14/02/2012 18:06 GMT | Updated 15/04/2012 06:12 BST

The Rise of Political Islam Presents Challenges, But We're Not Doomed!

Growing up, I was a fan of the sitcom Dad's Army. Set amongst the hapless volunteers of the Home Guard during World War Two, one of my favourite characters was Private Frazer. A depressed undertaker who had grown up on the "wild and lonely" Isle of Barra, Fraser responded to every sticky situation with the catchphrase 'We're doomed!'

When Islamists of various stripes won 70% of the vote in Egypt, the temptation to say 'we're doomed' and give up was understandable. But it was fundamentally mistaken. If western powers set clear standards and make use of their economic leverage they can maximise their ability to shape the development of rising Islamist powers in the Middle East.

Over the past few decades Western powers have swayed between two approaches. One approach assumes that for most part Islamists will moderate their positions when faced with the realities of power, and calls to engage Islamist parties and find ways to get along with them. The other assumes that the ideology of the Islamists inherently runs contrary to our values and out interests, and takes the approach that the only way to deal with the Islamists is to isolate them and restrict their ability to influence the region. The Arab Spring has changed the equation. Now that Islamist parties have achieved impressive electoral results in Egypt, Morocco, Tunisia and elsewhere, the option to avoid contact with them and hope they wither away is no longer available.

Nonetheless, how we engage with rising Islamist powers, and on what terms, still matters greatly. This is because Islamist parties are undergoing an extraordinary period of evolution and change forced on them by the Arab Spring. The opening up of Arab societies and the opportunity to compete in fair elections has created enormous opportunities, but also great dilemmas. It is one thing to claim that 'Islam is the solution' whilst in opposition. But when standing for office or actually making governmental decisions, the public need something more.

How will they respect human freedoms and the rights of women, and non-Muslim religious minorities? How will they approach Islamic observance in public spaces? What role will Islam take in their new constitutions? Will they cooperate with the West in countering violent extremism, promoting stability and furthering the Middle East peace process? And will they maintain their enthusiasm for democratic institutions once in power or will they use their power to silence opposition?

There are reasons to fear the worst. The former Supreme Guide of the Muslim Brotherhood in Egypt, Muhammad Mehdi Akef said following the 2005 Egyptian elections that: "for us, democracy is like a pair of slippers that we wear until we reach the bathroom, and then we take them off." Past cases seem to bear this out. After achieving power through elections in 2006, Hamas used its power to reinforce its own military forces, violently oust its Fatah rivals from the Gaza Strip, and create a regime which muzzles opposition and has so far prevented new elections from taking place.

So what can we do? External powers have only limited influence over what takes place within Arab societies. But as a new paper by BICOM Senior Visiting Fellow Michael Herzog argues, we do have some leverage afforded to us through our economic relations and we should use it to pull movements in the direction of the values and interests we hold. This week the US administration published its draft budget showing that it intends to maintain its $1.55bn economic aid commitments to Egypt, including $1.3bn of military aid - an annual aid package which rewarded Egypt's peace treaty with Israel. Last May at the G8 summit in Deauville the European Investment bank committed 3.5bn Euro to a global fund of $20bn for transitioning Arab states.

Taking into account the dire economic straits of Egypt in particular, the largest Arab state, this aid matters, and Islamists cannot ignore our concerns. Given that fact, BICOM's paper proposes four criteria according to which Western powers should measure the extent of their engagement and support for Islamist parties: commitment to non-violence; adherence to values of democracy; approach to the application of Islamic law ("Sharia") in public life; and attitude towards the West and Israel.

Given the plurality of Islamist voices now emerging, and the speed with which positions are evolving, there is a need for some flexibility in the application of these criteria. But at the same time, there must also be clear red lines. Western powers must be clear that violent or extreme anti-democratic, anti-Western and anti-Israeli attitudes and behaviours are unacceptable. In the particular case of Egypt, any threat to abrogate the Israel-Egypt peace treaty, which is a cornerstone of regional stability, must also be clearly beyond the bounds.

Arab peoples have the right to elect whoever they choose. But we have a right to say who we are going to support both politically and economically. We need to exercise this right with judgement.