I had several small surprises and one big surprise waiting for me when I came back to Egypt this time, after a six-week absence. At the airport, I found out that the pound had surged in value, and in general found people to be upbeat about the economy. However, a week later I was contacted by a friend, who, though hard-working and with marketable skills, is having a terrible time finding a job, and is near desperation wondering how he will support his family. On the political side of the fence, I saw my first Kifaya demonstration—kifaya meaning enough, as in enough of the current system. Although small, it was to me a novelty to see demonstrators enraged not by the latest dramas in Palestine or Iraq, but by the stagnancy at home.

Those were all small things. The big surprise was President Mubarak's declaration that the next presidential election should be by popular ballot. Of course, the regime may not actually implement the necessary constitutional changes, or add restrictions on candidates to render the whole thing meaningless. However, this could be most significant political reform in a decade.

First, though, the pound. Partly, the rise comes from a weak dollar, but there's more. After years of ordering Egypt's economic actors to defend the pound like so many army divisions on the Suez line, the regime has at last appeared to sit back, give professional economists real authority in running of key institutions, and let the country's immense revenue-generating resources, including newly operative natural gas fields and the ever-rebounding tourism industry, do the rest. Confidence in the economy is up, and direct investment is once more ?coming in.

Not soon enough for my friend, however. Recent events like the Asian crisis or September 11 did not make it easy for Egypt's economy, but years of counterproductive policies—everything from overpriced, under-performing megaprojects to sending State Security after currency traders in order to keep the pound up—suggested that the regime just couldn't bear to let go of the idea of a command economy. Investors stayed away, and the country lost years' worth of job creation.

In part because of those slow years, discontent with the regime's performance is as acute as ever. Hence the Kifaya demonstrations. However, though they may reflect wider dissatisfaction, the rallies are by themselves not that significant. As usual, protesters are outnumbered by riot police. Even many organizers grimly remark that reforms are more likely to be driven by external than internal pressure.

There are other reasons to be cynical about the reform promises. They follow the arrest of Ayman Nour of Al Ghad Party, one of the few people who could, if not actually win a presidential election, at least make a credible showing. However, Mubarak’s declaration could herald a real opening-up of the system over the next five years. For years, the regime has held power thanks not to the public's affection, but their disaffection—their failure to envision an alternative. To have a system where multiple candidates even appear on the ballot could be a major psychological breakthrough.

So what will happen? Having finally accepted economic liberalism, has the regime turned the corner on political liberalism as well? Quite possibly, and that's very promising for Egypt's future. If so, officials will probably argue that their slow and steady approach to both forms of opening up has saved the country all kinds of upheavals. Maybe they're right—we'll never know if more radical liberalizations in the middle 1990s would have led to widespread social hardship, or some very illiberal people taking power.

However, like the fits and starts in economic liberalization, the political delays have also taken a very high toll, in denying a generation of potential leaders a chance to create a genuinely active opposition. Moreover, the style of such liberalization—called down from on high without consultations with the public—will leave a bitter taste among many here, particularly those activists who fought so long, without recognition from the state, to bring these reforms into being.