It took a day of back-room negotiations, but the powers behind Egypt’s throne finally settled on Hazem Beblawi, an economist, as interim prime minister. Beblawi, 76, served as finance minister in 2011, when Egypt was under the direct rule of the Supreme Council of the Armed Forces (SCAF). He wrote against the Gamal Mubarak succession project when that stance was not fashionable in respectable Egyptian society. Those who have met him say he is bookish and capable.
Egypt’s state-run media is going to great lengths to argue that there is a new sheriff in town. Unlike his three predecessors in the interim slot, they say, Beblawi is neither an old-school apparatchik nor a yes-man beholden to unseen bosses. The new leader himself said that his cabinet will be chosen “based on experience and efficiency.”
His chief argument is that excessive reliance on “rents” — unearned state revenues — makes governments bloated and unaccountable to the citizenry. Such governments are “rentier states.” Rents classically come from hydrocarbon deposits or other natural resources. But foreign aid, tourist dollars and the remittances of migrant workers are also rents. In the case of Egypt, so are tolls upon traffic in the Suez Canal. The key for Beblawi’s theory is that rentier states do not have to extract taxes from the people in order to pay the government’s bills. The rentier state, in fact, is flush enough to prop up living standards with handouts of varying generosity. The result is a dynamic of “no taxation, no representation.” Governments have fewer incentives to perform well; because they do not bankroll the state, citizens have less leverage in pushing for more rights or a greater say in public affairs. To put it another way, in the world according to Beblawi, rentier economies are no good at producing democracy.
Middle East studies is not often ahead of the curve. On rentier state theory, however, Beblawi and his intellectual descendants were light years beyond conventional understandings. (Subsequent research has pushed rentier state theory well past Beblawi’s formulations. And the question of oil’s relationship to democracy is still very much a question. On its own, oil does not do anything. The people who receive the money that oil sales generate make the decisions.)
Can an academic who studies Arab economies break Egypt’s impasse and deliver the bread, freedom and social justice that so many have clamored for since January 2011? It’s not promising, and rents are a big reason why.
Every instant expert in the firmament, for instance, has an opinion about US aid to Egypt, much of which goes to the army. Should the assistance continue? Should it be conditional? In practice, the debate is already resolved in favor of keeping the aid flowing — the “national interest” is too pressing, the lucre for the arms industry too great. (Much of the aid to Egypt is Foreign Military Financing, which by US law must be spent on purchases from American weapons manufacturers.) But the White House and State Department are facing embarrassing questions before the television cameras. How can the US go on sending money to a military that has just mounted a coup? Rushing in to save the day with supplemental cash injections are the Gulf kingdoms. Qatar provided nearly $8 billion to Muhammad Mursi’s government during its year in power, but less than one week after the Muslim Brother’s ouster Saudi Arabia, United Arab Emirates and Kuwait had already topped their gas-rich neighbor, pledging a combined $12 billion to the fledgling “civilian” interim government in Cairo.
So Beblawi comes to the prime minister’s office amidst a windfall of rent. An early proponent of rentier state theory is overseeing a rentier economy with international partners floating on rents of their own and willing to use them to “stabilize” Egypt. A further irony: Beblawi coined the term “rentier mentality” to describe the essential laziness of Gulf Arab monarchies vis-à-vis the task of governing. The enormous oil and gas rents in the Gulf effectively reward the regimes for rule by handout. Now, in effect, Saudis, Emiratis and Kuwaitis are rewarding Egypt’s coupmasters in the same way.
What will Beblawi do with the rent? He won’t give more handouts, apparently. “The canceling of subsidies requires sacrifices from the public and therefore necessitates their acceptance,” he told Daily News Egypt in an interview before Mursi’s removal. “It is crucial that they understand the scope of the danger that the current size of subsidies imposes on Egypt’s economy, and they must also feel that rationing is done in a way that guarantees social justice.” It’s not clear, given his scholarly output, that the new premier even believes that Egypt can be a democracy. But the crowds in the streets of Egypt’s cities may have ideas of their own — about subsidies and about political theory.