Why Obama's offer to Egypt isn't good enough

What did Obama say about Egypt in his Middle East speech?  Here's an excerpt from the full text of Obama's speech: 

After all, politics alone has not put protesters into the streets. The tipping point for so many people is the more constant concern of putting food on the table and providing for a family. Too many in the region wake up with few expectations other than making it through the day, and perhaps the hope that their luck will change. Throughout the region, many young people have a solid education, but closed economies leave them unable to find a job. Entrepreneurs are brimming with ideas, but corruption leaves them unable to profit from them.

The greatest untapped resource in the Middle East and North Africa is the talent of its people. In the recent protests, we see that talent on display, as people harness technology to move the world. It’s no coincidence that one of the leaders of Tahrir Square was an executive for Google. That energy now needs to be channeled, in country after country, so that economic growth can solidify the accomplishments of the street. Just as democratic revolutions can be triggered by a lack of individual opportunity, successful democratic transitions depend upon an expansion of growth and broad-based prosperity.

This is all true, and Obama has said it well.  But the big question is how the outside world can help these economies.  How can these countries put millions of unemployed youth to work?   What is Obama offering to do for them?  And can it work?  Obama continued:

Drawing from what we’ve learned around the world, we think it’s important to focus on trade, not just aid; and investment, not just assistance. The goal must be a model in which protectionism gives way to openness; the reigns of commerce pass from the few to the many, and the economy generates jobs for the young. America’s support for democracy will therefore be based on ensuring financial stability; promoting reform; and integrating competitive markets with each other and the global economy – starting with Tunisia and Egypt.

Obama talks about the need for Egypt to end "protectionism," yet does not offer to eliminate US cotton subsidies.   Obama does not mention that under Hosni Mubarak, Egypt liberalized its markets substantially (see this post) yet widespread economic misery persists.   Obama continued: 

First, we have asked the World Bank and the International Monetary Fund to present a plan at next week’s G-8 summit for what needs to be done to stabilize and modernize the economies of Tunisia and Egypt. Together, we must help them recover from the disruption of their democratic upheaval, and support the governments that will be elected later this year. And we are urging other countries to help Egypt and Tunisia meet its near-term financial needs.

Second, we do not want a democratic Egypt to be saddled by the debts of its past. So we will relieve a democratic Egypt of up to $1 billion in debt, and work with our Egyptian partners to invest these resources to foster growth and entrepreneurship. We will help Egypt regain access to markets by guaranteeing $1 billion in borrowing that is needed to finance infrastructure and job creation. And we will help newly democratic governments recover assets that were stolen.

Third, we are working with Congress to create Enterprise Funds to invest in Tunisia and Egypt. These will be modeled on funds that supported the transitions in Eastern Europe after the fall of the Berlin Wall. OPIC will soon launch a $2 billion facility to support private investment across the region. And we will work with allies to refocus the European Bank for Reconstruction and Development so that it provides the same support for democratic transitions and economic modernization in the Middle East and North Africa as it has in Europe.

Fourth, the United States will launch a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa. If you take out oil exports, this region of over 400 million people exports roughly the same amount as Switzerland. So we will work with the EU to facilitate more trade within the region, build on existing agreements to promote integration with U.S. and European markets, and open the door for those countries who adopt high standards of reform and trade liberalization to construct a regional trade arrangement. Just as EU membership served as an incentive for reform in Europe, so should the vision of a modern and prosperous economy create a powerful force for reform in the Middle East and North Africa.

Spoken like a Republican:  Obama speaks of "trade liberalization" as if it is the tried and proven panacea for economies of the developing world.   Yet how well has that worked out for Iraq so far?   Many of the most successful industries in today's economic powerhouses were nurtured on protectionist trade policies. Think South Korea or Japan.  Obama continued:

Prosperity also requires tearing down walls that stand in the way of progress – the corruption of elites who steal from their people; the red tape that stops an idea from becoming a business; the patronage that distributes wealth based on tribe or sect. We will help governments meet international obligations, and invest efforts anti-corruption; by working with parliamentarians who are developing reforms, and activists who use technology to hold government accountable.

Egytians need to examine the details before accepting any foreign offers of economic assistance.  Are they sincere?  Or are they just a ploy to get Egypt to open-up its market to foreign-branded goods and services?  What's good for US-based multinationals (Monsanto, Pfizer, GE, etc.) or Apple Computer and its Chinese factory workers is not necessarily what's best for the people of Egypt.

Governments in the Middle East face the same problem that confronts Barack Obama at home:  how to create jobs for millions of people -- especially young people.  Given that the economic system of the United States, its political leadership, its most vocal ideologues, and even its media have failed to address America's own unemployment crisis, Egyptians should be careful about taking economic advice from Americans. 

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In post-Mubarak Egypt, protesters are often beaten by thugs.

There's another thing Obama ought to have said but did not.  Obama should have promised that the US would hold the leadership of the Egyptian Army accountable for their actions during Egypt's transition to democracy.  Obama should have said that attacks against peaceful protesters by thugs working in conjunction with soldiers are reprehensible, and that torturing protesters, virginity-testing them, and subjecting them to military trials is unacceptable.   Obama should have made clear that future US military assistance to Egypt's army will contingent upon its adherence to basic principles of human rights and the rule of law.