CAIRO — Egypt’s political and economic elites are in the midst of an intense policy tussle over the pace of change and the country’s future. The July 9 resignation of the government led by Atif Obeid, 72, and the appointment a week ago of Ahmed Nazif, 51, a computer engineer, seemed to be the beginning of an earthquake.
“I feel the choice of prime minister was a surprise,” said Hedayet Abdel Nabi, an Egyptian journalist. “Again, President [Hosni] Mubarak surprises the people — but with a good surprise, because for the first time, the pulse of the people was reflected in the choice of prime minister.”
“They wanted a young man, an expert, to modernize the country and get it liberated from the policies of the old guard. But what is to be seen — and we all remain cautious — is whether the new government with its 14 new faces will really deliver on the demands of the people,” Mr. Abdel Nabi said.
The Obeid government had been criticized for its poor track record in economic reform.
The reshuffle came days after Mr. Mubarak’s return from Germany, where he had an operation for a slipped spinal disk.
“We’re fed up with this government. We’ve lost hope in any real changes,” said Naguib Sawiris, chairman and chief executive officer of the mobile-phone giant Orascom Telecom, Egypt’s largest multinational corporation.
Mr. Sawiris also slammed the government’s privatization plan as “zero” and criticized policy-makers for delays.
“They give you 100 reasons why they are not doing things,” Mr. Sawiris said before the reshuffle.
“The country needs a face-lift,” he said, prophetically singling out Mr. Nazif as one of the few genuine reformers of the previous Cabinet.
The divide is between a new generation of leaders eager to drastically reduce the role of government in the economy and overhaul the bureaucracy, and an old guard around Mr. Mubarak, 76, that prefers gradual change for a variety of political and security reasons.
A report this year by the Office of the U.S. Trade Representative (USTR) said Egypt’s plans to prepare four state-owned insurance companies for privatization “have made little headway” in the past few years. Similarly, although legislation was passed in 1998 to allow privatization of four state banks, which hold more than half the banking sector’s total assets, “the government has announced no explicit plans for privatizing them,” the USTR report said.
“We should go faster. What is pulling us back is bureaucracy,” said Abd El-Fatah A. Loufti, vice chairman at the Chamber of Commerce of Alexandria, northwest of Cairo.
Critics such as Mona Makram-Ebeid, adjunct professor of political science at the American University in Cairo, think the country needs a strong dose of economic and political liberalization.
“There’s a lot of cronyism, corruption and stagnation among the decision-makers,” said Mrs. Makram-Ebeid, a former member of parliament who faults the government for having been slow to open up the Egyptian economy.
Reformers want Mr. Mubarak to lift the emergency law and amend the constitution to enhance democracy and promote political participation and civil liberties.
’Gradual change’
However, Ossama El Baz, political adviser to Mr. Mubarak, told a group of foreign reporters: “We still believe in gradual change.”
Mr. El Baz, a Harvard-trained lawyer and the architect of Egyptian foreign policy for the past two decades, said the country has witnessed many rapid changes in the past 50 years, including the change from a monarchy to a republic and the signing of the peace agreement with Israel in March 1979.
“Reform should be gradual and not overnight from black to white. But you have to move and not stand still. [Otherwise] you ruin your economy. So we started to introduce changes and reforms.”
Mr. El Baz says Egypt “can live with gradual transformation” and noted that the country’s spending for education has increased by 315 percent in the past 13 years.
He said one of the major reformist achievements of the Mubarak era is: “We succeeded, more than other areas [in the Arab world], in spreading freedom of thought and expression.”
He was quick to add, “We succeeded in establishing the legitimacy of the private sector. [The previous] socialist era looked on the private sector as a bunch of thieves.”
But Mr. El Baz said more needs to be done in order to raise the standard of living and that the most pressing problem for Mr. Mubarak is the economy.
Necessary growth
The World Bank says about 17 percent of Egypt’s population lives below the poverty line, but the gap has widened between the more affluent Lower Egypt, where the Nile runs into the Mediterranean, and poorer Upper Egypt to the south.
But with the explosion in Egypt’s population — now 72 million, up 29 percent in 12 years and rising about 2.5 percent annually — and high unemployment, the country needs to increase the pace of economic reform, say Egyptians who study such issues.
James Kunder, deputy assistant administrator for Asia and the Ear East at the U.S. State Department’s Agency for International Development, told the House International Relations Committee last month, “In Egypt, basic economic challenges — stagnant real wages, a growing debt burden and unemployment in excess of official estimates — require a renewed and sustained commitment to real economic reform.”
David Welch, the U.S. ambassador to Egypt, recently pledged “continued U.S. support for Egypt’s economic reform program.” He has expressed “cautious optimism” but said, “More must be done for the country to compete internationally.”
Amr Moussa, secretary-general of the 22-member League of Arab States, of which Egypt is a member, says the reform issue should be accorded “the highest priority.”
“Reform should be the order of the day, because we need it and no ifs or buts,” he said.
Mr. Moussa, a former foreign minister of Egypt, said, “The market economy, open economies, globalization are now the rules of the game.”
Ismail Serageldin, a former senior vice president of the World Bank, estimates that the Egyptian economy needs to grow 6.5 percent to 7 percent annually to accommodate the 800,000 new entrants to the labor force each year.
Mr. Serageldin, director of the Library of Alexandria — founded in 288 B.C. and recently restored as a museum of antiquities 1,600 years after its destruction — said the projected 4 percent to 5 percent growth is not enough.
But senior Egyptian officials sympathetic to Mr. Mubarak’s philosophy of gradual reform argue that advocates of trying a “big bang” do not adequately consider the social consequences.
Sources close to the president say he thinks a fast pace could put reform at risk.
Others say these are excuses by an entrenched elite more interested in holding on to power than in pursuing genuine reform and economic growth.
“We need to move fast, but his does not mean losing stability,” Mr. Serageldin said. “We need to move quickly, but make sure it does not lead to upheavals.”
New guard
The president’s son, Gamal Mubarak, 41, is in the camp of the reformers. A former banker, he heads the policy unit of the ruling National Democratic Party.
Mr. Nazif is an ally of Gamal Mubarak. He earned his bachelor’s and master’s degrees in engineering at Cairo University and a doctorate in computer engineering in Canada.
Mr. Nazif joined the government as executive manager of the government’s information center and was appointed five years ago to the Obeid Cabinet to head the new Communication and Technology Ministry and given the mission of bringing Egypt into the era of the World Wide Web.
He became an advocate of free Internet access for Egyptians and recently told an Egyptian newspaper that about 1 million Egyptian households have Internet access, “which translates into around 2.5 million users. Four years ago, there were only 300,000.”
International Cooperation Minister Faiza Abul Naga, a holdover from the previous Cabinet who kept her post in the new government, said Egypt has “great potential” but cautioned that reforms must come gradually and at a pace that “Egyptian society could absorb” without creating social unrest.
Mrs. Abul Naga said the country is opening up its markets and changing Egypt’s economy to fully integrate it into the global economy. She said the country’s “heavy bureaucracy” of 6 million is a big problem, but that it cannot be overhauled overnight and must try to modernize and upgrade the skills of government employees.
In 2003, despite the war in Iraq, Egypt’s economy grew by 3.2 percent, thanks to a boost in merchandise and services exports aided by a sharp devaluation of the Egyptian pound, which followed the decision to float the currency, while the country’s foreign debt stood at $29 billion.
How the debate over economic reform plays out could prove decisive for whether Egypt surges forward — a move that would act as an engine for the whole region — or lag and risk bigger problems later.
White House fightsfor military aid to Cairo
UNITED PRESS INTERNATIONAL
The Bush administration last week pressured Congress to maintain U.S. military aid to Egypt, the Middle East Newsline reports.
The House voted to approve amendments to a $19.4 billion foreign-aid bill that could cost Saudi Arabia millions of dollars in military costs and cut off aid to Jordan.
Senior administration officials were summoned Thursday to beat back a House attempt to cut $570 million in military aid to Egypt. Egypt received $1.3 billion in military aid from the United States last year.
The House effort was led by Rep. Tom Lantos of California, the ranking Democrat on the House International Relations Committee, who proposed a three-year plan to convert U.S. military aid to Egypt into economic assistance. Mr. Lantos, supported by House Majority Leader Tom DeLay, Texas Republican, has said that Egypt failed to cooperate with the United States on a range of strategic issues, including the war on terror and conflicts in Iraq and Sudan.
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