Egypt's Defense Minister Abdel Fattah al-Sisi is seen during a news conference in Cairo, Egypt,  in this May 22 2013 file photo.  Picture: REUTERS
Abdel Fattah al-Sisi in May 22 2013. Picture: REUTERS

ANOTHER evening, another power cut at Raouf Fayez’s jewellery store in Cairo’s sprawling Shoubra neighbourhood.

Flanked by darkened shops, his window display is empty of the gold ornaments that Fayez hasn’t felt safe showcasing since the 2011 uprising against former Egyptian president Hosni Mubarak. Overlooking the scene from a poster on a neighbour’s balcony is the man who Mr Fayez hopes can finally make it all better: Abdel-Fattah al-Sisi, who shed his military uniform last week and stepped down as defence minister to contest next month’s presidential vote.

"I am sure he’s aware of all the problems and has studied them," Mr Fayez said in the darkness. "It will take a lot of time, but I am confident that he is able to reform the country on all fronts."

The expectations that are set to carry Mr Sisi into the top job may weigh on him once he’s there. Egypt’s political struggles over the past three years have had a devastating effect on the economy, with growth stalled and unemployment rising.

There are few signs of a revival since Mr Sisi led the overthrow of elected Islamist leader Mohamed Mursi last year.

"There’s a sort of desperation in the investing of hope in this one man at this moment that I think is quite problematic," said Michael Wahid Hanna, senior fellow at The Century Foundation, a New York-based research institute. "Things aren’t going to get better very quickly."

Bets that Mr Sisi will end Egypt’s turmoil have helped drive stocks higher, though the benchmark index has pared gains since he declared his candidacy. It’s still up almost 60% since Mr Mursi’s fall.

The economy hasn’t managed a similar rebound. The government’s growth target for this financial year was 3%, well below the average of about 5% in Mubarak’s last decade, and two ministers have said it won’t be achieved. That’s even after the government announced plans to boost public spending, and the central bank cut its key interest rates three times in the second half of last year.

Unemployment has exceeded 13% and foreign reserves have plunged by more than half since the end of 2010.

Egypt has a lot of needs and few resources, said the senior researcher at Al-Ahram Centre for Political and Strategic Studies in Cairo, Ziad Akl, by phone. The elevation of Mr Sisi to savior status "raises the ceiling of aspirations without increasing his ability to find solutions."

While Mr Sisi has said little about his economic plans, he has lamented that subsidies and debt servicing leave little money for spending in areas like health, education and housing.

Egypt’s budget deficit grew to almost 14% of gross domestic product in the fiscal year that ended in June, with fuel subsidies alone accounting for about 20% of spending, and the government predicts a 12% gap in the current one. Countries need "altruism" to progress, Mr Sisi said at a recent conference. "A generation or two may be subjected to injustice so that the other generations can live."

The comments prompted a jab from political satirist Bassem Youssef. "Does the economic platform of Mr Sisi centre on ‘bear with us’ and ‘tighten the belt’?" Mr Youssef wrote in a column. If the public is asked to adopt austerity, "you’ll be finishing off the purchasing power in the country and leading it into recession".

Defusing a tense political climate and reducing violence is one of the keys to recovery. World Bank data show that net foreign direct investment was negative in 2011 for the first time on record. Tourism revenue fell by 40% to $6bn last year.

The Carnegie Endowment for International Peace said in a report last month that the period since Mr Sisi’s removal of Mr Mursi has seen "a use of violence that is unprecedented in Egypt’s modern political history". It cited estimates that more than 2,500 people had been killed in protests and clashes, and several hundred more in terrorist attacks.

"I don’t expect the political turmoil to disappear once he becomes president," said Samer Atallah, assistant professor of economics at the American University in Cairo. "You cannot use repression to achieve political stability," he said.

The government, which is also battling militants in Sinai, says it is fighting a war on terror and blames Mr Mursi’s Muslim Brotherhood for much of the violence, a claim the group denies.

As well as the support of many ordinary Egyptians, Mr Sisi enjoys backing by Egypt’s army and other areas of the state apparatus that wasn’t accorded to Mr Mursi, and that’s essential to achieve reforms, Mr Akl said.

Financial support from friendly Gulf countries, which oppose the Brotherhood and have already pledged billions of dollars in aid since Mr Mursi’s fall, may also help buy Mr Sisi time and make changes that will bolster the economy.

Before he stepped down as defence minister, the army revealed a partnership with UAE-based Arabtec Holding to build 1-million homes over five years, touting the plan as part of a Sisi initiative.

"The grip of the armed forces on the economy is strengthening, and Gulf aid to the current Egyptian leadership is becoming more assertive," said Islam Al Tayeb, a research analyst at the International Institute for Strategic Studies. While that may help Mr Sisi for now, "unless the perilous economic situation is dealt with, there will be a growing risk of discontent when the masses become disillusioned."

Back in teeming Shoubra, while Mr Fayez, the jeweller, is optimistic that Mr Sisi can put such advantages to good use, one of his neighbours is more circumspect.

Mohamed Mahmoud said he had not decided who to support for president. "Things will be worse in the summer, a complete disaster," he said as he turned away a prospective customer from his key-making shop because of the power cut.

Mahmoud said that while he’s been affected by the blackouts and inflation, "there are people who are suffering more than I am." If the next president doesn’t improve their lives, "it’s these people who will turn against him".

Bloomberg