PIMCO CEO and co-CIO Mohammed El-Erian spoke to Bloomberg Television on Tuesday about the situation in Egypt, saying, “The Egypt of tomorrow will not be the Egypt of eight days ago. The genie is out of the bottle … People have been empowered.”
El-Erian, (left) who speaks Arabic and is the son of an Egyptian diplomat, described the country — now in its second week of political protests — as “certainly [moving] on to something new.”
Egypt's population is about 80 million. The majority of its population is under 30 years of age, and the youth unemployment rate is 35%.
Still, “Egypt is not defenseless in terms of its economy,” El-Erian said. “It’s financially very strong.” The country’s economy, he notes, is free of external debt and has some $35 billion in reserves.
“I think you are going to see three steps if [President Hosni] Mubarak steps down — and this is a big if,” El-Erian said.
There could be a transition regime led by the current Vice President Omar Suleiman, also chief of intelligence, or led by opposition leader Mohamed El-Baradei, he explains. Next, there would be parliamentary elections, followed by a rewriting of the country’s constitution and presidential elections.
“Egypt has enabling conditions [for constructive reform] if you can channel all of this in a positive manner … and can overcome its rigidities,” El-Erian said.
“Look for Egypt to go forward,” he concluded. “It has yet to define fully its journey and its destination.”
In early afternoon trading on Tuesday, as the Dow Jones Industrial Average rose 1.23% to trade near 12,038, the MarketVectors Egypt Index ETF (EGPT) rose 1.54% and traded around $17.77.