Ali Habib's family had been selling trinkets to tourists in Cairo's historic Khan el Khalili district for 53 years before the revolution this year scared off many foreign visitors, cutting his sales in half. Mr. Habib considered closing his shop.
But he and many other small-business owners are growing more optimistic in the belief that help for Egypt's ailing economy is near—not from Western-educated economists, but from the Quran-quoting Islamists who appear on track to win about two-thirds of the parliamentary seats when Egypt's elections end in early January.
The Muslim Brotherhood has the most organizational experience and I've read what their business program entails—I'm hopeful," Mr. Habib said of the largest Islamic political group in Egypt. "The Islamists have been neutralized and marginalized up until now. Why not give them a chance? If it doesn't work, we'll vote them out."
More than any specific policy proposal or ideological perspective, it is the Islamists' popularity that reassures investors and businessmen. The Islamist parties' electoral mandate will help them make policy decisions that will bring direction to the economy, which has drifted under Egypt's interim military rulers, say many in the business community.
The generals have shown a reluctance to make resolute decisions without an electoral mandate, particularly decisions on unpopular issues such as Egypt's bloated subsidy program that might incite public unrest.
"An element of certainty has been brought forward as opposed to uncertainty," said Mustafa Abdel Wadood, chief executive of Abraaj Capital, a major investor in Egypt. "You will have a Parliament in place, you will have a president in place, and I think that's the most important step for stopping that free fall."
On Monday, both Islamist parties looked set to continue their electoral dominance from the first round of polling, in which the two together won more than 60% of the votes. The Freedom and Justice Party, which represents the Muslim Brotherhood, said Sunday that it had won 37% of the votes in the second of three rounds of voting.
In the meantime, political instability and fiscal uncertainty have kept foreign investors at bay. The death toll from clashes between security forces and protesters rose to 12 Monday, less than three weeks after earlier skirmishes left more than 40 people dead.
Since the revolution began in January, the lack of capital inflows has forced Egypt's central bank to deplete about 40% of its foreign-currency reserves to prop up the Egyptian pound. The country faces the possibility of an imminent economic crisis.
"If the new government fails to take action, a disorderly devaluation of the pound looks inevitable," London-based Capital Economics Ltd. wrote in a note this month. "The immediate impact could be an increase in inflation, interest rates and the fiscal deficit. Combined with an uncertain global environment, Egypt's near-term economic conditions could deteriorate rapidly."
Egypt's Islamists are untested behind the wheel of the Arab world's second-largest economy after Saudi Arabia. But economic analysts, businessmen and foreign investors say they are hopeful that the market-oriented mindset that the Islamists have expounded in policy papers and public statements will return Egypt to the rapid growth—but not the rampant corruption—that characterized the final years of ousted President Hosni Mubarak's rule.
Economic policy platforms published on Islamist party websites and drawn from candidates' public statements advocate lowering barriers to foreign investment, promoting free trade and implementing only reasonable regulation. They see the private sector as the primary driver of growth and employment, a departure from Egypt's long reliance on bloated state-run businesses and bureaucracies.
Such positions are broadly consistent with those of more liberal parties' economic ideas and even with the unpopular market-oriented policies expounded by the ousted former regime, highlighting the narrowness of the debate about Egypt's economic future.
Both the Muslim Brotherhood's Freedom and Justice Party, which has about 40% of the vote, and the hard-line Salafi Nour Party party, with about 25%, diverge most sharply from the status quo in their contempt for monopolistic business practices and their preference for Islamic banking.
The ultraconservative Salafi Islamists represent a wild-card addition to Egypt's Islamist mix, particularly in the case of tourism, one of Egypt's biggest foreign-currency earners.
Both parties want to see a "gradual" increase in the role of Islamic banking—a financial concept that works around Islamic laws against charging interest through profit-sharing mechanisms. Islamic finance, which is widely practiced in the Arab Gulf, in South Asia and in Muslim-majority Southeast Asian nations, bears a strong resemblance to conventional banking and is unlikely to affect investor confidence, said Magda Kandil, the director of the liberal Egyptian Center for Economic Studies.
Islamists also say they hope to mimic American and European restrictions on monopolies—a perspective influenced by Egypt's history of rampant corruption rather than by the Islamic canon.
While official literature makes no mention of dramatic changes to the tourism industry, Salafi leaders have told local newspapers they are considering plans to segregate beaches and restrict or outlaw the sale of alcohol, or even cover Egypt's pharaonic-era monuments in wax.
Emad Abdel Ghaffour, the head of the Nour Party, denied the more radical claims about Salafi plans for the tourism industry. Non-Muslims will be allowed to consume alcohol, he said, and questions of bikinis and beaches would be "discussed later." But analysts say even Salafis are unlikely to make dramatic changes that would risk destroying a national business.
"Banning alcohol would destroy beach tourism and that could ruin a lot of livelihoods," said Ahmed al-Naggar, an economic analyst at the government-funded Al Ahram Center for Political and Strategic Studies.
In a reflection of Egypt's nascent ideological discourse, liberal parties and Islamists have both shown a reluctance to present specific economic policy prescriptions.
Few politicians, Islamists included, are willing to say whether they would return to negotiations on a $3.2 billion International Monetary Fund loan that the military leadership rejected in the summer. Although the much-needed loan came with few conditions, the IMF is unpopular in Egypt. Many blame it for austerity measures the Egyptian government introduced in the 1990s that seemed to widen Egypt's already gaping division of wealth.
Ms. Kandil and Mr. al-Naggar complain that Islamist economic policies say little about what will drive economic growth, particularly for the small and medium-size enterprises that form the bulk of Egypt's economy and most affect businessmen like Mr. Habib.
"The only solution to rescue the economy is by using the talents and resources of Egypt's population," Mr. al-Naggar said. "These are very general ideas. Nothing new or revolutionary."
source: The Wall Street Journal