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March 11, 2015

Egypt's welcome turn toward free markets

IDB Editorial

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Al-Sisi puts Egypt on its feet.

Leadership: Egypt is quietly forging ahead with a grand plan to expand its Suez Canal, open itself to investment and modernize its economy. In light of its credible actions to destroy radical Islam, it's a praiseworthy path.

From his powerful speech declaring a "religious revolution" and reclaiming Islam for civilization at Cairo's famed al-Azhar University last January, to his efforts to protect Egypt's battered Christians, and now his shutdown of 27,000 unregulated radical mosques, President Abdel-Fatteh al-Sisi has already secured a place in history just for his leadership in attempting to right the axis of the Islamic world.

But he's also running a parallel operation to pull his country up on its economic feet and make it a First World country, quite possibly comparable to the two-track effort that transformed Chile in the mid-1970s.

Instead of telling Egyptians to just be content with stability, al-Sisi has launched into a breakneck modernization of the Suez Canal, ordering military engineers to double its capacity to 97 ships a day by August, two years ahead of schedule.

He's also hosing out the regulatory morass and simplifying laws to attract foreign capital. Egypt's investment minister, Ashraf Salman, wrote in last week's Wall Street Journal that the country is attracting high interest from multinationals, with as many as 2,000 companies expected to visit the country's investment conference next week in the tourist resort city of Sharm El Sheikh.

Cairo also is looking to connect with Israel's high-tech powerhouse economy, leveraging its educational prowess, its tech genius, its agricultural expertise and its investment capital into helping Egypt develop, too.

And as IBD reported this week, the great Peruvian guru of property rights, Hernando de Soto, said he has been asked by Egypt to help its poor turn their informal system of land rights into the invisible architecture of title deeds and thus create wealth from that capital.

Al-Sisi's ambition is not without risk — the Associated Press has reported that Egypt will have a tough time expanding the canal if Europe's economy remains in the dumps, and some of al-Sisi's reforms have been praised by the International Monetary Fund for all the wrong reasons — tax hikes being one.

But nothing is riskless, and these moves are desperate tradeoffs. What we are seeing is an admirable effort to pull Egypt away from the dead end of Islamic radicalism and replace that siren song with the best of global civilization to give Egypt the chance it deserves. We want this to succeed.

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M. Elmasry

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