videos are available from the first meeting of the year of Open Letter. Filmed by Rafael Calvino.
can also see this link .
Sunday, February 27, 2011
Sunday, February 6, 2011
Do You Lose Calories With Diarrhea
La economía egipcia: Aplicando las recetas del FMI
Then an old Arabic article of 2000 that provides an overview of development in recent decades, or if drift is to Nasser Mubarak's regime, is well read is a fundamental contribution to understanding modern Egypt. (Shared by fellow Lido).
The Egyptian economy: IMF prescriptions applying
Uncertainties about the political future of the scheme if the following condition liberalization measures Egyptian economic transition
The new Egyptian economy under the aegis of the International Monetary Fund has been developed slowly, facing the internal reluctance to oppose any change that could jeopardize the status quo, and the critics who accuse him of being a strictly focused program to enable the debt to foreign creditors, forgetting Egyptian people. The progress of the new Egyptian economy go for creating two parallel systems in constant contradiction. On the one hand survives, although diminished, the old system of rentier state and other western capitalism appears whose referent is the market.
Egypt's approach to the U.S. in search of a peace treaty with Israel after the 1973 war was a turning point not only politically, but also economically. The first steps toward free trade gave them, timidly, Anwar Sadat in the late seventies with the infitah or open door policy. The theory of this new economic orientation advocated increasing exports, foreign investment, the role of the private sector and trade liberalization. If these measures are added macroeconomic stability have a recipe that the International Monetary Fund (IMF) has recommended to Egypt since the mid-eighties.
The legacy of twenty years of socialism and fear of social change and power structures that could result from new order slabs were too heavy economic who mishandled the changes necessary to move towards free trade. Nor his new ally seen as a priority economic reform, since their main objective was to maintain the peace agreement with Israel in 1979 and the Egyptian regime's stability. These two factors explain much of the slow and sometimes contradictory path of economic reforms that will run until today.
The duality of the economic system
partial measures taken resulted in the coexistence of two systems. On the one hand the massive machinery of the State was providing jobs to most of the population active, subsidizing food and services, while in parallel a new class of merchants engaged mainly export and import of consumer goods under the partial lifting of previous restrictions on the private sector and its good relations with the regime . Subsequently the most important of these businessmen would lead to great economic empires of the nineties.
Another phenomenon of the early years of infitah were Islamic investment companies. These were firms that attracted the burgeoning speculative money coming from the oil boom and remittances of Egyptian immigrants, offering earnings of up to 34 percent. In 1988 these companies collapsed leaving hundreds of thousands of workers without the fruit of several years of work and several banks to the brink of bankruptcy. This bankruptcy be the beginning of the collapse of the ambiguous economic system. Private trade openness increased the current account deficit of 5 billion dollars in fiscal year 1983-84 to 7.5 billion in 1988-89. External debt in 1990 reached 50 billion dollars. The decline in oil prices in the mid-eighties (along with textile major exportable goods in the country) and the decline in traditional exports, lack of competitiveness in the international market, coupled with the aforementioned increase in imports resulted in the destruction of government accounts. Inflation rose above 20 percent, the structural adjustment program presented by the IMF in 1986 was not met and therefore not approved the agreement on debt moratorium at a time when Egypt could not do meet the payment of its foreign debt.
In 1990 the Egyptian government, beset by all sorts of pressures and economic imbalances, in need of new external financing to maintain the pace of its imports of food security depended, accepts a new Structural Adjustment Programme (SAP .) From this time to present the relation of Egyptian executive with international financial institutions go through different phases of tension coinciding with negotiations on the implementation and enforcement of the measures prescribed by the IMF and World Bank (WB).
The SAP outlines submitted to Egypt following the guidelines of free-market orthodoxy is exported by the dominant economic system, where it landed without changing the requirements and solutions according to the characteristics of each particular case, it should sort the problems of a small Central American country like Guatemala, serves a large North African country like Egypt, or one of Black Africa and Mozambique, or Asia like India. The steps are clear:
macroeconomic stabilization. Priority to the numbers reflect inflation, current account, the budget deficit and interest rates.
Make a macroeconomic policy that encourages private initiative, is open to foreign investment, and create the appropriate framework for safety and efficacy for the competition to operate at full capacity without interference.
Privatization of public enterprises, reform of public relations firms, banks and government, public enterprises and liquidate non-viable economically.
local price liberalization in three years, which would eliminate state subsidies for essential items (bread, sugar, tea, etc.) Popular energy sources (kerosene, gasoline, etc.) To their prices reach international levels.
trade liberalization, eliminating the distortions created by the controlled economic system (tariffs and other protectionist measures) and letting the international market and the private sector who mark the prices and the companies that survive in it.
Creating Social Fund for Development to alleviate as much as possible the social costs of SAPs, especially aimed at helping the workers to be dismissed from public enterprises are privatized. The funds that should be nurtured this program will come from international donors, notably EU and U.S..
economic reforms and democracy
One of the premises under which the IMF and WB sell their structural adjustment programs in the Egyptian case seems to be forgotten is that economic reforms alone will bring greater democracy the country where they are deployed. If anything has characterized the landscape Egyptian politician of the last ten years has been the opposite.
Although this article focuses on the reality of the acceptance of the road to free trade that Egypt has decided to take no longer want to remember, however briefly, the rising tide of economists and thinkers who offer alternative economic models that export authorities in Washington. The basis of the criticism is that the very countries that more efforts must be made to adapt their economies, and therefore more costs will represent the new economy are those who have less, and least involved in decision making the new training system. This new trading system is being built in the interests of the richer countries that require infinitely more weak economies that are open to export their products and capital, when the history of free trade in the West has been forged over a century of fighting protectionism and to improve the system. The clearest case of this inequality of interest is the dispute over agriculture. If the free trade, is applied as it is supposed to Europe and Japan would stop producing food that would leave the South, with comparative advantages in this sector, who export and supply these markets. But in fact the opposite is true. Surplus subsidized European farm are exported to the world without the Uruguay Round in 1993, would address the problem of dumping of agricultural products that undermine not only the possibility of export, but production of traditional agricultural country. Something similar, but being resolved, it occurs voluntarily limited textile exports from developing countries. Since the development of this subject requires one or more articles the more we will limit ourselves to quoting some proposed solutions as an alternative to development of societies (not just the economy) to this stream of thinkers. The main idea would be to return the human being the focus of the model, down to Market Your encumbración of deity. Endogenous development, a land division that makes workers productive, improved access to education, a system of preferential tariffs to enable developing country firms have a chance to compete in the global market, promote trade regional collaboration between countries with similar economic characteristics as a starter for foreign trade, the implementation of the Tobin tax, or fair trade that promotes "direct relationships between producers, primarily the South and consumers, especially the North."
Program Structural Adjustment
Since the acceptance of PAE Egyptian executive discussions on the pace of its implementation have been constant. Over these 10 years the Egyptian requests to lower the requirements and deadlines of the program have been supported in many cases by U.S., which regards Egypt as a key to security and stability in the region. For Washington, as happened with the infitah, the stability of the Mubarak regime has priority over any other consideration, whether in democratic development or depth and orthodoxy of economic reforms that could trigger social disenchantment. The other major actor within agencies international finance is the European Union, whose interests in the region are similar, stability over any other premises. European exports to Egypt are large, with very favorable trade balance. The eternally postponed signing of the Euro-Egyptian still take place, which is not an obstacle to trade continue to grow and continue to keep the date of entry into force of the Mediterranean Free Trade Area in 2010. The measures were to bring profound changes in Egypt (in the system of work, wages, consumption habits and life, worsening living conditions of much of society) were administered in doses lighter of what has happened in other parts of the world, but we shall see its effects will be profound in Egyptian society.
IMF pressures to bear beginning the first steps to cut subsidies and privatize the public sector had its counterpart in the restructuring of the debt. In May 1990 he was presented the "Program for 1,000 days," which described in vague intentions on action to take. The first was taken without notice: the price increase of essential items by 40%, or pharmaceuticals by 20%. The IMF called for the total elimination of subsidies in four months. The lower classes, the main affected by this rise, led to riots in several cities which temporarily halted the increases until May 1991 when it was the turn of the fuel. The commitment to the private sector relied on a series of measures including the liberalization of credit outstanding, the reorganization of the bag and the effort to de-dollarization the economy, unifying the different exchange rates against the dollar. The export commitment was based on private initiative, to diversify the range of products, supporting other exports other than raw materials such as semi-finished products.
The Egyptian participation in the Gulf War in the Western camp a radical change in the structure of its foreign debt. U.S. forgave 7.1 billion military debt owed bilateral Egypt had, in consideration of the Egyptian support in the campaign against Iraq. In the midst of conflict, in November 1990, the Paris Club decided to cancel 50% of Egyptian debt. These measures, together with new aid for Egypt Consultative Group of 8 billion dollars for the years 1991-92 and 1992-3, was granted a reprieve and a greater margin of maneuver to the Egyptian government, compared to the pressing IMF demands for further progress on reforms. Financial aid to Egypt during the early years of SAP remained essential support Egyptian finances. The total aid granted by the Consultative Group for the first five years was U.S. $ 6 billion in nonmilitary aid, to which we have to add 2.1 billion annual U.S. aid. In September 1994, benefits alignment of Egypt during the Gulf War continued to arrive in the form of bilateral debt reduction to Kuwait at 2.8 billion dollars. Aid from Gulf countries has always been difficult to quantify, because of the secrecy with which it circulates, but it is estimated that economic aid to Egypt in this area over the past 20 years is about 16.4 billion dollars.
After almost three years of negotiations in May 1991 an agreement was reached with the IMF, which is granted the first loan ($ 372 million) to cope with economic reforms, which opened at the same time access to another loan of $ 500 million World Bank to help implement trade liberalization. This package of assistance allows Egypt to look at the next three years without the anxiety of the past and the debt service was reduced to slightly less than half of the 3,000 million dollars in previous years.
In June 1991 approved Act 203, which de-linked with public companies from any interference by ministries, placing them under the command of men of the ruling elite, who later would be one of the beneficiaries of privatization. In these first moments launched the Social Fund mentioned, but it was not until 1993 when he fills in Financial (368 million) intended to soften the negative aspects of reforms ranging from basic medical aid to aid to SMEs, or infrastructure. In December 1994 he received an additional 1.2 billion that helped create 230,000 jobs, while some of these were temporary. For fiscal year 1995-96 budget was $ 762 million. Despite the important role developed by this fund, did not escape accusations of inefficiency and corruption that run constantly Egyptian administration. It is also a widespread belief that economic resources are there in the background are far from real needs.
In 1992 the Egyptian government turned to give priority to short-term solutions, sacrificing some of the measures required in exchange for a momentary stability. Despite this slowdown, possible relief offered by the Paris Club on its foreign debt, and was not pressing the activation of the second part of IMF credit. But the road began in 1990 and had no reverse gear. Reforms could be delayed a month due to a particular situation, such as reduced pressure on the maturity of the debt or the fulfillment of other requirements of macroeconomic stability, but the Egyptian government is in a way in which these delays are only a break in a distance race with a goal as little uncertain.
this address in 1992 was continued to liberalize trade by reducing the list of goods that could not be imported (some tariff rates remained above 80% allowed by the GATT), and adopted two laws that would fundamental to the way the new economy. The first Law 95 was passed which amended the functioning of financial markets Egyptians giving greater transparency and agility obstacles and reducing taxes, while creating a watchdog of financial markets. Some critics of this reform see it as an attempt to favor large financial corporations and exclude small brokers, while criticizing the elimination of taxes on profits, which reduces the capacity of state revenue and encourages speculation. The truth is that following these changes Bag of Cairo has grown at a strong pace.
agrarian reform law
The other important law passed in 1992 was the controversial land law (Law 96), which amended the existing land relations since the revolution of 1952 Nasserist unsuitable for the new economic system. The properties were reduced to 50 feddanes maximum size, the hereditary condition of the lease of the plot, and the inability of the landowners to evict the lease as stipulated should pay the rent, which had remained unchanged from 1952 to 1975, when he decided to go up, but only at the same rate of taxes they had to pay the landowners. This system resulted in increased fragmentation of land holdings, to the point that they were not sufficiently productive to support a family. To preclude the sale of farms, and therefore the concentration of ownership, the modernization of the Egyptian countryside has been impossible.
The new law frees the rental prices of the plots, leaving it to the market (or owners) which set the new rent to pay (an estimated 315% more expensive). Three solutions are being considered for leased: to reach agreement on the new income to the landowner, purchased the land to the owner as the price they set, for which funding would have a State Bank, Principal Bank Agricultural Development, or be relocated to a parcels of new creation in the Sinai or the New Valley (southwest of the country), the latter option seems expressly designed to recruit new settlers for new and inhospitable farmland that the Egyptian government plans to create, as the first two options seem inaccessible to the majority of the Egyptian agricultural class impoverished by low food prices and low productivity. Given the predictable displeasure that this law would unleash among farmers the entry into force of the law stood at the October 1, 1997, allowing time for the relevant negotiations were developed to establish the new landlord-tenant relationship.
During the first months of 1997 there were serious clashes between peasants and police when the first protest at the imminent entry into force of the law with the result of 18 peasants killed and hundreds injured. Finally the dreaded date of October 1, 1997 was not serious because of renewed fighting. The massive police presence where the owner decided to evict tenants and their family, or reached agreements to which (multiplying two to three times the old rent) or immobility of landowners who delayed the review of rents for fear avoided a confrontation more serious problems. The increase of the income produced by their land owners generate a incomes above can theoretically invest in upgrading their new irrigated land, more machinery, or buy more land.
is still too early to take stock of the new situation may emerge from the agricultural land prices increase, but there are two factors that do seem clear: on the one hand there is the possibility to modernize the Egyptian countryside along the western approach of heavy capital investment, technology application and extension of farm size to large estates, which will increase macro figures such as agricultural output per hectare and total production.
The second consequence arising from this first. If this production model is imposed, it must be remembered that in developed countries the percentage of the population engaged in agriculture is very low: in the English State, for example, is about 8% and is considered to be reducing and now in Egypt to 40% of workers are employed in the agricultural sector and whether the modernization of Egyptian agriculture takes place within the next ten years, as expected by the IMF would have to find a new job for about 5 millions of peasants who have no place in this new operating system. First
positive macro figures
Gradually progress the SAP began to move to the macro: The budget deficit declined from 20% of GNP by the year 1990-91 to 6.4% in 1991-92, subsidies on basic necessities were down 6.2%, new taxes were introduced, in March 1993, tariffs ranged exceptions, between 5 and 80% as requested by the World Bank, private importers could trade with products that were once monopoly of state enterprises. These data resulted in March 1993 to the release of the second phase of the WB loan to support the liberalization program sponsored by the IMF, which should have been granted in July 1992, but that disagreements over half a year delayed.
this good news again served as a stimulus to encourage Egypt to continue to deepen reforms. President Mubarak, after meeting in U.S. with IMF managing director Michael Camdessus and Bill Clinton, declared his willingness to continue reforms. The new agreement with the IMF should provide a framework for approval to the second stage of debt relief by the Paris Club should be launched on July 1, 1993, subject to compliance with the reforms presented by the IMF. With the support of Washington and claiming the risk of popular uprising could mean too rapid implementation of reforms, international organizations accepted the new agreement despite the fact that Egypt only partly fulfilled the requirements.
The third stage of debt relief (20% of the total agreed by the Paris Club) to be adopted by the IMF in July 1994 was rejected as insufficient by the Egyptian efforts in recent months to meet requirements. The damage of this move was more political than economic because the debt burden had ceased to be overwhelming in the short term, but the credibility of reforms and international propaganda to that effect had made the Egyptian executive were questioned. It is at this point that the differences with the dictates of international agencies are beginning to do more patents.
classes historically had profited from the controlled and inefficient economic system and opening Egyptian driver is part of the pressure group that succeeded in slowing down the steps leading to Egypt to be a highly attractive country for foreign capital and therefore the potential for foreign competition. The tariff rates continued to decline as required by World Trade Organization (WTO), the pace of privatization was desperately slow and directed, while the bureaucratic remained one of the most important impediments to the slow influx of foreign investment.
One of the main points of confrontation between the Egyptian government and the IMF has been and remains the monetary policy. One of the premises which are normally included in structural adjustment programs is the devaluation of the currency. The Central Bank of Egypt has chosen to support the change against the dollar keeping interest rates too high (currently about 17%) to bring fluidity to the Egyptian pound and participating directly in times of increased speculation against the Egyptian currency, against the IMF's request that the change to float free will to be the supply and demand which check their value (some sources that talk about who conducted the Egyptian pound would be devalued by up to 60%). The control of inflation could have led to lower interest rates, which in turn should act as an engine of growth for the economy, but the defense of the current change does not allow too many joys in this regard. IMF sources estimate that the decline in interest rates could carry out a controlled devaluation of the pound by 20%. A weak pound would support exports, but would also make imports more expensive that in 1998-99 nearly quadrupled exports and payment of the debt, and the resulting capital flight of deposits attracted by high interest from the Egyptian Central Bank, which would jeopardize one of the achievements of the reforms, foreign exchange reserves. The statements in defense of the pound against devaluation from all political and economic levels have occurred over the past ten years, which is the intractable issue for the IMF staff.
new impetus to reforms
The appointment of Gamal al-Ghanzouri as prime minister in 1996 was interpreted as an impetus to the modernization of the economy, the inflow of foreign capital and accelerating privatization. Despite statements by the new Prime Minister and President Mubarak on accelerating the reform process, the reality remained the same, a controlled process to the last fringe, taking into account any possible risk of both social destabilization loss the privileges of the ruling class. It is only in October 1996 and after lengthy negotiations when it signed an agreement with the IMF would release the third and final stage of debt relief approved in 1991 by the Paris Club. For the first time Egypt accept included among the possible topics to discuss the devaluation of its currency, also promises to speed up privatization, trade liberalization, developing financial markets and streamline the budget structure.
In May 1997 the Egyptian parliament approved after fierce debates Act 8 / 1997 on Investment, which has since become the new framework for all investments, both foreign and domestic. This law changed several of the guidelines under which they moved businessmen in Egypt to date. The infrastructure, previously untouchable private hands, is favored by incentives to attract investment, this initiative will several contracts to exploit BOOT power plants by private companies. Other beneficiaries by this law are the software, the car ensamblación, tourism or manufacturing, as well as SMEs and exporters. Establishing a series of safeguards to create a climate of trust and confidence necessary to attract foreign investment among which the inability to nationalize or confiscate businesses, no state agency to interfere with the taxation of commodity prices or profits of enterprises; companies may own the land and buildings in which they carry out their activities regardless of the nationality of their owners.
The new speed the pace of privatization of public sector (1991 to 1996 only had privatized 1,500 of the 30,000 million represent estimated public assets) began by setting the standards to follow in the process that would begin for those public companies that had benefits, and why would one need only financial adjustment. Studying various forms of privatization used by the Egyptian government in the 131 firms sold notes that in models involving a larger number of shareholders is relegated to companies with lower market capitalization, leaving the method of direct allocation to a single company after a public competition for the largest and most desirable, thus instead the little transparent transfer of public enterprises dominant families in the Egyptian political and economic world or majors.
disputes and cross-accusations of bribery and corruption are a constant in privatization, lack of transparency in the allotments or excessively high prices as foreign investors or too low by internal opponents are a source of continuing controversy . One of the more lurid chapters has been the resignation of the president of the Cairo Stock Exchange in 1998 on charges of harboring manipulations in the prices of some securities. The stock market boom that followed the first 18 months the firm plans to privatize (September 1997) lost a third of its value in the next 12 months doing doubt the mechanisms of privatization and its intended recipients. It charges a large number of family clusters of profit at the expense of bargain prices to the state to sell the former public enterprises. The more representative the groups Osman, Bahgat and Orascom. Behind each of them are hugely influential families whose major interest in the reform process is to be done so that its monopoly position in the socialist system is perpetuated in the name of the market now. Companies engaged in import and export, construction, tourism, franchising large Western firms such as McDonald's or Microsoft are some of the areas in which it dominates.
Despite the push to privatize the state continued to hold significant stakes in many privatized enterprises, in addition to controlling all those whose production is considered strategic. The financial crisis that erupted in 1997 in Southeast Asia served as an excuse to stop the privatization momentum that seemed to envelop the Egyptian executive in the summer of 1998 paralyzed the process in the time when the IMF was asking to be started with key sectors such as banking, insurance and telecommunications. But the government not only elaborated on these privatizations but decided to buy back their old shares in public companies, such as the buyback earlier this year of the Duty Free only two years after its privatization, after a long controversy over the adoption of a law restricting its activity just after being sold. This is one example of the internal struggle that exists within the government between those who support the reform process and trying to torpedo it from within.
The first nod for advocates of reform, which has its culmination in the composition of the last government was the appointment of Youssef Boutros-Ghali in July 1997 as Minister of Economy. Boutros-Ghali had been a member of the IMF and had a good reputation in international financial circles for being an outspoken proponent of the reform process. It was also seen as part of a new generation of Egyptians technically well trained and would give new strength to an executive full of dinosaurs adherents to the old style of doing things. In the following years the enthusiasm that greeted his inclusion in the government would be reduced just by the old guard executive immobile.
First hints of crisis
momentary brake reforms in 1998 had a significant negative effect on the Egyptian economy and inextricably involved with the new economy, what that means depending on numbers, reports from international institutions and the confidence of the nebula called international investors. The unexpected change in Egyptian policy was mainly due to fears that sparked the 1997 financial crisis and the social disruption that occurred in the Asian dragons, so often made as a model for other developing countries. This situation was exploited by the ultraconservative faction of the regime to reverse some reforms they had never sympathized. In this context means the aforementioned law proposed by Finance Minister al-Gharieb Moheiddin restricting the activity of tax-free shops. This episode, along with new restrictions against imports, in a desperate attempt to curb the rampant increase in trade deficit. The problem they encountered is that these new measures were taken in an economic environment that no longer fit the protectionist philosophy that once defended this sector. The good performance of the Egyptian economy during the global financial crisis, which in contrast to expectations did not suffer as much as other countries are opening their economies such as Brazil and Argentina, was hurt by the decline openness policy.
The pressures on the Egyptian economy and its instability during 1999, which are hampering the smooth running of macro Egyptian recession threaten to have their first origin in the march behind the reforms in the atmosphere of unrest that generates permanent the contradictory decisions of the Egyptian government. The effects of this minor setback in a fragile environment had a rapid impact on the loss of international investor confidence, loss of competitiveness, increased pressure from creditors and international agencies as well as the liquidity crisis that speculated that was the reason Ganzouri last why he lost the support of Mubarak and therefore his position as prime minister.
The liquidity problem, both internally and externally, is a reflection of a series of financial sector inefficiencies Egyptian attempts to maintain a foot in the old state system, fixed and controlled while flirting with large institutions seeking slowest way to upgrade a vital sector for the two systems currently living in Egypt. On the one hand the state banks are an inexhaustible source, or so it was understood from the apparatus of state funding for projects, grants and subsidies needed to maintain the current system of patronage. On the other new investors require a dynamic financial system, provide them with the cheapest sources of funding needed to launch their new business ventures. Regarding the convertibility of the pound goes something like, as we have seen, international institutions say the pound is overvalued by between 25 and 40 percent, argue that if the monetary authorities to float the currency Egyptian dejasen its real value Egyptian exports to gain competitiveness, it might lower interest rates and thus enable economic growth. But it is the same Egyptian exporters who are opposed to the devaluation of the pound because they say the industry's dependence on imported Egyptian foreign goods more expensive own exports.
The center of controversy in the Egyptian economic life has monopolized almost exclusively during the past year, said the liquidity problem, its causes and consequences. One of the main causes is funding short-term loans and investments of state construction projects, or mega-projects that have been shipped (the New Valley in the south of the country, the development program of North Sinai, the Gulf of Suez and the new port of Port Said) when projecting long-term productivity. Banks have trouble getting income becoming harder and expensive to obtain loans from international institutions. Having financial problems decreases investment, increases the difficulty of the state to fulfill its commitments (internal and external debt, public salaries, allowances, etc.) Resent expectations, so that makes the danger of recession.
The arrival of the new economic team
The bad performance of the economy and the barrage of criticism received by the government in finding solutions killed the prime minister who had accumulated more power in Egypt since independence. Falling Ganzouri is a reflection of his own ambition, his obsession control all movements of his ministers, denying them the necessary autonomy to carry out its functions. To be ultimately responsible for all movements, especially economic, is also noted as the main responsible for the hesitant time of the Egyptian economy.
The new Prime Minister Atef Obeid chosen by President Mubarak on October 10 has shifted the economic team and infrastructure of its predecessor, leaving out of the new cabinet to old dinosaurs who were present, in some cases from late 70's. Obeid involved in the reform process since 1980 is a good knowledge of the public sector was responsible Ganzouri's cabinet and responsible for the plan to privatize 314 public enterprises for the year 2001 proved unworkable, partly because of strong opposition from some of their former teammate of staff. In his first statement of intent continued playing and ambiguity to which we are accustomed Egyptian high places. He spoke to foreign ears gallery, accelerate privatization, end of financial instability, attract foreign investment, develop the banking sector, removing barriers to the export ..., and for the Egyptian people: improving the education system, revitalize the state sector, to end the chronic problem housing.
Obeid in the restructuring of several key ministers have lost their jobs as the planning and international cooperation Zafer al-Bisri, commerce and supplies Ahmed Guweily, finance al-Ghabrieb Moheiddin latter two accused of being the promoters of the measures antireformistas that had damaged the international image of the Egyptian economy and were poised on the edge of recession. In the infrastructure sector two old collaborators of the regime had lost his wallet: Soliman Metwalli, transport and communications minister accused of being responsible for the continued delay of the privatization of telecommunications giant Telecom Egypt Egypt, and Maher Abaza, Minister of Energy. The rule of Metwalli telecommunications and transportation has been divided into two new ministries: Ministry of Transport, Communications and Civil Aviation and Ministry of Telecommunications and Information Technology.
The only minister of the economic team that remains is precisely in charge of coordinating the government's economic committee and Minister of Economy and Foreign Trade Youssef Boutros-Ghali. The new ministers seem to be closer to the tenets proaperturistas the finance minister than his predecessors, as one exception is Western-educated technocrats, with a greater outreach. Another significant relay has happened to head the Ministry of Oil, since Sameh Fahmy has gone to former CEO of Midor, the first private refinery in the country, which is expected to change the course of his predecessor and promote export gas and the private sector. What has not changed the new prime minister, as expected, has been the core of the government where they repeat the Foreign Minister Amr Moussa, Information Minister Safwat el-Sharif and the Minister of Defence M. Hussain Tantawi.
The reception from the international trade environment to the new cabinet has been positive, as in the Egyptian stock market went up after several weeks of apathy. But when only been six months since the new government was put in place does not seem to have changed things much. The first problem he has had to tackle was the liquidity crisis. We have prepared a series of measures in nine months to pay the debt of state enterprises, both public and private sector, amounting to 25 billion dollars through real resources, ie avoiding the old practice of printing currency the consequent rise of inflation. The remedies must come from the approved budget for 2000/2001, the increase in oil exports (3 billion U.S. dollars), and privatization revenues (5 billion). Financial circles have given good intentions of Prime Minister and the activity begins to revive. But Egypt's problems in adapting to global markets remain the same as ten years ago but with a society far more aware and concerned, and with great challenges to face. The so-called export orientation has not worked as expected as the opening itself has meant a doubling of imports. The acceleration of the privatization process is still not past the first speed. The expected privatization of the first tranche (10%) of Telecom Egypt has been postponed from January to April this year, and now postponed again with no fixed date. Undated also found two long-awaited privatization: the one of the big four state banks and insurance companies, is also planned that seven local utility to be privatized by mid-2001. Another problem that has hardly improved over the last ten years has been the inefficient and corrupt administration, justice slow and opaque, unpredictable and arbitrary import tariffs that hinder the arrival of needed international capital.
struggles inside the device that controls the country between opponents and supporters of the new economic order are being developed, while the Egyptian economy has taken steps important enough to reverse no longer possible. The only option that seems to fit into Egypt to negotiate the speed at which you want to make this transition, which apparently so far and the strategic support that account will remain very slow.
The Egyptian economy: IMF prescriptions applying
Uncertainties about the political future of the scheme if the following condition liberalization measures Egyptian economic transition
(Article published in the Arab nation, no. 41 , Spring 2000).
Pedro Rojo - Arabist
The new Egyptian economy under the aegis of the International Monetary Fund has been developed slowly, facing the internal reluctance to oppose any change that could jeopardize the status quo, and the critics who accuse him of being a strictly focused program to enable the debt to foreign creditors, forgetting Egyptian people. The progress of the new Egyptian economy go for creating two parallel systems in constant contradiction. On the one hand survives, although diminished, the old system of rentier state and other western capitalism appears whose referent is the market.
Egypt's approach to the U.S. in search of a peace treaty with Israel after the 1973 war was a turning point not only politically, but also economically. The first steps toward free trade gave them, timidly, Anwar Sadat in the late seventies with the infitah or open door policy. The theory of this new economic orientation advocated increasing exports, foreign investment, the role of the private sector and trade liberalization. If these measures are added macroeconomic stability have a recipe that the International Monetary Fund (IMF) has recommended to Egypt since the mid-eighties.
The legacy of twenty years of socialism and fear of social change and power structures that could result from new order slabs were too heavy economic who mishandled the changes necessary to move towards free trade. Nor his new ally seen as a priority economic reform, since their main objective was to maintain the peace agreement with Israel in 1979 and the Egyptian regime's stability. These two factors explain much of the slow and sometimes contradictory path of economic reforms that will run until today.
The duality of the economic system
partial measures taken resulted in the coexistence of two systems. On the one hand the massive machinery of the State was providing jobs to most of the population active, subsidizing food and services, while in parallel a new class of merchants engaged mainly export and import of consumer goods under the partial lifting of previous restrictions on the private sector and its good relations with the regime . Subsequently the most important of these businessmen would lead to great economic empires of the nineties.
Another phenomenon of the early years of infitah were Islamic investment companies. These were firms that attracted the burgeoning speculative money coming from the oil boom and remittances of Egyptian immigrants, offering earnings of up to 34 percent. In 1988 these companies collapsed leaving hundreds of thousands of workers without the fruit of several years of work and several banks to the brink of bankruptcy. This bankruptcy be the beginning of the collapse of the ambiguous economic system. Private trade openness increased the current account deficit of 5 billion dollars in fiscal year 1983-84 to 7.5 billion in 1988-89. External debt in 1990 reached 50 billion dollars. The decline in oil prices in the mid-eighties (along with textile major exportable goods in the country) and the decline in traditional exports, lack of competitiveness in the international market, coupled with the aforementioned increase in imports resulted in the destruction of government accounts. Inflation rose above 20 percent, the structural adjustment program presented by the IMF in 1986 was not met and therefore not approved the agreement on debt moratorium at a time when Egypt could not do meet the payment of its foreign debt.
In 1990 the Egyptian government, beset by all sorts of pressures and economic imbalances, in need of new external financing to maintain the pace of its imports of food security depended, accepts a new Structural Adjustment Programme (SAP .) From this time to present the relation of Egyptian executive with international financial institutions go through different phases of tension coinciding with negotiations on the implementation and enforcement of the measures prescribed by the IMF and World Bank (WB).
The SAP outlines submitted to Egypt following the guidelines of free-market orthodoxy is exported by the dominant economic system, where it landed without changing the requirements and solutions according to the characteristics of each particular case, it should sort the problems of a small Central American country like Guatemala, serves a large North African country like Egypt, or one of Black Africa and Mozambique, or Asia like India. The steps are clear:
macroeconomic stabilization. Priority to the numbers reflect inflation, current account, the budget deficit and interest rates.
Make a macroeconomic policy that encourages private initiative, is open to foreign investment, and create the appropriate framework for safety and efficacy for the competition to operate at full capacity without interference.
Privatization of public enterprises, reform of public relations firms, banks and government, public enterprises and liquidate non-viable economically.
local price liberalization in three years, which would eliminate state subsidies for essential items (bread, sugar, tea, etc.) Popular energy sources (kerosene, gasoline, etc.) To their prices reach international levels.
trade liberalization, eliminating the distortions created by the controlled economic system (tariffs and other protectionist measures) and letting the international market and the private sector who mark the prices and the companies that survive in it.
Creating Social Fund for Development to alleviate as much as possible the social costs of SAPs, especially aimed at helping the workers to be dismissed from public enterprises are privatized. The funds that should be nurtured this program will come from international donors, notably EU and U.S..
economic reforms and democracy
One of the premises under which the IMF and WB sell their structural adjustment programs in the Egyptian case seems to be forgotten is that economic reforms alone will bring greater democracy the country where they are deployed. If anything has characterized the landscape Egyptian politician of the last ten years has been the opposite.
Although this article focuses on the reality of the acceptance of the road to free trade that Egypt has decided to take no longer want to remember, however briefly, the rising tide of economists and thinkers who offer alternative economic models that export authorities in Washington. The basis of the criticism is that the very countries that more efforts must be made to adapt their economies, and therefore more costs will represent the new economy are those who have less, and least involved in decision making the new training system. This new trading system is being built in the interests of the richer countries that require infinitely more weak economies that are open to export their products and capital, when the history of free trade in the West has been forged over a century of fighting protectionism and to improve the system. The clearest case of this inequality of interest is the dispute over agriculture. If the free trade, is applied as it is supposed to Europe and Japan would stop producing food that would leave the South, with comparative advantages in this sector, who export and supply these markets. But in fact the opposite is true. Surplus subsidized European farm are exported to the world without the Uruguay Round in 1993, would address the problem of dumping of agricultural products that undermine not only the possibility of export, but production of traditional agricultural country. Something similar, but being resolved, it occurs voluntarily limited textile exports from developing countries. Since the development of this subject requires one or more articles the more we will limit ourselves to quoting some proposed solutions as an alternative to development of societies (not just the economy) to this stream of thinkers. The main idea would be to return the human being the focus of the model, down to Market Your encumbración of deity. Endogenous development, a land division that makes workers productive, improved access to education, a system of preferential tariffs to enable developing country firms have a chance to compete in the global market, promote trade regional collaboration between countries with similar economic characteristics as a starter for foreign trade, the implementation of the Tobin tax, or fair trade that promotes "direct relationships between producers, primarily the South and consumers, especially the North."
Program Structural Adjustment
Since the acceptance of PAE Egyptian executive discussions on the pace of its implementation have been constant. Over these 10 years the Egyptian requests to lower the requirements and deadlines of the program have been supported in many cases by U.S., which regards Egypt as a key to security and stability in the region. For Washington, as happened with the infitah, the stability of the Mubarak regime has priority over any other consideration, whether in democratic development or depth and orthodoxy of economic reforms that could trigger social disenchantment. The other major actor within agencies international finance is the European Union, whose interests in the region are similar, stability over any other premises. European exports to Egypt are large, with very favorable trade balance. The eternally postponed signing of the Euro-Egyptian still take place, which is not an obstacle to trade continue to grow and continue to keep the date of entry into force of the Mediterranean Free Trade Area in 2010. The measures were to bring profound changes in Egypt (in the system of work, wages, consumption habits and life, worsening living conditions of much of society) were administered in doses lighter of what has happened in other parts of the world, but we shall see its effects will be profound in Egyptian society.
IMF pressures to bear beginning the first steps to cut subsidies and privatize the public sector had its counterpart in the restructuring of the debt. In May 1990 he was presented the "Program for 1,000 days," which described in vague intentions on action to take. The first was taken without notice: the price increase of essential items by 40%, or pharmaceuticals by 20%. The IMF called for the total elimination of subsidies in four months. The lower classes, the main affected by this rise, led to riots in several cities which temporarily halted the increases until May 1991 when it was the turn of the fuel. The commitment to the private sector relied on a series of measures including the liberalization of credit outstanding, the reorganization of the bag and the effort to de-dollarization the economy, unifying the different exchange rates against the dollar. The export commitment was based on private initiative, to diversify the range of products, supporting other exports other than raw materials such as semi-finished products.
The Egyptian participation in the Gulf War in the Western camp a radical change in the structure of its foreign debt. U.S. forgave 7.1 billion military debt owed bilateral Egypt had, in consideration of the Egyptian support in the campaign against Iraq. In the midst of conflict, in November 1990, the Paris Club decided to cancel 50% of Egyptian debt. These measures, together with new aid for Egypt Consultative Group of 8 billion dollars for the years 1991-92 and 1992-3, was granted a reprieve and a greater margin of maneuver to the Egyptian government, compared to the pressing IMF demands for further progress on reforms. Financial aid to Egypt during the early years of SAP remained essential support Egyptian finances. The total aid granted by the Consultative Group for the first five years was U.S. $ 6 billion in nonmilitary aid, to which we have to add 2.1 billion annual U.S. aid. In September 1994, benefits alignment of Egypt during the Gulf War continued to arrive in the form of bilateral debt reduction to Kuwait at 2.8 billion dollars. Aid from Gulf countries has always been difficult to quantify, because of the secrecy with which it circulates, but it is estimated that economic aid to Egypt in this area over the past 20 years is about 16.4 billion dollars.
After almost three years of negotiations in May 1991 an agreement was reached with the IMF, which is granted the first loan ($ 372 million) to cope with economic reforms, which opened at the same time access to another loan of $ 500 million World Bank to help implement trade liberalization. This package of assistance allows Egypt to look at the next three years without the anxiety of the past and the debt service was reduced to slightly less than half of the 3,000 million dollars in previous years.
In June 1991 approved Act 203, which de-linked with public companies from any interference by ministries, placing them under the command of men of the ruling elite, who later would be one of the beneficiaries of privatization. In these first moments launched the Social Fund mentioned, but it was not until 1993 when he fills in Financial (368 million) intended to soften the negative aspects of reforms ranging from basic medical aid to aid to SMEs, or infrastructure. In December 1994 he received an additional 1.2 billion that helped create 230,000 jobs, while some of these were temporary. For fiscal year 1995-96 budget was $ 762 million. Despite the important role developed by this fund, did not escape accusations of inefficiency and corruption that run constantly Egyptian administration. It is also a widespread belief that economic resources are there in the background are far from real needs.
In 1992 the Egyptian government turned to give priority to short-term solutions, sacrificing some of the measures required in exchange for a momentary stability. Despite this slowdown, possible relief offered by the Paris Club on its foreign debt, and was not pressing the activation of the second part of IMF credit. But the road began in 1990 and had no reverse gear. Reforms could be delayed a month due to a particular situation, such as reduced pressure on the maturity of the debt or the fulfillment of other requirements of macroeconomic stability, but the Egyptian government is in a way in which these delays are only a break in a distance race with a goal as little uncertain.
this address in 1992 was continued to liberalize trade by reducing the list of goods that could not be imported (some tariff rates remained above 80% allowed by the GATT), and adopted two laws that would fundamental to the way the new economy. The first Law 95 was passed which amended the functioning of financial markets Egyptians giving greater transparency and agility obstacles and reducing taxes, while creating a watchdog of financial markets. Some critics of this reform see it as an attempt to favor large financial corporations and exclude small brokers, while criticizing the elimination of taxes on profits, which reduces the capacity of state revenue and encourages speculation. The truth is that following these changes Bag of Cairo has grown at a strong pace.
agrarian reform law
The other important law passed in 1992 was the controversial land law (Law 96), which amended the existing land relations since the revolution of 1952 Nasserist unsuitable for the new economic system. The properties were reduced to 50 feddanes maximum size, the hereditary condition of the lease of the plot, and the inability of the landowners to evict the lease as stipulated should pay the rent, which had remained unchanged from 1952 to 1975, when he decided to go up, but only at the same rate of taxes they had to pay the landowners. This system resulted in increased fragmentation of land holdings, to the point that they were not sufficiently productive to support a family. To preclude the sale of farms, and therefore the concentration of ownership, the modernization of the Egyptian countryside has been impossible.
The new law frees the rental prices of the plots, leaving it to the market (or owners) which set the new rent to pay (an estimated 315% more expensive). Three solutions are being considered for leased: to reach agreement on the new income to the landowner, purchased the land to the owner as the price they set, for which funding would have a State Bank, Principal Bank Agricultural Development, or be relocated to a parcels of new creation in the Sinai or the New Valley (southwest of the country), the latter option seems expressly designed to recruit new settlers for new and inhospitable farmland that the Egyptian government plans to create, as the first two options seem inaccessible to the majority of the Egyptian agricultural class impoverished by low food prices and low productivity. Given the predictable displeasure that this law would unleash among farmers the entry into force of the law stood at the October 1, 1997, allowing time for the relevant negotiations were developed to establish the new landlord-tenant relationship.
During the first months of 1997 there were serious clashes between peasants and police when the first protest at the imminent entry into force of the law with the result of 18 peasants killed and hundreds injured. Finally the dreaded date of October 1, 1997 was not serious because of renewed fighting. The massive police presence where the owner decided to evict tenants and their family, or reached agreements to which (multiplying two to three times the old rent) or immobility of landowners who delayed the review of rents for fear avoided a confrontation more serious problems. The increase of the income produced by their land owners generate a incomes above can theoretically invest in upgrading their new irrigated land, more machinery, or buy more land.
is still too early to take stock of the new situation may emerge from the agricultural land prices increase, but there are two factors that do seem clear: on the one hand there is the possibility to modernize the Egyptian countryside along the western approach of heavy capital investment, technology application and extension of farm size to large estates, which will increase macro figures such as agricultural output per hectare and total production.
The second consequence arising from this first. If this production model is imposed, it must be remembered that in developed countries the percentage of the population engaged in agriculture is very low: in the English State, for example, is about 8% and is considered to be reducing and now in Egypt to 40% of workers are employed in the agricultural sector and whether the modernization of Egyptian agriculture takes place within the next ten years, as expected by the IMF would have to find a new job for about 5 millions of peasants who have no place in this new operating system. First
positive macro figures
Gradually progress the SAP began to move to the macro: The budget deficit declined from 20% of GNP by the year 1990-91 to 6.4% in 1991-92, subsidies on basic necessities were down 6.2%, new taxes were introduced, in March 1993, tariffs ranged exceptions, between 5 and 80% as requested by the World Bank, private importers could trade with products that were once monopoly of state enterprises. These data resulted in March 1993 to the release of the second phase of the WB loan to support the liberalization program sponsored by the IMF, which should have been granted in July 1992, but that disagreements over half a year delayed.
this good news again served as a stimulus to encourage Egypt to continue to deepen reforms. President Mubarak, after meeting in U.S. with IMF managing director Michael Camdessus and Bill Clinton, declared his willingness to continue reforms. The new agreement with the IMF should provide a framework for approval to the second stage of debt relief by the Paris Club should be launched on July 1, 1993, subject to compliance with the reforms presented by the IMF. With the support of Washington and claiming the risk of popular uprising could mean too rapid implementation of reforms, international organizations accepted the new agreement despite the fact that Egypt only partly fulfilled the requirements.
The third stage of debt relief (20% of the total agreed by the Paris Club) to be adopted by the IMF in July 1994 was rejected as insufficient by the Egyptian efforts in recent months to meet requirements. The damage of this move was more political than economic because the debt burden had ceased to be overwhelming in the short term, but the credibility of reforms and international propaganda to that effect had made the Egyptian executive were questioned. It is at this point that the differences with the dictates of international agencies are beginning to do more patents.
classes historically had profited from the controlled and inefficient economic system and opening Egyptian driver is part of the pressure group that succeeded in slowing down the steps leading to Egypt to be a highly attractive country for foreign capital and therefore the potential for foreign competition. The tariff rates continued to decline as required by World Trade Organization (WTO), the pace of privatization was desperately slow and directed, while the bureaucratic remained one of the most important impediments to the slow influx of foreign investment.
One of the main points of confrontation between the Egyptian government and the IMF has been and remains the monetary policy. One of the premises which are normally included in structural adjustment programs is the devaluation of the currency. The Central Bank of Egypt has chosen to support the change against the dollar keeping interest rates too high (currently about 17%) to bring fluidity to the Egyptian pound and participating directly in times of increased speculation against the Egyptian currency, against the IMF's request that the change to float free will to be the supply and demand which check their value (some sources that talk about who conducted the Egyptian pound would be devalued by up to 60%). The control of inflation could have led to lower interest rates, which in turn should act as an engine of growth for the economy, but the defense of the current change does not allow too many joys in this regard. IMF sources estimate that the decline in interest rates could carry out a controlled devaluation of the pound by 20%. A weak pound would support exports, but would also make imports more expensive that in 1998-99 nearly quadrupled exports and payment of the debt, and the resulting capital flight of deposits attracted by high interest from the Egyptian Central Bank, which would jeopardize one of the achievements of the reforms, foreign exchange reserves. The statements in defense of the pound against devaluation from all political and economic levels have occurred over the past ten years, which is the intractable issue for the IMF staff.
new impetus to reforms
The appointment of Gamal al-Ghanzouri as prime minister in 1996 was interpreted as an impetus to the modernization of the economy, the inflow of foreign capital and accelerating privatization. Despite statements by the new Prime Minister and President Mubarak on accelerating the reform process, the reality remained the same, a controlled process to the last fringe, taking into account any possible risk of both social destabilization loss the privileges of the ruling class. It is only in October 1996 and after lengthy negotiations when it signed an agreement with the IMF would release the third and final stage of debt relief approved in 1991 by the Paris Club. For the first time Egypt accept included among the possible topics to discuss the devaluation of its currency, also promises to speed up privatization, trade liberalization, developing financial markets and streamline the budget structure.
In May 1997 the Egyptian parliament approved after fierce debates Act 8 / 1997 on Investment, which has since become the new framework for all investments, both foreign and domestic. This law changed several of the guidelines under which they moved businessmen in Egypt to date. The infrastructure, previously untouchable private hands, is favored by incentives to attract investment, this initiative will several contracts to exploit BOOT power plants by private companies. Other beneficiaries by this law are the software, the car ensamblación, tourism or manufacturing, as well as SMEs and exporters. Establishing a series of safeguards to create a climate of trust and confidence necessary to attract foreign investment among which the inability to nationalize or confiscate businesses, no state agency to interfere with the taxation of commodity prices or profits of enterprises; companies may own the land and buildings in which they carry out their activities regardless of the nationality of their owners.
The new speed the pace of privatization of public sector (1991 to 1996 only had privatized 1,500 of the 30,000 million represent estimated public assets) began by setting the standards to follow in the process that would begin for those public companies that had benefits, and why would one need only financial adjustment. Studying various forms of privatization used by the Egyptian government in the 131 firms sold notes that in models involving a larger number of shareholders is relegated to companies with lower market capitalization, leaving the method of direct allocation to a single company after a public competition for the largest and most desirable, thus instead the little transparent transfer of public enterprises dominant families in the Egyptian political and economic world or majors.
disputes and cross-accusations of bribery and corruption are a constant in privatization, lack of transparency in the allotments or excessively high prices as foreign investors or too low by internal opponents are a source of continuing controversy . One of the more lurid chapters has been the resignation of the president of the Cairo Stock Exchange in 1998 on charges of harboring manipulations in the prices of some securities. The stock market boom that followed the first 18 months the firm plans to privatize (September 1997) lost a third of its value in the next 12 months doing doubt the mechanisms of privatization and its intended recipients. It charges a large number of family clusters of profit at the expense of bargain prices to the state to sell the former public enterprises. The more representative the groups Osman, Bahgat and Orascom. Behind each of them are hugely influential families whose major interest in the reform process is to be done so that its monopoly position in the socialist system is perpetuated in the name of the market now. Companies engaged in import and export, construction, tourism, franchising large Western firms such as McDonald's or Microsoft are some of the areas in which it dominates.
Despite the push to privatize the state continued to hold significant stakes in many privatized enterprises, in addition to controlling all those whose production is considered strategic. The financial crisis that erupted in 1997 in Southeast Asia served as an excuse to stop the privatization momentum that seemed to envelop the Egyptian executive in the summer of 1998 paralyzed the process in the time when the IMF was asking to be started with key sectors such as banking, insurance and telecommunications. But the government not only elaborated on these privatizations but decided to buy back their old shares in public companies, such as the buyback earlier this year of the Duty Free only two years after its privatization, after a long controversy over the adoption of a law restricting its activity just after being sold. This is one example of the internal struggle that exists within the government between those who support the reform process and trying to torpedo it from within.
The first nod for advocates of reform, which has its culmination in the composition of the last government was the appointment of Youssef Boutros-Ghali in July 1997 as Minister of Economy. Boutros-Ghali had been a member of the IMF and had a good reputation in international financial circles for being an outspoken proponent of the reform process. It was also seen as part of a new generation of Egyptians technically well trained and would give new strength to an executive full of dinosaurs adherents to the old style of doing things. In the following years the enthusiasm that greeted his inclusion in the government would be reduced just by the old guard executive immobile.
First hints of crisis
momentary brake reforms in 1998 had a significant negative effect on the Egyptian economy and inextricably involved with the new economy, what that means depending on numbers, reports from international institutions and the confidence of the nebula called international investors. The unexpected change in Egyptian policy was mainly due to fears that sparked the 1997 financial crisis and the social disruption that occurred in the Asian dragons, so often made as a model for other developing countries. This situation was exploited by the ultraconservative faction of the regime to reverse some reforms they had never sympathized. In this context means the aforementioned law proposed by Finance Minister al-Gharieb Moheiddin restricting the activity of tax-free shops. This episode, along with new restrictions against imports, in a desperate attempt to curb the rampant increase in trade deficit. The problem they encountered is that these new measures were taken in an economic environment that no longer fit the protectionist philosophy that once defended this sector. The good performance of the Egyptian economy during the global financial crisis, which in contrast to expectations did not suffer as much as other countries are opening their economies such as Brazil and Argentina, was hurt by the decline openness policy.
The pressures on the Egyptian economy and its instability during 1999, which are hampering the smooth running of macro Egyptian recession threaten to have their first origin in the march behind the reforms in the atmosphere of unrest that generates permanent the contradictory decisions of the Egyptian government. The effects of this minor setback in a fragile environment had a rapid impact on the loss of international investor confidence, loss of competitiveness, increased pressure from creditors and international agencies as well as the liquidity crisis that speculated that was the reason Ganzouri last why he lost the support of Mubarak and therefore his position as prime minister.
The liquidity problem, both internally and externally, is a reflection of a series of financial sector inefficiencies Egyptian attempts to maintain a foot in the old state system, fixed and controlled while flirting with large institutions seeking slowest way to upgrade a vital sector for the two systems currently living in Egypt. On the one hand the state banks are an inexhaustible source, or so it was understood from the apparatus of state funding for projects, grants and subsidies needed to maintain the current system of patronage. On the other new investors require a dynamic financial system, provide them with the cheapest sources of funding needed to launch their new business ventures. Regarding the convertibility of the pound goes something like, as we have seen, international institutions say the pound is overvalued by between 25 and 40 percent, argue that if the monetary authorities to float the currency Egyptian dejasen its real value Egyptian exports to gain competitiveness, it might lower interest rates and thus enable economic growth. But it is the same Egyptian exporters who are opposed to the devaluation of the pound because they say the industry's dependence on imported Egyptian foreign goods more expensive own exports.
The center of controversy in the Egyptian economic life has monopolized almost exclusively during the past year, said the liquidity problem, its causes and consequences. One of the main causes is funding short-term loans and investments of state construction projects, or mega-projects that have been shipped (the New Valley in the south of the country, the development program of North Sinai, the Gulf of Suez and the new port of Port Said) when projecting long-term productivity. Banks have trouble getting income becoming harder and expensive to obtain loans from international institutions. Having financial problems decreases investment, increases the difficulty of the state to fulfill its commitments (internal and external debt, public salaries, allowances, etc.) Resent expectations, so that makes the danger of recession.
The arrival of the new economic team
The bad performance of the economy and the barrage of criticism received by the government in finding solutions killed the prime minister who had accumulated more power in Egypt since independence. Falling Ganzouri is a reflection of his own ambition, his obsession control all movements of his ministers, denying them the necessary autonomy to carry out its functions. To be ultimately responsible for all movements, especially economic, is also noted as the main responsible for the hesitant time of the Egyptian economy.
The new Prime Minister Atef Obeid chosen by President Mubarak on October 10 has shifted the economic team and infrastructure of its predecessor, leaving out of the new cabinet to old dinosaurs who were present, in some cases from late 70's. Obeid involved in the reform process since 1980 is a good knowledge of the public sector was responsible Ganzouri's cabinet and responsible for the plan to privatize 314 public enterprises for the year 2001 proved unworkable, partly because of strong opposition from some of their former teammate of staff. In his first statement of intent continued playing and ambiguity to which we are accustomed Egyptian high places. He spoke to foreign ears gallery, accelerate privatization, end of financial instability, attract foreign investment, develop the banking sector, removing barriers to the export ..., and for the Egyptian people: improving the education system, revitalize the state sector, to end the chronic problem housing.
Obeid in the restructuring of several key ministers have lost their jobs as the planning and international cooperation Zafer al-Bisri, commerce and supplies Ahmed Guweily, finance al-Ghabrieb Moheiddin latter two accused of being the promoters of the measures antireformistas that had damaged the international image of the Egyptian economy and were poised on the edge of recession. In the infrastructure sector two old collaborators of the regime had lost his wallet: Soliman Metwalli, transport and communications minister accused of being responsible for the continued delay of the privatization of telecommunications giant Telecom Egypt Egypt, and Maher Abaza, Minister of Energy. The rule of Metwalli telecommunications and transportation has been divided into two new ministries: Ministry of Transport, Communications and Civil Aviation and Ministry of Telecommunications and Information Technology.
The only minister of the economic team that remains is precisely in charge of coordinating the government's economic committee and Minister of Economy and Foreign Trade Youssef Boutros-Ghali. The new ministers seem to be closer to the tenets proaperturistas the finance minister than his predecessors, as one exception is Western-educated technocrats, with a greater outreach. Another significant relay has happened to head the Ministry of Oil, since Sameh Fahmy has gone to former CEO of Midor, the first private refinery in the country, which is expected to change the course of his predecessor and promote export gas and the private sector. What has not changed the new prime minister, as expected, has been the core of the government where they repeat the Foreign Minister Amr Moussa, Information Minister Safwat el-Sharif and the Minister of Defence M. Hussain Tantawi.
The reception from the international trade environment to the new cabinet has been positive, as in the Egyptian stock market went up after several weeks of apathy. But when only been six months since the new government was put in place does not seem to have changed things much. The first problem he has had to tackle was the liquidity crisis. We have prepared a series of measures in nine months to pay the debt of state enterprises, both public and private sector, amounting to 25 billion dollars through real resources, ie avoiding the old practice of printing currency the consequent rise of inflation. The remedies must come from the approved budget for 2000/2001, the increase in oil exports (3 billion U.S. dollars), and privatization revenues (5 billion). Financial circles have given good intentions of Prime Minister and the activity begins to revive. But Egypt's problems in adapting to global markets remain the same as ten years ago but with a society far more aware and concerned, and with great challenges to face. The so-called export orientation has not worked as expected as the opening itself has meant a doubling of imports. The acceleration of the privatization process is still not past the first speed. The expected privatization of the first tranche (10%) of Telecom Egypt has been postponed from January to April this year, and now postponed again with no fixed date. Undated also found two long-awaited privatization: the one of the big four state banks and insurance companies, is also planned that seven local utility to be privatized by mid-2001. Another problem that has hardly improved over the last ten years has been the inefficient and corrupt administration, justice slow and opaque, unpredictable and arbitrary import tariffs that hinder the arrival of needed international capital.
struggles inside the device that controls the country between opponents and supporters of the new economic order are being developed, while the Egyptian economy has taken steps important enough to reverse no longer possible. The only option that seems to fit into Egypt to negotiate the speed at which you want to make this transition, which apparently so far and the strategic support that account will remain very slow.
Thursday, February 3, 2011
Ah! Megami Sama Third
Egipto, su pueblo y los nuevos mapas de Medio Oriente.
By Mariela Table 1
The people of Tunisia rose. By hunger, unemployment, and democracy. Ousted, and the President Zine al-Abidine Ben Ali, who had 23 years in power. He fled to Saudi Arabia and now the people of Tunisia, star of the so-called "Jasmine Revolution", is still standing, expectant and alert to attempts by former comrades of the former president to take advantage of the achievements of the people. From demonstrations in Tunisia, many analysts began to consider the possibility of expansion of the revolution to its neighbors in North Africa. And the expansion has been and the Egyptian people got up (also by hunger, unemployment also) in order to overthrow President Hosni Mubarak.
Mubarak is in the Egyptian power exactly 30 years ago. It was Sadat's vice-president (who in turn had replaced Nasser and had been responsible for setting the strategic alliance with the Together through the signing of peace with Israel) and when he was killed automatically assumed power. The 80 and even 90's, witnessed a good relationship between Mubarak and the Egyptian people. Then came the crisis of neo-liberal model with its consequences of increased unemployment and poverty, Mubarak was the alliance with the much-maligned George W. Bush and reached the Tunisian people who demonstrated to the Egyptians that people do not necessarily have to live on your knees. Hegemony is materiality and material needs of the Egyptians were not met. Therefore, they decided it was time to change the government.
Now Mubarak seems to have no desire to leave. Even Secretary of State, United States (after strong resistance by the Obama administration to support regime change, urging reforms for which it was too late) ruled in favor of an "orderly transition." Instead, Mubarak cracked down first (continues to do so, arresting scores of protesters, killing several others) and then ordered a cabinet reshuffle that further hardened its position, placing as vice-president (and, therefore, possible future successor) to his intelligence chief, Omar Suleiman, in charge of suppressing any opposition to the government by hiding behind the widely used terrorist threat. At the same time promised reforms, greater social freedoms, political and civil rights, amendments to the constitution to allow greater participation, to preserve the state subsidies to food staples, controlling inflation and promoting employment. As stated, these ads were late, because the Egyptian people is intransigent with regard to their main demand: that Mubarak leaves office (the last event attended by more than a million people so testify).
The form of government and composition of it after the fall of Mubarak are uncertain. A multitude of scenarios are possible: from the control Government by the military hierarchy is seeking to build hegemony among the Egyptian people (have not suppressed the protests and were welcomed by protesters to enter the scene) to the call for democratic elections with potential (through constitutional reform ) that assumes the Muslim Brotherhood. In the midst of these alternatives (and perhaps akin to the first) we can think of a reconstruction without Mubarak Mubarak government. We must also take into account the role of Ayman Nour, who came second with 7% of the votes in the last election "multiparty" in 2005 and Mohamed El Baradei who took the lead protests and met with Washington's envoy to Egypt.
The end result will be a result of the meeting of many interests at stake: the Egyptian people and political factions, Washington, Tel-Aviv, Riyadh, Tehran. The concern of the American giant is no less: Egypt is a cornerstone of its foreign policy in the Middle East. Just worth remembering that since the signing of peace between the Arab country and Israel (with whom he has a "special relationship"), there were no more wars Arab-Israeli conflict to be confined to an exclusively Palestinian-Israeli conflict. And the U.S. is also maintaining a "help" 1300 million dollars annually to the Egyptian armed forces, with Egypt the second largest recipient of U.S. aid in this field, after Israel. This military assistance was also a product of the Camp David Accords of 1979 and its consequences for regional stability for Israel and the United States. The Muslim Brotherhood, meanwhile, while not supporting the use of terrorism in their own country, it does in the occupied Palestinian territories considered by the State of Israel (in this sense, states that the use of these tactics is part of a legitimate resistance to the occupier). Corollary, a result that can be difficult for the United States and Israel is the accession to power of the Muslim Brotherhood. And not because its Islamic character, but because of their political platform with regard to the Middle East. Risking the hypothesis
quite possible the fall of Mubarak, it is necessary to pay attention to events in Egypt, it is not just an internal matter what is at stake here: to play the balance of strategic power in the Middle East region. Indeed, we may be in the presence of a true historical event, ie a fundamental shift in power relations globally. We express our fraternal solidarity with the Egyptian people and repudiate the killing of demonstrators by state security forces.
Mubarak is in the Egyptian power exactly 30 years ago. It was Sadat's vice-president (who in turn had replaced Nasser and had been responsible for setting the strategic alliance with the Together through the signing of peace with Israel) and when he was killed automatically assumed power. The 80 and even 90's, witnessed a good relationship between Mubarak and the Egyptian people. Then came the crisis of neo-liberal model with its consequences of increased unemployment and poverty, Mubarak was the alliance with the much-maligned George W. Bush and reached the Tunisian people who demonstrated to the Egyptians that people do not necessarily have to live on your knees. Hegemony is materiality and material needs of the Egyptians were not met. Therefore, they decided it was time to change the government.
Now Mubarak seems to have no desire to leave. Even Secretary of State, United States (after strong resistance by the Obama administration to support regime change, urging reforms for which it was too late) ruled in favor of an "orderly transition." Instead, Mubarak cracked down first (continues to do so, arresting scores of protesters, killing several others) and then ordered a cabinet reshuffle that further hardened its position, placing as vice-president (and, therefore, possible future successor) to his intelligence chief, Omar Suleiman, in charge of suppressing any opposition to the government by hiding behind the widely used terrorist threat. At the same time promised reforms, greater social freedoms, political and civil rights, amendments to the constitution to allow greater participation, to preserve the state subsidies to food staples, controlling inflation and promoting employment. As stated, these ads were late, because the Egyptian people is intransigent with regard to their main demand: that Mubarak leaves office (the last event attended by more than a million people so testify).
The form of government and composition of it after the fall of Mubarak are uncertain. A multitude of scenarios are possible: from the control Government by the military hierarchy is seeking to build hegemony among the Egyptian people (have not suppressed the protests and were welcomed by protesters to enter the scene) to the call for democratic elections with potential (through constitutional reform ) that assumes the Muslim Brotherhood. In the midst of these alternatives (and perhaps akin to the first) we can think of a reconstruction without Mubarak Mubarak government. We must also take into account the role of Ayman Nour, who came second with 7% of the votes in the last election "multiparty" in 2005 and Mohamed El Baradei who took the lead protests and met with Washington's envoy to Egypt.
The end result will be a result of the meeting of many interests at stake: the Egyptian people and political factions, Washington, Tel-Aviv, Riyadh, Tehran. The concern of the American giant is no less: Egypt is a cornerstone of its foreign policy in the Middle East. Just worth remembering that since the signing of peace between the Arab country and Israel (with whom he has a "special relationship"), there were no more wars Arab-Israeli conflict to be confined to an exclusively Palestinian-Israeli conflict. And the U.S. is also maintaining a "help" 1300 million dollars annually to the Egyptian armed forces, with Egypt the second largest recipient of U.S. aid in this field, after Israel. This military assistance was also a product of the Camp David Accords of 1979 and its consequences for regional stability for Israel and the United States. The Muslim Brotherhood, meanwhile, while not supporting the use of terrorism in their own country, it does in the occupied Palestinian territories considered by the State of Israel (in this sense, states that the use of these tactics is part of a legitimate resistance to the occupier). Corollary, a result that can be difficult for the United States and Israel is the accession to power of the Muslim Brotherhood. And not because its Islamic character, but because of their political platform with regard to the Middle East. Risking the hypothesis
quite possible the fall of Mubarak, it is necessary to pay attention to events in Egypt, it is not just an internal matter what is at stake here: to play the balance of strategic power in the Middle East region. Indeed, we may be in the presence of a true historical event, ie a fundamental shift in power relations globally. We express our fraternal solidarity with the Egyptian people and repudiate the killing of demonstrators by state security forces.
1 Degree in Sociology (UBA). PhD in International Relations (UNLP). Fellow Conicet.Coordinadora Middle East Department of the IRI-UNLP. CERPI member-researcher-UNLP.
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