Feeling the squeeze

The state-owned press owes billions. They are debts, writes Fatemah Farag, that land both the government and its media in a quandary

---

The state-owned press -- comprising 10 institutions ranging from the internationally-renowned Al-Ahram to the little known Dar Al-Taawoun -- is in debt to the government to the tune of LE7 billion. This much is not news; but what has everyone in the business in a huff these days is that within the government there are now those making noises to the effect that it might ask these organisations to pay up.

The debts of the state-owned press were first subjected to public scrutiny under the government of Prime Minister Atef Sidqi in 1991. At the time, they were estimated at LE55 million, with the larger organisations, including Al-Ahram and Al-Akhbar, still in the black.

By 2005 the state-owned press was clearly in financial straits. In a measure that was widely perceived as an attempt to repair faulty financial structures, the positions of chairman of the board and editor-in-chief were separated. By summer of the same year, allegations of gross mismanagement and corruption began to emerge against the previous incumbents of the joint post. Shura Council Chairman Safwat El-Sherif announced that a special committee headed by former prime minister Ali Lutfi would look into the matter and suggest solutions, while Minister of Finance Youssef Boutros Ghali established a separate investigation, sub-contracting the job to the accounting firm of Hazem Hassan.

Come January 2007 and the results are in. According to the report of the committee headed by Lutfi, the cumulative debt of the state-owned press has reached LE7 billion, with Al-Ahram topping the list. The latter alone accounts for some LE3.5 billion in debt, followed by Al-Akhbar and Dar Al-Tahrir.

Much of the ensuing debate has focused on questions of ownership. El-Sherif this week came out vehemently against privatisation, calling on the government to pull back. At the same time, the Ministry of Finance seems to be pushing for at least a partial sell-off. One of the solutions thought to be on the table is the privatisation of publications that make losses, as opposed to the outright privatisation of the big dailies.

"There is talk of setting up a holding company for state-owned organisations which suggests the financial restructuring of these organisations as a first step to their eventual privatisation," says Khaled El-Sirgany of Al-Ahram, who is also editor of Al-Destour's media-watch page. "The differences between senior regime figures on the issue seems to reflect a conflict between the old guard of the ruling party, represented by El-Sherif, and the new guard represented by Boutros-Ghali."

Press laws passed in the early 1960s placed ownership of the press in the hands of the country's sole political party, the National Union, which later became the Arab Socialist Union. The Shura Council inherited the press from the latter, following the introduction of the multi-party system under President Sadat in the late 1970s and the law has yet to change.

But why make a fuss about these long-standing debts now? The sheer magnitude of accumulated debt could well have forced the issue. There are also those, including Makram Mohamed Ahmed, the former editor-in- chief of Al-Mussawar, who see the issue as politically motivated. Ahmed has been quoted as suggesting that in bringing to the fore the debt issue, the government is punishing the state-owned press for having widened its margins of freedom, opening its pages to views and opinions from across the political spectrum.

Yet, says Sirgany, a cursory look at the state-owned press since the reshuffle of 2005 suggests that "if anything, the margin of freedom has decreased."

"The former editors were the regime's men and understood the red lines, and hence could afford to stretch the margin of freedom. But the new leaderships are all novices ,and this is expressed in their fear of crossing the line of the acceptable."

"A close look at the opinion pages of Al-Ahram over the past two years," he continues, "reveals an increase in contributions by members of the [ruling NDP's] Policies Committee, and you find the same people writing in all three major national papers. So what kind of diversity of opinion are they talking about?"

Salah Eissa, the editor-in-chief of the weekly Al-Qahira, offers another rationale, suggesting that the government is attempting to implement within the media, the policies that it advocates in other areas of economic life, which is that state-run institutions should be run in an economically viable manner.

Many of these debts are owed to social and health insurance bodies. "For years these organisations have collected social and health insurance premiums from their employees, but have not forwarded the monies to the relevant government bodies," explains Sirgany. He points out that while this seems to imply obvious corruption, critics of the economic performance of the state-owned press continue to shy away from holding those responsible for this, as well as other forms of corruption, legally accountable.

The solution advocated by El-Sherif is that the debts of these organisations be rescheduled, in tandem with their undertaking medium- as well as long- term financial and structural reform. Sirgany advocates a change in ownership that would transform the state- owned press organisations into genuinely public institutions, where journalists would enjoy controlling shares and be able to hold senior executives accountable. But unless financial restructuring is coupled with editorial reform, many observers argue, the process will amount to nothing.

The debate over the future of the state-owned press comes at a difficult time for journalists. While the margins for the proliferation and development of an independent and privately- owned press have expanded, press freedom and the rights of journalists have witnessed setbacks. According to Arab Press Freedom Watch's (AFPW) Annual Report on Press Freedom in Egypt 2006 released this week, "during the last year the Egyptian press has been exposed to unprecedented violations and abuses."

Even if the government does not opt for outright privatisation, and chooses to re-schedule debts, the continuing development of a vibrant, privately- owned independent and opposition press leaves the state-owned institutions with a problem that they can no longer ignore. Sirgany estimates that "if the state-owned press does not re-structure soon, then their current market share of 80 per cent will shrink to 40 per cent within a couple of years, with the privately owned papers taking up the shortfall."