Al-Ahram Weekly Online   7 - 13 April 2005
Issue No. 737
Economy
 
Published in Cairo by AL-AHRAM established in 1875

Salah El-Amrousi

QIZ politics

Salah El-Amrousi argues that politics lie at the heart of the agreement establishing Qualified Industrial Zones in Egypt

The agreement on Qualified Industrial Zones (QIZ) had generated much controversy even before it was signed on 14 December 2004. QIZ is technically a protocol, we've been often reminded, but it is fraught with politics. Critics of QIZ say the politics behind the deal are too immense to ignore. The agreement, they argue, conflicts with the long-term interests of Egyptians and undermines the cause of national and social liberation. QIZ proponents disagree, offering a range of short-term justifications, specifically pointing out that the agreement would boost trade.

The media hype surrounding the deal was less than helpful. The government, for its part, denied the political nature of the agreement, saying that QIZ was solely motivated by economic considerations and "the interests of Egypt." Critics play up the political nature of the deal, calling it a second Camp David, a fourth Israeli invasion of the Egyptian economy, and a return to the Middle Eastern common market scheme.

Even among the liberals, doubts have been voiced. "The agreement was not signed for purely economic reasons, but as part of a political process aiming to improve the conditions in the Middle East, with economic interests used as a smoke screen. The military intervention in Iraq and the continued talk about the need for change in the Middle East, all this constituted a major change in the international scene and placed immense pressures on governments," wrote Hazim El-Biblawi, a leading liberal economist. "If it were true that the signing of QIZ was necessary to protect the Egyptian industry from collapse after the rescinding of the quota systems in America, this would cast doubts on the government's performance over the past 10 years. I hate to think that we left matters to fester till the last minute and then relied on last minute help from Israel and America. I prefer to think that the deal was made for political reasons that will become clear one day. This is the more benign explanation."

Whether it is a case of selective memory or political spin, it is inconceivable that the government forgot to do its homework for an entire decade. The QIZ was either signed for purely political reasons or motivated in large part by politics. It is interesting how politics can influence economics when decisions of political nature are monopolised by so few. And yet, there is indeed an economic aspect to QIZ. The textile industry is in dire straits, not so much due to administrative failure as because of neo-liberal policies, something our neo-liberal economists decline to discuss.

Even the Egyptian minister of foreign affairs has contradicted the government's claim that QIZ is a purely economic process. Speaking to the members of the American Chamber of Commerce, he said, "I think what matters most about QIZ is that it is a political process dressed in economic clothing... There are new developments on the international, Israeli, Palestinian and Arab scene... that make QIZ more of a political opportunity than a specific economic tool." The minister's statements make QIZ look like as a political opportunity at best, or the result of political coercion at worst.

This is not totally true, for the agreement was motivated by both ideology and vested interests. And yet, the minister's remarks suggest that QIZ is part of a larger process, one of re-arranging the regional map according to US and Israeli wishes, one of promoting normalisation with Israel.

QIZ has been sold to the Egyptian public as something that would save Egyptian textile exports from impending doom. It is hard to imagine that other partners in that agreement did not see QIZ as a way of stimulating the process of political normalisation with Israel, a process that has been stalled for years.

Trade Minister Rasheed was rather candid in his comments about QIZ. Speaking after a meeting between President Hosni Mubarak and Ehud Olmert, Israel's minister of industry, trade and labour, Rasheed expressed hope that the agreement would enhance the economic interests of Egypt, Israel, and the entire Middle East. QIZ "would contribute to the achievement of comprehensive and just peace in the region," Rasheed said, dismissing claims that Egypt was under political pressure.

Unlike Egyptian officials, who played down the political aspect of QIZ, the Israelis and Americans were outspoken on the matter. Following a meeting with President Mubarak, Israel's Olmert lauded QIZ for offering "benefits that transcend bilateral commercial and economic agreements... The agreement will provide a precedent for other countries in the Middle East. More countries will discover that having peace with Israel does not just lead to neighbourhood but also opens great prospects for economic exchange and business ties, as well as to better quality of life to all concerned nations."

The US trade representation office saw the agreement as the beginning of a historic trade partnership. Before his departure to Cairo to attend the signing ceremony, US Trade Representative Robert Zoellick said that QIZ was the most important agreement between Egypt and Israel in two decades and a fruitful outcome of President Bush's plan to promote US relations with the Middle East in a way that encourages development, openness, and peaceful economic ties between Israel and its neighbours. Such industrial zones, he said, would create daily opportunities for personal and trade contact between the Egyptians, Israelis, and Americans.

Zoellick said that while in Egypt he discussed the way QIZ is to contribute to a wider programme of economic reform in Egypt. Discussions, he added, addressed Egyptian-US cooperation with regards to bilateral and regional ties as well as world trade negotiations (the US had been complaining of Egypt's policy on matters related to agricultural commodities in WTO negotiations). The US trade representative said that QIZ was a step towards achieving President Bush's vision of a Middle East free trade area, a scheme that would lead to the integration of national economies from Morocco to the Gulf.

To conclude, QIZ has much to do with normalisation and with the integration of Israel's economy in Arab economies. It is, therefore, a political issue of utmost national importance. To deny this fact is to subjugate national political considerations to so-called national economic interests.

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