Waiting for war
Government officials and business associations are bracing themselves for an anticipated US attack on Iraq. Mona El-Fiqi reports
As war in Iraq becomes increasingly likely, an eventuality which experts believe will have an extremely negative impact on Egypt's economy, government and private sector representatives met last week to discuss ways to minimise the damage.
The government's first step was to check with business associations on the status of essential food commodity stocks and inputs for manufacturing.
Last week, the Minister of Supply and Internal Trade Hassan Khedr, announced that Egypt's stocks of strategic commodities exceeded international levels and would meet Egypt's consumption needs for the coming few months. Khedr added that President Mubarak has given instructions to increase these stocks in order to provide people with their basic needs.
Additionally, the Ministry of Supply and Internal Trade has decided to establish emergency centres in all governorates to deal with people's complaints about increases in prices or shortages in basic commodities.
The industrial sector is also preparing for the negative effects of a war. Producers say that if the Middle East becomes a war zone, they will not be able to import materials used in manufacturing or export their final products. They also expected a rise in shipment costs.
Last week, the Minister of Industry Ali El-Sa'idi, met with representatives of the Federation of Egyptian Industries (FEI) to discuss ways to protect Egyptian industry from the fallout of war.
During the meeting it was agreed that the FEI will establish a fund to help manufacturers whose businesses might be negatively affected by the war. The fund, which will be financed by producers themselves, will provide assistance to companies finding it difficult to pay back their bank loans.
El-Sa'idi also said that the government has decided to exempt imports of raw materials, and other production inputs used in manufacturing food commodities, from customs duties over the coming three months. He added that, if necessary this period could be extended. However, he stressed that it is up to the private sector to cooperate and overcome this crisis.
Mahmoud Soliman, chairman of the 10th of Ramadan Businessman's Association estimated the losses to Egyptian industry, in the event of a war, at $8 billion. Soliman explained that losses expected in 10 Ramadan city alone are $1.5 billion.
According to a study conducted by the association on the negative impact of war on 10 Ramadan city, producers will lose as much as $500 million in exports to Iraq.
Moreover, the study says that producers in 10 Ramadan city expect a 25 per cent increase in prices due to increases in input, shipping and insurance costs.
In addition, 10 Ramadan city will lose foreign investments estimated at $300 million annually, the study says. The study points out that investors in the city have already incurred some $250 million in losses due to the pound's devaluation.
As for solutions, Abdel-Moneim El- Seoudi, chairman of the FEI, said that in order to soften the expected negative impact on industry, producers have to find local alternatives to their imports. He added that this will help factories to continue working during the war.
FEI members have also agreed to establish a committee to identify the current levels of raw materials that factories have in stock and what their needs will be over the coming months.
