Speaking of Egypt…

This was one of the more interesting paragraphs in Bush’s State of the Union:

To promote peace and stability in the broader Middle East, the United States will work with our friends in the region to fight the common threat of terror, while we encourage a higher standard of freedom. Hopeful reform is already taking hold in an arc from Morocco to Jordan to Bahrain. The government of Saudi Arabia can demonstrate its leadership in the region by expanding the role of its people in determining their future. And the great and proud nation of Egypt, which showed the way toward peace in the Middle East, can now show the way toward democracy in the Middle East.

The lines about Egypt and Saudi Arabia were nicely phrased, in that they represented a challenge to the regimes there. Coincidentally enough, the Wall Street Journal has a front-pager by Karby Leggett on Egypt’s economic reforms. From the opening, it appears that Egypt’s latest prime minister is adopting a much more market-friendly posture:

When Ahmed Nazif was appointed prime minister of Egypt last year, it came as a surprise. Mr. Nazif, 52 years old, was the youngest of 32 ministers in the previous government. His name hadn’t appeared on any of the internal U.S. embassy briefs handicapping the leadership race. What Mr. Nazif did next was even more surprising: He introduced the most far-reaching economic changes in Egypt’s modern history, cutting customs tariffs by 40%, signing a trade deal with Israel and the U.S., and chopping income taxes in half. Now he’s planning more painful steps. He wants to slash the government payroll and scale back subsidies on everyday goods. The moves are designed to spur foreign investment and coax Egypt’s long-dormant economy to life. “Egypt is open for business,” says the Canadian-educated prime minister.

Sounds good — but what about democracy? Here’s where things get sticky:

Economic change doesn’t necessarily mean political change. In the wake of Iraq’s election, in which voters chose freely from a wide range of candidates, attention is turning to Arab states such as Egypt where the government keeps a leash on political competition. Mr. Nazif argues that if Egypt gives full rein to democracy before prosperity spreads, an “organized minority” — referring to Islamic fundamentalists — might take over. He says “nobody in his right mind today would be against democracy” but “when and how is the real challenge.” Egyptian intellectuals and government officials speculate that Mr. Mubarak is hoping for an economic revival to pave the way for his son to take over from him one day. The president has repeatedly denied that he wants to hand power to his son. He has also ruled out significant changes to the political system.

So, what does the U.S. do? Hope that the economic reforms trigger future political reforms, or apply more leverge on the Mubarak regime — even if a more democratic government might not pursue such market-friendly policies?