9 insights for Egypt’s new rulers by Mohamed El-Erian @FortuneMagazine July 5, 2013, 11:11 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons FORTUNE — Egypt is navigating its third, largely unplanned government transition in just two and a half years. A fourth one is likely to be months away (and hopefully better-planned). Almost by definition, and certainly by force of circumstances, this is an inherently tricky phase in the country’s proud and long history; and its consequences extend well beyond the 85 million Egyptians eager both to harvest the fruits of their inspiring revolution and to avoid a slide into civil conflict. In the coming weeks, a lot of effort will be focused on — indeed, should urgently be devoted to — holding presidential and parliamentary elections, revising the constitution, and strengthening the country’s institutions. All this is all necessary for a durable and orderly transition away from military and back to democratic rule; but it is not sufficient. To enhance the probability of success this time around, Egypt’s armed forces (now in charge of the country) and the politicians (again set to receive the governing handoff) may wish to consider the following nine insights. These are drawn from the country’s history, old and recent, as well as international experience. MORE: What’s next for Egypt’s entrepreneurs? On a standalone basis, each insight would offer Egypt potential benefits during yet another delicate and potentially precarious transition. Their would-be cumulative impact is even more important. Indeed, the collective gain could well be much larger than the sum of the individual parts. And today’s Egypt needs to secure every possible advantage to successfully navigate what is still a challenging, uncertain and potentially hazardous short-term outlook. Governance credibility is no longer bestowed; it needs to be earned every single day. In the old Egypt, the really hard part for governing elites was to gain power. Once achieved, the whole apparatus of state (and the vested interests and crony capitalism that flourished then) was essentially wired to maintain the status quo, and do so regardless of performance. Not so in the new Egypt. Today, the country’s rulers — whether civilian or military — need to earn and retain the trust of the majority of citizens on a high-frequency basis. They are now dealing with citizens who, having lived for far too long under repression and a culture of fear, are empowered and entitled to influence their country’s destiny. Indeed, the feeling of popular ownership has rarely been so visible and pronounced. Consistently engaging the youth movements is not just desirable; it is absolutely critical. For the second time in two and a half years, it is the committed youth of Egypt who brilliantly organized and led a countrywide popular uprising. Once again, they were the change agents facing enormous odds; and once again they delivered outcomes that far exceeded most “experts’” predictions, whether in scale, scope, or timing. Egypt’s youth movements have again displayed admirable vision, coordination, and discipline. If they were to repeat the experience of the 2011 revolution that ousted President Mubarak, their inclination in the next few weeks would be to again step back and turn the governance keys to the country’s elders. After all, Egypt is a traditional, age-respecting society. (Growing up there in the 1960s, I frequently heard the popular saying: “The one older than you by a day knows more than you by a year.”) MORE: How Brazil can win back investors For their part, Egyptian ruling elites have continually failed to properly engage youth movements, let alone benefit from their energy and vision. Instead, they tend to stick with old and tired formulas and practices. In the process, they have repeatedly disenfranchised a very important segment of society, and thereby undermined the future and vibrancy of the country. This time around it is critical that the youth movement remain actively involved in the governance process; and that the older generations be able and willing to materially incorporate them. Otherwise, the objective of the revolution — “bread, dignity, and social justice” — will continue to prove elusive. Govern inclusively, collaboratively, and transparently. Again, this does not come naturally to a country that for too many centuries was traditionally ruled by some type of “pharaoh,” whether domestic or foreign. It is also challenging in a transitional phase that is led by the military. Today and tomorrow’s rulers need to realize that the country will continue to struggle if the majority of Egyptians do not quickly unite under a well-communicated national vision. Indeed, a rapid process of national political and social reconciliation is essential if the country is to have any chance of minimizing violence and rapidly completing the critical revolutionary pivot: from dismantling a repressive past to building a better future. Avoid the temptation of overreach. The three prior governments fell victim to the dangerous notion that they can rule by favoring a certain segment of the population while imposing dictates from above on the rest. Egypt’s current and future governments need to do a much better job at being balanced, embracing a spectrum of view in a national political and social revival effort. Enable grass-root activities and civil society to flourish. Vibrant and successful democracies are built and sustained from the bottom up, and not from the top down. This also provides a critical flow of information up to the ruling class; and it constitutes an additional set of checks and balances to underpin a successful and durable democratic transition. Visit Egypt today, and you will be impressed by the number of new grass-root activities that have been initiated since the 2011 revolution. Be it education or health, they play an important role in improving — albeit still at the margin — the well-being of the poorest and most vulnerable segments of the population. MORE: The colors of revolution Even after President Mubarak’s removal, these individual successes continue to battle a system that struggles with the delegation of civic responsibility. By converting an unnecessary headwind into an enabling tailwind, Egypt’s new ruling elites can provide for much greater on-the-ground progress and engagement. Facilitate the involvement of the diaspora by creating better transmission mechanisms to domestic civil society. Do not underestimate the diaspora’s willingness to devote time and financial resources to assist the fulfillment of the revolution’s objectives. Remember, quite a few of them originate from families that emigrated out of Egypt to overcome repression and find opportunities. They greatly admire the brave Egyptians whose steadfast determination is now offering the country the possibility of pursuing the road to inclusive prosperity; and they wish to help. Make rapid and steady progress in addressing the country’s deep economic challenges. Awful economic conditions have been important contributors to the sense of national frustration and even despair in some quarters, and understandably so. Moreover, Egypt’s economy does not have the luxury of time. Every day, it is being pulled further down by a self-feeding vicious cycle of insufficient investment, anemic growth, inflation, budget and balance of payments deficits, foreign exchange pressures and capital flight. The longer the situation is neglected, the greater the cost for both current and future generations. MORE: China and Africa: What the U.S. doesn’t understand No reasonable citizen expects overnight solutions to the long-standing and deeply entrenched problems of alarmingly high unemployment, insufficient purchasing power, overly stretched and porous social safety nets, and excessive income and wealth inequality. But the people are desperate for a well-communicated economic vision, accompanied by yearly targets for variables that are commonly understood and monitored. For quite a while now, Egypt has lacked a credible medium-term economic framework. Rather than establish a clear destination, communicate a strategic direction, and deliver a credible policy package, recent governments have opted for ad hoc measures and exceptional funding from friendly countries. In the process, they have led themselves to believe that the responsibility of economic governance can somehow be outsourced to external organizations such as the International Monetary Fund. It cannot. Deliver some early wins. Egyptians are desperate for some basic deliverables that are now feasible and desirable from many perspectives. The new rulers need to restore security in the streets, remove the garbage that has invaded many of them, deal with electricity outages, and address pockets of extreme deprivation and poverty in both urban and rural areas. Most of this can be done by a focused and committed government that restores a functioning set of key public services. Some will need foreign financial resources and know-how to supplement domestic efforts. Finally, never lose sight of Egypt’s highly admired traits of humility and its robust sense of humor. Anybody who has spent time in Egypt will immediately know what I am referring to. Derived from the down-to-earth goodness of the traditional farmer (the “fellah”), most Egyptians are capable of tolerating a lot with admirable humbleness and humor. In the old Egypt, the ruling elites saw this as a way to continuously repress and exploit the masses. In today’s Egypt, however, this can serve as a strong fuel for collective societal achievement, including emerging stronger from the inevitable potholes that lie on any revolutionary path. Mohamed A. El-Erian is the CEO and co-chief investment officer of PIMCO.