Mohamed El-Erian

It is a great pleasure to be with you today. I would like to express my deep appreciation to the Board of Trustees of the American University in Cairo … and extend my immense congratulations to AUC’s graduating class of 2011.

At this time, and more than ever, AUC and other centers of learning in Egypt occupy a very important position in a country that is in the midst of historic transformations. In today’s Egypt, universities are — and should be — much more than centers of learning. They are critical facilitators of beneficial change for millions of Egyptians; for current and for future generations; and for the well-being of a country, a region, and a global system.

People look to our centers of learning for education and thought leadership. They look to them for guidance in navigating complex economic, institutional, political, and social transformations. And they look for them to develop the future leaders of society at every level.

All this gives our centers of learning a critical role in Egypt’s already rich and inspiring history. It is a privilege for AUC and other universities in Egypt. It is also a huge responsibility.

I have no doubt that, with sustained effort and steadfast commitment, you will deliver; and do with pride and excellence.

Speaking today at an academic institution, I could — and should — support this assertion with a well-formulated theoretical foundation, empirical evidence, and peer analysis. I should, but I will not.

Instead, I will illustrate it with two very down-to-earth analogies that reflect the importance of never forgetting the insights of simplicity.

The first comes from the 1980s. I was traveling from Cairo to New York on the direct, non-stop EgyptAir flight. We left Cairo 5 hours late, had an uneventful flight, and experienced the perfect landing that Egyptian pilots are internationally renowned for. Sitting next to an American, we did not exchange a single word during the 10-hour-plus flight — that is, until we landed.

Just after the wheels touched down incredibly smoothly, this gentleman turned to me and said “typical Egypt.” “Excuse me?” I responded. He repeated “typical Egypt.” And then went on to share with me an explanation along the following lines: “Leave Egyptians to do things on their own, and they will deliver a world class outcome. That is why we had such a perfect landing. But place them in an inefficient system, and the outcome is far from world class; and that is why we are five hours late.”

This EgyptAir story is illustrative of the fact that there are many examples of Egyptians shining in the toughest of worldwide competitions. It is about a Naguib Mahfouz and an Ahmed Zewail winning Nobel Prizes. It is about Egyptian doctors that are among the very best healers in the most respected hospitals around the world. It is about Egyptian professors that are first-class educators and researchers. It is about Egyptian artists who bring music, movies and art to millions. And it is about Egyptian football stars helping their teams win league championships in tough national and regional competitions.

Speaking of football, allow me to share the second simple analogy. This one comes from my childhood.

Growing up in Egypt, I was always among the very last kids to be picked for a soccer team at primary school. And sometimes, I would not be picked at all. Instead, I would be asked to stand behind the goal to retrieve the balls rather than play on the field.

Well, as a 10-year-old, I followed my father to New York as he assumed his post at the Egyptian Mission to the UN. I joined a school there and, quickly, I became the captain of the class soccer team.

Now it could be that I experienced some remarkable transformation during the trip to New York. I did not. The reality is that, back then, Egyptians were simply better at the sport.

I share with you these simple stories because I believe that Egypt, led by Egyptians, is today at a very special juncture.

Egyptians have a remarkable opportunity to shape a new and better destiny for their country. And the rare combination of both willingness and ability comes wrapped in a new sense of purpose, energy and engagement on the direction of the country.

Owing to the tremendous sacrifices of its many heroes, Egypt is in the midst of a revolution — a truly transformational moment in a history that goes back over seven millennia. We thank all those that bravely took to the street, forming a movement that helped all Egyptians overcome decades of fear. In the process, they united Egyptians of all ages, social classes, and religions around a simple aspiration of a better tomorrow.

To use a song that I came across when watching a wonderful American television (“60 Minutes”) interview with Wael Ghonim, and one that has been played many times in our home and at presentations that I have made in the U.S. on the Egyptian revolution-Sout el Horreya, or the Voice of Freedom sung by Hany Adel and Amir Eid: “Our dreams were our weapon…[and] all barriers have been shattered.” And to use New York Times columnist Tom Friedman’s characterization, what was delivered was a revolution “made in Egypt, by Egypt, for Egypt.”

But most revolutions are not discrete events; they are transformational processes. They are seldom easy; they can take many months and years; and the first, most visible part of a successful revolution — that of overthrowing a regime — is often a necessary condition for a successful revolution; but this huge and courageous step alone is not sufficient. It improves the probability of achieving the objective of the revolution — that of a better society for all of Egypt — but it does not guarantee success.

In today’s Egypt, the required transformations involve challenges that cut across politics, economics and finance. They have important social and geo-political dimensions. And they operate in fluid regional and global contexts. And they will not happen without continued steadfast commitment. Each of these realities is extremely complex.

Think about the challenges inherent in altering the structure of an economy so that it can deliver in a decisive and lasting manner the combination of more inclusive economic growth, greater poverty alleviation, improved international competitiveness, and low inflation.

Think of the importance of reaching the most vulnerable segments of the population in a timely manner — providing better access to education, health, nutrition and other essential social services.

Think of the challenges of keeping the country’s finances in order at a time of reduced tourist receipts, lower remittances from workers in Libya and elsewhere, and high food and commodity prices in international markets.

Think of the challenges of constructing an open and transparent political process after many decades of repression, suppression, and too much control by too few.

And think of the importance of institutions. As Jean Monnet, the famous French father of European unity, observed: “Nothing is possible without men and women, but nothing is lasting without institutions.” Egypt today faces the complex challenges of quickly adapting and building institutions that are credible and efficient.

None of these are easy; and the significant degree of difficulty compounds quickly when the challenges interact, as is the case in Egypt today.

It is tempting for a nation and for a society to feel overwhelmed by all this. Today’s Egypt should not. These are all surmountable challenges, especially if the country retains its unity, commonality of purpose, and purity of aspiration.

It may also be tempting for some of you here to feel powerless, believing that your own potential contributions pale in comparison to these significant societal challenges. You should not.

Every single one of you has the ability to make a difference in today’s Egypt. Indeed, many of you already do so, day in and day out.

You maintain the momentum for positive change. You work hard to counter the huge disparities in income and wealth, and the extremes in access to education, health and other basic social needs. And you are unwilling — and rightly so — to see millions of your countrymen and countrywomen condemned to a life of poverty, human degradation and despair.

All of you are facilitators of a better tomorrow for Egypt, of the “new Egypt.”

Indeed, nothing gives me greater joy than to hear all the stories of Egyptians volunteering to make a difference in a village, in a slum, in a school that has insufficient books, and in a hospital overwhelmed by patients.

Just a few months into Egypt’s revolution, we see concrete changes on the ground. And it is not just about new political parties, broad-based national debates, and a more generalized sense of empowerment to influence the country’s outlook. It is also about multiple daily wins.

It is about young volunteers adopting villages and neighborhoods to help make a difference on the ground. It is about individual Egyptians, like Wael Ghonim, setting up NGOs to improve the future of other Egyptian families. And it is about true visionaries, such as Ahmed Zewail, who is inspiring and leading a national project to help Egyptian society attain the scientific and technological advancements that are so essential to sustain growth, poverty alleviation and employment creation in today’s rapidly changing global economy.

AUC has also been at the forefront of change. New courses have been created to put the revolution in context, both historical and forward looking. New initiatives, such as the Tahrir Dialogues, are part of an effort to help “build a better Egypt.” Public seminars are being held to encourage debate among the many and facilitate civic and political participation. And web-based approaches are being used to facilitate volunteerism and community service.

A lot is already being done; and a lot, lot more will need to be done.

To be associated with a university in Egypt today is to occupy a very special and important place. Whether you are members of the student body, educators or administrators, you should always remember that privilege comes with enormous responsibility.

As John F. Kennedy once said, “To those whom much is given, much is expected.” And Egyptians living outside Egypt, like me, are committed to help you and others in whatever way we can to ensure a truly successful revolution and a better Egypt for current and future generations.

This is adapted from a commencement speech delivered at the American University in Cairo on June 16, 2011.

By Mohamed A. El-Erian
El-Erian is the CEO of PIMCO. He spent part of his childhood in Egypt where his father was a professor of international law at Cairo University and then served as an Egyptian diplomat and was elected to the International Court of Justice in 1978. The opinions expressed are his own.

For centuries, songs have provided populist narratives of historical movements. And, every once in a while, a song comes along that also succeeds in capturing forcefully the raw emotions of the moment. This is the case today with "Sout el Horeya," or the "Voice of Freedom," sung by Hany Adel and Amir Eid.

Coming out of Egypt, this song skillfully encapsulates the strong drivers behind the ongoing transformations impacting the Middle East and North Africa. It is a "must hear" for all those trying to understand previously-unthinkable developments in the region, including western governments whose sophisticated intelligence services have been caught flat-footed and are now playing rapid catch up.

In powerfully plain language, the song speaks to the what, why and how of the Egyptian revolution. In a post on YouTube, the video version opens with images of peaceful protests in Cairo's Tahrir (Liberation) Square. The intention is a simple one -- to remind us all that what is in play is a secular revolutionary movement involving citizens of all ages, classes and religions. This is not a movement that can be derailed by diversionary tactics seeking either to blame foreign involvement or to threaten the alternative of a repressive Islamic theocracy.

After visually reminding us of what Tom Friedman (one of the very best western commentators on the region) called a revolution made "in Egypt, by Egypt, for Egypt," the lyrics of the song convey a simple message: "In every street in our country, the voice of freedom is calling."

This dominant refrain is placed in a context that all those formulating policies must not forget. "For a long time we have been waiting," "searching yet unable to find our place." Suddenly, "barriers have been shattered" and our "rights are the most important pursuit." And, in pointing to "the clarity of tomorrow," the lyrics speak to "our weapon is our dreams."

Toward the end of the song, a poem is superimposed praising Egypt's youth for converting "winter to spring" and for delivering a "miracle that awoke a deadened nation." The accompanying set of still photos is a reminder of the sacrifices made and of the supportive and highly-appreciated role of the Egyptian armed forces.

Egypt's new policymakers, including the Cabinet formed over the weekend, would be well advised to internalize these messages as they guide the country on its new path towards greater democracy and individual freedoms. This is also true for Egypt’s allies and friends that are stepping up to try and help the country, after having been unexpectedly marginalized by a domestic movement that neither requested nor needed foreign assistance.

The song should also be of interest to countries elsewhere in the region. It has relevance for reforming governments that are seeking to proactively meet the awakened and legitimate aspirations of their people. It is also important for those that, erroneously and tragically, think that their old notion of overwhelming force can deny an energized movement willing to die for a better tomorrow for their children.

"Sout el Horeya" provides us all with concise and powerful insights into historical developments in an important part of the world. Let us hope that its messages are never far from the minds of those entrusted with the well-beings of millions in the Middle East and North Africa. If they are ignored, this will only delay the inevitable while greatly increasing human suffering and, in some cases, dangerously increasing the disturbing probability of failed states.

By Mohamed A. El-Erian
El-Erian is the CEO of PIMCO. He spent part of his childhood in Egypt where his father was a professor of international law at Cairo University and then served as an Egyptian diplomat and was elected to the International Court of Justice in 1978. The opinions expressed are his own.

While Egyptians are yet to specify the final destination for their revolution -- and only they can, and should do so -- there is little doubt in my mind that the country is now on a new, bold and uncertain road toward greater democracy and individual freedoms. The next few days and weeks will be critical in determining the journey for a country that is central to the stability of the Middle East.

Undoubtedly, domestic political developments hold the key to what will happen. Egyptians need to converge on a common understanding and vision of "managed change". And this vision must satisfy the millions of Egyptians -- from all ages, religions and walks of life -- that unite in Tahrir (Liberation) Square and elsewhere to better influence and improve their destiny.

Yes, street and state politics are the undeniable drivers today. This will involve both upheavals and compromises. Yet economics and finance will also play a crucial role, especially when it comes to the urgent recovery of an economy that has experienced one of the most dramatic "sudden stops" in recent history. In the process, this will also define how Egypt's friends and allies can come off the sidelines and help the country's unprecedented transformation.

For two weeks, economic activity was at a virtual standstill. Supplies dwindled. Banks and many shops closed. ATMs ran out of cash. Schools and offices were shut. Domestic and international trade was disrupted. Tourism evaporated.

Egypt's economy will need to restart and reset. Three factors stand out in a process that is critical for the longer-term well-being of the country, including the millions of Egyptians that are protesting for greater freedoms.

First, Egypt's banking system must resume normal operations in an orderly fashion. A very good start was made on Sunday to bring part of the system back on line, and important challenges remain.

The central bank has no choice but to flood the financial system with both domestic and dollar liquidity. And both the central bank and the commercial banks must continue to avoid the temptation to overly curtail deposit withdrawals lest that, in itself, fuel a deposit run.

Second, the Finance Ministry must deal properly with the unanticipated collapse in tax revenues. It must make sure that this temporary interruption in government receipts does not lead to even more destabilizing spending disruptions. Salaries must be paid promptly, and all supplier bills must be met.

Third, particular emphasis must be placed on targeted social spending, particularly when it comes to health, food subsidies, and shelter. Remember, Egypt's poor are extremely vulnerable to the current economic and financial dislocations.

The challenge of such an orderly reset is an enormous one. It cannot be met easily by Egyptians alone. They will need help; and their courage and determination warrant international support.

Assuming a satisfactory political resolution, Egypt's friends and allies will have a chance to support the country's economic recovery. In particular, they should stand ready to provide central bank swap lines, as well as to significantly accelerate and redirect aid in the pipeline. And they should actively facilitate the involvement of institutions that already have effective links and extensive networks among the most vulnerable segments of Egyptian society.

A historic grass root movement has made massive sacrifices by taking to the street to bring greater democracy to the most populous country in the Middle East and North Africa. The movement has endured tremendous pain and taken enormous risks. Let their brave historic efforts be reinforced by properly resetting an economy that has been subjected to a dramatic sudden stop.

Photo, Top: An anti-government protestor shouts anti-Mubarak slogans after Friday prayers at Tahrir Square in Cairo February 4, 2011. REUTERS/Mohamed Abd El-Ghany

Bottom: Anti-government protesters carry a big Egyptian flag after Friday prayers at Tahrir Square in Cairo February 4, 2011. Tens of thousands of Egyptians prayed in Cairo's Tahrir (Liberation) Square on Friday for an immediate end to President Hosni Mubarak's 30-year rule, hoping a million more would join them in what they called the "Day of Departure" . REUTERS/Amr Abdallah Dalsh