Train Wreck Along the Nile

The battle over Egypt's parliament is more than just a legislative disaster. It's a legal nightmare.

A little over a month ago, I surveyed the array of lawsuits and other legal pretzels littering Egypt's political landscape and wrote a commentary titled "Judicial Turbulence Ahead in Egypt, Fasten Your Seat Belts." In June, when the country's Supreme Constitutional Court forced the dissolution of parliament, that title seemed prescient. Now that newly elected President Mohamed Morsi has summoned that Islamist-dominated parliament right back into session, it is clear that I may have erred seriously in my choice of transportation metaphors. We no longer have a bumpy airplane ride. Instead we have a train wreck in slow motion. Well, actually, forget slow motion.

Let's begin by reviewing what Morsi did -- not that it will help clarify where things stand. Instead it will make clear that at this point, significant actors are no longer acting with any clear strategy or even a defined set of tactics. They seem to be lurching ahead, grabbing any tools conveniently available to advance their short-term interests. If we want a gentler metaphor than a train wreck to describe Egyptian politics, we should realize we are not watching chess or even checkers -- this is a game of bumper cars.

Here's how we got into this mess. Last year, the ruling Supreme Council of the Armed Forces (SCAF) issued an electoral law that allowed for two-thirds of the parliament to be elected by party lists. The other one-third was supposed to go to independents. Because civilians feared that old regime elements would be able to dominate the independent races, the SCAF agreed to permit members of legal political parties to run for those seats as well. One judge from the Constitutional Court said he spoke up at the time that this would cause legal problems, but he was ignored.

What was the problem that only constitutional cognoscenti saw early on? The Constitutional Court had struck down similar systems in the past because, it said, independents were squeezed out in the process. When the case finally got to court last month, the Constitutional Court -- basing itself on its previous jurisprudence -- found the entire parliamentary election system unconstitutional, leading the body to be dissolved.

Was the court acting at the SCAF's behest? Probably not in terms of the substance of the ruling -- those who know the court best were not surprised by the ruling, only by the speed. The justices were very proud of their past jurisprudence on the subject and had taken the trouble to anchor past rulings broadly and not in any specific language, so the change in the constitution did not change its attitude toward the electoral system. What raised eyebrows was the timing: The court had taken much longer to issue its rulings in the past. This time, however, the haste may have owed more to a Tombstone, Arizona, system of justice: The court was drawing its weapon before the parliament could pull out its more potent one (of gutting the court through legislation).

If the SCAF didn't instigate the ruling, it certainly acted on the ruling with alacrity. Immediately following the verdict, it ordered the parliament dissolved and locked up the building. It also amended Egypt's interim constitutional order to take on the parliament's legislative authority, clip the soon-to-be-elected president's wings, and prevent any attempt to elect a new parliament anytime soon. The intent was clearly to correct the flaw that the SCAF itself had inserted a year earlier: Had it not acted as it did, according to the SCAF's own rules, its authority would have ended when the new president took office.

So what did Morsi do? He canceled the decree dissolving the parliament. Can he do that? His arguments do have a veneer of plausibility -- but only a fairly thin one. First, he says he is not overturning the court's ruling. That ruling didn't dissolve the parliament; it only struck down the law by which the parliament was elected. That is all that the Constitutional Court can do. This may seem like splitting hairs, but in Morsi's eyes, it means that it was the SCAF that actually implemented the ruling. Now Morsi -- replacing the SCAF, which had been serving as acting president -- has canceled that implementation.

In fact, his legal advisor Mohamed Fouad Gadallah claims that Morsi had almost no choice: Nobody has the right under the interim constitution to dissolve parliament. So that body is still there, and necessity requires that it continue to sit with its full authority until a new one is elected. Morsi is generously ordering elections for the new parliament to be held as soon as the constitution is approved, which is what the SCAF itself has said is the right time for new elections. But the old parliament, according to the president, stays until that time. His decree cited all kinds of domestic and even international sources for its authority, but pointedly refused to mention the SCAF's supplementary constitutional declaration last month.

So Morsi seems to be picking a fight with both the judiciary and the SCAF. What's the Muslim Brotherhood's strategy for coming out on top? And how are its various antagonists working to stop it?

The Brotherhood's game plan is hard to parse because its modus operandi in the past was to elbow its way ahead -- hard enough to annoy others but not so hard that it would unite all its opponents. It has shown plenty of clumsiness to date, but the movement seemed to be showing its cuddlier side over the past week -- it had just won the presidency and wanted to show that it could govern. Indeed, Morsi's post-election rhetoric was not simply designed to reassure political opponents, but also to reassure the Egyptian state. In a speech at Cairo University on the day of his inauguration, he had some conciliatory words for the state's institutions: "To fully preserve the country's independence and territorial integrity," he said, "it is necessary to keep up the armed forces, police, and judiciary, and to protect all the people of Egypt." It was a strange experience -- imagine if a U.S. president took office reassuring the Joint Chiefs of Staff, FBI agents, and the federal bench.

But now the Brotherhood finds itself instead in a potential cold war with a host of institutions of the state it is now trying to lead -- not simply the SCAF and the judiciary, but also the official Islamic religious establishment and the state-run media. The move is far more confrontational than most Brotherhood watchers expected and seems to be based in part on a principled insistence that those who won the election should be entitled to govern -- a kind of naked majoritarianism that Egyptian state institutions seem almost designed to resist.

What of the judiciary? While a few individual judges sympathize with the president, the bulk of them will likely circle the wagons to protect their colleagues. Indeed, Morsi's decree prompted Egypt's Judges' Club to shoot back with a 36-hour ultimatum for the president to retreat on his decision. "Otherwise, we will have to make much firmer responses," the head of the club warned. What those are as yet remain to be seen.

What can judges do other than issue rulings? Perhaps not much, but in Egypt that can mean a lot. The justices of the Constitutional Court stand apart from the judiciary in many ways, but most of their colleagues in other courts -- most notably the administrative courts -- will take up their cause. And they can wreak havoc, dissolving the constitution-drafting body the parliament put in place, moving against the Islamist-dominated upper house of parliament, encouraging legal moves against the Brotherhood (which has no legal status itself), and even dissolving the Brotherhood's legally recognized political arm, the Freedom and Justice Party. And, of course, the courts can simply ignore every single action the reconvened parliament takes.

And the SCAF? Its response so far has been circumspect, but the stakes are high. Its June supplementary constitutional declaration is being ignored, its assertion of legislative authority is being challenged, and the constitution writing process is proceeding -- at least so far -- with the military having few levers to affect the outcome as long as the courts leave it alone. The military's autonomy is safe for now, but its ability to shape the political process over the longer term is suddenly much less certain. If there is any time for the SCAF to learn subtlety, this may be the moment. The threat posed to its interests by Morsi's action is real but not necessarily immediate, and it might make most sense simply to wait for a misstep or other opportunity.

Other political forces -- Egypt's motley assortment of nationalists, leftists, liberals, and others outside the Islamist camp -- are caught in the middle by Morsi's move. Those with seats in the parliament certainly would love to have them back, but they hardly want to stumble into a position in which both the legislative and executive are in Islamist hands. They are already reacting by lurching in several directions at once, unable to formulate a coherent position toward Morsi's decree.

A collision between Egypt's powerful political forces is not simply inevitable -- it is occurring. Whether it is a train wreck or bumper cars remains to be seen. The first better describes the noise and suddenness of events. The second better describes the limited damage thus far: Nobody has been hurt, and in fact, each collision has led only to a further one. So far, Egyptians have been fortunate enough to come out of most political conflicts jostled and confused -- but largely unscathed. They will probably do so this time as well. But if various political actors continue to choose confrontation over consensus, the country's luck might eventually run out.

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America's real outsourcing crisis isn't the one Obama and Romney are arguing about. It's the talented immigrants who are prevented from setting up shop in America.

The U.S. presidential election quickly seems to be turning into a battle of "who-outsources-least." President Barack Obama has taken to referring to Republican candidate Mitt Romney as an "outsourcing pioneer" during his tenure at private equity firm Bain Capital. The Republican National Committee has countered with a new website accusing Obama of enriching foreign firms and workers with U.S. stimulus money.

The concern over outsourcing certainly hits a political nerve among the electorate -- and it makes sense during a time of high unemployment. But if the campaigns want to really focus on what accounts for America's sluggish economy, they should spend less time focusing on who is sending jobs overseas and more on who can actually bring skilled workers into the United States -- or keep them there. America's real outsourcing crisis is not firms moving manufacturing to other countries, but the thousands of potential entrepreneurs and job creators who are prevented from setting up shop in America because of immigration laws.

After years of stalemate, recent weeks have seen a number of developments give hope to advocates of U.S. immigration reform. First, Obama stirred the pot with an executive order on June 15 calling on federal law enforcement to stop prosecuting the offspring of illegal immigrants -- children who likely would have qualified for the perennially politically challenged DREAM Act, which would establish a path to citizenship for upstanding people brought into the country by illegal-immigrant parents. Obama's order at least ensures that these young people can remain in the United States and work without fear of deportation.

Then, the U.S. Supreme Court struck down key parts of Arizona's SB 1070, a draconian piece of legislation that turned the entire state into a "stop-and-frisk" zone for anyone unlucky enough to possess nonwhite ethnic facial features. The law also forced the hand of law enforcement agencies, essentially mandating arrest for anyone who failed to produce the precisely required papers. (In fact, a similar law in Alabama snared Japanese and German automotive executives tending their stateside factories. It made for a funny news story, but incredibly shortsighted economic policy.)

However, the most important reason to revisit immigration reform has largely remained off the political radar: namely, that high-skilled immigrants could provide a tremendous boost to the U.S. economy in a very short period at virtually no cost to taxpayers. It's taken as a truism in American politics that start-ups and small companies drive the majority of the country's new economic growth and job growth. The pundit class has repeated ad nauseam that the economy and unemployment numbers will likely make or break Obama's reelection campaign. But frozen by fears of a nativist backlash, both Obama and Romney have refused to discuss immigration as an economic issue.

Maybe they should. Research indicates that immigrant entrepreneurs have achieved astonishing inroads in launching technology start-ups in the United States. Foreign-born immigrants dominate the ranks of technology entrepreneurs in Silicon Valley. In U.S. postgraduate programs in hard sciences, foreign-born students comprise more than 50 percent of classes focused on science, technology, engineering, and mathematics (STEM). And these students want to remain and build businesses in America -- if the country lets them. So it seems like a no-brainer. Let in more high-skilled immigrants to stoke the U.S. economy and pander to a fast-growing political base. In fact, the only constituencies that arguably would not benefit from America's allowing in more skilled workers would be countries like China, India, and Brazil, which are currently benefiting the most from the legions of U.S.-educated and U.S.-trained workers who are returning home and boosting innovation and entrepreneurship there.

A simple set of changes to existing immigration policies would go a long way toward driving immediate entrepreneurial growth. The United States should make it easier for the more than 500,000 highly skilled foreign workers who are in the country on work visas and who are trapped in "immigration limbo" to start companies and stay permanently. It should also make it easier for foreign entrepreneurs in high-growth sectors (technology, biotech) to relocate to the United States from abroad. And the U.S. government should make it easier for advanced-degree holders in science- and technology-related disciplines to secure the right to work in the United States.

In my research I have found that, between 1995 and 2005, over 50 percent of technology companies started in Silicon Valley included at least one co-founder who was foreign-born. Nationwide, 25 percent of technology companies founded in this period had a foreign-born co-founder. An even higher percentage, in both cases, had a foreign-born person as a member of senior management. The largest percentage of these co-founders came from India and China (both mainland and Taiwan). These immigrant-founded companies generated $52 billion in revenues and created 450,000 jobs over this 10-year span. They likely paid billions of dollars into U.S. government tax coffers as well.

Less than 2 percent of these entrepreneurs came to the United States specifically to start a company. Most came for work or family reasons. And already there are more than 1 million skilled immigrants and their families currently residing in the United States on temporary work visas. They are already acclimated to American culture and, with immigration reform, could be freed to start companies. But present laws don't even allow them to work for start-ups that they found.

Students are increasingly seeing greener pastures abroad and are returning to their home countries after they graduate. This is largely because it has become harder and harder for them to secure work in the United States after they get their degree. In effect, the country is training students -- often with government subsidies and grants -- and then telling them to go to other countries to generate economic value or start a company. The United States has a pool of skilled workers who would be the envy of countries the world over and is telling them they can't stay. New York Mayor Michael Bloomberg wasn't exaggerating when he described the U.S. immigration policy as "national suicide."

It's worth examining how the system works in other countries. If a tech start-up wants to launch in Chile, the government rolls out the red carpet. Entrepreneurs get $40,000 grants, free office space, and expedited visa clearance. There are no strings attached -- provided the entrepreneur relocates to Chile and spends at least six months launching his or her idea. Australia, Britain, Canada, Germany, and Singapore all offer variations on this theme as part of aggressive efforts to recruit entrepreneurs. For its part, the Chinese government has pursued a particularly aggressive effort that includes awarding coveted city residency passes, free ownership of apartments, prestigious university posts, and outright cash grants to highly skilled returnees. Contrast this with Silicon Valley, where many foreign-born entrepreneurs spend a considerable amount of time, energy, and money worrying about their immigration status and the whims of the Department of Homeland Security (which has subsumed the immigration enforcement functions of the U.S. government).

The net effect is simple. Entrepreneurs may still prefer to locate in the United States due to the tremendous pools of accomplished workers and intellectual capital. But more than ever before, they are considering relocating their operations to, or founding their company in, other countries, which have made it clear there are real options beyond the erstwhile Land of Opportunity.

Poster children for this trend are emerging. Facebook co-founder Eduardo Saverin may have garnered notoriety as a tax dodger when he renounced U.S. citizenship prior to the company's initial public offering. But Saverin, who has lived in Singapore for some time, countered that Singapore is actually an environment more conducive to launching Internet companies focused on Asia. He's absolutely right.

The United States can begin to stop the bleeding by making it easier for skilled immigrants who are already in the country to stay -- let's think of it as a kind of white-collar DREAM Act. The fastest path to economic development is with the existing class of resident immigrants. And smoothing the road (without subsidies) for technology start-ups and their foreign-born founders or workers exerts minimal societal cost. Putting these reforms in place could go a tremendous way toward boosting the U.S. economy. In fact, we'll see the impact within just a few years. You wouldn't think that making these smart choices requires a visionary leader -- but today it does.

In an ideal world, the campaign debate would not be about how to keep immigrants out and jobs in, but how to bring in the people who can create jobs in America.

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