Egypt Under Pressure: A contribution to the understanding of economic, social, and cultural aspects of Egypt today

158 Pages·1986·2.722 MB·English

by  Marianne Laanatza, Gunvor Mejdell, Marina Stagh, Kari Vogt, Birgitta Wistrand

EGYPT UNDER PRESSURE
A contribution to the understanding of
economic, social, and cultural aspects of
Egypt today
BY
Marianne Laanatza
Gunvor Mejdell
Marina Stagh
Kari Vogt
Birgitta Wistrand
Scandinavian Institute of African Studies
Uppsala 1986
Published and distributed by
The Scandinavian Institute of African Studies
P 0 Box 1703
S-751 47 Uppsala, Sweden
EGYPT UNDER PRESSURE
A contribution to the understanding of
economic, social, and cultural aspects of
Egypt today
BY
Marianne Laanatza
Gunvor Mejdell
Marina Stagh
Kari Vogt
Birgitta Wistrand
Scandinavian Institute of African Studies
Uppsala 1986
O The Authors 1986
ISBY 91- 710 6-255-6
Printed i n Sweden by
The Scandinavian Institute
of African Studies, Uppsala 1986
1. EFFORTS TO CHANGE THE DImION OF THE Mrr71P'FWQ
E O N W - Are they hsed on reality or illusion ?,
Mar ianne Laanatza
2. MILITANT I S M I N EGYPT
A survey, Kari Voqt
3. RELIGIOUS REVIVAL AND POLITICAL IVIDBTLISATION:
Developmt of the Copitic -unity in Egypt,
Kari Vogt
4. THE PRESS IN -
Hm free is the freedom of speech ?,
Marina Stagh
5. THE IMAGE OF EUROPE IN EXXPTIAN LITlFRAm:
Tm recent short stories by Baha Tahir on a rearrent
t h e ., Gunvor l& jdell
6. TOURISM IN EXXPT -
Interclmnge or confrontation, Birgitta Wistrand
7. THE FOLLCW-UP IN M ; W F , Mar i m e L aanatz a

The publication pressure is the result of a co-operation between
soms Nordic researchers representing different disciplines. In April 1985 a
two-day seminar on Egypt took place in Stockholm at the Swedish Institute of
International Affairs. A grant covering travelling expenses -was made by the
Nordic Co-operation Cammittee for International Politics. All contributors
of this publication participated as wll as Eva Nyberg, researcher at the
University of Stockholm, and Ekatrice Zeidler-Blomberg, editor at the
Institute of International Affairs. During the sminar each one presented
their respectivs subject concerning the Egyptian society. From the lectures
given and the discussion which follow&, we decided how to continue the work
on mch subje&. This bcok is the result of our efforts, published by tl~e
Scandinavian Institute of African Studies in Uppsala, to which we want to
express our appreciation as well as to the Nordic Co-operation Caranittee for
its grant.
Stockholm June 1986
m THE WTBE
ARE THEY BASED ON REALITY Q . I LLUSION ?
The pressure on the Egyptian econq is growing, both from inside and
outside. On one hand the International Monetary Fund has tightened its
conditions for lending to Egypt, thereby trying to force President Hosni
Mubarak to bring about new econcanic reforms. On the other hand, any econmic
reform leading to increasing costs of living, constitutes a political threat
in a society with high unemployment and underemployment, and where ordinary
civil servants and other middle-class people already need to have tkK) jobs
to afford a rnodest way of life.(l) The opinion of many Egyptians was that
President m a k tried to pursue a good policy, although taking small
steps. Due to mre or less uncontrolable factors, the economic situation has
deteriorated, and earlier feelings of confidence are beaming undermined.
The base of the Egyptian economy is a very weak one, and easily disturbed by
external factors. Oil ex~~rtsre,m ittances frm Egyptians working abroard,
Suez Canal tolls, and tourism constitute .the main revenues in the current
account balance. At present, all of them are affected, and the dependence on
foreign economic assistance, especially frm the Americans, is growing, The
heavy burden of subsidies in the Egyptian budget forms the main problem that
faces the government, How to alter its obligations has b e m t he mst
important and urgent question.
Tne purwse of this chapter is to examine the steps taken by President
Ltbarak, by which he is trying to influence different individual economic
factors in -ays acceptable to bth the Eg\jL2tian people and outstanding
foreign finacial authorities.
THE IIMITACE OF PRESIDENT SWI'
The economic policy of President MuSarak's predecessor, President Anwar
Sadat, was announced as "a1 Infitah" or the "Open Door" policy. It
was introduced in the first half of the 1970's. The intention was a
reorientation in political-economic strategy, which included a
liberalization of foreign trade, mre positive attitude towards foreign
investment, and less restrictions on the financial and banking sectors. The
annual growth rate of the EWptian economy was 8,5 p r cent during the
second half of the 19701s, which was pointed out as a proof of success of
"a1 infitahu-policy. Egypt becam aligned with the West, and this
relationship deepened, especially after the Camp David conference in
Novemkr 1978 and the following peacy treaty with Israel in March 1979.
The liberalizing tendencies in Egypt were established even though the
economic mnagement remained highly centralized, and acted quite contrary to
mrket forces. The Egyptian gover~~nencto ntinued its underpricing of basic
-
comtlwdities and energy, as it had done since the days of President Nasser
then however, in a socialist frame.
The costs of the subsidies have increased tremendously. When Mubarak carne
into power the bill of the direct subsidies exceeded $2 billion. The
official figure on budget outlay including all calculable direct subsidies
for 1982/83 was just under $2.5 billion. If the indirect energy cost would
be included the figure for subsidies would be at least doubled. - Anyhow, in
a study of the 1979 subsidies, done by the US Agency for International
Developrent (AID) in 1981, it was esthted that indirect subsidies going
towards fuel and electricity were higher than direct subsidies for both food
and energy. ( 2 1
"Al infitahW-policy d i n e d with these subsidies led to an increasing need
for borrowing. The econanic dependency upon the US b e m r emarkable. The US
ecencmic assistance program for Egypt during the period 1975-82 munted to
roughly $7.6 billion, together with an additional $4.2 billion in military
aid.( 3)
Although Egypt gained substantial foreign exchange earnings during this
period fram oil exports, remittances, Suez Canal tolls and tourism, the
pressure on the public finances led to a balance of payment deficit and
growing external debts. In 1982/83 the balance of payrent deficit was b u t
$1-8 billion and the foreign debts was nearly $22 billion at the end of
1982. (4)
The backside of President Sadat 'S "a1 in£i tah" policy has been colourfully
described by Fouad Ajami, nmly that "its harvest was wild rents, land
speculations, inflation, and corruption..,.The official classes plunged into
.
the private mrket " ( 5 ) An Egyptian businessman made another s d n g u p of