The presidential victory of Abdel Fattah El-Sisi may have been an electoral walkover, but now comes the hard part. Egypt's new ruler simply has to tackle his country's skewed economy which has two major flaws. The first and most enduring is the system of budget-crippling subsidies. These drain government finances which already suffer from poor tax collection. The second flaw concerns the structure of Egyptian business, which is dominated by a relatively few large enterprises which have benefited from long association with the country's past military-backed governments. Not surprisingly, the military itself has acquired important business investments. There is, therefore, an almost built-in resistance to change, to the opening up of the economy to new innovative enterprises able to raise capital and fund themselves through the Egyptian financial system. If to this is added a bloated and often stunningly inefficient government bureaucracy, where petty bribes are pretty well essential before a citizen can receive even the smallest service, the reform challenge facing Sisi's new administration looks daunting. Subsidies on bread, cooking fuel and gasoline are so ingrained that they are seen by the country's millions of poor as an entitlement. Past governments who have sought to remove or substantially reduce them have faced destabilizing riots. This was hardly surprising in a country effectively devoid of a welfare safety net. Indeed, it was through the widespread provision of its own welfare that the Muslim Brotherhood was able to build its support base during the Mubarak years. Yet despite the impact on a population where officials put joblessness at around 15 percent, probably a very conservative estimate, the removal of subsidies has to happen. There will be inflation and there will be unrest, but now, at the very start of his rule, is the time for Sisi to act. The military has already been seeking to create jobs in the manufacturing companies that it controls. However, in the short term, there is no way that the financial impact of the blow on ordinary people can be offset totally. Yet in the longer term, a state that is unburdened by the wasteful expenditure on subsidies will be able to invest in much needed infrastructure. Decent roads and railways and communications will boost the Egyptian economy and create real jobs and distribute wealth. There is, of course, the major obstacle of security that also has to be tackled. Egypt is facing a terrorist threat of major proportions. Sisi will have to address this, not least because until the country is seen as secure, the crucial tourist industry will not revive and the economy will continue to miss out on a foreign currency income of up to $15 billion a year. There is, however, one option that Sisi simply cannot afford to take and that is to do nothing. For too long, successive administrations have sat on their hands, applying sticking plasters to deep and gaping social and economic wounds only when they absolutely had to. Thus the severe distortions in the country's economy have become ossified. It will take a brave and visionary leader to break down the model and free the Egyptian entrepreneurial genius. The big question is: Can former army general Sisi with all his military training and instincts, plus lack of economic background, demonstrate the political courage and vision to see through such a fundamental and painful program of change?
