Morsi

Building a new Egypt: Where we are today

January 8, 2013: 10:04 AM ET

No nation can be rebuilt in short order. Egypt is no exception. A Harvard Business School professor describes how business leaders can help.130108032311-tahrir-square-egypt-gallery-horizontal

By Tarun Khanna

FORTUNE -- When Hosni Mubarak's regime fell in Egypt, I wrote in a column for Fortune that businesspeople should not stand by the sidelines. Rather, they should actively combat the deficit of trust that had rent the Egyptian social fabric. Without nurturing trust, I argued, institutions would not function properly.

At the time, my students -- businesspeople of Egyptian origin living within Egypt and elsewhere -- mused about the course they were on. Most were ecstatic over the heady atmosphere in Tahrir Square, which looked to them like the onset of democracy. The alternative seemed less likely to them: a collapse into chaos in the absence of the authoritarian hand that had, for better or worse, kept Egypt's contending factions in check.

Almost two years later, Tahrir Square has been re-occupied. I caught up with my students again. They are all impatient and disillusioned. Morsi, of the Muslim Brotherhood, has been elected president but has tried to assume more power than the denizens of the street are willing to concede. The generals, emasculated by Morsi lately, are making threatening noises on the sidelines. The judges feel aggrieved, accused of being stooges of the old regime. And commerce and investment flows are in stasis.

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The impatience is understandable as daily lives, and livelihoods, are at stake. As an entrepreneur, I can relate to the frustration. Two years is a long time for a financier to keep capital un-deployed, or for workers to be in limbo, or production runs to be compromised.

Yet, as a scholar, the only surprise is that anyone is surprised at the recent turn of events. Re-arranging an institutional deck of chairs -- reaching a new bargain about who wields what kinds of authority and how they will be held accountable -- is a messy process that, in my estimation, takes years, if not decades sometimes. I'm hard-pressed to imagine that a new arrangement could have been settled on in a year-and-a-half.

One of my more articulate students lamented, "When I see Cairo today, it feels like Kabul," reflecting the view that the erstwhile intellectual center of the Arab world ought to do better. Maybe so, but comparisons to Kabul are overly pessimistic. Others are more apt.

Pakistan, another majority Islamic country in the news today, also suffers from internal strife. It shares some similarities to Egypt. The military and the judiciary consider themselves protectors of the country. Pakistan's army is ready to step in if civilian incompetence or corruption exceeds tolerable (to them) bounds. The judiciary is an activist one, egged on by relieved Pakistanis eager to see someone speak truth to power, but, in others' views, over-reaching in its assumption of power. Just as Morsi must focus on his country's relationship with Israel, Pakistan struggles with Afghanistan along its poorly demarcated border. To the extent that the Pakistani experience has anything to say about Egypt's evolution, we're in for a long journey.

Turkey is another one to watch these days, in the era of Prime Minister Recep Tayyip Erdogan. As in Egypt, Turkey features the rise of Islam, and the sidelining of a historically paramount army. Istanbul's generals have been decisively silenced. Along with that, Turkey is undergoing a societal reexamination Turkish founding father Mustafa Kemal Ataturk's avowed secularism. The elites of the Aegean coast are coming to terms with the ascent of the more religious Anatolians. As Turkey tries to position itself as a leader of the Islamic world, it is easy to forget that the transition from the generals to Erdogan took time.

The May 1998 fall of strongman Suharto in Indonesia also offers us a lesson. Here, the transition to the somewhat stable regime of current President Bambang took some time, perhaps a decade, through Habibie, Sukarnoputri, Wahid, and the current president's first term. It is not an overnight process.

Yet my students, ever practical, have not let their impatience stymie their efforts. What are they to do? One of them said that the situation in Egypt under Mubarak came about because no one dared to speak up. Most would have preferred a democratic outcome to the strongman's rule. Today, referring back to his Afghanistan comparison, my student said the same error might very well repeat itself. If Egyptian moderates don't speak up, those with extreme views will, and then, in his words, Egypt will get what this silence merits.

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My advice to my students and other entrepreneurs working abroad has not changed. Don't rush for the exits; engage, either physically if in Egypt, or through social media. It is the only way to shape the new contours of power. Stand up and be counted.

Tarun Khanna is Jorge Paulo Lemann Professor at the Harvard Business School, Director of Harvard University's South Asia Institute, and co-author of Winning in Emerging Markets: A Roadmap for Strategy and Execution (Harvard Business Press, 2010).

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