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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Focus Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Head in the sand
By Aziza Sami
The way the Egyptian economy is perceived by the decision-makers shaping the world's financial policies becomes significant when such perceptions prove to be at odds with what the government says.
The fact that a foreign official or financial adviser visiting Egypt can speak frankly with the members of its business community about their problems, when their own government does not address these issues with the same candour, leaves one wondering how transparent the interchange between government and business really is.
At a luncheon where the American Chamber of Commerce in Egypt (AmCham) hosted US Secretary of the Treasury Lawrence Summers on Sunday, the secretary said he had expressed the following thoughts at his meeting with Prime Minister Atef Ebeid: "The single best policy a country can pursue to attract investors is that [these investors] be properly treated -- have proper opportunities. Our... friends [the Cabinet's economic group] agreed in principle. I said, this has to be not only in principle, but also in practice."
Summers's remarks proceed not from a vacuum, but from a studied knowledge of what local and foreign businesses are saying. "Non-discriminatory tax rules, courts that enforce contracts properly, the ability to obtain input at relatively fair prices" -- if realised, these goals would indicate what the secretary described as "a hospitable attitude to the foreign investor."
The accusation that Egypt is discriminating against foreign investors through its laws and its bureaucracy is a serious one. It acquires greater import in light of the government's constant declarations that it seeks foreign investment, and is encouraging it. It must be taken yet more seriously when the market is at a standstill, and action more vigorous than mere declarations is needed to resolve its problems. Weary of the current inertia, some of those attending the AmCham meeting seemed to want Summers to voice their unspoken concerns. "In your meetings [with officials], did you feel the government knows what it is doing?" one AmCham member asked the secretary with the innocence of a child wondering at the emperor's new clothes. Summers received the question with inscrutable passivity.
"The government is 'aware'," he said slowly, "of what needs to be done. I was impressed by their commitment to strengthen the economy. But it is important not just to make it a matter of time."
At the luncheon tables, despite the measures the government has said it will take to resuscitate the market, the mood was pessimistic.
General Motors in Egypt is starting to lay off its workers, said GM-Egypt chairman Jay Ganatra. "If the government does not resolve the liquidity squeeze in six weeks' time, we will have to downsize our labour force even more, from 1,100 down to 800," he added.
"The public sector banks are shaken by their bad loans, but average Egyptians and sound businesses -- now unable to obtain credit -- are the ones paying for the banks' mistakes."
"The government is fixated on the exchange rate, and will not consider slight devaluation, even though world currencies are fluctuating, and the euro is down by 20 to 30 per cent against the dollar."
"The government claims it is repaying its LE25 billion in accumulated debts to the contracting and public sectors, but it is not."
These were the topics of conversation among members of the American Chamber of Commerce -- in other words, a substantial portion of the country's local and foreign businesses.
When an international financial personality like Summers meets with government officials, he listens to good intentions and hears suggestions for cosmetic remedies. Once he sets foot out the door, however, he will inevitably hear the truth.
The government cannot hide the facts when the market is open and the audience -- whether we like it or not -- is the world at large.
What is tying the government's hands? Where, on its agenda, are the issues it must tackle? How is it facing the economy's basic problems -- production structures are not geared for export, the educational system cannot produce a competitive labour force, employment prospects are dim, private initiative is stifled, and small and medium enterprises, the "engines" of economic growth, are not receiving adequate support?
The government has a message it must relay to international investors and to the Egyptian private sector: it will overcome corruption and vested interests. It will own up to the facts about its own performance, and about the market's glaringly evident problems. It must not ask the world to admire its new clothes.
