VCU Professor Sees Hope in Developments in Egypt

By Tom Gresham

Van Wood, Ph.D., the Philip Morris Chair of International Business in the VCU School of Business, believes that there are significant reasons to believe that the toppling of the Mubarak regime in Egypt among widespread street protests will result in positive economic developments for both the Arab and Western worlds.

Wood, who has traveled extensively in Egypt and the rest of the Arab world during the past 10 years, believes that the possible move to a more transparent, democratic Egypt would mean increased engagement with the global economy for the country and potentially for other Arab countries, which may be influenced by the direction Egypt takes.

“I’m a real believer in the value of globalization and I do believe the Arab world has been left out of that for a good part of the last 20 years,” Wood said.

Egypt has been largely hospitable to Western businesses in recent years, but obstacles have remained to full engagement, Wood said. The impetus for the street uprising in Egypt had many sources, but Wood said that the large population of youth in the country and the lack of opportunities for them were a critical factor. Egypt’s removal from the global economy was a reason for that lack of opportunity.

“They could join all that now,” Wood said. “They could be supercharged into that. There could be opportunities, particularly with the west – particularly with Europe – that would create enormous economic development in the region and enormous opportunity for the young people who are feeling left out.”

Wood said Egypt’s prominence in the Arab world – he said Cairo is seen as the region’s New York City or London and that the proper Arabic language is viewed as the one spoken in Cairo – means that its move toward democracy would be particularly influential.

“I think if they went in that direction – to the positive side – then the rest of the Arab world would follow them,” Wood said. “They’d say, ‘We need to be there, too. We don’t want to be left behind.’”

Despite his optimism, Wood said the direction that Egypt takes next is far from certain and the potential negative consequences of a fundamentalist regime taking root in Egypt are large and far-reaching. Egypt’s influence in the Arab world could impact other countries in the region, too, including those countries that supply the United States with much of its oil.

Egypt also controls the Suez Canal, a central hub in global trade. If a new regime in Egypt made passage through the Suez Canal more difficult – or worse – then it would cause a massive disruption of global trade.

“Energy resources and world trade patterns are at stake here,” Wood said.

In addition, Cairo has become a favorite spot for Western companies to develop locations that serve as bases for operations in Africa and the Middle East. A change toward a more closed Egypt would impact those companies’ interests in the entire region.

In light of the implications of an unfavorable change in Egypt, companies with efforts there might be tempted to voice opinions about who should be in charge next. Wood said that would be a mistake. There already is a sense in the region that Western countries have propped up leaders that favored their interests. Any sense that Western influences are inserting themselves in the debate about the country’s future will not be received well, Wood said.

Wood said publicly supporting democracy and an open society makes sense, but endorsing potential leaders or political parties would be a mistake.

“If you’re a policy person or a private enterprise and you decide you’re going to stick your noise in this business, then you’re in the wrong business,” Wood said. “It’s not what you want to be doing right now. You need to let them decide this.”