E gypt
Back to capitalism
Peter Hobday
There's something fascinating going on in the State of Egypt. After years of Nasserite
socialism, President Anwar Sadat has been cautiously but effectively putting the economy in the hands of the once despised capitalists – both domestic and foreign. He has stilL a very long way to go along the road to full capitalism but a start has been made – foreign banks have been welcomed back to Cairo; Barclays was the first to go. A stock exchange has been opened, and its aim is to become the main international exchange for the Middle East. Foreign exchange rules, once so strictly applied, have been loosened, In fact, seventy-five money changers in Port Said have been given a licence by the Central Bank, and they have been quoting around seventy piastres to the US dollar which amounts to a partial devaluation of Egypt's currency.
Behind all this there is the Egyptian five
Year plan up to 1980 which will spend up to £7,000 million on some of the biggest development schemes in the area, Over half will be Spent on rebuilding the whole of the Canal Zone with new towns at Port Said, Ismailia and St Suez. The Egyptian authorities have been entertaining western businessmen and giving them the red carpet treatment. But after twenty-five years of being in a permanent state Of War with Israel it is not surprising if the businessmen are very cautious about believing all that they hear. This is one of the reasons Why President Sadat himself has been travelling the well-worn circuit to the political caPitals of the world, including London, some twenty years after the Suez operation. He has been busy pointing out that his conversion to the idea of using profit as a bait for the foreign investor is no short-term expedient which will be suddenly reversed once the money has been sPent. At the diplomatic level ambassadors and their embassy staffs have also been emphasising the same message and telling the would-be investor that officials are busy trying to bury as ,rnuch red tape as they can so that decisions can be taken quickly and effectively. In the country itself there is much talk about the emergence of the 'Liberal man.' The small entrepreneur is being actively encouraged and scirne old Cairo hands talk of, but can't actually grove, startling gains in productivity following etter wage incentives. A few of the old names arx, e aPPearing too such as Omar Zulfikar and ,74-lbammed Farghali Pasha, men who must inave despaired of ever regaining their former nfluence. Even more dramatic in a country Where featherbedding is notorious, the wg°,_,verninent have now announced measures Will allow firms to get rid of surplus enour. What's more a once solemn pledge that LverY graduate was guaranteed a job — which ii ad led in many sectors to more chiefs than — has beh overturned. SO What is holding everyone back? Why isn't th. ere the rush to Egypt that we see in Saudi abia or in Iran? Partly it is the suspicion that, u_esPite all the homed words about profit and Unity of investment, if Sadat can so easily rs. e Nasser's policies on the economic and Political front his successor might do the same. Secondly, and even more fundamental, is the fact that Sadat is not really spending his own money. Despite all the efforts to woo the .western businessman, it is the Arab world, and the oil nations in particular, whd are footing the bills for the rebuilding of Egypt. Saudi Arabia provides the lion's share of the $3,200 million that is pledged by Egypt's neighbours.
Yet one could argue, given the evidence of Arab investment in Europe and elsewhere, that this should actually be an encouragement because if there is a common thread running through the policies of the Oil Sheiks it is the conservative nature of their overseas holdings. They are looking for stability and a good return on their money. Saudi Arabia, the main provider, is anyway more deeply commited to the West than almost any other Arab nation. Also, the United States is now back in the picture, with a $100 million loan agreement. The loan is, in effect, the first tranche of a $750 million aid package. France too, whose President Giscard has also been building political bridges with the Arab world, has signed an aid agreement worth Frs 350 million. Last month President Sadat signed a E20 million deal to buy BAC's Swingfire anti-tank missiles to replace the Russian built Sagger missiles. It is possible to argue that the arms deals will turn out to be the final seal of approval on the new economic policy of Anwar Sadat. Egypt's arms purchases are part of the stated joint strategy of Saudi Arabia, Qatar and the United Arab Emirates to create a £4,000 million arms industry. It puts him firmly in the Western camp, puts him in debt to the more conservative members of the Arab world, and so opens the door for increased trade with Europe and the United States.
Behind all the facts and figures there are other advantages which have not escaped the Egyptian president. With the troubles in Lebanon continuing, many of the bankers and international businessmen have moved down from Beirut to Cairo, which has given a further fillip to the open door policy while at the same time reinforcing Cairo's claim to be the political home of pan-Arab aspirations. The influx has prompted a property boom; the capital is beginning to undergo a facelift. It is a tangible sign that the President's policies are working. A few months after the crossing of the Suez Canal, the military victory that was so necessary to restore national morale, there were placards in the street which said: "We want breakfast as well."
While the economy is still largely controlled by the Government it is too early to talk of a capitalist revolution. But even these early signs of a swing to the right, economically speaking, in a developing country, must give some pause for thought in a Kremlin which has lost out so Orz...,..mically and swiftly in this part of the Arab world.
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