06/11/2013 08:11 am ET Updated Aug 11, 2013

The West Leans Out From Egypt

This is the second of three excerpts for Huffington Post from Vali Nasr's new book, The Dispensable Nation: American Foreign Policy in Retreat (In the UK, you can buy the book here). Read part one here.

AMERICA WAS FOLDING its tent in the Middle East when, in December 2010, a young fruit seller in an obscure Tunisian town set himself on fire to protest the daily injustices that he, like so many of his countrymen, suffered at the hands of a dictatorship. Mohamed Bouazizi's story went viral on social media as he lay dying in a hospital, and just like that, the wheels of history turned. Obama understood what was happening in the Arab world; in his inaugural speech he had told "those who cling to power through corruption and deceit and the silencing of dissent" that they were "on the wrong side of history." He would call the Tunisian uprising that Bouazizi's desperate act set off "an inspiration to all of us who believe that each individual man and woman has certain inalienable rights."

But Obama's rhetoric did not make up for a reluctant and sputtering response to fast-moving events. In early 2011, the Middle East looked poised for democracy -- you cannot think of a transformation with more significant strategic impact. The outcome would mean much to America, perhaps even a final satisfactory solution to all that in the Middle East had flummoxed us, threatened us, emptied our pockets and cost our soldiers' blood. That may be wishful thinking, and there is plenty of evidence today that the Arab Spring will produce illiberal new regimes, hybrid governments blending surviving security forces with rising Islamic parties of various hues.

There will be civil wars, broken states, sectarian persecutions, humanitarian crises, faltering economies and new foreign policy challenges (ranging from warming of relations between Egypt and Iran to new issues to fight over with Russia and China) -- nothing resembling a resounding march to democracy and economic prosperity, and no clear embrace of free institutions and norms.

But we did not know this for sure in the heady and hopeful days of early 2011, nor can we say now that the Arab Spring would have been such a disappointment had we engaged with the region quickly and forcefully to give change an economic direction, helping bloated public sectors to reform and integrate into the global economy.

We could have had an impact on the outcome had we had a strategy other than washing our hands of the region, and had we shown willingness to exercise leadership. We might not have averted conflicts and humanitarian crises, but we would have had a significant impact in those countries that got through the initial change of leadership and, in the fog of victory, needed help, especially with their economies.

As the extraordinary events were unfolding, there was certitude of a sort in the White House. Obama remained intent upon leaving the Middle East, and he was not going to let himself be distracted from that mission by sudden eruptions of pro-democracy protests, teetering dicta- tors, and looming civil wars. He did not know whether the Arab Spring would lead to ubiquitous democracy or a prolonged period of instability, but regardless, he was determined that America would not try to influence the outcome -- not if that meant reversing course to get involved in the region.

Take the case of Egypt, the most important Arab country and the touchstone for change in the Arab world. When hundreds of thousands of Egyptians jammed Tahrir Square to demand that President Hosni Mubarak give up power, Egypt had little in the way of sound political institutions -- no party system to speak of, a weak judiciary and an infantile civil society. There was nothing on the far side of Mubarak but the likelihood of instability at best, and chaos at worst.

If the Arab Spring were to bear fruit, America would have to get involved diplomatically and, more importantly, economically. American engagement had been vital to the success of previous democracy waves in Asia, Eastern Europe and Latin America. In those places, America had led international efforts to anchor burgeoning democracies in the closest alliances with the West that could be managed (the promise of NATO and then EU membership had served as a useful magnet for Eastern Europe). We influenced political discussions and helped with the work of writing constitutions, forming parties, holding elections and stabilizing young democratic governments. It is arguable that the Arabs would not welcome so much close engagement, but in any case we had no intention of offering it.

Of most crucial importance in the previous waves had been U.S. efforts to work in concert with Europe, international financial institutions and private enterprise to pour vast economic resources into the new democracies. The idea had been to give promising political developments a sound basis in economic restructuring and greater engagement with the global economy. Over a 10-year period between 1989 and 1999, the West directed more than $100 billion to Eastern Europe alone.

During that time period the relevance of economic reform to successful democratization was captured in the so-called Washington consensus, an agreement among international financial institutions and world powers, led by the United States, to push for a regimen of reforms that would change the structure of economies, societies and, hence, politics. That consensus has come under much criticism for its excesses, and the pain that many countries had to endure as a result. But it offered the benefit of clear direction to the international community and countries facing change -- a sense of where they all wanted to go and how they would get there.

Democracy and stability in the Middle East need the same kind of direction, and a similar level of investment. Without economic change, democratic stirrings would not stand a chance. None of the democracy waves comparable to the Arab Spring succeeded without economic reform. Recall that it was stagnant economic growth, chronic mass unemployment and the resulting despair that fueled protest against sclerotic Arab dictatorships in the first place. And America had blamed 9/11 on the same lack of opportunity and economic stagnation.

Yet now that economic frustration was creating an opening for democracy rather than recruiting foot soldiers for Islamic extremism, Western support was nowhere to be found. Nowhere was this Western insouciance more evident than in Egypt. None disputed that Arab democracy would be won or lost in Egypt. This is the most populous and, intellectually and politically, the most influ- ential Arab country. The outcome in Egypt would decide whether the original message of the Arab Spring would take hold or be swallowed up in power games waged between military establishments and Islamist movements.

Egypt faces a vortex of poverty and instability unless it fixes its economy and finds jobs for its rapidly growing population. If the past is any guide, falling wages, downward mobility, and growing inequality are drivers of Islamic activism. The deadly attacks on American diplomats in Egypt, Libya, Tunisia and Yemen by anti-American mobs in September 2012 are just a preview of the kind of radicalism that could take hold of the region if economic stagnation and social misery are to be the lot of its people.

Between 1974 and 1984, Islamic fundamentalism exploded in Egypt, especially among urban youth. During that same decade, public-sector white-collar workers (those working in state-owned enterprises) saw their real wages shrink by 8 percent, and, for those in government administration, by 23 percent.

The level of growth needed would require radical change. Egypt would have to open its economy, shrink its bloated and corrupt public sector (public debt stood at 80 percent of GDP in 2011), reform its laws and financial regulations, invest more in education and infrastructure and promote privatization, trade, and direct foreign investment. Unfortunately, the country has been reluctant to do any of this. Egyptians are not ready for economic change, at least not at the pace that was seen in Latin America or Eastern Europe when they went through reform. They want jobs and better services, but their political discussions do not include a serious debate over what to do with the economy.

Egyptians are suspicious of the West and jealously guard their national rights and sovereignty. They do not want the IMF telling them what to do, and their first impulse was to refuse its loan offers. They thought they could get away with this because Qatar and Saudi Arabia had promised Cairo $11 billion in economic assistance, but none of it ever materialized. One senior administration official told me that the interim government said to Washington and the IMF in private, "We don't want your help, and if we agree to your help we don't want you to tell anyone about it."

This is a shame because such changes have a record of working. Reform was not easy. Eastern Europe had to endure 20 percent inflation along with drops of 20 to 40 percent in GDP. There were many setbacks, social hardships and acts of political resistance. But in the end, economies were transformed, and Eastern Europe is better off for it. The same is true of Latin America.

Many hope that Egypt will embrace the "Turkish model," mixing democracy and capitalism with a somewhat toned-down brand of Islamism to produce an open and prospering society. But the Turkish model was built on the back of a series of IMF-prescribed reforms and the EU's deep economic and political engagement with Turkey. Absent similar fundamental economic reforms, Egypt looks to be going the way of Pakistan, its economy reliant on U.S. aid, constantly on the brink of disaster, and avoiding it only thanks to timely infusions of Arab aid and rescue packages put together by international financial institutions. Meanwhile, the country gets poorer, its problems grow and its escape from the cycle of crisis and poverty becomes more daunting and less likely.

Anti-American extremist forces would then reap the fruits of political frustration and social misery. On the political front, the military's "deep state" controls key sectors of the economy and wields considerable influence over the bureaucracy, the judiciary and the still-potent security services. Prospects for civilian rule, let alone true democracy, are dim. So far, Washington has neither endorsed economic reform forcefully nor used its considerable leverage (in the form of massive military aid) to nudge the military to consent to change.

The United States does not need to get it right everywhere, but it cannot afford to get it wrong in Egypt. It definitely cannot afford to stand back and simply watch events unfold without trying to influence them. That we have settled for doing so much less than we did after 1989 in Asia, Eastern Europe and Latin America speaks volumes about our disengagement from the region. If the potential for democracy held by the Arab Spring was not enough to compel our engagement, it is not clear what would be.

From the book: THE DISPENSABLE NATION by Vali Nasr. Copyright © 2013 by Vali Nasr. Published by arrangement with Doubleday, an imprint of The Knopf Doubleday Publishing Group, a division of Random House, Inc. and also by arrangement with Scribe.