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Egypt’s new parliament is taking a seat amid ongoing protests on the streets and deteriorating relations with the United States over the impending trial of NGO workers as they threaten to review $1.3 billion in Egyptian military aid. Thus, it’s essential to read into the economic policy the Muslim Brotherhood will devise to redress an economy battered by a year of severe mismanagement by the ruling military junta and its successive transitional governments.

The Brotherhood’s political arm, the Freedom and Justice Party, won 47 percent of the seats in the Egyptian parliament in January 2012, and concerns about that accession to power largely concentrate on secondary issues — sartorial restrictions, alcohol prohibition, gender-segregated beaches — leaving little room for serious policy discussion. But the Brotherhood’s economic policies may signify the most profound changes for the country.

Trying to discern a pattern in the FJP’s economic plans, one is struck by two competing ideologies: One is an interventionist tendency reflecting the organization’s traditional hierarchical structure.

The other is a group of Islamist industry and trade leaders headed by Khairat Al-Shater, a multimillionaire businessman who found himself imprisoned by the Mubarak regime, his assets twice confiscated.

Alongside such laudable generalities as restoring trust in the economy and self-sufficiency in strategic goods, the FJP advocates a mixed-basket of policies that include an export substitution industrial policy in cooperation with the private sector; controlling budget deficits and public debt, while rationing public spending; increasing the minimum wage, an original demand of Tahrir Square protesters; strengthening competition and anti-trust legislation; introducing a progressive income tax; and raising the ceiling for tax exemptions.

The interventionist and free-market tendencies explain why commercial banks and the stock market won’t see their business threatened. Despite declarations of “moving to an Islamic economy” — one where interest-free Islamic finance replaces conventional commercial banking — the Brotherhood and its businesspeople know that Islamic banking accounts for less than 4 percent of the local banking industry, estimated at $193 billion. They don’t want to frighten depositors and borrowers. The government will likely encourage banks to offer Islamic financial products to clients.

Most striking about FJP’s top-down approach in a nation where 25.2 percent of the population lives below the poverty line is the perception of poverty alleviation as a form of charity, not a necessary outcome of economic growth.

So how will the government finance charities and balance the national budget? Here, the FJP fumbles, offering little about fiscal policy. It seems to plan on methodically going through all of the country’s pockets.

Some Brotherhood leaders have floated the idea of repossessing previously state-owned land from owners who obtained it through corruption — a fair demand, but complicated, considering the reaction of investors to limited repossessions conducted by the transitional government in 2011.

Another improbable source of income, hinted at by FJP, is making zakat — yearly alms that Muslims should pay to help the less fortunate, amounting to 2.5 percent of wealth – compulsory.

The Brotherhood, increasingly engaged in visible politicking with the army, is unlikely to touch the deep pocket of the military budget any time soon. With the help of $1.3 billion per year in US largess, the military’s massive economic interests range from production of ovens and mineral water to beach-condo rentals. Such budget details are not public, though it’s estimated that the army’s economic interests represent a staggering 30 percent of the Egyptian GDP.

Ironically, a revenue-generating sector that seemed most threatened by the Brotherhood’s ascent – tourism – might escape unscathed. “No citizen who makes a living from [tourism] should feel concerned,” FJP officials said, attempting to ease worries of the almost 1 in 9 Egyptians whose livelihood depends on the industry. Many fear that the Islamist parties in the parliament will push for prohibitions on alcohol consumption and swimwear. Extremists, mostly in the Salafi wing, exacerbated such fears by issuing statements comparing Pharaonic statues to forbidden pre-Islamic idols.

The FJP promises to protect tourist sites, open new markets and improve tourism infrastructure. While restrictions on activities like alcohol consumption might befall Egyptian nationals, although that’s unlikely, tourists should notice no big changes.

To be viewed as moderates, the Brotherhood will attempt to distance itself from the extremist Salafi groups. Nevertheless, alliances, notably on issues deemed religious, will likely be created with the Salafi contingent. The latter has already voiced its support to compulsory zakat collection, for instance.

The end result will be a stumbling, learn-as-you-go pragmatic pro-market economic policy with a strong welfare component. Deregulation will slow. Relations with international donors will stay the same. At the end of the day, the Brotherhood’s economic policy may in fact represent little change.

YaleGlobal

Mohamed El Dahshan is an economist and writer.