Egypt / Michael Field. - [Electronic ed.]. - Bonn, 2000. - 25 S. =3D 71 Kb, Text . - (FES-Analyse) Electronic ed.: Bonn : FES Library, 2001 =A9 Friedrich-Ebert-Stif= tung

From: Snapshot-Content-Location: https://library.fes.de/fulltext/stabsabteilung/00909.htm Subject: =?utf-8?Q?Egypt=20/=20Michael=20Field.=20-=20[Electronic=20ed.].=20-=20Bo?= =?utf-8?Q?nn,=202000.=20-=2025=20S.=20=3D=2071=20Kb,=20Text=20.=20-=20(FE?= =?utf-8?Q?S-Analyse)=20
Electronic=20ed.:=20Bonn=20:=20FES=20Library,?= =?utf-8?Q?=202001=20

=C2=A9=20Friedrich-Ebert?= =?utf-8?Q?-Stiftung?= Date: Wed, 7 May 2025 14:25:10 +0200 MIME-Version: 1.0 Content-Type: multipart/related; type="text/html"; boundary="----MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r----" ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: text/html Content-ID: Content-Transfer-Encoding: quoted-printable Content-Location: https://library.fes.de/fulltext/stabsabteilung/00909.htm Egypt / Michael Field. - [Electronic ed.]. - Bonn, 2000. - 25 S. =3D 71 Kb, Text . - (FES-Analyse) Electronic ed.: Bonn : FES Library, 2001 =A9 Friedrich-Ebert-Stif= tung

FES

Egypt / Michael Field. - [Electronic ed.]. - Bonn, 2000. - 25 S. =3D 71 Kb, Text . - (FES-Analyse)
Electronic ed.: Bonn : FES Library, 2001

=A9 Friedrich-Ebert-Stiftung

=3D"INHALT"

The mid-1990s idea that Egypt was emerging as an economic "Ti= ger on the Nile" has gone out of fashion. Yet there was real economic chan= ge in the decade. The government successfully implemented an IMF reform pa= ckage and the country=92s growth since has run at around 5 per cent.
Successful private businesses have developed in food pro= ducts, electrical goods, contracting, building materials, vehicle assembly,= telecommunications and tourism. Foreign investment - outside oil and powe= r generation - has been on a more modest scale.
Since 1993 the government has sold controlling interests= in 114 state companies, but the privatisation process is now slowing. The= more attractive businesses have been sold, and government officials find i= t difficult to accept that most of the state companies that remain are of l= ittle value.
The standard of living of poor Egyptians is slowly impro= ving. There has been some fall in unemployment. It is the old middle clas= s - people working in the public sector - who are being squeezed.
In the last two years the economy has slowed. Governmen= t borrowing has increased and interest rates have risen. Bankers suggest t= he Egyptian pound should be devalued. For the longer term growth will be he= ld back by the lack of real commitment to free markets among the Egyptian p= olitical classes - and by the many vested interests in the system.
Egyptian politics has been static since the early 1990s.= President Mubarak does not believe reform is necessary. Opposition parti= es are allowed, but their activities are restricted and they have little cr= edibility with the public. The Emergency Law passed after the assassinatio= n of President Sadat in 1981 is still in force.
Islamist violence has been brought under control since 1= 997, mainly by heavy handed security methods. Popular support for the mili= tants has waned, partly thanks to TV soap operas that show them in a hostil= e light. The moderate Islamists of the Muslim Brotherhood have been weaken= ed by internal divisions. Socially the influence of Islamic ideas may stil= l be increasing.
In some of the villages of Upper Egypt relations between= Coptic Christians and Muslims remain tense. The government has no policy = for dealing with the violence, apart from tough policing.
The Egyptian intelligentsia worries that the lack of pol= itical mobility may breed frustration and further violence in society. At = the least, the fear is that it will slow the development of Egypt socially = and economically.

A Decade of Economic Growth

There was a period in 1996 and 1997 when the young brokers who move the = global investment markets started to refer to Egypt as the "Tiger on the Ni= le". The Egyptian government loved the idea. The core of its economic = strategy is to promote its country as an attractive place for foreig= n investors. It generally represents it as having a more vigorous e= conomy and a much stronger commitment to reform than is really the case. H= elped by state inspired publicity and the enthusiasm of the young ba= nkers, investment flowed into Egypt, though the sums were not huge by <= b>international standards and much of the money was Egyptian capital= that had been held abroad rather than investment by foreign compani= es. Some small fortunes were made on the stock exchange.

The tiger image did not last long. It went out of fashion qu= ite suddenly when the real tigers of Asia crashed and Egypt ran into diffic= ulties of its own. Nowadays in Cairo nobody mentions the word without a wr= y smile.

Yet there was a real change in Egypt in the 1990s. At the beginning= of the decade the country had serious problems. Its economy was state con= trolled and immobile. Although since the years of President Sadat (1970-81= ) the private sector had been allowed to play a role in trade and real esta= te development, most of the economy remained socialist - in structure, bure= aucratic procedure and mentality. The state had foreign debts of some $50 = billion, more than 100 per cent of gross domestic product, and a huge budge= t deficit.

Then in 1990 the government had a stroke of luck. Saddam Hussein in= vaded Kuwait and Egypt promptly joined the allied coalition. It was forgiv= en $7bn of military debt owed to the United States and $6bn of debt owed to= Saudi Arabia and the Gulf countries. In May 1991, three months after the = liberation of Kuwait, Egypt reached a deal with the International Monetary = Fund (IMF) under which its government creditors agreed to write off half th= e $20bn still owed to them, in three tranches, if Egypt undertook a prescri= bed programme of economic reform. =20

The government duly abolished multiple exchange rates, which had the= desirable effect of putting all the subsidies it paid its people - a major= cause of its problems - into the budget, where their true size became visi= ble. The budget deficit was then reduced, partly by a gradual rise in the = prices of electricity and gasoline and the elimination of subsidies paid on= all but three food items - sugar, edible oil and bread. Later even subsid= ies on these products were cut. Today there are minor price controls on su= gar and oil, but the only subsidy paid by the government applies to low qua= lity flour for cheap bread. This measure, which helps the poorest in socie= ty, is not a great burden on the government and it does not worry the IMF. = In the last five years the budget deficit has been around 1 per cent of GD= P.

The Egyptian pound was floated, albeit in a controlled way. Interes= t rates were decontrolled and the government issued tax free treasury bills= . Money from expatriate Egyptians poured into the country, the pound becam= e quite buoyant and the government=92s reserves gradually rose to $20bn. T= hey were stable around this level in 1997 and 1998.

The government=92s borrowing was kept under tight - almost obsessive= ly tight - control. The external official debt in April 2000 was $29bn. M= ost of this was at well below market rates, which gave it a discounted valu= e of $19bn. At face value the debt was equivalent to 31 per cent of GDP.

The most important consequence of the reforms has been a r= easonably strong rate of GDP growth - stimulated above all by the decon= trol of interest rates. During the 1990s GDP growth ran between 4 and 6 pe= r cent, which was enough to give a gradual rise in real incomes of 2 or 3 p= er cent a year. Egypt=92s 65 million people now have a GDP per capita of a= bout $1,300.

Business Successes

It has been mainly Egyptian businesses that have driven the country=92s = growth. Many of the companies that are successful now began importing or m= anufacturing simple products in the Sadat period, developed slowly in the 1= 980s and have blossomed in the last decade. Food products have been a big = area of expansion. There are many businesses producing such items as potat= o chips, frozen chicken legs, ice cream and other dairy products, chocolate= and traditional Egyptian confectionery, pasta, and food ingredients such a= s acetic acid. Generally the new food industries are rated as good qualit= y and are highly profitable. A new brewery has been established, making a = beer named Sakkara, which has taken the top of the market from the long est= ablished and recently privatised Stella brand. =20

Some companies have gone into simple industrial goods and building m= aterials, such as pipes, or domestic electrical appliances. The electrical= goods brand name Mustapha Ali has become well known.

On a more sophisticated level several of the car importers in the la= st five years have gone into assembly, in some cases with foreign partners.= Egypt now assembles Mercedes cars and busses, GM cars and small trucks, M= itsubishi and Ford pick-ups, and Renault, Peugeot, BMW, Daewoo and KIA cars= . The Egyptian content of the vehicles is around 40 or 50 per ce= nt: the tyres, glass, interior fittings, batteries, lights, bumpers and= paint are mostly locally produced. There is some question as to whethe= r vehicle assembly is an appropriate industry for Egypt. The plants benefi= t from a high level of tariff protection and although the gov= ernment is trying to delay removal of these tariffs for as long as p= ossible, the WTO will eventually insist they go. It could be argued that t= he capital that has gone into the plants would have been of greater = benefit to the economy in the long term if it had been invested in other ar= eas.

The most visible area of growth has been tourism, in Cairo and the N= ile valley, on the Mediterranean coast, and, above all, on the Red Sea coas= t. Some of this development, including several of the big Cairo hotels, ha= s been undertaken by investors from the Gulf states and Saudi Arabia. Tour= ism has stimulated the construction, building materials and food industries= . It is now encouraging developments in aviation. In the last year or so = 28 companies have been given licences by the Civil Aviation Authority to de= velop businesses including charter flights, air taxi services and hot air b= allooning. In several cases tourist companies are developing airports and/= or air services linked to the resorts they are building. =20

All this activity has led to the emergence of some big entrepreneuri= al names - something unheard of in Egypt since President Gamal Abdel-Nasser= nationalised most of the private sector in the early 1960s. Much the best= known new name is that of Sawiris, a family of Copts (Egyptian Christians)= from Assiut in Upper Egypt, which owns the Orascom Group. The founder, On= si Sawiris, began as a contractor in the 1950s, went abroad when his compan= y was nationalised in the 1960s, and returned in the 1980s with various for= eign dealerships. As the government opened more sectors to private investo= rs - allowing them into businesses where they would compete with the state = - he and his sons went into tourism, hotels, construction, building materia= ls including cement, port management and most recently mobile telephones. = The group has a big holding in MobiNil, one of Egypt=92s two fast growing m= obile operators. The Sawiris are known as well educated, decent businessme= n, professional and, in the commercial sense of the word, aggressive.

Other prominent new names include: the Swedi Group, in electric cabl= es, building materials and real estate; the Ezz family, in steel and cerami= c tiles; the Baghat family in consumer durables, assembly, real estate, hos= pital development and the internet; and Mohammad Farid Khamis, who owns a c= arpet company , Oriental Weavers, which is the country=92s biggest private = sector exporter.

Foreign investors have been most important and visible in the oil an= d gas sector, where BP Amoco is the leading producer. They are also involv= ed in build-operate-transfer power projects, where, EdF of France and Inter= gen of the US have stakes. Four companies - Lafarge, Blue Circle, Cemex an= d Cimpor - have recently bought much of the cement industry. Vehicle produ= cers have invested in assembly plants, and two companies, one of them Vodaf= one, have gone into mobile telephones. Most other foreign investment is in= pharmaceuticals, food and household consumer goods. The main investors he= re are Glaxo Welcome, Unilever, Proctor and Gamble, Cadburys - which aims t= o use its Egyptian plant to export to the rest of the Middle East, Heinz, N= estl=E9 - which has had to recapitalise its operation, and Pepsi- and Coca-= Cola. If one excludes the oil and power sectors, the scale of foreign inve= stment has not been very great. The total for all sectors since 1994 has b= een not much more than $6bn.=20

An investor whose experience provides an interesting indication of t= he way the Egyptian economy is evolving is the British food supermarket gro= up, Sainsburys. The company is in an 80/20 partnership with an Egyptian bu= siness, runs 100 stores - most of them rather small - and has so far invest= ed around $160m. It is planning to put the same sum again into the country= in the next two years. In one of the two areas in which foreign investors= often encounter difficulties - quality of labour - it has had a typically = mixed experience. It has found that its older middle managers - many of th= em in 51 stores it runs under licence from the government - have the manage= ment style of the old economic r=E9gime. They are bureaucratic, inflexible= , dislike innovation and regard the system as more important than the custo= mer. But younger graduates, newly out of university, the company finds qui= te different. They have some grasp of English, which they are keen to impr= ove, they are computer trained and they want to work for a professional org= anisation which will turn them into modern managers. The company prefers t= o develop these people - it has extensive training schemes - rather than tr= y to alter the ways of the older generation. =20

In the other difficult area - improving the quality of local supplie= rs - Sainsburys has caused some controversy. In its stores it sells mainly= locally produced goods under the suppliers=92 own labels, but it has some = of its own label lines, both imported and locally produced. For obvious re= asons - cost, avoidance of tariffs and convenience - it wants to increase t= he local supply of its own label products. It also hopes to expand purchas= es from Egypt for its outlets in Britain. Generally it has found that pote= ntial suppliers cannot produce to its standards, but a small number are exc= ellent and there are several more which it can help in raising standards. = Given that Sainsburys is a major potential customer, these producers have b= een only too anxious to be helped to improve their output. The contracts t= hey have signed with the company have been valuable, and they have had thei= r eye on being able to raise their standards to a level where they will be = able to export on their own. =20

The poorer quality producers - some of them owned by quite influenti= al, long established businessmen - have felt themselves under pressure. Fo= r the first time they have been asked to produce what the retailer and cust= omer want, whereas since Nasser=92s time the normal practice has been for t= he retailer to be supplied with whatever is produced. They can see that it= is quite likely that in future, as other stores start to compete with Sain= sburys (which is the only foreign retail group in Egypt at present), they w= ill be asked again to change their products and cut their prices. They hav= e not been at all pleased to see part of their business with 100 supermarke= ts disappear as Sainsburys has awarded its own label contracts. They have = complained to influential friends at the top of government, though they do = not seem to have been given a very sympathetic hearing. In early 2000 they= tried another approach when they joined with some discontented retailers a= nd persuaded an obliging Islamic judge to issue a fatwa (a legal jud= gement) declaring, in very strong language, that shopping at Sainsburys was= "sinful". The fatwa received much publicity in Britain but was har= dly reported in Egypt. It had no effect on the company=92s sales.

Privatisation

A further push has been given to the economy since 1993 by a programme o= f privatisation, though this has been pursued by the authorities with rathe= r lukewarm enthusiasm. When it began the government drew up a list of 314 = state enterprises to be offered for sale. This represented less than half = of some 700-800 state holdings which were potentially privatisable. In the= seven years running up to the end of 1999 it managed to sell all the share= s or majority stakes in just 114 companies, and minority stakes in 22. The= government has congratulated itself on the progress it has made and has pr= oduced some figures which make the programme look quite impressive, but the= reality is that by international standards - and especially by eastern Eur= opean standards - it has moved very slowly. Only in 1996 and 1997, when th= ere were 78 sales, did the programme appear to gather any momentum.

During 1996 and 1997 the preferred method of sale was an offering of= shares on the stock exchange, but after some failed offerings and a fall i= n the market the government switched to negotiating sales with "anchor" or = "core" investors. In these cases the investors have been both foreign and = Egyptian, and typically they have bought large majorities of companies. At= all stages of the process there have been sales to employee stock associat= ions. Generally this has involved a management buy-out.

The job of finding anchor investors has been given to a group of ban= ks and independent selling agents. The list includes the major internation= al investment banks, which have shown little interest in the work because t= hey consider most of the companies unattractive and the prices asked too hi= gh. Most of the selling has been done by Egyptian banks and independent se= lling agents with contacts in the local private sector and among Egyptians = with capital abroad.

In the second half of 1999 the sale of four cement companies followe= d a different pattern. A number of international buyers - major players in= the current consolidation of the global cement industry - approached the g= overnment with offers. Egypt experienced its first take-over war, in which= bids and counter bids were made not only for the government shares but in = some cases for the minority stakes held by individual investors. Although = the government had a controlling stake in each of the four companies, all w= ere already quoted on the stock exchange. One result of the bidding was th= at the government has been forced to promise to bring its rules into line w= ith international practice, which obliges bidders in take-over battles to o= ffer for all the shares and not just a majority.

The rather ambivalent attitude of the government towards privatisati= on was shown by its hesitation half way through the take-over battle. At t= his point it became nervous about losing control of "strategic assets" and = thought of withdrawing Amariyah Cement from the sale. There was an outcry = both from the buyers and the minority shareholders, so the deal was allowed= to proceed. Even so the government had Suez Cement, a company it owns out= right, buy Torah Cement, which it had originally thought of privatising.

Whatever some of its officials - the few who really believe in a = free enterprise economy - may have said, the main motive for privati= sation in Egypt has been the government=92s need for money. It = has wanted the revenues it has got from sales, and it has recognised since = it was forced to reschedule its debts in the late 1980s that it is no longe= r able to sustain the losses of its companies. Before this the public sect= or was used as a means of providing jobs for young Egyptians. Little thoug= ht was given to making it profitable and its losses were financed by govern= ment grants or the lending of government controlled banks.

Working against the programme has been an equally pressing set of= government worries. There is great concern that privatisation - es= pecially where it involves sales of weak companies - will lead to workers b= eing laid off, which will increase unemployment and might increase t= he support given to militant Islamists. It has been estimated that govern<= /b>ment companies are over-staffed by anything between a third and seven= times.

There is similar concern about the idea of making companies more sal= eable through the banks being asked to forgive the debts they are owed. It= was estimated by the IMF in 1998 that 70 per cent of the debt owed by stat= e companies to the state banks was doubtful. If this debt were to be writt= en off the government knows that its banks would be shown to be insolvent.

Another problem is the illusion of much of the government establi= shment that the state companies are things of important value. = From the point of view of stimulating economic growth in the medium and lon= g terms, it would probably be a good idea for the government to sell many o= f the remaining companies for whatever it can get for them. It could even = try public auction, particularly where a company might draw international b= ids, which would make it difficult for local buyers to decide in advance am= ong themselves who should buy what company, and for what price. The govern= ment has a horror of such ideas. It is instinctively against the principle= that the price of a company should be determined by the market. It feels = that the price should be set by the seller or by local business appraisers,= acting under the supervision of the government=92s audit agency. The gove= rnment has the appraisers use well known Western valuation formulae, such a= s the replacement value of fixed assets or the net present value of future = cash flows, but it is applying them to inappropriate cases.

Unless the government can relax its views on valuation, it may be= that there will not be many more privatisations. Some 80 compa= nies, in textiles, a particularly weak sector, pharmaceuticals, construc= tion and shipping, have been set aside to be restructured. The susp= icion is that this means they will be removed from the privatisation list i= ndefinitely. =20

The four big state banks, Banque Misr, Bank of Alexandria, Nation= al Bank of Egypt and Banque du Caire, are regarded for the moment as= being too sensitive to be privatised. The problem is partly th= at they would be seen to be bankrupt, which would be embarrassing and would= probably cost the government a large sum of money. Their sale would certa= inly lead to many redundancies. It would bring protests about Egypt being = taken over by foreigners - because sales would certainly involve foreign ba= nks as core investors and managing shareholders. It would expose much corr= uption. It would lead to demands for the repayment of some loans made to b= oth private and state companies, and from the state=92s point of view it wo= uld remove the banks as an automatic source of funding for its big projects= and budget deficits. A little while ago it was being suggested that one i= nstitution, the Bank of Alexandria, might be privatised, but it is understo= od this idea has now been dropped. Instead the Banque du Caire has been gi= ven a new chairman with a brief to restructure the bank, root out corruptio= n and clean up the balance sheet. If he lasts in the job, and is reasonabl= y successful, it may be that the government will look again at the idea of = privatisation. =20

The government=92s current plan is to privatise the state owned insu= rance business. It has already sold its stakes in two joint venture compan= ies, in one case to the German firm Allianz. Now it is having the four who= lly owned state companies valued by foreign investment banks, an unusual pr= ocedure. No decision has yet been made on what method of sale will be used= . There is talk of the first company to be offered being Egypt Re.

There are only a few more companies which might have international a= ppeal, if and when they are offered for sale. One is Egypt Telecom. The g= overnment is intending to float up to 20 per cent of this in an internation= al and domestic offering. Other enterprises are the remaining three cement= producers and, if it wants to sell them, the electricity companies.

Stock Market

Privatisation has provided a great stimulus to the stock exchange, and i= t was the boom on the exchange in 1996 and Egypt=92s arrival as an "emergin= g market" that got the word "tiger" temporarily attached to the country.
The early privatisations of 1994 and 1995 were minor affairs in whic= h small minority stakes in companies were floated. Investors were invited = to subscribe through advertisements in newspapers. Little was disclosed ab= out the companies whose shares were being sold. Most of the buyers were pr= ivate Egyptian investors.
The market took off in 1996 when for the first time the government o= ffered a large majority stake in a company - 75 per cent of the Nasr City H= ousing Company. Later that year and in 1997 there were 33 further offering= s of majority stakes, along with nine sales of minority stakes, five sales = to employee stock associations and several offerings by the private sector.= Then, towards the end of 1997 international confidence in emerging market= s started to weaken and Egypt suffered a special blow in November when a gr= oup of Islamist gunmen massacred 53 tourists in Luxor. The stock market fe= ll and continued downwards through 1998. It picked up sharply in the autum= n of 1999 and in January 2000 hit a point close to its peak of 1997.
The market is now vastly bigger than it was at the beginning of the = 1990s. In 1991 it was capitalised at the equivalent of $2.6bn, in February= 2000 the figure was $40bn. Turnover grew from $69m in 1991 to $8.8bn in 1= 999.
About a thousand companies are listed, but only a hundred are traded= with any regularity. The four most popular stocks as of April 2000 were: = MobiNil, the mobile phone operator in which the Sawiris family has a big s= take; Media Production City, a studio complex which is still 90 per cent go= vernment owned; Orascom Construction Industries, another Sawiris backed com= pany; and the Commercial International Bank, which is 80 per cent private s= ector and 20 per cent government. Brokers say that the enthusiasm for Medi= a Production City does not reflect well on the market. Little detail is kn= own about the company - the government has released minimal information on = its performance and prospects - but it has the magic word "Media" in its na= me and everyone is aware that it is the biggest studio complex in the Middl= e East. (Egypt produces most of the Arab world=92s popular culture, partic= ularly its films and soap operas.) The company=92s shares have risen to su= ch dizzy heights that it now has a price/earnings ratio of 250. If one exc= ludes Media Production City from the calculation, the average price/earning= s ratio of the market is a bit over 9. The private sector banks, with earn= ings growth figures of 10-20 per cent, have p/e ratios of 5-8. By internat= ional standards the Egyptian market looks cheap, but recently there has bee= n no rush of foreigners to buy because of the uncertain overall economic pi= cture.
The "Real Economy" and Standards of Living

It is not easy to relate economic reforms, privatisation and the develop= ment of the stock market to the standards of living of the ordinary Egyptia= n people, but among economists and others who are interested in the subject= some fairly definite impressions have emerged. =20
At the bottom of society the people remain very poor. For th= e last 20 years or more they have been suffering from the steady deteriorat= ion of state education and the health service, but they are now benefiting = from an improvement in the country=92s infrastructure. The roads, water an= d sewerage systems have been considerably repaired and expanded in the last= decade. Public transport is a bit more efficient. For those who have acc= ess to it, the telephone system is better. In some areas the progress has = been quite striking. The new cities which the government began to develop = in the desert in the later 1970s, to take the pressure off the Nile valley,= have now reached a take-off point where they have a critical mass of peopl= e and are starting to generate economic activity of their own. The oasis o= f Fayoum, west of the valley, is prospering, though here, as elsewhere in t= he country, the prices land commands are out of proportion to what it is ab= le to produce. (The reason for this anomaly, which is found throughout the= Arab world, is that society seems more interested in putting its capital i= nto something which it considers a store of wealth, or a speculative invest= ment, than into businesses which are difficult to run and involve high cost= s and dealings with the bureaucracy.) =20
The skilled and semi-skilled Egyptian working class seems to be doin= g a bit better than it was a few years ago. Its members are getting jobs i= n the new companies that are being established. It seems that most of the = 1.5 million Egyptians who come onto the labour market every year are gettin= g jobs. Unemployment is falling slightly. The government claims the rate = is around 8/9 per cent, though independent sources suggest 15 per cent plus= would be a more likely figure. Ten years ago the rate would have been 20 = per cent.
Among the middle classes many people are suffering. Most young men = and women who come out of high school and university still go into the civi= l service or other parts of the public sector and earn salaries that are le= ss in real terms than were being paid twenty years ago. They also suffer f= rom the decline in social prestige of the educated middle class. Those peo= ple - perhaps 10 per cent of graduates - who find jobs in the "new" economy= , in businesses such as computers or financial services, are doing very wel= l. Salaries in these areas are quite attractive - high enough to attract f= oreigners and some of the Egyptians who have been working in Europe or Amer= ica.
An indicator of the anxiety of the middle classes has been the devel= opment of a parallel education system, to supplement the very poor quality = state system. Many of the universities have set up "language sections", br= anches run in association with foreign universities where fee paying studen= ts can study law, economics, business or some technical subject in a foreig= n language. Some of the teachers are foreign. A number of hotel managemen= t institutes have been established, in response to the recent boom in touri= sm. =20
New Economic Difficulties

The period of success that began with the reform programme of 1991 laste= d without any serious break until the autumn of 1997. At that point severa= l things went wrong together. The terrorist attack in Luxor temporarily cl= osed the Egyptian tourist business. Oil prices fell suddenly and then cont= inued a slow decline until by March 1999 they were below $10 a barrel. Thi= s cut Egypt=92s own oil export revenues and greatly reduced the flow of rem= ittances coming from its expatriates working in the Gulf. The Asian financ= ial crises damaged trade between the Far East and Europe and led to a drop = in revenues from the Suez Canal. Together these difficulties brought a big= fall in Egypt=92s foreign exchange revenues and in due course a check to a= ctivity in the private sector - particularly in real estate and constructio= n. =20
It happened at the same time that the government was increasing its = spending on a series of what are known as "mega-projects". The most famous= of these is an agricultural scheme for the development of the Toshka depre= ssion in the western desert, using Nile water pumped from Lake Nasser. The= first phase of the infrastructural work, which is what the government is p= aying, is set to be finished by 2002 and is expected to cost about $1.4bn. = There is a similar but smaller project being built at East Oweinat near th= e Sudanese border. It is hoped that eventually these two schemes will incr= ease the area of agricultural land in Egypt from 5 per cent of the country= =92s surface to 25 per cent. The aim is to achieve this by 2017, when the = country=92s population is expected to be 80 million. =20
Other mega-projects - the Gulf of Suez petrochemicals zone, the Port= Said industrial zone and the East Port Said container port and free zone -= are clustered around the Suez Canal. Here the government is spending some= $3.5bn on infrastructural work, including land reclamation. =20
These projects have certainly been the engine that has maintained th= e country=92s growth in the last two and a half years. If an estimate of t= he effect of government capital spending is taken out of GDP figures for 19= 98 and 1999 the economy can be seen to be in recession. This is certainly = the impression of many private businessmen, even though in some sectors, no= tably tourism, there was a recovery last year. There has recently been a b= ig lengthening of the credit terms being given by building contractors and = consumer durables suppliers.
The government has been financing much of its capital spending by bo= rrowing from the Central Bank and the four state owned banks. In the twelv= e months to November 1999 it is estimated by foreign bankers that Central B= ank lending to the government was equivalent to 7 per cent of GDP - a figur= e which is not compatible with the government=92s own reported budget defic= it of 1 per cent of GDP. According to the IMF=92s report of 1998 a number = of items are excluded from the government=92s budget. =20
The Central Bank=92s lending has been financed partly by drawings on= the local banking system and more importantly by running down the governme= nt=92s foreign currency assets.
Government borrowing has pushed up interest rates to a point where c= orporate borrowers are having to pay 11 to 13 per cent. The government has= a somewhat ambivalent attitude to this. It is aware that the rates are di= fficult for borrowers and an impediment to economic growth, but it sees the= m as keeping a check on inflation and supporting the Egyptian pound. Ever = since it embraced economic reform in 1991 the government has been preoccupi= ed with the idea that it has been low inflation, a stable pound and high or= fairly high interest rates that have attracted Egyptian capital held abroa= d back into the economy. This in turn is what has financed much of the gro= wth of the last decade. Now the government seems to have a horror of makin= g any change to its policy. The recent comment of a financial journalist i= n Cairo was that "having taken the IMF=92s medicine in the early 1990s and = seen it work, it is as if the government has become addicted".
It is not only with interest rates that the government supports the = currency. Since the pound was devalued and exchange controls removed in st= ages in the early 1990s, the currency has officially been floating and anyb= ody has been able to buy foreign exchange for current or capital transactio= ns. This, at least, is the theory, but the practice is different. The pou= nd has been held very close to =A3E3.4 to the dollar since 1991 and the gov= ernment has exercised careful control over sales of its foreign exchange. = In early 1999, for example, it cut the outflow of dollars by insisting that= anyone opening a letter of credit should deposit 100 per cent collateral i= n Egyptian pounds with his bank. It still imposes a licensing system on ce= rtain types of imports. =20
The problem for Egypt now is that high interest rates risk pushing t= he economy into recession. If the fall in the government=92s foreign excha= nge reserves leads to a slow down in its spending on the mega-projects, whi= ch is what already seems to be happening, the recessionary effect will be i= ncreased. In early 1999 foreign exchange reserves stood at some $20bn, but= early in 2000 the Minister of the Economy and Foreign Trade, Yousef Boutro= s Ghali, said that $10bn - eight months=92 import cover - would be adequate= . This would imply he thought the total was headed in that direction.
The private sector, and even foreign investors, would welcome a deva= luation. For the foreign investors the capital loss of, say, a 10 per cent= devaluation would be offset by a more buoyant economy and a stronger stock= market. Both they and the Egyptian private sector would like to see consu= mers being given a stronger incentive to buy local products and the country= =92s emerging export industries being made more competitive. There have be= en suggestions, notably by the investment bank, Robert Fleming, that the de= valuation should be as much as 40 per cent. More often bankers suggest 25 = or 10 per cent. On the free market, where much of the private sector=92s o= wn foreign exchange is traded quite legally, the rate has recently been aro= und =A3E3.7 to the dollar, which suggests that a 10 per cent devaluation wo= uld be about right.
The government is extremely reluctant to contemplate this course. T= he reasons are not only pride and its commitment to a stable currency, but = its fear of restarting inflation and increasing the price of basic commodit= ies, such as wheat, which would have an immediate impact on the poor. The = government acknowledges that the country=92s non-oil exports would benefit,= but because the volumes of goods involved are still very small it feels th= e benefits here would not outweigh the shock of an increase in import price= s. What seems possible is that if the gap between the official exchange ra= te and the free market rate grows wider, the government will undertake a de= valuation in small stages. =20
Lack of Commitment to Reform

The major problem for Egypt is that much of its government is not rea= lly committed to a free market economy. This is true even under the ne= w government of Atef Obaid, a reform minded Prime Minister who used to be t= he minister with responsibility for privatisation. It is not only that the= privatisation programme is moving rather slowly; the economy remains prote= cted by import controls - official and covert - and by high tariffs. The g= overnment sticks to the terms of its agreement with the World Trade Organis= ation but finds pretexts for delaying each step towards liberalisation for = as long as possible. Negotiations for a new association agreement with the= European Union are making very slow progress.
The fundamental reason for the resistance to reform is that a large = body of the people at the top - in the cabinet, the upper echelons of the c= ivil service, the People=92s Assembly and the state corporations - were bro= ught up, or had their first experience of politics, under Nasser or Sadat a= nd still have basically socialist instincts. The same goes for much of the= rest of the population of the older generation. There is a mistrust of th= e private sector and a feeling that it is natural and right for most aspect= s of an economy to be state controlled. =20
There are obvious vested interests within the establishment in thing= s remaining as they have been. There are many officials who have several p= osts in government or state companies and who are living rather well by dra= wing salaries from each. The more important officials control extensive ne= tworks of patronage. Ministers, senior military officers and other functio= naries have their own constituencies which back them in their manoeuvrings = with their rivals, and which they in turn are bound to protect. Sometimes = if a quite minor but very sensible piece of reform threatens the interests = of such a person it will be stopped or delayed.
Another break on reform comes from much of the establishment seei= ng Egypt as a rentier economy, which to a large extent is what it ha= s become in the last forty years. The country earns almost all its = foreign exchange from five sources over which it has only partial co= ntrol - tourism, oil, remittances of its workers abroad, the Suez Canal and= aid. Together these bring it some $12bn a year,
which is four times what it earns from all its non-oil visible ex= ports. The rentier income is what pays for the country=92s imports.= The conscious or unconscious view of much of the Egyptian establishment h= as been that the country=92s prosperity does not depend so much on i= ts own efforts, in the sense of it developing export industries, but is det= ermined by its success in sending its workers abroad, encouraging fo= reign governments to give it aid and hoping that the state of the wo= rld economy will bring it good revenues from tourism and the Suez Canal. It is only in the last year or so, as imports have risen steadily and th= e volume of oil exports has been reduced by the country consuming more, tha= t the government has become concerned to encourage exports.
The Egyptian government is remarkably unresponsive to foreign pressu= re to reform. The only occasion on which it moved fast was in 1991, when i= t was promised a large amount of debt relief. It does not feel itself very= much connected to the global market. It is much more focused on domestic = concerns - both public opinion and vested interests. What impresses foreig= n bankers and diplomats is how good the government is at avoiding having to= reform while persuading them, in a charming way, that it is just about to = do much more than it has any intention of doing.
Mubarak=92s View of Politics
Just as the government is reluctant to change the economic system, s= o its instinct is to preserve the status quo in politics. President Mubara= k is an intelligent and able man. (This is despite his being the butt of j= okes throughout the Arab world that portray him as stupid.) What he lacks = is vision. Hardly anybody in Egypt believes his promise that democracy wil= l be his priority during his fourth term as President, which began last aut= umn. A comment often heard in Cairo is that "all he wants is to keep the p= olitical boat afloat - he is not so concerned about where it is going".
His attitude stems from his being unconvinced intellectually that ch= ange - in particular greater democracy - is necessary. He believes that it= is more important for the government to build the economy and deal with so= me of the country=92s social problems, and that freer politics, with a nois= ier opposition, might hinder the process. He has sometimes claimed that ec= onomic development is "preparing" society for political change. He and his= ministers like to point to the chaos, crime and economic breakdown seen in= Russia as an example of what over-rapid change can do.
Mubarak=92s way of thinking was seen in the government changes made = at the end of 1999. The President promised a "new cabinet" but what actual= ly emerged was no more than a reshuffle. =20
Many of the personalities in the new body had been in ministerial jo= bs for ten years. Two had been in the cabinet for almost twenty years. An= d the new Prime Minister, Atef Obaid - admittedly a man known as a reformer= - had been a minister for most of the time since the late 1970s.
Mubarak=92s less dangerous critics - those in the establishment pres= s and in the non-Islamist political opposition - are co-opted into the syst= em. The President is quite accessible to journalists and other members of = the Cairo intelligentsia. He meets the press often and has got to know man= y of the journalists by name. Periodically he telephones the editor of one= of the major newspapers, which are state owned but relatively independent.= He may argue with the editor and try to persuade him to change his paper= =92s policy, but he does not go beyond this. Nasser=92s r=E9gime, in contr= ast, exercised actual censorship. Anwar Sadat used to telephone the editor= of Al-Ahram, the best known paper, al-most daily, to lecture him on his he= adlines and lead stories. Both Nasser and Sadat regularly fired editors. = =20
Politicians are made reasonably loyal by being given opportunities t= o make money. The people who have been allowed to establish the small secu= lar opposition parties benefit from government grants to their parties of = =A3E200,000 ($60,000) a year. They participate in the system in the sense = that they are allowed to run in the elections and if they or their colleagu= es are elected, as a few are, they gain all the benefits of being a member = of the People=92s Assembly and having links with the centre of power. Ther= e are many perquisites that come to a member of the People=92s Assembly. H= e has immunity from prosecution and he is able to enrich himself by, for ex= ample, purchasing government land at competitive prices or securing governm= ent supply contracts. It is accepted that members of the Assembly quickly = become millionaires.
Political Parties and Elections

The political system as it operates at present in Egypt has evolved from= the later years of President Sadat. In 1978 Sadat set up the National Dem= ocratic Party, to be his own supporting party in the People=92s Assembly (M= aglis As-Shaab), and this body has dominated the Assembly ever since. Duri= ng the remaining three years of his presidency Sadat kept a tight rein on p= olitics, because while he was regaining the Sinai peninsula in stages from = Israel he was anxious that there should be no domestic disturbances that mi= ght worry the Israelis and halt the process.
After Sadat was assassinated in October 1981, Mubarak gradually libe= ralised the system. Various opposition parties were allowed to establish t= hemselves, though in almost every case their applications for licences were= at first refused by the government=92s Political Parties Committee and the= y had to resort to the Supreme Administrative Court to have the decisions o= verturned. The initial refusals were based on the Political Parties Law of= 1977, which banned parties based on religion and said that new parties had= to be significantly different from each other in their ideologies and prog= rammes. =20
There are now fourteen little opposition parties, of which= only four are of any significance at all. These are: the Wafd, whi= ch is a revival of the liberal nationalist party established to campaign fo= r independence after the First World War; Tagammu, a left wing party= that harks back to the Nasser era; the Democratic Socialist Nasserite Part= y, which is similar but more moderate; and Amal, the Labour Party. = The last of these was established as an official socialist oppositio= n under Sadat, in 1978, and it was later allowed to take under its wing the= more moderate elements of the Muslim Brotherhood and run these peop= le in elections as its own candidates. The party now defines itself as "Is= lamist nationalist" and says that in the Islamic tradition it is con= cerned with looking after the poor.
None of the parties has made a significant political impact. In = 1987 they won 95 seats in the People=92s Assembly, out of a total of= 454. In the most recent election, in 1995, they won just 14.
The reason for the parties=92 failure is partly that the government = restricts their activities. They are allowed to hold meetings only in buil= dings that they own - inevitably very few - or in private buildings they ma= y hire. But they are not allowed to hire government owned buildings or hol= d demonstrations in the street. They are given little time on the state te= levision and radio. In elections the provincial governors, who are appoint= ed by the President, give the National Democratic Party candidates practica= l assistance with their campaigns and appear with them in public, which giv= es the people the feeling that the men with influence - who might be able t= o help them and their villages - are the government candidates. (It is not= iceable that in elections there is normally a much higher turnout in the co= untry areas than in Cairo, because it is in the country that patron-client = relationships operate most effectively.)
The other problem for the opposition parties is that the people are = not clear about what they stand for and do not take them seriously. The pa= rties all have their own papers, which are free to attack the government as= harshly as they like, but few people buy them. The popular view is that m= ost of the little parties are indistinguishable from each other and represe= nt no more than the groups of intellectuals and retired politicians who hav= e founded them.
In March this year a new law was passed giving judges, rather than t= he Ministry of the Interior, responsibility for administering elections at = a regional level. Much fuss was made about the reform, and certainly the E= gyptian judiciary is independent, but it is still not expected to make a bi= g change to actual results. Another new piece of legislation has removed t= he old stipulation that half of the members of the People=92s Assembly shou= ld be workers or farmers. This should put more businessmen into the Assemb= ly to be elected this autumn, which may have an effect in accelerating econ= omic reform.
So far nothing has been said about changing the way the President is= elected. From Sadat=92s time the law has said that any candidate for the = Presidency should be nominated by a third of the Assembly members, endorsed= by two thirds and then approved by the people in a referendum. The second= stage of the process makes it impossible for there to be more than one can= didate put to the people. Hosni Mubarak has been in the happy position of = being the single candidate on four occasions, in 1981, 1987, 1993 and 1999.= On the last occasion official figures gave him 94 per cent approval on a = turnout of 84 per cent.
There is some speculation about what will happen when Mubarak either= dies or becomes too old to stand. The President is now in his seventies a= nd is in reasonably good health, but he has appointed no vice President. O= ccasionally it is suggested that he might be thinking of handing power to h= is son, Gamal, a young man in his thirties, who is a member of the politica= l bureau of the National Democratic Party. The pretext for this appointmen= t is that he represents "Youth". The consensus among the intelligentsia is= that Gamal as a successor would be unacceptable, because Egypt is too soph= isticated a country for this sort of blatant nepotism.
Emerging Civil Society

Civil society is in much the same semi-free state as parliamentary polit= ics. In April this year the government renewed for another two years the E= mergency Law, which was passed in the aftermath of Sadat=92s assassination = in 1981 and has been in force ever since. Two of the Law=92s most importan= t clauses stipulate that permission is needed for political assemblies of m= ore than five people, and that civilians can be tried in military courts. = The Law, of course, is used selectively. It bears down far harder on the I= slamists, who are its principal target, than it does on secular politicians= . It is Islamist militants who have been put on trial in military courts. = =20
Non-Governmental organisations (NGOs) have recently been given a = little more freedom, but by normal democratic standards they = are still heavily regulated. Until the passing of Law 153 of 1999 an N= GO in Egypt could only operate if the government turned a blind eye to it, = as it did most of the time to a branch of the Arab Organisation for Human R= ights. This Organisation could not have a building registered in its own n= ame, nor open a bank account. Now the Organisation and a number of other b= odies are allowed an independent legal status, but they are obliged to regi= ster with the Ministry of Social Affairs and declare to it the source of th= eir funds. If the Ministry does not approve it has the right to block the = funds. This regulation, once again, is directed mainly against the Isla= mists. Several of the institutions that have benefited from being a= ble to operate on a fully legal basis have been women=92s organisations= , such as the National Council for Women and the National Council for Child= hood and Motherhood. Women=92s rights were strengthened last year by the p= assing of a law - very controversial in conservative quarters - which made = it possible for the first time for women to institute divorce proceedings.
Any person who wants to campaign on any liberal issue - religious= tolerance, minorities, human rights, women - still has difficulty i= n making his voice heard. The press, like the judiciary, is undoubtedly fr= ee, but the television and radio are cautious and seldom move= far from what they know is government policy. If a person wants to= speak out on something he will do best to go to Qatar and be= interviewed on the extraordinarily independent Al-Jezira sat= ellite channel.
Declining Islamist Influence

One of the strongest reasons for President Mubarak=92s reluctance to = let the political process operate more freely has been his fe= ar of Islamist violence, which killed his predecessor. The theme ha= s become an obsession with Mubarak. He refers frequently to the chaos,= amounting almost to civil war, which has gripped Algeria since 1993 and wh= ich had its origins in an over-rapid process of democratic reform in 1989 a= nd 1990. Although the President mentions the subject less often, Egypt in = the last twenty years has itself been hit hard by Islamist violence. This = has taken the form of assassinations of political figures and policemen, at= tacks on Coptic Christians and attacks on foreign tourists. In the 1980s t= he main group responsible was known as Islamic Jihad In the 1990s it was t= he Gamaa Al-Islamiyya.
The last two major episodes of violence were in 1996 when extremists= machine gunned tourists outside the Egyptian Museum in Cairo and in Novemb= er 1997 when 53 tourists were killed in Luxor. In the last two and a ha= lf years the government seems to have brought the problem und= er control. Money has been put into the development of Middle and Uppe= r Egypt, which were the principal areas of Islamist-Coptic tension. And sh= eer heavy-handed repression seems to have resulted in a very large number o= f militants being killed or locked up. At times in the early and mid-1990s= the security forces fought pitched battles with militants in the towns and= villages of Upper Egypt. On one occasion a battle raged for nine hours, w= ith the police using rocket propelled grenades. In Cairo a raid on the poo= r suburb of Imbaba led to the arrest of six hundred. Since 1997 things hav= e been much quieter. The general view in Egypt is that the remai= ning militants are mostly abroad, and although they might organise attacks = from time to time they are no longer a serious threat. =20
The violence of the extremists has cost the Islamist movement as a w= hole much popular support. As they often say themselves, the Egyptians are= a peaceful, patient people, religious by nature since ancient times, but n= ot inclined to extremism. It would be difficult to measure accurately what= level of support there is for Islamist political groups, violent and non-v= iolent, among the poor, but it seems to be declining. =20
The process has certainly been helped in the last five years by a st= ream of soap operas on the three state owned national television channels. = All the soaps show Islamism and its followers in an unappealing light. Ty= pically an Islamist will try to murder the hero or heroine, or brainwash th= e hero, who will come to his senses just before he commits a terrible crime= . Nothing is said about how the Islamists in the story have come to adopt = their extremist views. The television channels do not write all the soaps = themselves. Many are by independent writers who have discovered that putti= ng an anti-Islamist theme into their work helps them sell it.
The soap operas are hugely popular. They normally run once a day fo= r a month, and as the channels make sure their timings do not overlap, it i= s often possible for a person to watch two or three a night. In most cases= people watch in their own homes. Nowadays even the poorest households in = Egypt have TV.
The Islamist political parties, meanwhile, have split. In the 1980s= and early 1990s one could divide the movement into three streams: the viol= ent militants in Islamic Jihad and Gamaa Al-Islamiyya; the Muslim Brotherho= od members, who operated in the world of religious charities and profession= al associations, but were not allowed a political party of their own; and t= he few Brothers who had attached themselves to the parliamentary party, Ama= l. =20
The peak of the Brothers=92 influence was in the late 1980s and earl= y 1990s. It was then that their charities, generally attached to mosques, = seemed to be making most progress in poor areas. They provided schooling a= nd medical services - often of a better standard than the government provid= ed. They were much more effective than the state organisations in setting = up relief centres after an earthquake hit Cairo in 1992. They dominated el= ections in all the professional associations or "syndicates", except that o= f the journalists. These bodies are more important in the Arab world than = they appear at first sight, because they are the only places where politics= is free. All political views and parties can be represented in them - not= just those licensed by governments. The problem in using them as an indic= ation of the popular mood is that they tend to be dominated by activists, r= ather than the "silent majority".
The government moved against the Brotherhood in the early 1990s. Af= ter the earthquake it issued an Emergency Law decree which stated that disa= ster donations had to be approved by the Minister of Social Affairs. Then = in 1993 it passed a law which required the presence of an absolute majority= of electors for a syndicate board to be formed. And in 1995 it rounded up= the Brotherhood=92s leadership put it before a military court and sentence= d its members to between three and five years in prison.
Now there is a split in the Muslim Brotherhood between those who are= still implacably opposed to any compromise with the government and those w= ho feel that continual confrontation is pointless because it results in the= best and brightest of the members spending large parts of their lives in p= rison. In 1996 a moderate group, headed by Abo Elela Maadi, a leading figu= re in the engineers=92 syndicate, established El-Wasat (The Centre) as a po= litical party which it hoped would operate within the Egyptian parliamentar= y system. So far the government has refused to give El-Wasat a party licen= ce, and its members are being accused by some of their former colleagues of= weakness and treachery. The leading members of the Brotherhood seem to be= roughly equally divided between the two factions.
Cultural Islamism

What is not changing is the influence of "cultural Islamism". In Egypt,= as in the rest of the Muslim world, the revival in interest in Islam in th= e last thirty years has had both a political and a social aspect, and while= the political tide is now ebbing the social tide may still be slowly risin= g. There are more people, especially from the better off classes, going to= the mosques on Fridays, performing the daily round of prayers and fasting = during the month of Ramadan. Many young women have adopted Islamic dress (= without veils) in public, though as political militancy has weakened it see= ms that young women who think otherwise - who want to wear tight jeans and = tops - feel freer to dress as they please than they did a few years ago. = =20
There has been a growth in the numbers of religious book shops. It = is now more common to find men and women separated at weddings, funerals, c= ircumcisions and birthday parties. Small businesses are being created to c= ater for these tastes. There are Muslim musical groups to sing appropriate= songs at weddings, and shops specialising in Islamically acceptable women= =92s fashions and make up. And where they are not political and their fund= ing has been approved, Islamic schools, clinics, nurseries and other charit= ies still operate in the poor quarters of the big cities.
At the same time there has been a noticeable change in the character= of Egyptian Islam. In recent centuries there have not been different Isla= mic sects in Egypt, but the Sunni Islam practised in the country has drawn = some of its rituals and attitudes from Pharaonic, Christian and Shia ideas.= Egypt, like much of the rest of North Africa, was a Shia state under the = Fatimid dynasty in the later tenth, eleventh and twelfth centuries, and the= great university of Al-Azhar, founded in 970, was originally a Shia univer= sity. The influence of the old religions is seen in the way people visit a= nd pray at the tombs of relations, in the popular interest in saints, and i= n the habit a few people have of praying to saints in both mosques and chur= ches. There are many mosques named after Shia saints.
The new trend is towards a pure, austere Sunni Islam - strictly unit= arian and influenced by Saudi Arabia. The people who have taken to saying = their prayers in recent years, or who can be seen on busses or waiting in g= overnment offices rocking to and fro and mumbling the Koran, are of the new= breed. The same goes for those who have cultivated a zebeeba, the = dark mark on a person=92s forehead which comes from repeated contact with t= he prayer mat - or the secret use of abrasives.
The growing influence of Saudi Arabia, felt throughout the Islamic w= orld, comes partly from the Kingdom=92s wealth which has allowed it to fina= nce missionary activities and flood Muslim countries with free Korans and u= nitarian religious studies. It has also come from the globalisation of inf= ormation - particularly television broadcasting in the Middle East - and th= rough the huge growth in numbers going on the pilgrimage to Mecca and Medin= a in the last twenty years. These developments have made Saudi Arabia the = world centre of a religion which used to have many holy places (above all M= ecca) but nowhere which could claim to be a doctrinal capital. Among moder= ate Muslims holding to traditional attitudes in Egypt, the Maghreb countrie= s of north Africa and other parts of the world where Islam has acquired som= e slightly unorthodox ideas, the modern dominance of Saudi Arabia is resent= ed.
Muslim/Christian Tensions

The rise of Islamism since the 1970s has had the unhappy consequence of = creating tension in some areas between the Coptic Christians and the Muslim= majority. Traditionally the Copts, who account for about 8 per cent of th= e population, and Muslims have had quite good relations. The leaders of th= e two religions attend each other=92s major festivals. In the month of Ram= adan the Coptic Pope gives an Iftah banquet at sunset one evening for the s= enior members of the Muslim clergy. And Muslims have adopted the day after= the Coptic Easter Sunday as a national holiday called Sham en-Neseem, whic= h means literally "smelling the breezes". The intelligentsia of both commu= nities likes to stress that the Copts are every bit as much Egyptians as th= e Muslims. Indeed, because the Copts (the word has the same root as "Egypt= ian") embraced Christianity in the third century and the country remained m= ainly Christian until the arrival of the Fatimids in 969, the Copts can cla= im to be heirs to an older tradition than the Egyptian Muslims.
The origins of the recent tension - and of Islamist violence in gene= ral - go back to the early 1970s when President Sadat encouraged the Muslim= Brotherhood and other Islamist groups, especially in the universities, as = a counter-weight to what he thought was a greater threat from the Left. It= was in 1971 that Sadat jailed several of his socialist colleagues who had = been leading figures in Nasser=92s government. The policy brought clashes = between Copts and militant Muslims almost straight away, and there have bee= n periodic episodes of violence ever since.
The big cities have been peaceful and violence in the towns of the N= ile delta has been relatively rare because here the Coptic communities are = in a very small minority and are normally careful to keep a low profile. T= he main trouble has been in Upper Egypt where in some towns and villages th= e Copts make up 30 per cent of the population. A few villages have Copt ma= jorities. The Copts here tend to be richer and better educated than their = Muslim neighbours. They look down on the Muslims because they feel sociall= y superior, and the Muslims look down on them because they see them as a mi= nority in a Muslim state. In the minds of young militant Muslims here the = Copts are quite easily associated with what they believe is the malign infl= uence of the West, America and Israel, and they are an accessible target. = As a retired government minister puts it, "instead of fighting America, the= youths can attack the Copt jeweller or pharmacist in their own street".
The Copts have not been too worried by odd attacks on them carried o= ut by the same type of fanatics who did the killings outside the Egyptian M= useum or in Luxor. What has worried them more is where small incidents hav= e led to mobs of their Muslim neighbours attacking them and their property.= They refer to "self-righteous, ignorant young men" - the products of the = "new Saudi Islam" - coming out of the mosques after prayers shouting "Jihad= ". The words are those of a Coptic journalist. An episode of the type the= y fear occurred on 31^st December last year in the Upper Egyptian= village of Kosheh, when a dispute over credit between a Muslim woman and a= Christian textiles merchant led to several hours of rioting and more than = twenty dead. The authorities have since brought charges against some 140 M= uslims and Christians and have renamed the village El-Salaam, "Peace".
Some of the Coptic leaders and others concerned with human rights ha= ve claimed that police investigations into the incident were unnecessarily = brutal - with torture used to extract confessions. There have been proposa= ls that tensions between the communities should not be regarded purely as a= police matter, but should be made the concern of a special standing commis= sion. Such a commission might be formed of Muslim and Coptic leaders, reli= gious and secular, and academics, lawyers and officials concerned with educ= ation policy, and put under the chairmanship of one of the President=92s as= sistants. There has been no response to the idea from the President.
Conclusion - the Need for Political Change

The reluctance of the Mubarak government to reform politically, in an= y area, might not be seen as a serious fault. After all Egypt is be= coming gradually more prosperous, it is stable and the government, though h= ardly democratic, is much less harsh than many other Arab government= s.
But there are many among the intelligentsia who are dismayed by t= he stagnation of politics in the country. They admit that there= is freedom of expression and a free press, but they say that what is said = and written - what seems to be the consensus view of the educated classes -= has no effect on the government. As a former minister of Sadat=92s govern= ment says, "freedom of expression has become just a rather sterile human ri= ght =85..we are left talking to ourselves=85..it is as if the government ac= cepts that the public is free to criticise but feels that it is free to ign= ore the public".
Increasing numbers of Egyptians, whose hopes were raised by a moveme= nt towards freer politics in the late 1980s and early 1990s, are now losing= faith in their government. It is notable that there is very little intere= st in the elections for the People=92s Assembly which are due this November= , and comparisons are being made with the much more "real" elections that h= ave taken place recently in Morocco and Iran. =20
One fear is that just at a time when Egypt is making progress eco= nomically, frustration with the immobility of politics will lead to = violence from some quarter, the government will counter with repressive mea= sures, politics will become even less free than it is at present and= foreigners=92 faith in the economy will be damaged. This analysis is = most often put forward by liberal intellectuals, who are the people most fr= ustrated by the present situation but are not themselves likely to do anyth= ing about it. A more likely possibility, given the long suffering characte= r of the Egyptian people, is that static politics will hold back the countr= y=92s development socially, slow the growth of the economy and delay a rise= in the people=92s standard of living.
=A9 Friedrich Ebert Stiftung | t= echnical support | net edition=20 fes-library | Januar 2001

------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: image/gif Content-Transfer-Encoding: base64 Content-Location: https://library.fes.de/images/digbib/d_inhalt.gif R0lGODlhaQAPALMAAICZsxBAcPDz9iBNeaCzxjBZg9DZ42CAoLDA0HCNqeDm7FBzlsDN2UBmjP// /wAzZiH5BAAAAAAALAAAAABpAA8AQAT58MlJq7046827/xzjTAzzDA7TOM2zJk3cGOazOIdkCNIK WKsWaEi0iEgCB6HHcjVJNYki+WNWXbGEAxYrej+OcLM0CSRbQQp5VzngVuLwL/2td2SNwKPQKJTz DwGAEwV+f0ISggMTeI12jxhHEiUoS2kveDQTBA4BAA6GPkBPkKUVkg9kgQJnToipJgEOCHizTleM pKa7vL2+v8DBXnEtIgJ6rslQFJ8Oi1YTcdLCXqglnIuXuqp7OAoKubhMr9RE1ibY2tIpEwIIJ0rQ FXTlRecSn59o2zUI6wu3RpGr52EGCz3cmu17RcYNwAn+BCnBk00XwYsYOUQAADs= ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: image/gif Content-Transfer-Encoding: base64 Content-Location: https://library.fes.de/images/digbib/d_titel.gif R0lGODlhaQAPAMQAABBAcDBZg6CzxiBNefDz9uDm7HCNqdDZ45CmvGCAoLDA0B9MeYCZs8DN2UBm jP///wAzZgAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAACH5BAAA AAAALAAAAABpAA8AQAX/ICSOZGmeaKqubOu+4sOUTVMyD+k8guM7AcjOYWrkRDUIgNAYCnm/oOJI ahRgrsAP6gNAkoCf4BHd9aJPIo1q5Ymc5p9jADk8DG8CwYuFyUY7D4IkODqChw82gYiLZF82IwWO OzMlAGOHDXR9LFpyPwtyYZ8+AaNyQWF8gD9eWkEiqkqkm0IGDA6rnC5/VZAjhYBcpWlFbJoPCsVx xDi6EAW/uyu9I0mEVE+VhmpVx7F6k9VvDwgkCePT6uvs7e7v8PErRoiHBoz1mY2Cio4kjF8EbYKT b8YAO4cKdJMXYxsSaRCCkXNIbiGSY2PoEKSIzqEZhiPSXQOWbV+iYmusSdkY40McIhtGihAA2ZAG RInaTDhJ+VAEDhxEKN14UEtENJoQqoU5cGAhTmbEdhgQ5cBOrkckxVEMiCDAAAMECjxDSpbdqKIw QgAAOw== ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: image/gif Content-Transfer-Encoding: base64 Content-Location: https://library.fes.de/images/digbib/d_digbib.gif R0lGODlhHADoAKIAAP///73e/2Ol/4S1/0KM/yF7/wBj/wAAACwAAAAAHADoAEAD/2i63P4wyjle CWSaEbr/X6ExBQBkAaAMQDW+8HrGUeewAq1HJSAyqdxuKBgYj0jkD1ZgmZ6BpST1rFpnE4HNAAJJ I84OlECgDs9oSU+UUgQ1xaTc+B1xrthhMzCo8/BjdiYKgCYZMVSFAAE0BWR+aTAEJkIkKYyRmZqb k1VRm0NOV5iIhYegGj2AGDoCq3ocfKeotCMlpAs4tbsOlx4mH4a8qVYGa3qPwy+TmC0ylS9bDLrK 1Z1SnRnMEARGK3N0Md2JAQKQECkDZOvswtXv8PEOwCJNT7MQsV2LIfINF1UMdKKxjYsKg9CYdBtg zp+DgjsSKcoTL44JOZRoDNq0R//Wjlu9ACTU0GmUPyeETMmTqAhfvB7lyGhxp4adqxYy052rpQVT l37+ylw05mknEGcpGdCcMnGpw6cTjrXZgFQSIBfxWKp8CnMSwyBGQ2ZgIYYiPIstkmSMsfEjGQXs 4hIIywuckYYwFvXCRHbEzSsVerikhdJAS4d/+ZGjaxDrPLPomkKGSrmy5ctcNX5acHOwBFEz1+oA KLKUZM+YR8dCQ8WMQdQPCk5l4XjERYD2fLQaxTi1mjtXYDuAOac3UVw04hwBJiesVkDCfU9om6sq habGDR+UjkoUlOwGN+c2DrF6bQ2XfpAG750e9xiFD09Y+A0c+NTP8UR/z2MhXh3I+SFH0iJfpEND ClLghp5kk/0j14Nz8SfIQfJJ+FER+y2gykUsnRcZJjep51RkWFE34gP5WZGhhSxaWEBoxkR4IIcH pbCiQHoZJIOHTJVjIxXgkQbMSC02kKKKRZ601TI5IoVgDCBx8QltyalDFBRJ2radeS+0h0d21GV5 HYVL9ncIhMmIGUFTm8FBoAK45UZkA+W5MUOdEEBhRCIiUDmCUFBAc19l8ZWpZi1eupcXJUsAyuMN OT4UZg3WNXBiSE3tp5xdfRz6XgIAOw== ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: image/gif Content-Transfer-Encoding: base64 Content-Location: https://library.fes.de/images/digbib/fes-log1.gif R0lGODlhfQBPAPIAAP////f3/4yM/4SE/0pK/wgI/wAA/wAAACH5BAEAAAAALAAAAAB9AE8AQAP/ CLrc/jDKSau9T5jNuyGFJxIBMHRkKHKCum6EsBAvV8iBW5SAQNctG4+R68gAPE0tVeMQTKjia+cy HBmnpmgnHUm6WpYiiXJ0d+OqocoEqlc3xW8zmHlAQuT8FdygG2BHZE14WjJvKHtLYFMDQz2CCwFX SJQYXwpKU4wvhS8DiiOPmWU9o4ATAXWXmD1annBxr3urch61mh8OAgKjAb69rBY8YDG/LTEDyooE ygM+HaAdBc7KvNVszgJZMA970Fuj3GuKN7+TzGMQPmpPrkYMtHvU1ZSBWKUN37R2Noh0DPqEA6Yt mJlzvhAq/JUK4Zdr1gxKUvjFIZFt9U4J28ix/6PHj7ncEdExZN64NmvMVKGUawWulTrK+YpBUiU8 JKSc2PQD5s/JM75W6mvCy4OgfxssjQG6M6m6j1Cjqpr0C9SxbRqjBswnSSgSFyj/xIvGwGvObnp4 qV2LkS1bElpxvkPboEotAKF4OuDXUmnIiREYQhCsFViBw4eNYazGOGK9xY2fQY5sTZW2DNUmLVa6 YPIQdB6ocU6zpZmlvmM5SLNBoHVre2ah6NxrZA8suLJXiKwwREUzZe3OOu1Hx/aX2HhDN4OVkt/Q EePInQMnRm7c69iza9/OnfvC7+APnlsKvkT5wecBWQR0jRex9eJPtRxR5bDLkJyMIL2T3N8bKv82 zEVUTYB4NYgfjPWiQ1co/JSNNvc859IC4wDIR2APVqNIJAIW4FprjiAVhwIOTvMhSlbQFsZwX22C oQ2UGSjcbqTpFV0dJTrBWE+uqXEDPwGE9suCoXjYmgoCicVgdcR8eNcYJzYAyomuOULliT5cWVkD Wb4W0JWusQcCYh4+c6JGOz413x37wRUkIXnZEMybYVxlnmZ2EiNRXAd+8J1dmYAFFEXO5ebUdFEc sxASio733XV9rpAfPJMWN80yoXFZinvl9VIeOnzO2JQBd8WppC3+cLXVbD5o5tarr2a1UaT0rWjf Es719MhfkkjmVkS/ysqRsN1p5yqeahHL537/K34gTxMe2mqcikmVw1mFetj6mXCnanoTqpbONlhs J3lTGxD4oKtSDERIEqdeAqZIHKnvkjrSt4bSCK4VfN1i6DRSNkGYdZ1talRq4dL1QIQ1buCLUYXG W8OIBVKaLbRDoDbvagqPqlSl8EZclr89MEsxwcWmrPLKLLfs8sswxyzzzDTXvCyZOFOTM2JeBspz Djsj1kLQPc8QtJHE4PzIAIhQQeYpQAut5ivMppQjH1X72Z8hANS0plEE3sskt24Nqko2UehQtl1q hdJaNMeokWQA5fiKx9weTy3ukmtkfGnaAVZcXcE13AXTxFmdAYGMEgPuh1py47cfwxQuwQsz/5MW cFyzYzfuBMhaXx0Ocv++Yt4/3fLdLIe8ik3ONFdcfSrlLXbChur8jRu4A4y3zrfmAumSr+KCs0h3 aIDWdzproUmEDt7Fy9unvkz1tI3jWDdbh3MtPbEg6FaErTrrqiLhgd+L7Bf8Fo5sjPv5nSEVPNQH o2zzR1dxqhF8+FPmzCSUcZ7/HBPAXQ3wf5nQHygq46pifc0JJhsSnMLwBPDtQH+q6IV7rEIVXmQn UjkLnmvu0BOcvY01JxTCmG7lHz+t5Rmu0mAMXqisS0xvVLUQlPj2VQvK8Ypun/JUp2p4gT7RA0LZ gMUhEvEh6thLOAbY1aZSkYrRzAqKQjKZgv+awLGJnaYUwHpVGH+lr44YkUrFuEa9fqONNa5jU8Ia mBmsKIwbRu8uX+vWN0SYgVJMZYhBJOIwuNUYEbaNEAlyzjxG0TqqDEYCe4IKrW6RtfXdoVAtwaOq sLIQISrEg9gZwgEhEhnCjBIy9mhMry4zR08tZSKRTBn/7keBRXkkhjUE3yyiUa81SKt8W+NX/RwQ HR4wjRCPKMkWOOeEZ0Hrl3ublxPhlS6eFImFn9MbNRm1qsEFs4tlHJk3y0UtYU6omnCYiRPId6ms aIyH09LdOIG5D8RVrhOBMcO8REE4bzrzE66TF4noeS4W8LF0jyPCAFHGDoDGixL/PGfDBJp9L3Ox wDnFjI6c0CmkOE7rnd+M58LIBTDeFRQgEyUEe3hxu4yd7HisGmZIgTm+gOLmYtYkC0e9WE40GDMM fwBpRMM5UUvoMg4iwykLVLEFbNKBGJ3JCzV2hTOIkokdPDvOVRd2zC1IZIUnG8lWx9BVfraLlmhN q1rXytaZJQAAIf4zUmVkdWNlZCAzMSUgQCB3d3cucmFzcGJlcnJ5aGlsbC5jb20vZ2lmd2l6YXJk Lmh0bWwAADs= ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r---- Content-Type: image/gif Content-Transfer-Encoding: base64 Content-Location: https://library.fes.de/images/digbib/lone2.gif R0lGODlh2QEbALMAAAAAABgYGDExMVJSUmtra4yMjK2trbW1tcbGxufn5+/v7/////////////// /////yH5BAEAAA8ALAAAAADZARsAQAT+8MlJq7046827/2AojmRpnmiqrmzrvnAsW8lBCEEF7Dwg 7T/fgzcEAovBoO8oRCKJzqOodsvplsPohCmUdhSIAmFg6VG4v223iSZ6QWAx+dxDR9fL5jc8LmPt RnhJM4SFhh0JBgMBeoZvGmYsiYuNhxOTjJaSipkpjx6YlZqjpKWmp6ipqqusra6vV2qwhFBForJO npEtnytSvYMxv7ezxcYPobGDgGvLzbZ3ztDRI8mxbs/MINa41Nq5bc9TnI3D0nd52+R+uHbQtcfx llQ4Afb3+Pn6+/z9/v/4BBA4kEBEnDEDEipcyLChw4QECiBQsEfOw4sYM2KMOBFOAgT+BwyIHEmy pMmTJA8gSECRg4KPIVHKnFlSJUt5OHPq3Mmzp8+fpl6CNKAsF9ALQkP6CQSsqAcFLwvSmdH0A9QE Urs1rfo06tJgR8PK4Bbsm9k6555kwwNPHSV2f9ikowZqHQYodeTSfeMuBFlwbM+67TR1Wt4kccUq rvtWE1d2K/6OkoyT8ojHFywv3jzWLmdE5PKKHk06wAADWTWEIs26teu8plGrqwKwtj6BBEHTts3b Hu7UnxcnpUm8uPHjJm22DHEVq/Pn0KNLhw7VatTp2LNr1149uPfv4MOLH0++vPnz6I++Xs++vfv3 8OPLn0+/vv37+PPr38+/P+v0rDT+VxRmPQl4hVzE0HWCObwkiAKDdzn4YF8AinfQHFohqBc2dJjj xS5qqUGgBRculccwDI443IEXgLhLJDDONcKKhQGWooxPwUTUgTLGuEU3Fer0143nCKagj95IiIFk RmTxIV7iIGIDDi3W0heSRim4zZRWZFjkWltWAReU0nAYJE9D6pXkl5AZSWE1nslippGMEVYlWGzi +Wad5aj5yDd8tvmmGSCeWVmcgInopzgv4ogWYhqWwGQXZSE54qTwuIilLWDC2ZiXSiyaJQeTZvgk kIYe+ukhmKmpgmaGwGqMrB+MSAGtqYqHa3C7xtCrK6vtFxtwS4bG37C5HhOsf8xhAoCsXwbs1htA v+lWz7TYUjsQsRpcqNG3DXG0XLd8gGvuQuIma4y357brrrvpMqcjcsYp98W89OZLnL1wXLfdv9F1 94W/ABeMlcDqztKcwQw37DBL4yYs8cQUV2zxxS1GAAA7 ------MultipartBoundary--qO2Ts4Lm3dqDVU9WWjl7hih9JgGPAdQ4ogXc4iDS8r------