Changes in Egypt b/c of Bush...

[Guest bengalrick]

this isn't a "i love bush... bush is great" kind of article so all of us should be able to read it w/out shutters on our eyes and take it for what it is... btw, this is an overview of egypt in 2004, so some of this is meaningless to us.. but there are some very important facts that should be taken out of this too... btw, this isn't what we think about egypt... this is what they think about themselves... big difference imo...

[url="http://www.businesstodayegypt.com/article.aspx?ArticleID=4066"]click here for article[/url]


[quote][b]Facing the Consequences[/b]


Last year was perhaps even more event-filled than usual, but ultimately, what do some of those most important events mean to us?

By  Hadia Mostafa



Change. It’s not something easily come by in our country, where everything tends to be given the opportunity to ride its course indefinitely. Relatively speaking, however, 2004 has been a year of change. [b]Skeptics will argue that 2004 has been a year of cosmetic reform rather than real change.[/b] But as we start a new year, the business community is more enthusiastic then it has been in a long time. It is sincerely willing to give a new government, that has been both hailed and criticized as being exceedingly business friendly, the benefit of the doubt.

The year began pessimistically, with many still reeling from the effects of the government’s free-float of the pound. New investment was at a virtual standstill, unemployment was on the rise, the real estate market was depressed, consumer spending was down and the Ebeid government appeared helpless in dealing with any of the problems at hand. A lot has changed since then. Is the country more optimistic? Not quite. It may be safer to say that the country is in hopeful anticipation of a better future.

The following are the events that have shaped 2004 and the impact that they are likely to have on the year ahead.


[b]Egypt 2010 Bid[/b]


It has been called “one of the most disastrous defeats in the history of countries bidding to host a major sports event.” There was no way to get around the shame. Every sports fan if not every Egyptian felt the humiliation of the zero vote last May. Not a single member of FIFA felt that Egypt was worthy of hosting the World Cup. The fact that South Africa won was no surprise, it was the absolute vote of no confidence in Egypt that came as a striking blow.

“The shameful incident made us all pause and take a good hard look at ourselves and what we are doing, or actually, what we aren’t doing,” says a member of the bid committee who spoke on the condition of anonymity. “Our feelings of superiority over countries like Morocco are no longer valid. In hindsight, what we have learned from the experience is humility. Some will say that it’s over, done with and forgotten. Public opinion has moved on. But I think it’s going to stay with us. It has entrenched public skepticism towards the government even further. As for the government, they are going to think twice about who they appoint to handle such matters in the future,” he adds.

The fiasco that ensued after the zero announcement, with everyone finger pointing in opposite directions, is perhaps more indicative of what went wrong than the obvious, like not having enough stadiums, taxi cabs or public bathrooms. Former Minister of Youth and Sports Alieddin Hilal was even quoted in the media as saying several members of FIFA offered to sell Egypt their votes in return for US $67 million, but he refused. “Passing the blame onto others is not going to solve our problems,” said the above-mentioned committee member.

Teamwork is not our forte; quite obviously presenting a viable bid to host a major international sporting event like the World Cup requires much more than constructing paper pyramids and plastering an inordinate number of billboards and posters across Cairo. If only the bid committee had been half as effective in convincing FIFA as they were in convincing Egyptians that hosting the World Cup is within our reach.

The Parliamentary investigation into the 2010 Bid revealed a series of inconsistencies on everything from budget (estimated to be around LE 11 million) to the division of responsibilities. Hilal’s position hasdbeen precarious since the zero announcement was made in May. It was not until July, however, that Anas Ahmed Nabih El Fiqqi finally replaced him in the Cabinet reshuffle.

Egypt will not get another chance to host a World Cup until 2034 after FIFA’s continental rounds have been completed. Hopefully, by then we will not only have more stadiums built, but we will have learned how to spell words like “project,” which was written with a “b” on one billboard in Hurghada advertising to FIFA their “New Stadium Broject.”


[b]New Cabinet[/b]


[b]The mid-summer announcement that Ahmed Nazif would be replacing Atef Ebeid as prime minister came as a pleasant surprise to everyone who has watched the former minister of communications and information technology in action.[/b] Despite his lack of political experience, the efficiency with which he ran his former ministry makes him an above average candidate to fill the PM seat. Even those who were not aware of Nazif’s merits welcomed the change for the sake of change. The average cash-strapped citizen had grown weary of Ebeid’s empty promises of a better tomorrow.

Three more cabinet appointments, that of Rachid Mohammed Rachid as minister of foreign trade and industry, Mahmoud Mohieddin as minister of investment and the repositioning of Youssef Boutros-Ghali as minister of finance would complete the picture. The economic reform team of Boutros-Ghali, Rachid and Mohieddin, with the full support of Nazif and the patronage of Gamal Mubarak, has been dubbed the “Dream Team.”

They were appointed in July, but their big debut came in September at the National Democratic Party (NDP) Conference, where they first revealed their much-anticipated policies on customs and taxation. Businessmen cheered while political reformers lamented as bold economic liberalization stole the limelight away from issues of political concern like constitutional reform, presidential succession, opposition party dialogue, the emergency law, human rights and freedom of the press.

"The new Cabinet posts are fine but we have to ask ourselves is there real change,” says Walid Kazziha, political science professor at the American University in Cairo (AUC). “The government has been gradually withdrawing from the economy for years; this is not a sudden change in direction. What is noteworthy here is that the economic liberalization has not been matched with political liberalization of any sort. This makes you wonder whether or not the new Cabinet appointments that we are so pleased with are only different on the surface,” he adds.

“Granted, the new ministers are enthusiastic, active, progressive more qualified and better schooled in the ins and outs of a free market economy but in the absence of a real overhaul in the political system including vital issues like limiting the president’s term in office and changing the bureaucracy, their economic reforms can only take us so far,” says Ahmad El Naggar, editor of the annual Economic Strategic Trends published by Al Ahram Center for Political and Strategic Studies.

2010 Bid The fiasco that ensued after the zero announcement, with everyone finger pointing in opposite directions, is perhaps more indicative of what went wrong than the obvious, like not having enough stadiums, taxi cabs or public bathrooms.

Kazziha explains that most of “the men of wealth” now have their extensions in the state. “Either their sons, daughters, wives or themselves are involved in politics as cabinet members or parliamentarians. We have finally ended up in this stage with businessmen in the government. When we examine their voting pattern and more importantly their proposals for legislation we will see that their concerns are mainly economic. These individuals will never be a catalyst for democracy because it is not in their best interest to go against the ruling authority. Their business ties are too organically linked to the state. Their interests and the government’s interests are one and the same so you have no system of checks and balances,” he says.

While it is true that the same bureaucracy is still in place some of the new Cabinet ministers have created parallel structures within their ministries and have from day one surrounded themselves with core staffs of highly qualified professionals that are giving the government a completely new image. Official spokesmen like Magdy Radi, from the office of the prime minister, are presenting the outside world with a much more polished persona than Egypt has ever had.

[b]Are the changes merely cosmetic? Analysts are still apprehensive about passing judgment after only six months. Nazif has asked for two years before he is evaluated. Within that time frame he has promised to tackle the nation’s dire problems like unemployment, spiraling prices and the budget deficit, and is adamant about inflicting real change. [/b]


[b]Dethroned[/b]


[b]Out with the old and in with the new. Political heavy weights such as former Minister of Information Safwat El Sherif who was in office for 22 years and Youssef Wali, former minister of agriculture, in office for 22 years are gone. Entire generations have never seen anyone else in these posts. Their departure has given Egyptians a psychological boost.[/b]


[b]Economic Reforms[/b]


As the People’s Assembly convened for its final session of the year in November, economic legislation dominated the parliamentary agenda. A comprehensive new tax law that will slash income and corporate taxes for the first time in Egyptian history was first unveiled in September at the NDP Conference by Minister of Finance Youssef Boutros-Ghali. According to Boutros-Ghali, “the new tax policies will inject around LE 2 billion in cash liquidity into the pockets of at least 17 million fixed-salary employees.”

[b]Questioned about whether or not the new taxation policy was going to benefit the average man on the street any time soon, he claimed that the country won’t have to wait years to feel the benefit of the new reforms. “I am the one who will have to wait years to recover the deficit. From tomorrow there will be change. The law still has to be approved by Parliament before it goes into effect, but the investors have made their decisions today based on what we have announced,” said Boutros-Ghali in September. [/b]

[b]“The new tax law is both good and bad. The positive part of the law is that they have reduced taxes and raised exemptions for low income individuals,” says El Naggar. Ten percent in taxes will be levied on annual incomes ranging from LE 8000-LE 20,000 down from 20 percent. The law also exempts taxes for incomes of LE 7500 and less. The previous exemption bracket used to be LE 2500.

“But the tax ceiling of only 20 percent (down from 42 percent) on incomes of LE 40,000 and higher and slashing the corporate tax in half from 40 to 20 percent is ridiculous. Not even the US has a tax rate that low,” adds El Naggar. The tax cuts are expected to cost the treasury anywhere between LE 3.5 and 4 billion in revenue each year. The Ministry of Finance predicts that the budget deficit will reach 7.5 percent of GDP in the fiscal year ending in June 2005 and that it will climb even further to at least 9 percent the following year. [/b]

Boutros-Ghali, however, feels that other measures like a dramatic increase in new investment, a marked reduction in tax evasion and the elimination of tax holidays will help the government recover the deficit within two years. He claims that there are currently 80,000 court cases of tax evasion that are still pending. “We want to begin a new era and build a relationship of trust with our citizens,” said Boutros-Ghali in a press conference immediately following his proposed tax cuts.

El Naggar is a bit more skeptical. “Tax cuts alone will not boost investment or at least not the type of long-term investment that we need to develop our economy. Sure the money has already begun to circulate in anticipation of the new tax law but keep in mind that there are two types of incentives that can encourage investment: financial incentives and market incentives. Smart businessmen go for the latter,” says El Naggar. “They will go where they can conduct business in a corruption-free environment without all the bureaucratic hassles that Egypt has become famous for. They are not only after profits,” he adds. El Naggar also points out that issues of corruption and size of the bureaucracy have not yet been tackled or even highlighted.

For years, the Egyptian government has been facing mounting external pressure to reform its archaic customs system. This has finally happened. Customs on everything from clothing to raw materials and automobiles have been brought down to levels that are starting to comply with international trade standards.

“The government is quite late on this front. They have now given up approximately LE 3 billion in customs revenue. Whether or not this will be translated into any type of economic revival will depend on whether the money ends up in the pockets of the consumers or in the pockets of the importers,” says El Naggar. “There must be some sort of regulations on profit margins for importers. I cannot import a product for LE 100 and sell it for LE 200 or even LE 150. As of now we have no such regulations, which is why consumers have not yet witnessed price reductions on basic goods.”

[b]The year’s economic reforms culminated in one of the most controversial trade agreements that Egypt has ever witnessed. On December 14th Egypt, the US and Israel signed the Qualified Industrial Zone (QIZ) agreement. Goods produced in these zones will be given free trade status in US market provided that 11.7 percent of the manufacturing components come from Israel. [/b]

The Egyptian government has been toying with the idea of QIZs ever since they were established in Jordan (the only other country to have such an arrangement) in 1999. It was Egypt’s new Minister of Foreign Trade and Industry, Rachid Mohammad Rachid, however who was aggressive and farsighted enough to push the deal through despite the inevitable criticism that he would receive.

[b]Reaction to the new economic link with Israel has been mixed. Business people who stand to benefit from the arrangement, which includes seven zones in Greater Cairo, Alexandria and Port Said are pleased with the pragmatic approach to business that the government has recently adopted. Textile producers in particular have embraced the QIZ as their last chance salvation with US markets now that the export quota system has expired. [/b]

According to political scientist, Imad Gad, an expert on Egyptian- Israeli relations and the head of Arabs Against Discrimination, an organization which closely monitors the Israeli political system, the establishment of QIZs is a practical way of tackling Egypt’s economic problems.

[b]“The political climate in the region is right for this type of agreement. It could not under any circumstances have been signed a year ago when tensions were too high. It is very significant because it is the first time that Egypt has prioritized its own economic interests above any other political concerns,” says Gad.[/b]

El Naggar, however, believes that the QIZ agreement will only be serving the interests of Israel by giving them new access to not only the Egyptian market but Arab markets as well. “Israeli products will be disguised under an Egyptian trademark and therefore have unprecedented entry to Gulf markets that have otherwise shunned Israeli goods,” says El Naggar.

New Cabinet “What is noteworthy here is that the economic liberalization has not been matched with political liberalization of any sort.”

[b]In its first phase of implementation, the new system is expected to boost trade between Egypt and Israel from US $30 million to US $150 million annually. The ministry of foreign trade and industry claims that the competitive edge that Egyptian exporters are now going to enjoy will create 250,000 jobs and increase exports to the US by LE 4 billion during the next five years. The ministry also expects to attract $5 billion in foreign direct investments in the coming period.[/b]

[b]Is the government setting their expectations too high as to the real benefits that can come out of the QIZ and the rest of their reform package? “Perception of the state of the economy is a very important factor. Right now the perception is much more optimistic than it has been in a long time and that will reflect positively on the economy at least in the short run,” says El Naggar. [/b]


[b]Taba Attacks[/b]


In the period between January and September 2004 over 300,000 Israeli tourists visited Egypt, a figure that was up by 51 percent from the same period last year. In fact, Israelis are among the top 10 nationalities who visit Egypt before the intifada in 2000, they were ranked in the top five. When news of the car bomb that shattered a 10-story façade at the Taba Hilton hit the airwaves during the Sixth of October weekend most Egyptians braced themselves for yet another slap in the face for the volatile tourism industry.

Press reports of frantic Israelis being shuttled across the border for medical treatment and vowing never to set foot in Sinai again would not only impact the market for Israeli tourists but would no doubt have an effect on tourists of all nationalities.

[b]Fortunately, however, the damage was not as profound as tour operators initially anticipated. Immediately following the attacks, Sharm El- Sheikh reported minimal cancellations with occupancy rates remaining at their high-season average of 70-80 percent. [/b]

“It is very different from past terrorist incidents that have occurred at other Egyptian destinations. Just look at the timing and the choice of place,” said newly appointed Minister of Tourism Ahmad El Maghrabi in a statement following the attack. Maghrabi was referring to the fact that the bombs were clearly targeting Israelis.

[b]Three months after the accident, it is pretty much business as usual at destinations outside of Taba but at the scene of the attack, hoteliers say that it has been tough to recover. Ahmad Anis, general manager of the Sofitel at Taba Heights, says that his business has suffered a lot. “We have four main markets in Taba which is not a destination that is as well known as Sharm El-Sheikh and Hurghada.” The four markets are Britain, Israel, Slovakia and Italy in that particular order. Anis claims that he has experienced a 15 percent drop in his largest market, the British, and other markets have suffered even more.[/b]

“It’s been worse than just cancellation in our hotel. There are entire charter flights that have stopped coming to Taba. We used to have regular Italian and Slovakian charters that brought in at least 160 people to my hotel every week. These flights have been completely halted since the accident. The Italians are now very wary about coming to the area because Italians were killed,” says Anis.

"It is a misconception that we rely solely on the Israeli market in Taba,” says Osama Massoud, general manager of the Marriott at Taba Heights. “We do get a lot of British tourists as well. I think that it is important that we try to market ourselves better so that we don’t rely on one group of tourists alone,” he adds. Massoud believes that the local market also needs to be tapped into. “I think all the hotels in the area now see the importance of tapping into as many markets as we can. The local market can be a savior in times like these,” adds Anis.

[b]International Relations “The Egyptian government cleverly calculated all of this... They are moving towards a warm peace with Israel, getting on America’s good side and giving the economy a boost all at the same time.” [/b]


[b]Bush Again[/b]


[b]The verdict on November 2 that the world was going to get four more years of George W. Bush in the White House was no cause for celebration in Egypt or elsewhere in the Middle East. The major issue at hand where Egypt is concerned was how aggressively President Bush would be pressuring the Mubarak regime on reforms.[/b]

“I think they have to tread softly on these issues because America is caught in a dilemma. They see regimes that are not democratic and they feel the need to change that, while they are at the same time dependent on them for support in the region,” says Glenn Johnson, head of the Walid Bin Talal Center for American Studies at AUC. “We will more than likely continue to see some quite pressure behind the scenes to reform. There will be increased pressure to alter the education system especially in a country like Saudi Arabia. In the case of Egypt, the US is too dependent on Mubarak as an ally, they are not going to jeopardize that by pushing a whole lot harder,” he adds.

In a recent editorial, Ibrahim Nafie, however, claimed that “growing hostility towards Egypt in the US Congress, as evidenced by bills targeting US aid allocation to Egypt, has prompted the government to devise a new framework for its relations with Washington, one that will better enable us to channel these relations towards advancing our political, economic and strategic interests.”

[b]According to Imad Gad, Bush’s reelection was one of the main factors that have prompted Egypt to take on a more active role in improving its relations with Israel. “Bush is here for the next four years and there is nothing we can do about that. Israeli Prime Minister Ariel Sharon is his trusted ally, our economy is suffering and Arafat is gone. I believe that the Egyptian government cleverly calculated all of this and decided to take the more practical, pragmatic route for a change. They are moving towards a warm peace with Israel, getting on America’s good side and giving the economy a boost all at the same time,” says Gad. [/b]

As with every other event this year, the long-term impact of this remains to be seen.[/quote]

baby steps... but steps that wouldn't be taken imo, if Bush wasn't at the helm... progress doesn't happen overnight...

btw, don't hit me w/ the cosmetic changes or shit like that... i bolded those comments to for all to read and notice... we don't know how much of a difference it will actually make, but it sounds good on the surface... there is A WHOLE BUNCH of work still to be done though... but having egypt and israel signing a trade agreement is definately a step in the right direction...

[Chris Henrys Dealer]

But they've recognized each other and had trade relationships since 1979? That's what cost Egyptian leader Anwar Sadat his life.

Also, Hosni Mubarak is a smart man. He's a virtual dictator, but importantly in world eye's, a secular one. The longest thorn in his side have been groups like the Muslim Brotherhood etc. In this current world climate, it's perfect to cosy up to the Western world and have them remove his problems.

The re-election of Bush definitely would have reshaped their thinking, it probably would for any country, but Israel / Egypt have been doing their thing for a while now. Definitely though, you can say that scope is increasing.

[Guest bengalrick]

[quote name='Stanley Wilson's Dealer' date='Aug 8 2005, 01:18 PM'][b]But they've recognized each other and had trade relationships since 1979? That's what cost Egyptian leader Anwar Sadat his life. [/b]

Also, Hosni Mubarak is a smart man. He's a virtual dictator, but importantly in world eye's, a secular one. The longest thorn in his side have been groups like the Muslim Brotherhood etc. In this current world climate, it's perfect to cosy up to the Western world and have them remove his problems.

The re-election of Bush definitely would have reshaped their thinking, it probably would for any country, but Israel / Egypt have been doing their thing for a while now. Definitely though, you can say that scope is increasing.
[right][post="126867"]<{POST_SNAPBACK}>[/post][/right][/quote]

i didn't realize that... i guess they just extended the trade relationship, right?

[Chris Henrys Dealer]

Hi Rick, I think so, but the article does make a fair point that current administrations in Israel and the States are the reason for this proposed increase.

Sadat was assasinated by members of the Egyptian Islamic Jihad group in 1981. The official line was due to his signing the treaty with Israel. As the first Arabic country to do so, he was villified in the rest of the Arab world as a sell out to the palestinian / ARAB cause.

In the two years after 1979, he launched a brutal campaign against fundamentalists, losing much of the support he had garnered in the West for his actions in 1979.

There's a clip of a younger Ayman Al-Zawahiri in court shouting in English at court officials after his arrest that you might have seen. CNN shows it a fair bit.

Finally, some conspiracy draftniks also think that the Jihad thing was bullshit, and it was an assasination by Hosni Mubarak (who was chief of the air forcr I think) to get himself into power.