Fawaz Gerges, Founding Director of the Middle East Centre at the London School of Economics, speaks to Arabic Knowledge@Wharton about how Islamists are really interested in becoming the Arab World’s new capitalists.

When the Muslim Brotherhood took power in Egypt, there was fear that draconian social measures would be pursued, thereby killing the country’s important tourism industry. Instead, the party has attempted to portray a moderate face, and more aggressively, tout itself as an administration willing to cut lucrative deals. While the politics of the Brotherhood remain in question following last week’s mass protests outside the American embassy in Cairo, earlier this month Egyptian president Mohamed Morsi met with US executives, promising economic reforms and to work to develop a better investment environment in the country.

Morsi’s efforts are part of a trend by Islamists to take a new economic role in the region, says Fawaz Gerges, Founding Director of the Middle East Centre at the London School of Economics and Political Science. For years Islamists cultivated social organizations and political machinery, Gerges notes, and now see the chance to leverage them into economic power.

Gerges is a noted author and scholar on the Middle East, Islam and terrorism. His most recent book, Obama and the Middle East, examines American foreign policy in the Arab World in the current administration. His other books also include The Rise and Fall of Al-Qaeda and Journey of the Jihadist: Inside Muslim Militancy. In addition to guest writing editorial columns for several countries’ prominent newspapers, Gerges is regularly invited on television to discuss the region.

He spoke with Arabic Knowledge@Wharton about how Islamists are really interested in becoming the Arab World’s new capitalists. As Gerges notes, “What people in the West don’t always know is that the Islamist movement is a bourgeois movement. Islamists are basically merchants, they’re traders. They believe in the whole idea of wealth accumulation and free-market capitalism. They have transformed over the years and in fact, gone out of their way to really assure the Western powers, they are all for free-market capitalism.”

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: You recently gave a talk at the University of Pennsylvania titled, “Transformation in the Middle East.” What was the gist of the lecture?

Fawaz Gerges: The big point I tried to make is what has happened in the Arab World in the last year or so has represented a pivotal moment in the Middle East, a revolutionary point. I compare what has happened with the Arab Revolution with the French Revolution in the late 1700s. I also caution students not to be blinded by the battles. Once the dust settles on the various battlefields, there will be a great deal of turmoil. There will be a great deal of upheaval. You’re basically trying to restructure the entire authoritarian order that has been in place in the last 50 years. This will be prolonged. This will be costly. This will be difficult. And there will be setbacks.

One point is very clear. A new world will be born, and the new world will be entirely different from the Western world. Of course, we don’t know how inclusive, how democratic or how genuine it will be. I think this will be up to the people in the region to determine what sort of government they will establish.

The reason why I think it’s a very historical and revolutionary moment is because a psychological rupture has taken place. People feel they’re empowered and in charge of their destiny. For the first time in many decades, the Arab people, who have been oppressed, politically and economically devastated, feel a sense of empowerment. And the reason they won’t return to the old world order is this feeling what they call psychological rupture, which is really a sense of empowerment.

Arabic Knowledge@Wharton: With the rise of power of the Muslim Brotherhood, will they be part of the solution for the new Middle East after the Arab revolutions?

Gerges: It was not the Islamists, particularly the Muslim Brotherhood, who were the spark of the revolutions. As you know, they were the young men and women, human rights activists, professionals, nationalists and leftists. Those were the people who really triggered the revolution. The Islamists got involved very latently. In almost every single country, the Islamists will likely reap the fruits of these particular revolts.

There are many reasons for this. The Islamists have been on the scene for many, many years. They have established very potent, well-organized political machines. They have resisted the authoritarian rulers for many, many years. They have suffered a great deal. They were persecuted. They have positioned themselves as the alternative to the existing order. They have invested considerable social investment in welfare and education.

The Muslim Brotherhood and Islamists have, if you want to see them in terms of American politics, mastered the art of local politics. Even though they did not trigger the revolutions, they will take ownership of the revolts. Because in fact, they are cashing in on the social investments they have made over the last four decades. One of the major points I made in the lecture and in my writings is that most of the Islamists — what I call Islamic modernists or centrists — accept the rules of the political game. They basically accept democratic practices. They believe the will of the people is the foundation of political legitimacy. So even though the Islamists are reaping the fruits or the benefits of the revolutions, they are basically hijacking the results. They know better and have evolved and have come a long way in the last four decades.

Arabic Knowledge@Wharton: As you say, the Islamists were not the ones who triggered the revolution, rather it was the nationalists and leftists and human rights activists who triggered the revolution. So why haven’t they gotten it together to play a bigger role in the new governments?

Gerges: It’s very simple. First of all, they’re not institutionalized. They’re not organized. They’re not as mobilized and active as the Islamists. They’re newcomers to the scene as political activists. Also, the Islamists have been around for many, many years. They have invested in social capital. They have invested in welfare organization. They’re doctors, engineers, and teachers. During the Arab revolutions, they provided the needs, the food, the clothes, and medical care. They’re seen as part of the local scene. They’ve also positioned themselves as a shadow government in exile.

That’s why when the elections took place, it was quite natural the Islamists were there. They had the machines. They had everything. So we’re not surprised actually they’ve managed to do as well as they have. The question is, “Will they be able to deliver the goods?” That’s the challenge. And the jury is out.

That’s why I think it can be very misleading to use the current elections as a yardstick for the forthcoming election. In Indonesia, in 1999 after the revolt, the Islamists made similar gains. Yet in the following election, they did miserably. They were not seen as competent and active enough. What I’m trying to say to you is the jury is out. We shall see whether the Islamists have what it takes.

Arabic Knowledge@Wharton: The younger 1970s generation of the Muslim Brotherhood have split from the Old Guard. Will they gain enough power to exert influence on Egypt so that a secular state can exist, which the Turkish prime minister had publicly said he hoped for?

Gerges: At the end of the day, we will see what kind of system will emerge. If you’re talking about a secular country like what exists in the West, that’s not going to happen. I think they’re going to find their own systems. I don’t think they’re going to call for an Islamic state because none of the Islamists have called for an Islamic state. What they’re really calling for is abiding to Islamic law as a source of legislation, as opposed to the only source of legislation. What they’re going to have is very similar to what exists today with minor, minor changes. I don’t think we will expect a radical shift. I think the Muslim Brotherhood and En-Nahda party in Tunisia and [Islamist Justice and Development Party] in Morocco are happy with what exists. They have made it very clear that they have no intention to really scare people off. They have no intention of changing things because the electorates don’t want it. They realize they have their pulse on public opinions. They’re not really as dumb as you think.

Arabic Knowledge@Wharton: You recently wrote for openDemocracy that Islamist parties are becoming “service” parties, promoting economic growth, job opportunities and are willing to be transparent. Do you think the people’s desire for economic stability will vote Islamists into power or a desire to return to religious code of conduct?

Gerges: One of the points from the article is they really are the new capitalists. What people in the West don’t always know is that the Islamist movement is a bourgeois movement. Islamists are basically merchants, they’re traders. They believe in the whole idea of wealth accumulation and free-market capitalism. They have transformed over the years and in fact, gone out of their way to really assure the Western powers, they are all for free-market capitalism. They believe in free trade and growth. Across the board — in Egypt, Tunisia, Jordan — Islamist parties have really become service parties. The most critical challenge they have is the economy. They also realize they live and die on whether they can deliver jobs and bread and butter. A bigger point I was trying to make is they are ideologically disposed toward free-market capitalism. They are capitalists. [A lot of the Western media] focus on the rhetoric as opposed to seeing what kind of policies they will adopt on the economy and foreign policy as well.

Arabic Knowledge@Wharton: In much of the Western media, there seems to be a lot of focus on returning to a religious code of conduct.

Gerges: No. Of course, you see a thin layer of rhetoric. Once you really peel off rhetoric, what has happened within the Islamic movement, they have voices that call for justice and socialism and distribution of wealth. And in fact, all the capitalists in the Islamic movements now really dominate the decision-making process. And that’s why I call the Islamic movement really a bourgeois movement. It’s a movement that comes as a surprise to world pretension. If there is one slogan that captures what Islamists believe in is this: Islam is good for business. Islam and capitalism are really reinforcing one another.

Arabic Knowledge@Wharton: What can the new governments do to provide economic stability and job opportunities?

Gerges: That is the million-dollar question all of us are trying to understand. The enormity and the challenges facing the Islamists doing their jobs are [massive]. Employment among youths in some areas of Egypt and Tunisia is almost 50%. On average, you have 40% of Arabs living at or below the poverty line. That’s why even though they believe in free-market capitalism, they really haven’t seen any kind of policies or specific progress. They really lack the ideas and specific blueprint to help us understand the measures they will use to stimulate growth and provide jobs. And that’s why I said if the Islamists don’t really provide the goods, services and jobs, then the Islamic movement will prove to be very fleeting. And that’s why we should not be shortsighted and saying they won it all. The Islamists have made gains in the first elections but the Islamists will have to deliver the goods. If they don’t, the electorates will vote them out in the same way they have voted them in.

Arabic Knowledge@Wharton: You mention the Turkish model of Islamic economic dynamism is being used as a model for many Islamists, but the Turkish model may not work for other economies like Egypt and Libya. Can you explain that further?

Gerges: Islamists know they can’t apply the Turkish model but they can use it as an example. There are two aspects that come out of this. Islam is good for business and Islam and capitalism are reinforcing one another. Also, Turkey has applied democratic principles and capitalism in an Islamic country. They would like to imitate the Turkish example as opposed to the Turkish model. What they mean by that is they want to apply free-market capitalism and encourage a free-market economy.

They want to institutionalize a political process. What I mean by institutionalizing the political process is, to establish a system that basically establishes a democracy with separation of powers, checks and balances, peaceful transfer of powers, and also limiting the role of the military in their political powers. This is a very important point. The reason I believe the Islamists’ interest lie in a democratic system is because they want to protect their movements. Because as you know, over the years, they’ve been persecuted, imprisoned, incarcerated. Their interest lies in a system of parliamentary system that protects them from the whims and military might of the ruling generals.

Arabic Knowledge@Wharton: So the ruling generals are not part of the Muslim Brotherhood in Egypt. They’re more interested in protecting their own powers.

Gerges: Absolutely. The ruling generals represent the centralization of power and the institutionalization of the military. They’re interested in preserving their own privileges and their own institutional role in the political process. We’re not talking about soldiers but we’re talking about the generals who call all the shots. They do not want to submit to an elected leadership.

Remember, the military institutions in the Arab World are not only fighting machines. They’re also economic powerhouses. In a sense, what the Egyptian military wants to do is protect their own economic interests and also their own powerbase. Remember, economic interests means they can exercise power, they can yield power. They’re terrified the democratization process will basically marginalize them and force them to submit to an elected leadership. That’s why the ruling generals are fighting tooth and nail to shield the military from any type of civilian oversight.

Arabic Knowledge@Wharton: Whoever is elected into these transitioning Arab countries has such an uphill battle. You point out they are battling double-digit unemployment, poverty, and the absence of a competitive private sector. What are some of the things these new governments can do to alleviate the sufferings in the short-term while laying the foundation for a healthy economy in the long term?

Gerges: I think in the short term, there will be a lot of dust and upheaval. I think most governments are going to be short-lived because the demands are overwhelming. The needs are overwhelming. We’re basically talking about providing bread and butter.

Egypt is bankrupt. They’re basically running out of cash, running out of wheat. Egypt can’t afford to pay the salaries of their workers. That’s why Egypt is going back to the IMF even though initially they said they didn’t want to go to the IMF. They need US$3.2 billion to pay the salaries of their employees, [among other things]. And it tells you what the Islamists or other political candidates about the challenges they face. In the short term, they have to provide basic assistance. We’re not talking about relief. They’re living in poverty and below the poverty line. That’s just how bad the situation is.

At the same time, the new government has to think in terms of the long term in how they can create a competitive private sector to provide jobs. You see the private sector in the Arab World today is not competitive and does not provide jobs. They are what you call “crony capitalists.” They really feed on the remains of the state. They depend on the subsidies the state provides. They don’t need to provide anything because they’re an extension of the state. They want to change this and create a competitive private sector that basically produces jobs. How do you do it, given the lack of resources? There is no global effort to help them. Remember a huge chunk of the budget goes to subsidies, to bread and butter. You almost have on average 40% of the budget that goes to sustenance. That’s a huge chunk.

Subsidies don’t help the poor. Subsidies help the crony private sector. In fact, a very small tiny portion of subsidies goes to the poor. That’s one of the secrets people don’t know about. The fuel subsidies go to companies that provide the things, and that’s why private sectors in the Arab world are not competitive. They go to the cronies who depend on the subsidies the state provides. They want to use it ideally in central investment. You want to invest in the economy, technology, education and training. Ideally, you want to give subsidies to private companies to provide the support. Of course, you cannot afford not to provide the bread and butter or you’ll have a revolt on your hands.

Arabic Knowledge@Wharton: But there’s a limit to how long you can provide bread and butter or they’ll turn into a welfare society.

Gerges: Absolutely. That’s why initially the Islamists wanted to stay out. They said they do not want to have 30% of the parliament or field a presidential candidate or dominate the constitutional review committee. We all thought, “Wow, what a clever idea.” And as soon as they realized, “This could be ours,” they wanted it all.

Arabic Knowledge@Wharton: As the founding director of the London School of Economics’ Middle East Centre, how have your priorities shifted with the unrest?

Gerges: Our centre was born really at the very moment the Arab revolts erupted. It was the duty of our center because our priorities are institution building, governance, dissenting politics, and developing economies. These questions really go to the very heart and what people across the Arab World have been saying for many, many years. So institution-building is about how do people build institutions in broken societies, such as parliaments, civil society, nongovernmental professional organizations, etc.

The question of development goes to the very heart. In the Arab World, you have redevelopment. We don’t have development in the Arab World. In fact, there has been regression. How do we reverse the trend? Of course, we’re talking about politics and the rise of dissenting movements, the rise of public opinions, the rise of new social movements, human rights organizations, etc. These are very important points in society.

The [London School of Economics and Political Science] have a new book coming out from Cambridge University Press at the end of the year called The Arab Uprisings: A New Era of Politics in the Middle East. We have about 30 chapters. The leading scholars all over the world have contributed chapters dealing with some aspect of institutional building, social movement, revolt, and revolution. We’re very fortunate that we didn’t do anything different in our vision and interests than what we’ve been doing from the beginning.

*[A version of this article was originally published by Arabic Knowledge@Wharton on September 18, 2012].

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.