September, a bare majority of Egyptians expressed confidence in the promise of their future. That number may be smaller today.

Despite the need for political and economic leadership and vision, the approach of Egyptian policymakers to the country’s economic problems has largely been reactive and piecemeal. They have raised salaries for public employees and made permanent previously temporary contracts for thousands of public officials. Pinning its economic hopes on alleviating corruption, the government has vigorously prosecuted thousands of cases of corruption alleged to have taken place during the previous administration. A coherent strategy for empowering the private sector to create the jobs needed to answer widespread calls for dignity has yet to emerge.

More troubling, the institutional channels through which diverse elements of Egypt’s political and civil society may participate in the conversation about the country’s future remain unformed. Ideally, the parliamentary elections which commenced yesterday would produce a representative body capable of building consensus among broad sectors of Egyptian society and using it to build policy.

Due to an extremely complex election law and the unrest that has formed a background to this round of voting, however, it is unclear whether these elections will produce a body capable of claiming popular legitimacy and wielding significant power. Even if a strong parliament emerges, three and a half important months will have passed before the three rounds of voting finish and the new parliament assumes power.

Outside the political arena, civil society should serve as another channel through which Egyptians can participate in their transition by generating ideas and holding their government accountable. Thus far, however, the ability of Egypt’s civil society to participate meaningfully in the transition has been limited. Feeling that more formal channels of communication offer them little power to shape the country’s future, many have returned to the streets.

An economic recovery in Egypt would not only provide a greater number of Egyptians an enhanced opportunity to achieve the dignity for which they have sacrificed so much, but would also infuse confidence in their nascent democracy. Yet the political and economic wariness that Egyptians are currently expressing will not merely disappear of its own accord. Rather, Egyptian leaders must articulate a political and economic vision for the country that appeals to Egyptian society in all its diversity.

Earlier this month, the Carnegie Endowment’s Ibrahim Saif wrote a paper laying out what Egypt’s leaders can do to stabilize the economy and ultimately create inclusive growth. While some of Egypt’s economic reforms will require the backing of a popularly elected government, Saif argued that moves aimed at stabilization should not wait.

In order to stabilize Egypt’s economy, Saif called on its interim leaders to:

  • establish security,
  • lay out a more clear economic and political roadmap,
  • work more closely with the full range of the private sector including small- and medium-sized enterprises,
  • adopt transparent and inclusive mechanisms for policymaking,
  • guarantee funds for small- and medium-sized enterprises, and
  • funnel the flow of foreign grants and loans into the construction of infrastructure and low-cost housing.

Egypt’s economy has reached a critical stage. Attracting foreign investment, restoring domestic consumer confidence, and rejuvenating the tourism industry cannot wait for the emergence of an elected parliament or president. Failure or inaction could undermine confidence in democracy.

A strong, broadly based Egyptian economy is fundamental to the country’s stability and lasting democratic governance. Yet the argument that Egypt needs its people to listen to its leaders, while the process remains exclusive, is a specious one. Widespread economic development coupled with democratic governance will create stability, not the other way around.

Beyond the elites: Why Syrian businesspeople have a stake in democracy, not Assad

A small business in Syria. Photo: http://www.kfw-entwicklungsbank.de

In searching for an end to the bloody stalemate in Syria, many have identified the Syrian “business community” as one of the last pillars of support propping up Bashar al-Assad’s presidency.

In June, The Financial Times ran a story headlined “Business reluctant to cut loose from Assad.” In October, when The Christian Science Monitor attempted to answer the question “Who backs Syria’s Assad?” it pointed the finger first at “businessmen.” Most recently, Elliot Abrams identified “turning the business community” as one of the four tactics US policymakers can use to knock Assad from his perch and stanch the bloodshed.

The idea that the business community is complicit in the repression of Assad’s security forces stems from the idea that moral concerns of Syrian businesspeople are trumped by those of dollars and cents. As the idea goes, the Syrian business community, or at least sizeable pockets of it in Aleppo and Damascus, believes that the policies of the Assad government have allowed it to prosper, and that future prosperity relies on the guiding hand of Assad.

Recently, Radwan Ziadeh, Syrian activist and member of the Syrian National Council (SNC), spoke at Johns Hopkins School of Advanced International Studies and exposed this idea as myth. “There is no business community support for the Assad regime,” Ziadeh stated. On the contrary, he argued that many in the business community form a pillar of support for the opposition, funding many of its operations.

Indeed, The Guardian reported in May that one of the earliest opposition conferences was funded by prominent Syrian businessmen, such as Ali and Wassim Sanqar, sibling luxury car dealers, and Ammar Qurabi, chairman of Orient TV. Exploring their motives, the article reported that all three had been burned directly by the government’s preferential treatment of Syria’s most notorious crony capitalist Rami Makhlouf. These three businesspeople do not stand alone in their support for the protest movement. According to Ausama Monajed, a member of the SNC, “Millions of Syrian pounds are coming from these people. If a protesting community needs something, the money gets to them very quickly.”

In comparison, the segment of the business community supporting Assad seems to be small. At an event at USIP on October 13, Murhaf Jouejati, a member of the SNC, estimated that Assad’s support in the business community is limited to perhaps 10 to 15 elites who have long benefitted from his favor and now stand to lose much from his ouster. In a recent article in Foreign Policy, Randa Slim estimated that Assad’s nouveau riche “do not exceed 200.”

Of course, as my colleague Abdulwahab Alkebsi argued recently, the idea of a monolithic business community unanimously supporting or opposing anything is a myth. The term business community, even more than the term private sector, encompasses a range of firms of various sizes, operating in a range of different sectors. This diverse part of society comprises a dizzying array of conflicting agendas. Thus, it’s not surprising that some support Assad and some oppose him. Yet, the question remains whether the average businessperson has a stake in supporting the continued rule of Assad.

Recent Syrian economic history does not seem to merit significant support among businesspeople. Indeed, under Assad, the Syrian economy has underperformed for many. Between 2006 and 2010, due to some limited economic reform, Syria’s per capita GDP rose from just over $1700 to just under $2900. That rise put the average Syrian on par with the average citizen of Guatemala or Egypt. While Syria’s 6 percent growth in 2009 was relatively impressive, its 3.2 percent growth in 2010 lagged behind the world average. This growth has benefitted very few, many of whom selected by Assad rather than the markets.

The story of Rami Makhlouf is telling. While Bashar inherited the political power of his father Hafez, Makhlouf inherited the economic power that had been granted to his family when Makhlouf’s aunt married Hafez. Initially operating in the telecommunications industry, Makhlouf scooped up businesses throughout the economy during Assad’s period of “reform.” With his connections in the halls of power and in the security forces, Makhlouf’s participation in a business deal was thought to be crucial to its success. An oft cited figure characterizes Makhlouf as controlling 60 percent of the Syrian economy. Some, like Makhlouf, have prospered due to their connections. Others have prospered because they have operated in a sector that Assad and Makhlouf chose to support. For the majority, however, business has been difficult.

Even before the uprising, Syria’s economy offered extremely barren soil for business. The recently released Arab World Competitiveness Report sheds light on this troubled business climate. The report ranks the Syrian economy 98th in the world in competitiveness, putting it ahead of only Yemen in the Arab world. Beyond the ranking, the report describes a Syrian economy in which it was difficult to secure capital, difficult to compete with the country’s few mega-firms, difficult to hire and fire workers, and difficult to participate in trade or attract foreign investment. If the average businessperson supported Assad heading into the uprising, it was not because Assad had made conducting business easy.

Assad’s effect on business since then has only made things more difficult. His brutal crackdown on unrest has disrupted commerce, crushed the country’s growing tourism industry, and attracted economic sanctions that have put the country’s annual $2.5 billion in oil revenue in serious jeopardy. While the IMF recently forecast that the Syrian economy would shrink by 2 percent this year, some economists estimate that the damage is actually far worse. The governor of the country’s central bank recently admitted that the government has spent $3 billion to stave off the collapse of its currency. With access to Euros limited by international sanctions, government officials recently “threatened” to conduct transactions in rubles.

With the country’s economy in disarray, Assad’s hand has been anything but firm. Last month, Assad’s government announced an import ban. After days of spiraling prices, the government quickly retracted the ban. With its economy collapsing, Assad’s government announced that rather than tightening the belt during tough times, it would increase next year’s budget by 59 percent to provide social support, a decision that would make even Keynes stir in his grave. In August, a Syrian businessperson told The Financial Times, “The regime has sacrificed the economy for its own survival.” Indeed, if Assad’s years of economic mismanagement had failed to alienate the Syrian private sector, the past few months may have done the trick.

The remaining justification for Syrian businesspeople to stand behind Assad would be a combination of confidence that the current government can right the ship, and fear that in the absence of Assad, there will be no stability in Syria. In a country in which sectarian identity seems to matter, it is concerning to some that the opposition has been slow to unite and present a positive vision of a better future for all Syrians. The increasing militarization of the Syrian uprising has blurred moral lines to some. The difficult transition in Egypt is also affecting the attitudes.

At the same time, Assad’s supporters sing a bizarrely confident tune. A Syrian official recently predicted, “In a few months the protests will stop and the situation will be getting back to normal. This is a problem we will overcome.” One Syrian analyst stated, “Economic reforms will continue and if waste is cut and corruption cut back, the economy will emerge from this period stronger than it was at the start.”

These rosy predictions, like much of the administration’s message, seem largely divorced from reality. The Syrian economy has far greater problems now than waste and corruption. Even if Assad is to gain the upper hand in this conflict, life in Syria is unlikely to return to its previous normal. The sanctions will likely remain. The tourists will be slow to return. The economic dislocation is likely to persist. Resentment will fester. Another uprising will likely always lurk around the corner. While the opposition’s road is difficult, Assad’s road seems more so.

In February, when Hosni Mubarak clung to power despite the widespread calls for his resignation, I attended an event at the Carnegie Endowment titled “Egypt on the Brink.” At the event, Neil Hicks, advisor for Human Rights First, observed that Mubarak had a choice: he could hand over power or he could remain as the Robert Mugabe of North Africa. Today, Bashar al-Assad is presented with a similar choice: he can leave, or he can preside over a collapsed economy and perhaps a civil war. While he may be able to choose the second option, I doubt there will be many in the business community excited to stand behind him.