Earlier this week, former National Security Adviser Jim Jones was promoting “a type of Marshall Plan for emerging democratic states like Egypt.” The White House has now stated that in his speech on the Middle East this morning, President Obama will announce a new foreign aid package for Egypt.
Egypt’s financial situation is undeniably dire. As David P. Goldman noted two weeks ago in the Asia Times, “Egypt is running out of food and, more gradually, running out of money with which to buy it. . . Egypt imports half its wheat, and the collapse of its external credit means starvation.” The Egyptian revolution has driven away tourists, while the Libyan one has cut remittances from Egyptians working there. Goldman calculates that Egypt lost $13 billion in foreign exchange reserves in the first quarter of 2011 alone.
But the idea of a ‘mini-Marshall Plan’ for Egypt is still a bad one. It calls to mind the President’s proclamation in January of a “Sputnik moment” for education: the administration likes to conceive of itself as forward-looking, but has a curious addiction to concepts and names derived from the early Cold War, perhaps because it is actually stuck in the past. On Goldman’s figures, the amounts the administration is talking about – $1 billion in debt forgiveness, and $1 billion in loan guarantees – will be swallowed up by the broader collapse of the Egyptian economy. In practice, the Administration’s plan is not enough to matter, but enough to create the false impression that the U.S. can simply ride to the rescue of the Egyptian economy.
More broadly, the idea relies on an analogy with the Marshall Plan that is as tired as it is wrong-headed. The Marshall Plan gave dollars to the advanced economies of Western Europe that had been devastated by the Second World War so that they could buy U.S. goods to rebuild their factories and restart the normal flow of trade. Contrary to popular myth, it was not a U.S.-led effort to rebuild entire countries, and it was certainly not what the White House is proposing, i.e. debt forgiveness on the one hand and more loans on the other.
Absolutely none of the conditions that conduced to the success of the Marshall Plan are present in Egypt, which is a poorly-governed, corrupt, ill-educated country with a backwards economy and a political system that is trending strongly towards an alliance of military authoritarians and radical Salafis. The Marshall Plan does indeed show that, given good domestic governance, certain kinds of U.S. assistance can work. But the Marshall Plan was not a hand-out: it was conditioned in many ways, it was predicated on a shared acceptance of democracy and economic freedom, and it rested on the competent administration of Europeans.
If the President wants to apply that Marshall Plan precedent, he might begin by pointing out that these lessons also apply to Egypt, and indeed the entire Middle East: absent fundamental, sustained, serious efforts at political, economic, and administrative reform, U.S. aid cannot, and will not, save them.