Interview

Replacing Mubarak

Amr Moussa is nothing if not a political survivor. As he prepares to contend Egypt's upcoming presidential election, he talks to Foreign Policy about his views toward Israel, the military's role in politics, and Obama's first term in office.

Amr Moussa has emerged from Egypt's revolutionary tumult as the front-runner in the upcoming presidential election. But for this quintessential establishment man -- he served as foreign minister under Hosni Mubarak and then as secretary-general of the Arab League -- capturing the top seat in Egyptian politics is fraught with pitfalls. The revolutionaries on the streets scorn his ties with the previous regime, and the new kingmakers in Cairo -- the Islamists and the ruling Supreme Council of the Armed Forces -- are sure to demand concessions in return for their support.

It's not easy to walk that line, particularly with all the hot-button issues in Egypt's future. Here, Moussa tackles them all in an exclusive interview with Foreign Policy: the military's future role in politics, the Egypt-Israel peace treaty, and the upcoming U.S. presidential election, among others. In his discussion with Adel Abdel Ghafar, he says that certain aspects of the pact with Israel should be "revisited" and admits that he would vote to give President Barack Obama another term in office -- but only because of his misgivings about Obama's Republican challengers.

Foreign Policy: Do you believe the Egyptian Army should ultimately be under civilian control?

Amr Moussa: A state is a state. It has one head, not two. It has one legislative institution, not two. It has one government, not two.

FP: There are several examples of how countries transitioned from military to civilian rule -- Indonesia, some Latin American countries, even the Turkish experience is noteworthy. In Egypt, do you think we will ever get rid of military interference in public life, or will there always be a presence of the military institution?

AM: A revolution occurred on Jan. 25 that transitioned us from "dictatorial rule"
to democratic rule. This democratic government will not be far away from the military, as this is the military of Egypt -- an integral and original part of the Egyptian administration. We do not say that the military will leave -- no, they will take their own path as one of the integral Egyptian institutions.

We shouldn't frame the debate within a provocative context such as you suggested, with Indonesia and the Latin American countries. We have passed this stage and are moving forward on a democratic path not ruled by military forces. The military exists to defend Egypt and is a force for stability in any country; therefore we have to approach the relationship between the military and the state from a positive side rather in than a negative, provocative way.

FP: In your view, do the Camp David Accords [signed between Egyptian President Anwar Sadat and Israeli Prime Minister Menachem Begin in 1978] need adjustment?

AM: First of all, Camp David is not what is applied now. Camp David ended as a background paper. What governs the relationship between the two states is the Egyptian-Israeli treaty [signed in 1979]. And I believe that we should adhere to this treaty, as we do with all of our international commitments and treaties, as long as the other party adheres to it too.

However, within a security context in Sinai, the treaty has to be revisited. Unfortunately, the treaty in its current form has led to the Egyptian government's inability to enforce the rule of law in Sinai and on the border. Egypt as a sovereign state should be able to fully secure its borders.

FP: Some people are calling to cut the natural gas supply to Israel, while others are calling on modifying its prices. Where do you stand?

AM: We have to modify the prices according to global prices. This is not only an issue with Israel -- we also export natural gas to Jordan. It is in our national interest to price the natural gas according to global prices, and today's prices are much higher than the prices agreed on.

FP: What do you think of the Islamist majority in parliament? Does it worry you, as it worries many people in Egypt who fear religious rule?

AM: Let me tell you, worrying is a part of politics, especially in such a crucial period like this. However, we said we will go down the democratic path. Democracy produced the current parliament. You cannot have democracy and reject its results.

But we have to decide what would be our "modus operandi" in dealing with these results, and this is what preoccupies me. On what basis do we deal with the Islamist forces? We do not live through normal circumstances now that we can play politics. Therefore I would be looking to cooperate and work with the parliament.

FP: As a previous foreign minister, how do you think Egyptian foreign policy should evolve following the revolution?

AM: Egyptian foreign policy collapsed over the past several years. It has to be rebuilt for it to play its rightful role.

The Arab world will not be led by Turkey or Iran; it has to be led by the Arab countries themselves. And Egypt, as the largest Arab country, should have a leadership role in that regard. This will require a new type of leadership in the 21st century -- you cannot lead if you are not advanced technologically; you cannot lead if you have no real development program.

FP: The massacre that occurred in Port Said is currently under investigation, and there are a lot of conspiracy theories surrounding the events there. What are your initial impressions of what occurred in Port Said?

AM: What occurred is not normal. A city has a football team, and its team wins; why does this chaos occur? People should celebrate after winning, not kill each other.

Setting aside conspiracy theories, what happened was politically motivated and was intended to create chaos. When 74 people die and hundreds are injured in a sporting event, it simply doesn't add up. You can call it a conspiracy theory -- whatever you call it, it is clear that there is a group that encourages chaos in Egypt.

These violent incidents have occurred at the Balloon Theater, Maspero [the state television building], Mohamed Mahmoud Street, Parliament Street, Port Said -- then the most recent clashes on Mohammed Mahmoud Street again. Six incidents, no proper investigation with a clear outcome, no report. This attitude has to stop. The families demand answers, and we as citizens also demand to know what happened.

FP: As you note, there were more clashes on Mohamed Mahmoud Street following the Port Said massacre. How do you suggest that Egypt avoid such violence in the future?

AM: I believe that the revolutionaries of Jan. 25 are not the ones responsible for the latest clashes. There are forces of chaos that have infiltrated the lines of the revolutionary forces. When I watched on TV people climbing the tax department building and attempting to put it on fire -- this is not a revolution; this is chaos.

The people responsible for chaos should be dealt with using the full force of the law, and the state has to be present to prosecute them. It is unacceptable that the state use live rounds and victims fall, but nonetheless the state has to be forceful in bringing those responsible to justice through legal prosecution.

FP: You mention the revolutionaries. Are there tensions between yourself and the revolutionary forces?

AM: No. First of all, there are a lot of different revolutionary forces, and I have relations with several of them. Perhaps some of them have the point of view that I was a foreign minister during the previous regime, and so on, but that does not mean that all revolutionary forces perceive me this way. I have very good relations with several of these forces and we meet frequently.

FP: What do you think of U.S. President Barack Obama's first term in office?

AM: In all honesty, I am disappointed.

FP: If he is reelected, do you think that this would give the United States another opportunity to show renewed international leadership?

AM: Our previous experience shows that there are no differences, or only minor differences, between the first term of an American president and his second.

However, from what I know of other candidates, should I be eligible to vote in the United States, I would have voted for Obama. Some of the other candidates have really strange ideas about Arabs. For example, look at what Newt Gingrich said about Palestine, when he stated that there are no Palestinian people. These positions are unacceptable and cannot be reasoned with.

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Interview

'We've Got Bigger Problems Right Now'

Nouriel Roubini and Ian Bremmer reveal the surprising winners and losers of the coming year, and debate whether the big brains at Davos can rescue a global economy in crisis.

As the global elite gather for the World Economic Forum this week the topic of discussion is less about creating wealth for the less fortunate or helping the developing world -- it's about saving the core. Perhaps not surprisingly, economist Nouriel Roubini says don't hold your breath, calling 2012 a year of "no progress." But Eurasia Group's Ian Bremmer is also worried about the retreat of democracy and inequality becoming a global class war. The two experts also reveal their surprising predictions for the big geopolitical and economic winners of 2012 -- and which former European finance minister shouted at Roubini to "Go back to Africa!" Excerpts below (and, for a inside look at the goings on in Davos, keep an eye on Bremmer's daily blog):

Foreign Policy: So, you're both off to Davos. And the World Economic Forum's foremost global risk this year is "dystopia." Is it all that dark?

Ian Bremmer: The folks at Davos intelligently recognize this problem, and they're calling it the great transformation -- it's a search for new models. I think it's appropriate because we're not at the new normal yet. The new models have not shown up. Nouriel and I both believe that we're presently at a G-zero, where there isn't global leadership, and that is articulating itself economically [with] the eurozone. If the Europeans don't get themselves out of this, the U.S. obviously isn't going to, the Chinese obviously aren't going to, no one else is. It's also proving itself in terms of political transition in places like Syria, across the Middle East, Pakistan, and Afghanistan. If the United States isn't going to be able to ensure democratic transition, well, who else is? They're going to have to do it themselves.

Last year's Davos fell in the middle of the financial crisis, and then Egypt hit right in the middle -- and no one knew what to do with that. Looking at it a year on, it's not like we've moved back to Frank Fukuyama and the "End of History." This has not been a year where democracy is bursting out all over; it's vastly more complex than that. Part of the reason is the existence of major economic disjunctures, but part of it is because the global backdrop is not one where Western, democratic values or the free market is actually leading the charge. In the old days, you had the International Monetary Fund and the World Bank providing money, but they also influenced economic shock therapy and political reform. Well, the Chinese have no interest in doing that. The Chinese Development Bank is putting more money on the table than the World Bank and the IMF combined.

Nouriel Roubini: Last year was one in which there was a whole series of tail risks that led to uncertainty, to volatility. They optimists said that these were just temporary shocks: rising commodity prices, the Arab Spring, the Japanese earthquake, the eurozone problems, the worries about the U.S. fiscal environment. But if you look at all these things, they're not temporary, they're not reversible, and these shocks are going to persist -- and the sources of uncertainty as well. You know, for commodities, demand is rising because of growth, industrialization, and urbanization in emerging markets. But supply is not growing as much -- for many reasons. And therefore energy and food insecurity is here to stay with us.

The problems of the Middle East have spread: Tunisia, Egypt, Libya, Syria, Yemen, now tension in Iraq, possible conflicts within U.S., Israel and Iran, conflicts between Turkey and Israel, Turkey and Cyprus, between Israel and Palestinians -- that's going to keep all prices higher. Even these natural events that are unpredictable, like earthquakes, tsunami in Japan, many of these damaging events are man-made. There is now scientific evidence that these extreme weather events, whether it's a drought in Russia, Argentina, or Texas -- or floods in Pakistan, China, or Thailand -- have to do actually with global climate change and these things can disrupt economic activity, as we've seen in the case of the Thai floods.

The eurozone problem has spread from Greece to Ireland to Portugal, to Italy and Spain, to their banks, to their sovereign. Now it is spreading to the core of the eurozone, with French banks and Belgium's banks under pressure, with the downgrade of France and Austria. It is not going away. And the U.S. saga about fiscal deficit and the gridlock between Democrats and Republicans is there to stay. This year is going to be a year of no progress. But next year, whether Obama is elected or Republicans go for Romney, neither party is going to have 60 votes in the Senate -- so one party can veto tax increases, the other can veto entitlement reform. We live in a world in of risk: market risk, financial risk, fiscal risk, sovereign risk, regulatory risk, taxation risk, and -- as Ian says -- geopolitical and geostrategic risk. And it's here to stay.

IB: When you see all of the social movements that have so grasped the attention of the press over the last year -- whether you're talking about the Arab Spring, the protests in Russia, the 180,000 demonstrations in China, or Occupy Wall Street, that's the narrative that people are talking about. It's the one that the Western press is really articulating, and the implication is that it's all about economic dislocations. It's all about rich vs. poor, the gap and divide. It's all about class. And, you know, people have made that mistake historically, and I think we're starting to make that mistake again today.

There's no question economic dislocation is a very, very big issue. But the state is very important. In fact, the state is going to be a more important actor coming out the financial crisis than it was before. I think as a consequence of that we're seeing that it's not just about intra-governmental strife, it's also about inter-governmental strife. There's a lot of nationalism that's emerging. And there's also a lot of sectarianism that's emerging. And much of those trends are distinctly anti-democratic, so even in the places where you do get transitions that come as a consequence of this economic volatility, combined with social networking, global communications, and all the rest, it's not at all clear that the direction you move is the one that the West has been hopefully predicting over the past decade.

FP: But the issue of economic inequality is certainly a factor. Is there a plan to deal with that?

IB: And I think the answer depends enormously on where you look. In the United States, not to in any way downplay the Occupy Wall Street [OWS] movement, but it's not going to lead to significant change in policy. And, frankly, the American system is immensely resilient; it's the most resilient governmental system in the world, and it's not under a lot of pressure to change. And I think despite the fact that it's going to get a lot of attention, and in some ways, it's getting more attention because the Republicans are fighting over the issue internally. Ultimately, I suspect that OWS is going to be subsumed by the Democratic Party, in the same way that, historically, the Green movement has -- and, in some similar ways, to the way the Tea Party has been subsumed by the Republicans.

But I believe that major wealth disparities that are growing in China are probably not as important as Chinese nationalism as a factor in determining where cleavages and where conflict are likely to really pop up over the coming years. And that may very well be true in Russia as well. In other countries -- in countries that Nouriel knows exceptionally well -- in places across Europe, I think the economic cleavages are huge and are becoming bigger.

NR: I don't want to overstress class factors -- nationalism, race, religion, even inter-generational cleavages. Yes, they are going to be important, but there's a broad nexus of economic and financial concerns. It's about income and wealth inequality, but it's also about jobs -- whether your children are going to be better off than you. It's about economic insecurity, about whether the benefits of social security, health care are going to be there. It's about underemployment, or unemployment. So it takes different manifestation in different places, of course. There's the Arab Spring, Occupy Wall Street, the riots in London, the middle class in Israel demonstrating because they cannot afford their homes, the Chilean students that cannot afford good education, anti-corruption in India, people saying enough of what's going on in Russia, and in China where people cannot go out on the streets to protest so they turn to the microblogs to voice anger about corruption and inequality.

So it's a whole nexus of things that have to do with economic insecurity, whether it's poverty, education, skills, the ability to compete in a global economy, keeping your old-age benefits, and then inequality. The manifestation of them can be class warfare as opposed to nationalism, or religious warfare as opposed to inter-generational cleavages between young and old. But I think there's a complex nexus of economic concerns that are at the basis for many of the things that are happening in different ways in different countries.

FP: Ian, you've both mentioned a lot of risks and fears that people have going into this year. But what are the big stories and personalities in Davos in 2012?

IB: You know, it's funny, because last year [IMF Managing Director] Christine Lagarde did incredibly well at Davos, and so did [German Chancellor] Angela Merkel. But the IMF is in a more marginal role today than it has been historically. It's weaker. And the Germans are too -- so there are more questions to what extent the Germans are going to be able to get things done, although they're clearly taking on a lot of leadership. So, I think Europe is going to be the focus of a lot of scrutiny, but they're not going to look like winners.

The United States would be a winner because the U.S. economy is doing better. But the U.S. does not typically take Davos very seriously -- especially during a presidential election, where we're talking about Occupy Wall Street and the 1 percent and Mitt Romney's 15 percent tax. So I think a lot of people will be seeing that the United States is doing better, but it won't get a lot of attention. American corporate CEOs will be feeling a lot better, if even still skittish and gun-shy, given the volatility in the world, they'll look like comparative winners.

Beyond that, I mean, you've got to look at China. They're in the middle of a leadership transition, and they're handling it incredibly competently and confidently. They're still showing very, very strong growth, though, obviously it's coming off the burn. And, yes, there are 180,000 demonstrations a year, but those numbers are going up in large part because urbanization is going up in China. Of course, there are more people demonstrating in the cities -- there are more people in the cities. But actually, given the massive transformation that's been going on in that country, they've been handling it very, very well. And I think there's a reason the Economist runs with state capitalism as their cover for the week that Davos is going to be in town. Frankly, it's because this has moved to becoming conventional wisdom.

FP: Nouriel, you've been a lot more pessimistic on China. In our previous conversations, you've said you've seen this bubble bursting soon rather than later.

NR: Well, the data in China already suggests an economic slowdown. Residential investment now is falling at an annualized rate of almost 20 percent. Net exports are weakening because export growth of China to the world has slowed down and to the eurozone periphery is actually falling and so you see the economic data for Q4 is lower and for Q1 is also going to be lower. Given that it's a transition year this year, they're going to do any necessary to maintain at least 8 percent growth to additional stimulus.

The point that we're making is that no country in the world can be so productive that you take half of your GDP every year and you reinvest it into new capital stock, whether it's real estate or infrastructure or industrial capacity. You're going to have down the line 3 problems and we see the risk this happening in 2013/2014: the first problem is that massive non-performing loans in your banking system lead to a credit crunch. Secondly, the public debt of China is in our estimates is already 80 percent of GDP and when you add all these different loans of provincial governments, policy-development banks…you name it. And third, every investment boom has ended up eventually in a hard landing -- there is no historical example of a soft landing from a 50 percent of GDP, even a 40 percent of GDP, investment boom. So we are right to worry that China's reforms that are going to lead people to save less and consume more are occurring too slowly. After all, consumption is only still 33 percent of GDP while investment is 50 percent and once the investment bust occurs and exports cannot grow because the U.S. and other countries cannot be anymore the consumers of first and last resort, then the weakness of consumption growth is going to manifest itself in a hard landing.

FP: We haven't really spoken much about the resource economies -- about OPEC, Russia -- countries that haven't been touched as much by reform and democratic movements. But if you look at the Davos agenda, "enabling green growth" -- which is perhaps code for disengagement from these strong resource economies -- is far down the list. Why?

IB: I think "down the list" is code for we've got bigger problems right now; we can't deal with this. I mean, in the United States, how much are we talking about climate right now? In Japan, they've got to get energy, right? Fukushima means no more nukes. Germany is having that problem; even France is having that debate. China -- the world's largest carbon emitter -- is also the one country that doesn't have to worry about regulatory problems or the safety of nuclear reactors. So the consequence is that they can continue to build with reckless abandon, but they're still going to be overwhelmingly dependent on dirty coal.

There is a lot more geopolitical risk around energy this year. The reason for that is that the Middle East is more problematic. Iraq is still the most exciting story in terms of new oil coming on to the markets this year. But Iraq is becoming much more unstable, and there's a potential for more fragmentation through sectarian fighting as the United States has left, and [Prime Minister] Nouri al-Maliki's center will have a hard time holding. That's a real risk. Add to that the likelihood of provocation from Iran, and between Iran and Israel is absolutely going up.

All of that is implying there's not a lot of spare capacity in the world, even with the comparative slowdown, now that the U.S. numbers are coming back up a bit. Clearly, now you are going to see demand increase, and there's going to be a squeeze on global energy. That, of course, is continuing to provide an awful lot of cash for the Russians, for the Saudis, and for the other Gulf economies, and they aren't being hit very hard, and they're not going to be. You know, unemployment in Saudi Arabia is structurally different than unemployment in Egypt, there are just lots and lots of jobs that Saudi men are not prepared to do, and that go to immigrants into Saudi Arabia -- Bengalis, Pakistanis, Filipinos, and the rest. The Saudis have tried "Saudization," it's worked in neighboring Oman, but it's not working very well in Saudi Arabia.

FP: Nouriel, what about the bottom billion? Previous Davos's have seen Bono parading up there, getting developed nations to commit money to focus on poverty. Is this just not the time? Does the insecurity in global markets mean that this goal has to be put aside?

NR: Well, people don't talk about it as much when the new human development goals have not been achieved. But what has happened in the last year is that people have understood that you need growth but you also need inclusive growth. And economic and financial insecurity combined with rising inequality across countries and within countries can be a major source of social and political instability.

So, we cannot ignore this issue of inequality. We must make sure that growth is inclusive -- in China, in India, in Latin America -- and that we do create opportunities for young people in Europe and United States to have jobs and succeed in life. We have a huge amount of social and political instability. The issue you raised is usually couched as the bottom of the bottom, meaning the starving people in sub-Sahara Africa. But there is a bigger issue because now we have several billion people in the world working in advanced economies, in emerging markets, who feel very insecure about their own future.

And unless we're going to address that, everything that happened in the last year -- from the Arab Spring to Occupy Wall Street to riots throughout Europe -- is going to get worse. Even in sub-Saharan Africa, you could start to see a lot of social and political instability. We've seen, for example, what happened in Nigeria, when they started to phase out subsidies on oil, and prices went up by 200 percent. Which is why there are now riots in the streets.

So we have to think about these issues; we have to discuss them and figure out how to address them. Not only are a lot of people starving, but actual social and political instability comes from potentially middle class people who see their hopes being dashed.

FP: Ian, what's the biggest winner of the coming year?

IB: United States.

FP: Really?

IB: Oh, absolutely. First of all, it's all a relative game. If you're concerned about the euro, the dollar looks really good, and that gives us a lot more flexibility in this country. I'm a believer in American entrepreneurship. I'm also a believer in quality of life, and when things start falling apart, people look to the U.S. more. The reason [President Barack] Obama's Asia trip went so well is because when you pull out, everyone is like, ‘Oh my God, we need these guys.' If there was anyone else filling the breech, it could be a different story; in many parts of the world, there isn't.

FP: So that makes the United States a leader of a last resort?

IB: Well, hey, "leader of last resort" in Libya worked really well for the United States. I mean, you managed to get rid of Qaddafi, you didn't lose a single troop. So increasingly, the United States is not the global policeman; it's not going to be doing everything. You know, without any question, "leader of last resort" is less problematic for the U.S. than it is for anybody else.

Beyond that Brazil is looking good. They've got the World Cup and Olympics coming up, and the Brazilians are hosting the Davos banquet this year, which they've never done before. It's their time. [President Dilma] Rousseff got rid of a host of ministers for corruption and she's shown herself to be competent and capable, not just an emerging market leader. She's much more able to balance between the United States and China, balance between being a BRIC and being a country that's been a safe destination for capital for a long time now. Plus, they've got massive commodity wealth and more coming from the pre-salt offshore. This might be Brazil's year in Davos.

FP: Biggest loser? Or biggest retrenchment? Biggest country taking a step back?

IB: Europe's is still going to look like big losers this year because they're not coming out of crisis. At best, they're muddling through. And I think "muddle through" is going to continue to happen. So it's not looking pretty, and that's particularly true for the countries in the periphery. This is also not a good year for Russia. You know, I don't agree with the Fitch downgrade, personally. I think that if anything, after Russian elections, [Prime Minister Vladimir] Putin might actually say, "Oh, I need to take governance a little more seriously, bring some more serious people in." But clearly, of all the BRICS, Russia doesn't deserve to be there -- they really don't. They're so consolidated around a single individual; their governance is so poor, so opaque, so corrupt. You've had years in the past where [President Dmitry] Medvedev and Putin have gotten up and they've given really great speeches. This time around, everyone knows that they're running into elections that are going to be a bit of a farce; that those demonstrations are not going to matter very much. Russia has been left behind, despite all its commodity wealth. It really hasn't done anything else right compared to the other BRICS. They're a big loser.

FP: Nouriel, do you concur?

NR: I agree that Russia might not be left among the BRICS. Actually, I wrote an article about a year ago saying that maybe they should drop Russia and add Indonesia. I felt quite positive about Indonesia when I visited there recently, and I am going to go soon again. Another rising power outside of the BRICS is Turkey. It is rising economically and flexing its diplomatic muscle throughout the Middle East. It could become a model, over time, for a successful, moderate Islamic state. Plus, it has taken an assertive role towards Syria, towards Iran -- it may be able to help the United States in many ways in the Middle East in spite of the current tension that exists between Turkey and Israel. So I would say Turkey is a relative winner.

But, certainly the periphery of the eurozone is the big loser. You know, at Davos 2006, I was in a session together with [Guilio] Tremonti, who was then the finance minister of Italy, and [European Central Bank president] Jean-Claude Trichet, on the future of the eurozone. And I dared to say then, in 2006, that if the divergences in the eurozone were to continue, in five years Italy and Spain and the periphery might end up like Argentina -- in default and currency crisis. Tremonti got very angry and shouted at me while I was giving my talk, "Go back to Turkey!" I happened to be born in Turkey, but it meant, "Go back to Africa" or to some other underdeveloped country.

Now, five years later, what I predicted is happening: It's a disaster in the eurozone, Greece is collapsing, and Turkey is doing well. And I think the Europeans made a big mistake in slowing down the negotiations about having Turkey -- a young, dynamic country -- join the European Union. And that's the world we are in right now.

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