Taher Helmy* explains how a new philosophy of governance can extract Egypt from its current state of stagnation For decades, there has been a tacit understanding between Egyptians and the government about who was in charge and who wasn't. This understanding is arguably rooted in traditions typical of a central planned/ socialist system that favour paternalism as a means of organising society. The problem is that when the state runs almost everything and maintains tight control, the people tend to assume the role of children. It's one thing to obey the law; it's another to relinquish the benefits, responsibilities and duties of citizenship. That's when a nation stagnates. The message being sent by the new government is this: we aren't children anymore, so it's time for the old relationship to change. Egypt -- both government and people -- has reached a new stage in its development. A free market economy demands a new social contract, one that emphasises participation -- political as well as economic -- and mutual obligation, where everyone bears the consequences of their actions. The basis of this social contract is nothing less than a new philosophy of governance built on a new legislative and institutional framework. If successful, it would remove the remnants of a system that no longer matches our aspirations. The private sector offers illustrations of both the old and the new approaches. Private companies have for years been obliged to accommodate government intervention in many aspects of their daily operations, which limited their ability to act efficiently in a fast-moving, competitive market. Government interference in businesses resulted in extensive bureaucracy that contributed to the downgrading of Egypt's investment environment. Now, however, we're facing an era of scaled-back governmental intervention, wherein the state serves primarily as a supervisory and coordinating authority. This is the essence of deregulation or simplification: a reduced role of government that frees the private sector to act. The decision to grant this freedom by reducing legal restrictions and bureaucratic procedures not only means empowering the private sector, but also rendering it more accountable. With greater freedom comes greater responsibility. Deregulation will inevitably result in an increase of litigation, that is to say more disputes between the different players, between corporate competitors; between corporations, citizens and shareholders; and between consumers and goods producers. Egypt's judicial system is therefore directly implicated in the success or failure of the latest reform measures. If the private sector is to become self-regulating, and this is the goal of every market economy, then participants must have recourse to an efficient and equitable judiciary. Beyond this, we may learn from the mistakes of those who have taken this course of action before us. In the US corporations still find legal loopholes that result in abuses of power. Nevertheless the scandals associated with Enron and WorldCom, for example, instigated improvements to the US corporate and securities laws. Indeed, a strong legal system, if equitably enforced, is the best deterrent to potential abusers. Such a system must be subject to constant review and upgrades to meet new challenges as they arise. Recent reform measures such as corporate tax cuts (down to an unprecedented 20 per cent), customs reductions, and the establishment of a new ministry for investment working to simplify legal procedures and lift legal restrictions, all reflect a new philosophy and set the tone for a more self- determined future. If these measures succeed, the private sector would no longer be able to justify lacklustre performance by referring to a stifling bureaucracy or other government-related constraints. Once the private sector finds itself in a position to act, it can begin by making itself accountable to both the government and society. One thing seems sure: if government reform initiatives are taken for granted, they will fail. I believe that success rests on our ability to act honourably to build trust and confidence in a shared future. That is why the public must be apprised of the terms and conditions of this new social contract and the media must be mobilised to convey them consistently in a language that every ordinary citizen can appreciate. If, as a result of reform, incomes do increase and freedoms improve, people should understand the responsibilities that come with the changes -- such as paying taxes and raising their standards for doing business with each other. They must also understand the opportunities for a better livelihood that are inherent in this new social contract. But a social contract is only valid if and when everyone knows the full story, and the exact role each party is expected to play. If the goal is a better life for every citizen, and more participation in decision-making processes, the citizen's role as partner must be well defined in order for it to be executed properly. Raising public awareness is itself a major goal, one that falls squarely on government, political parties, the private sector and every branch of civil society. If ever there was a chance to prove that by diligence and ethical behaviour a society could be transformed -- that chance is ours and it is now. Egypt has reached a turning point. * The writer is a prominent lawyer and the president of the American Chamber of Commerce in Egypt.
