C HRONICLES T HE

THE
CHRONICLES
ECONOMIC AND BUSINESS HISTORY RESEARCH CENTRE CHRONICLES
JANUARY—MARCH 2006, V OLUME 1 / I SSUE 3
The American University in Cairo
TABLE
OF
CONTENTS
EBHRC CHRONICLES
Editor: Dina Khalifa Hussein
Director, EBHRC:
Prof. Abdelaziz Ezzelarab
Project Officers:
Mostafa Hefny
Mohamed I. Fahmy Menza
Wael Ismail
Administrative Assistant, EBHRC:
Yasmeen Samir
Young Scholars Contributors:
Zeinab Abul-Magd
Jano Charbel
Amr Nasr El-Din
Lee Nunley
Karim El-Sayed
Dina Waked
Guest Contributors:
Prof. Joel Beinin
Layout &Design:
Magda Elsehrawi
Logo:
Nadine Kenawy
THIS
ISSUE HAS BEEN COPY EDITED BY
Prof. Hala El-Ramly
Ms. Jayme Spencer
Prof. Herbert Thompson
*******
About EBHRC
EBHRC Supporting Institutes:
Center for Middle East Studies,
Harvard University
Near East Studies Program,
Princeton University
Middle East Center,
University of Pennsylvania
Middle East Center,
University of Washington
Global Business Center, Business School,
University of Washington
Office of Provost, AUC
Office of Dean of BEC, AUC
Economics Department, AUC
The Editor’s Note
2
From our Archives
Margins of the Economic Past
3
A Prologue to Egypt’s
Industrialization
5
Graveyards and Digital Recordings
7
Interview
When Firms and Entreprenures Cross Borders
12
Historical Perspectives
Egyptian Textile Workers in the
Transition to a Neo-Liberal Order
16
The Story of Egyptian Railroads
19
The Nurturing of Wealth:
The First Call for a National Bank in Egypt
Translated Manshour p. 26
23
History in the Making
Law and Economy in Egypt
30
Skirmishes in the War for Drugs
34
The Chinese Real Estate Boom
38
In the Pipeline
Egypt’s Trade Unions:
Reason for Hope or Hopelessness
44
Business Not as Usual
Traditional Crafts—An Untraditional Source of Income
47
Research Ideas
The Laws of Competition
50
Book Review
The Story of an Arab on Wall Street
52
EBHRC Collaborating Scholars:
Prof. Ellis Goldberg,
(University of Washington)
Prof. Roger Owen (Harvard)
Prof. Robert Tignor (Princeton University)
Prof. Robert Vitalis
(University of Pennsylvania)
1
Our Archives
54
Announcements
back
cover
Cover image: Salim Khalil al-Naqqash, Misr lil-Misriyin. (Alexandira, 1884)
EDITOR’S NOTE
EDITOR’S NOTE...
istorians and storytellers have a lot in common. They both endeavor to
describe a story that occurs between a spectrum of fiction and reality, and mostly precedes a present disquiet and delve into the past,
narrating details of incidents and how they occurred. More ambitious
historians attempt to propose an answer to a question, such as what
went wrong? People’s memories is the reservoir for our quest to revisit historical
incidents and narrate similar historical stories and questions. Some of these memories expose a history on the margin of mainstream literature. The Chronicles’
From our Archives section presents stories of Egypt’s industrial experience and
more importantly highlights the human factors behind important policies and
their execution.
H
In an interview with Prof. Geoffery Jones, we delve into the intellectual development of a prominent business historian, and explore how business history is and
should be conducted. Prof. Joel Beinin gives voice to the marginalized, the workers whose story is traced through their strikes and protests. Jano Charbel recounts
the story of the unions and syndicates.
As in all historical stories, the writers’ treasures are old documents that are themselves the foundations of historical realities. In this issue, Prof. Abdelaziz Ezzelarab
introduces a communiqué or manshur titled “Inma’ al-Mal” (“The Nurturing of
Wealth”) which was issued in April 1879 and urged the public to found a joint
stock national bank through public subscription. Its opening statement claims
that God commands people to invest in nurturing natural wealth. Thus, the first
call for a national bank is nourished by a religious lingua whose consequent historical repercussions are raised by the author.
We present this issue of The Chronicles as an intertwining of historical stories and
contemporary realties. We shift between digital recordings of oral history to old
documents and newspaper clippings among other sources to present 14 articles,
with immense gratitude to our contributors and supporters.
Dina Khalifa Hussein, Project Officer, EBHRC
NOTE OF GRATITUDE
One of our colleagues made a career shift last month. Wael Ismail is one of the
founding project officers of the center and was present since its conception.
We are immensely grateful for Wael’s contributions and wish him the best in his
future plans. We also send our best wishes to Dina Waked, Karim El-Sayed, and
Omar Cheta, our colleagues and friends who have embarked on new careers,
and thank them for their continuing support.
2
FROM
OUR
ARCHIVES
Margins
of the
Economic Past
Wael M. Ismail, Project Officer, EBHRC
oices of those on the margin are easily swept under
the carpet of great events
of a nation’s history. The
marginalized have been
cast in the past as those oppressed
classes of the underprivileged, the poor
and the working classes. Our definition
of the term has to be broadened however for us to truly understand the
course of events. The marginalized are
not necessarily those mentioned above,
in some cases they are not those working on the factory’s floor but those sitting
in their offices higher up the ladder.
V
Egypt’s economic history can be
summed up with ease into neat, clear
cut compartments and epochs. Looking
from the outside it would seem that
before the 1952 revolution the country
“... the marginalized
are in some cases
not those working
on the factory’s
floor but those
sitting in their
offices higher up
the ladder...”
3
possessed a liberal economic system,
the revolution came to change all that
and transform the country and the
economy into a state-run enterprise. The
death of Gamal Abdel Nasser brought
new waves of reforms that culminated
in the 1974 October paper that ushered
the way for the open door policy and a
complete change in the country’s economic policies. It would seem that Egypt
for the past fifty years has been working
its way back to the pre-1952 current
state of things, although this brief outline
of the country’s economic transformation might be true to an extent; this is an
outline that stands on shaky ground.
For the past two years, interviews conducted by the Economic and Business
History Research Centre brought to the
fore, at least to the interviewers conducting interviews with various public
officials, whether ministers or public sector managers, new issues and questions.
The roster of interviewees was mainly
focused on individuals who had played
an important role in shaping Egypt’s
economic past. Their reflections on their
careers and current state of things produced a number of interesting and
insightful narratives. These narratives
often opened a window onto a past
that was blocked by mass generalizations and assumptions usually taken for
granted about the epochs discussed.
Dr. Eng. Adel Gazarin, was one of the
first interviewees. His tenure at Al Nasr
Automotive Co. and his involvement in
institutions such as the Egyptian
Federation of Industries (former presi-
“... To truly understand the impact of
economic policies,
it was essential to
grasp the point of
view of the men
responsible for their
execution ...”
dent) helped illuminte issues concerning
Egypt’s industrial experience - especially after 1952. To truly understand the
impact of economic policies, it was
essential to grasp the point of view of
the men responsible for their execution.
Dr. Gazarin’s input mainly revolved
around Al Nasr Co.. From his account of
the ups and downs of this fallen giant, a
number of observations can be extrapolated. The importance of such an
account and others compiled is that
these figures witnessed the changes
that occurred in Egypt’s economic policy as they took place. They were not
themselves marginalized, but
their
accounts and narratives were clearly
marginalized when Egypt’s economic
history was numerously. Listening to Dr.
Gazarin narrate his own version of the
past, a number of issues that were formerly taken for granted were problematized in light of the new material.
FROM
“.. The marginalized
have been cast in
the past as those
oppressed
classes of the
underprivileged,
the poor and the
working classes.
Our definition of the
term has to be
broadened
however for us to
truly understand the
course of events ...”
OUR
of the state’s political agenda. On
more than one occasion Dr. Gazarin
spoke of how some policies that were
enacted severely impacted the public
sector and, in particular, Al Nasr Co.
According to him the company was
burdened with so many projects, it
never had the chance to specialize in
one area and excel in it. From the outset the company, everything was politicized, from the pricing of the cars that
was determined by politicians to the
refusal of partnering foreign capital in
the establishment of the company. The
latter reason contributed to the failure
of the company as Dr. Gazarin noted,
especially if Al Nasr was to be compared to the other car manufacturing
companies that were established in the
Far East with the participation of foreign
capital leading to various success stories. Another major problem that the
company faced was the introduction
of the labor force as important players
on the board of the company under
Nasser. The workers gained numerous
rights that according to Dr. Gazarin
were abused, and, on more than one
occasion kept the management from
running the company efficiently. What
is mentioned in this article, are glimpses
of what the entire narrative offered.
The narrative offered by Dr. Gazarin
gave birth to numerous perspectives,
some already known to the academic
public and others, which are not. One
of the most interesting issues raised in
the interviews with Dr. Gazarin was the
intangible benefit of the public sector
endeavor that Egypt embarked upon.
Talking about the public sector Dr.
Gazarin mentioned the difficulties that
mangers of public companies faced from lack of investment, to poor economic
and
financial
planning.
However, he was also aware that these
companies, and Al Nasr Co. in particular, acted as an “academy” that graduated executives who gained experience and know how in the company
that they later transferred to the private
sector where they now work.
In these holistic narratives dealing with
the economic history of Egypt, rarely do
we find mention of the role of the managers of public companies. In most
cases they were merely executives.
Clearly there is more than one example of managers who were not blindly
following orders but were individuals
who truly cared for the enterprise they
were running. The account given by Dr.
Gazarin is invaluable on its own; however, such an account gains a whole
new perspective when it is amassed
with other narratives from the same era
of individuals who had more or less the
same position, whether as managers of
public firms or policy makers involved
with economic policies.
The three interviews conducted with Dr.
Gazarin offered a run down of the
impact of various economic policies on
Egypt’s industrial sector. From his post as
the longest, serving chairman of Al Nasr
Co and later as the president of Egypt’s
Federation of Industries, Dr. Gazarin
spoke of how the state’s attitude
changed regarding the country’s
industrial base. Dr. Gazarin was equally
critical of both the nationalization laws
of the 1960s and the open door policy
adopted under Sadat. In both epochs
the economy was left under the mercy
Dr. Heba Handoussa is an economist
and an academic who also worked as
a consultant for various ministers of
industry over the years. In an interview
with her, she commented on the state
of public sector managers in the 1960s,
asserting that with the increased government role, managers of public sector firms were transformed from daring
young executives to mere bureaucrats.
The transformation of this class of executives from entrepreneurs in their own
right (albeit in public sector firms) to
ARCHIVES
“... The
transformation of
this class of
executives from
entrepreneurs in
their own right
(albeit in public
sector firms) to
exactly what critics
of public sector
firms warn against
is an issue that is
rich and intriguing,
yet remains largely
unexplored by
researchers in the
economic and
business history of
Egypt ...”
exactly what critics of public sector
firms warn against is an issue that is rich
and intriguing, yet remains largely unexplored by researchers in the economic
and business history of Egypt.
Such narratives, more than anything
else, help us shed some light on areas
that have been untapped by research,
either because of ignorance of their
existence or due to the lack of research
material. These counter narratives, so to
speak, allow us to see what could have
happened and what actually did happen in the end. They are pathways to a
treasure of missed opportunities that
are at times more telling about an era
than those chances taken.
4
FROM OUR ARCHIVES
A Prologue
to Egypt's Industrialization
Dr. Ismail Sabri Abdallah introduces the human
elements behind Egypt’s industrialization
Dina Khalifa Hussein, Project Officer, EBHRC
he economic history of Egypt
is founded on the decisions
of political rulers-independent
and
otherwise.
Mohamed Ali might be the
first in a line of political leaders who
shaped modern Egypt’s economic history and Gamal AbdelNasser has
strongly staked his position in this historical structure. A myriad of arguments
are still sounded, almost on daily bases,
that are either critical of Nasser’s era or
in praise of his policies. In most cases,
we are left to bay the moon, searching
for a clear understanding of Egypt’s historical experience, particularly when it
comes to industrialization. Without
promising any easy way out of this
dilemma, it becomes insightful to look
closer at how the players of this era
introduce the story of Egypt’s industrialization.
T
Dr. Ismail Sabri Abdallah was less than
thirty years old when he was first asked
to be a consultant for Nasser. In an
environment that applauds young people’s involvement in public policy, an
ideological conflict occurred between
Nasser and Abdallah. “Nasser wanted
to benefit from me as an economist,
while fighting me as a communist, so I
ended up most of the time, either in a
position of power in the government or
as a political prisoner,” Abdallah stated.
He was the head of the Economic and
Financial Division at the Economic
Development Organization (EDO) at
the time of the implementation of the
nationalization policies, and he chose
to introduce us to the narrative Egypt’s
industrialization by focusing on the
human factor behind such policies.
Who were the economists, engineers,
industrialists and policy makers behind
5
Egypt’s industrialization and nationalization policies and how did they function? This is the focus of this article,
which is extracted form a series of interviews with Abdallah.
Data collection and research that the
policy makers and economic planners
undertake are significant to their decision-making. Abdallah was the economic authority inside the EDO, which
was responsible for administering the
nationalization process. It is interesting
to note that Abdallah, one of Egypt’s
prominent economic planners, shaped
his understanding of the status of
Egypt’s economic position through
studying the companies that were
involved in the process of nationalization. The EDO was established in 1957,
after the Suez war, to administer the
Egyptianization and nationalization
process. Through the EDO, Abdallah
was able to establish a system of data
collection from the companies that
were considered for nationalization,
which became a significant source of
information on Egypt's economic status. According to Abdallah they used
to study all the conditions surrounding
the companies and the companies
themselves were the source of information. They implemented a proficient system of studying the companies through
promoting a new method of preparing
the companies' annual reports - adding
new information on the sector that the
company belonged to and its relation
to other sectors. Information on the
company's competitors, its market
share, other companies' market share
and labor information were also
added. This was done through sending
a team of economists who used to
spend 15-30 days to train employees in
the extraction and recording of such
information.
The importance of such endeavor is
that it provided a unique opportunity
for Abdallah and his team to study the
various sectors in the Egyptian economy, the position and status of each sector and the key companies within them.
In addition, it highlighted the relationship between the Egyptian economy
and foreign companies. It is worth noting that according to Abdallah, a company such as al-Bayda was very significant in the textile sector. It was beneficial to other textile companies since it
introduced to the market some essential feeding industries, such as the dying
industry. Through EDO data collection
efforts, it was possible to understand
inter-company relations and to obtain
a clearer picture of industry in Egypt.
Moreover, it demonstrated the relationship between the various industries and
service sectors such as transportation.
The story behind the EDO and its data
“...Nasser,
Abdallah stated,
was from a rural
background and
was convinced
that agriculture
alone will not solve
Egypt's poverty...”
FROM OUR ARCHIVES
collection mechanism is significant in
understanding how the economists
responsible for nationalization formulated their knowledge of the Egyptian
economy that consequently shaped
the decision making process.
The nationalization of the early 1960s is
a key event in the economic history of
modern Egypt and a central feature in
the country’s path to industrialization.
Nevertheless, the controversy concer ning its appropriateness is huge and
beyond the scope of this piece.
However what is worth highlighting is
the perception of those who were
responsible for this policy. According to
Abdallah, the process took two major
turns. The first stage of nationalization
was dominated by an understanding
that only foreign companies [viz.
European or American] with key economic positions are to be seized. As an
example, the famous Shamla department stores did not fall in the nationalization grip given their origins as Tunisian
jews, in spite of the fact that its owners
held French citizenships. On the other
hand, the insurance companies that
were under foreign control were
nationalized due to their power as
major saving and investment agents.
The EDO, according to Abdallah was
concerned with the companies that
had a downstream or upstream multiplier effect. He added that mistakes
occurred in the nationalization of the
publishing sector and other small sectors were due to the fact that some
ministers and others bought many of
the foreign establishments that were
under custody. As Abdallah reiterated,
the EDO was not a holding company
but a developmental agency, since it
used some of its resources to establish
new companies and study the surrounding conditions thoroughly to
ensure their continuity and success.
It is futile to approach the policies of
the State control era without touching
upon Nasser's policy- making strategies.
Being a consultant for Nasser during this
era, Abdallah unveils some of Nasser's
perceptions. Nasser, Abdallah stated,
was from a rural background and was
convinced that agriculture alone will
not solve Egypt's poverty. It would neither attain its own developmental
goals nor create employment opportunities for the masses. He argued that
the high dam was first conceived as a
tool for land reclamation that would
increase Egypt's agricultural capabilities, contrary to the widespread belief
that it was established solely to produce electricity that was crucial for
“... the high dam
was first conceived
as a tool for land
reclamation that
would increase
Egypt's agriculture
capabilities...”
industrialization. The original conception was based on the hope that the
dam would fulfill the hopes of the smallest of peasants by availing three fiddans of agricultural land to each of
them.
Nasser's
background
as
described by Abdallah made him con cerned with the agricultural laborers
commonly referred to as 'umal altarahil, who are transported from one
piece of land to another to work on a
haphazard seasonal manner with very
low day by day wages. Abdallah stated that such laborers were one of the
reasons that made Nasser consider the
industrialization option as a solution to
Egypt's developmental problems. He
further stated that this shift to industrialization was not based on ideological or
theoretical grounds, but on Nasser's
understanding of the reality of challenges facing Egypt. This shift materialized when Aziz Sidqi established the
Ministry of Industry and commenced
the first industrialization plan 1958.
Abdallah claimed that Nasser believed
in a trial and error as the approach by
which indigenous Egyptian calibers
would drive the country. Thus, Nasser
advocated free education to give
Egyptians an opportunity to enhance
their capabilities. An obvious move
towards industrialization took place in
the 1950s and among its major contributors were a group of military engineers. Those engineers were the ones
who proposed the establishment of military industries during Farouk's era and
visited various European industrial complexes and studied business administration and other critical disciplines, which
made them qualified to contribute to
the industrialization effort. Among those
engineers are Sidqi Soliman who supervised the establishment of the high
dam and Moahmed Younis who headed the Suez Canal Company. At the
same time, Nasser depended on academicians such as Aziz Sidqi and
Mostafa Khalil to lead the industrialization endeavor.
Prior to what Abdallah called “serious
industrialization” by the Egyptian engineers and academicians, the situation
was one he characterized as a collage
of haphazard initiatives of "venture
capital." The success stories were initiatives that mirrored the already successful sectors, such as the textile industry.
As for the military engineers or the new
industrialists, they chose the iron and
steel industry as their starting point.
From an engineering perspective, this
was a typical starting point for countries
in earlier stage of industrialization given
their interest in ensuring adequate supplies of basic raw materials that are
necessary inputs for establishing industry. This, according to Adballah, was
not always economically efficient. It
would have been best, for example, to
import raw iron rather than manufacturing it given its low share in the final
product. The material outlook that the
engineers held in their undertaking of
the industrial project lacked efficiency
considerations, essential as they are
from an economic perspective.
Abdallah insisted that Nasser's policy
and the environment in which the revolution's policies were formulated were
mostly not ideologically based nor
were they an attempt to copy other
countries' models. Abdallah tried to
explain some of the intellectual and
human factors that accompanied
Egypt's industrial experience. He added
that more attention should be paid to
the role of the military engineers when
studying Egypt's industrialization, especially that they performed a remarkable job in operating the Suez Canal
Company after nationalization. The
nationalization of the Suez Canal, he
explained, was not a decision taken on
the spurt of the moment, but required a
close study for two years by three committees. Abdallah acknowledged the
problems that Nasser's policies bore,
namely the mammoth bureaucratic
system and lack of freedom of expression. He concluded that Nasser's experience was a very unique one and
what Egypt needs now is democracy,
which is the only guarantee for sustainable development.
ISMAIL SABRI ABDALLAH headed the
Economic and Financial Division of the
Economic Development Organization
(EDO) in 1957. He was the General Director
of the Institute of National Planning (19691977) and the Minister of Planning (19711975). He is currently the Chairman of the
Third World Forum.
6
FROM OUR ARCHIVES
In November 2005 the Economic & Business History Research Center held a panel entitled “New
Approaches in Business History” at the Middle East Studies Association [MESA] Conference in
Washington DC. The following is an excerpt of “On Business History”, one of four papers presented dur ing the session. In the excerpt the center’s oral history methodology is considered before selection of
the center’s oral history archive is surveyed with the aim of demonstrating the possibilities of using this
type of oral record in the writing of history.
& Digital Recordings
The Apparatus of Economic & Business History Research Center
Mostafa Hefny, Project Officer, EBHRC.
The Modus Operandi
Prior to its official establishment,
EBHRC’s director assigned some his students and former students at the
American University in Cairo the task of
reviewing the available literature on
Business History, which, at that point,
was assumed to be a discipline whose
tenants could be examined for application in an Egyptian context. An
intensive three-day seminar was held
on the subject. It quickly became clear
that what had started as a question
about the applicability of the pillars of
business history for our purposes
became a search for those very pillars.
We started out questioning whether
business history could travel from its
bases in 20th century United States and
Western Europe only to find that the
discipline had disintegrated prior to
takeoff. Business history maybe defined
as a nexus of variably incorporated
social sciences bound by demonstrable behavior of economic actors in history.
Business history failed to provide EBHRC
with a theoretical framework with
which to proceed. The absence of a
framework is far from a crippling
impediment to practice. Indeed it is
the docility of the field of business history, and the variability of the material
presented under its auspices, that
enabled the center to proceed with
7
the task of chronicling 20th century
political economy of Egypt through the
history of enterprise and governance in
a way that best suited the prevailing
conditions. In this way business history
released the center from the ivory
tower to which many historians remain
confined. Ground level turned out to
be a fine place to start.
Hence the method of oral history.
As a mainstay of anthropological practice, oral history’s considerable tradition is more inclined towards service to
that social science. It remains nonetheless, in the parlance of another social
science, fungible; a method to be
molded and remolded. The anthropologist's fingerprints are however unambiguously betrayed in the considerable
literature on the method and technique of oral history. Consider The
Voice of the Past: Oral History by Paul
Thompson, a complete textbook.
Marrying a procedural approach with
an argumentative one, and therefore
raising the discussion above the merely technical, the author offers a highly
readable work that provides instruction
to the collector of oral accounts whilst
making an argument in favor of oral
history as a valuable medium. In doing
this, however, he betrays an ideological presumption that limits the use of
the apparatus for the center. For
Thompson, an oral historian himself, the
technique of oral history is first a
democratizing process that gives voice
to the marginalized and inarticulate; a
counter-history through which a stance
that is a priori established as antithetical to a prevailing history is put forth.
Of this way of thinking arise two immediate implications: First, the venerable
egalitarianism that motivates the seeking of the accounts of the marginalized and inarticulate will inevitably
aggregate said accounts in what
would amount to a community history.
Second, the assumption that oral history provides a "counter-history" is
embedded with the assumption that a
history to which the aggregated voices
are contrasted already exists. For
EBHRC, working in the mostly unsullied
field of Egyptian business history this primary protagonist, the anti-hero against
which oral historians seem to rally, simply did not exist. Although the
accounts obtained by the center frequently clash with official stories and
popular myths, the disorderly state of
those stories and myths makes disqualifies them from any mandate over
what can authoritatively be identified
as the mainstream. The center's
accounts, because of novelty of the
field, will inevitably be central to any
discussion of Egyptian business history.
For EBHRC, the interviews were never
going to be method to amass an alternative history.
FROM OUR ARCHIVES
In the literature of oral history one finds
allusions to the unique suitability of oral
history to the countries of the South
where it is claimed that oral tradition
has been more thoroughly embraced
because of the absence of institutions
that provide raw material for more traditional, i.e. written histories. Here are
tentacles of a West-East clash: does
this development of a well meaning
blanket method for the "South" not
carry the assumption that there are no
traditionally decipherable institutions in
a country such as Egypt? Or is it, in
counterpoint, in fact a call for historians working in Egypt to explore unique,
local, methodologies of which oral history is a mere example?
The clash is a false one. At EBHRC the
incongruity of the oral history methodologies proposed by the literature was
due more to the implicit purposes of
the process rather than where and by
whom it was developed. It was indeed
the western institution of Columbia
University and the system it had
devised that added the most to the
EBHRC's intuitively devised oral history
apparatus, of which an overview is
now in order.
Egypt remains without a tradition of
free access to document. Oral
accounts are not without their objective advantages over written documents, but this is a case where talking
to the decision makers, administrators
and entrepreneurs was less a matter of
preference than an imposition by circumstance. The narratives of Egypt's
industrial and entrepreneurial experience are absent from the written
records. Those interviewees are therefore the guardians of a history that has
never been made available to scholars, let alone the public. Specialized as
they often are, many remain innocent
of the historical value of their experiences. A coherent synthesis of the testimony of officials, bureaucrats, administrators and businessmen is a prism
through which an historical perspective will almost certainly be entirely
original.
Then there is the quandary of time.
Oral history maybe richer source material than accessible written documents
but its sources are human - and mortal.
It is a delicate but unavoidable fact
that the guardians of precious
accounts of economic and business
endeavors are in many cases in the
twilight of their lives. An invaluable history of Egypt may perish with these
men. Indeed for an administrator or
worker to have been substantively
involved in the immense flux of
resource allocation that characterized
the state-led industrialization of the
early 1960s, a decisive span in the economic history of Egypt, that person
would likely have been, at least, in his
thirties. This in turn makes potential purveyors of first hand experiences of that
important time a group with a minimum age of seventy. The connotation
of this elementary observation is not
limited to the need for urgency. That
much is obvious. What had concerned
us at EBHRC was what this rush to interview those most likely not to be available for testimony in a few years would
do as far as the cohesiveness of the
center's output was concerned: If the
most important criterion for choosing a
subject becomes their age this would
demote other considerations such as
sectoral analysis and other unifying
themes to a secondary status. This fear
however proved to be unsubstantiated as the interviewees themselves
proved the greatest source for other
potential oral history subjects who, in
many cases, traveled in similar circles,
worked in the same sectors and were
of a similar age.
“...In contrast to
military service in
Latin America, a
necessary stage in
the life of young
aristocratic heir,
the Egyptian army
was shunned by
the landowning
elites and
embraced by
classes who would
otherwise have
had no access to
education...”
As interviews continued in the fall of
2004, an apparatus started to take
shape.
The
lear ning-by-doing
approach continued, but experience
had refined the apparatus to include
an initial meeting with the subject in
which a free flow of memory was
encouraged with the subject having
been made aware of the framework of
inquiry which, in turn, had been refined
to addressing the relationship of
finance and Egyptian industry. The
interviewers would listen to a recording
of the initial session and formulate a
series of questions that connects the
subjects’ experience with the framework of inquiry. This procedure governed the reminiscences to the general topic without unnecessarily curtailing potentially valuable information
that had not been targeted beforehand by the interviewers.
The apparatus was taking shape. Yet
as more and more interviews were
recorded there were fresh concerns
about the final form this labor would
take. Here we entered into the perilous
realm of the transcript – the bête noire
of the EBHRC project officer.
"People," writes one commentator on
oral history, "do not usually speak in
paragraphs"(1) . We are well advised in
the literature on oral history of the dangers of distorting the intonations and
meanings of the oral record during the
process of transcription, a process that
is described by this commentator as
one of temptation and decadence. (2)
No one at EBHRC ever courted such
temptations. The center's first attempt
at transcription was scrupulous in its
fidelity to the recorded interview inasmuch as it was a verbatim transfer of
the record to paper. The interview,
conducted over five sessions was with
Eng.
Mohammad
Abdel-W ahab,
Egypt's Minister of Industry from 1984 to
1993 - a period through which he was
involved in protracted negotiations
with the International Monetary Fund
over the form of Egypt's adoption of its
structural adjustment program. The fullness of the account was such that
EBHRC later developed a workshop
during its annual May forum devoted
entirely to issues raised by the interview. Yet none of this was evident in
the ad verbatim transcript. In fact if
one were to successfully wade through
the colloquial Arabic of that first document one would more likely be left with
scatterings of meaning barely decipherable to a native speaker who had
heard the oral recordings. The
prospects of this document being of
use to researchers outside EBHRC
looked bleak.
8
FROM OUR ARCHIVES
It is a matter of language. Written
(fusha aka classical) and spoken
Arabic in Egypt are drastically different. The language of Egyptian dailies
and popular fiction does integrate colloquialisms, but the amalgam tilts
strongly in favor of the written Arabic
and is weighted arbitrarily by the writer.
Surprisingly, the solution to this local,
culturally specific problem was inspired
by the oral history tradition of an institution that, as far as we know, has never
collected an account in Arabic. In
January of 2005, the center's director
visited Columbia University's Oral
History Research Office, an important
institution in the practice of oral history.
The crux of the Columbia method is the
centrality of the final, written transcript.
The oral recording is secondary.
Columbia enables the interviewees to
amend a transcript of their documents,
to add, edit and delay the publication
“...The oral history,
as conducted by
EBHRC may be
validly critiqued as
a top-down history
inasmuch as those
interviewed are
persons nearer the
center of things,
but any history
written on the
basis of these
accounts will be
history written with
the building blocks
intact - a history
written from the
ground up. ...”
9
of its contents. This empowering of the
interviewees makes the final written
transcript the definitive document that
is later made available for researchers.
This was a watershed moment of sorts.
The fact that interviewees review and
sign off on the final transcript meant
that the final transcript could be written in fusha and the ideas sorted and
clarified. For all the loss of inflection
and tone justifiably predicted by critics
of this method – even when editing is
reduced to a utilitarian minimum, the
presentation of a written transcript to
the interviewee has proved to be an
incredibly rewarding step. More than
just providing space for an editing and
expansion of their comments, some of
the people interviewed were moved
to see their stories treated as text; as
historical documents. The transcripts
enable the interviewees to see the
fruits of the sessions and the goals of
the interviewer. A transcript, which is
presented to the subject after the first
session, helps guide subsequent sessions – the process of transcription crystallizes, to the interviewers and the
interviewee, what issues raised in the
initial meeting would be worthwhile to
pursue further. Most important however
is the increased level of trust that interviewees feel towards the entire
process once its fruits are laid before
them.
Oral history is, in part, the black market
that develops when the ceiling on
access is set below the standards of
scholarship, which has sullied its reputation somewhat; as a last resort, a
poor man's history. This is a trivial reading of the method. Whether it provides
the central pathway to political, economic and business institutions of a
country, as it does in EBHRC's primary
oral history project, or it serves as an
alternative mode, this is a method with
unique scope. One need only consider
the question of externalities, patronage and other unofficial – if not under ground- dealings to see but one example of this scope. In their recent work
on the development of the Cairo suburb of Heliopolis early in 20th century,
Dina Khalifa and Lina Attallah link the
preponderance of Bedouins working
as security guards and janitors in the
neighborhood to a promise made by
the Belgian industrialist, Baron Edouard
Empain, to the Bedouns of jobs in
return for their land. Of this deal there
are no official records save the testimony the authors were able to extract.
The usage of the method may be
enforced by circumstance – but this
adaptation to the realities of working in
Egypt has led to one whose advantages are not limited to evasion of
authoritarian constraints on academic
research. Indeed its principle advantage as a method designed for the
landscape in which it is put to use is
that it prompts a reappraisal of socalled universal practices that may
have otherwise been awkwar dly
employed.
Contrasts and Intersections
Oral history, when conducted as part
of a project larger than the subject
interviewed, becomes a study of contrasts. Crucially, in the oral history that is
the primary activity of EBHRC, and in
profound distinction from history written about a particular institution, the
building blocks of history, the life stories
of the interviewees, exist independently as intact historical documents uninjured by editing for an a priori established objective. The overarching goal
maybe the chronicling of economic
and business history of Egypt, but in no
way should such a goal segregate the
professional experience of interviewees from the rest of their makeup. A
life history must, and indeed does,
cover the life and times of an individual. Once that record is extracted
intact, we may then subject it to all
manner of critique and contrast with
press clippings and lesser discourses. It
is not that an oral history in the form of
a life history is necessarily a complete
or exceptionally truthful document –
but it must be, within the parameters
set by the life history format – whole
before it is put to a service of a more
narrowly defined objective. The oral
history, as conducted by EBHRC may
be validly critiqued as a top-down history inasmuch as those interviewed are
persons nearer the center of things, but
any history written on the basis of these
accounts will be history written with the
building blocks intact - a history written
from the ground up.
Now we return to the records in the
center's archive. Each had been
extracted independently – a fact that
makes contrast more meaningful, and
overlaps more noteworthy. Surveying
the records one is struck by overlaps in
the accounts – the contrasting perspectives and overlapping experiences of some of the major figures in
the modern economic history of Egypt.
A brief tour of a selection of oral history
records demonstrates the possibilities
of how the overlap maybe used to
construct a history.
FROM OUR ARCHIVES
Consider, as a point of departure, the
narrative of Mohammad AbdelWahab, whose association with the
Egyptian industrial experience spans a
period of fifty years from his appointment as an engineer in military factory
no. 54 to up until 1993 when his nineyear tenure as Egypt's Minster of
Industry came to an end. AbdelWahab described a nation's industrialization that began within the army barracks where a clear dedication to independent innovation led to the manufacture a wholly Egyptian rifle license
for which was then sold to Iraq in 1959.
For Abdel-Wahab the transfer of military
industries to the civilian Ministry of
Industry in 1967 was a severe blow to
sector previously dedicated to developing an integrated industrial base. The
political considerations and unfocused
vision led to a public sector becoming
a misshapen apparatus that was gravely overstaffed and under employed.
Remedially, Abdel-Wahab was one of
the architects of Law no. 203 of 1991
designed to place an "iron curtain"
between the government, with its inefficient administrative apparatus, and the
public sector so that latter could "go as
private" without having to be actually
sold. This rehabilitation of the public
sector he hoped would save it from the
World Bank's incessant pressure to liquidate.
Muhammad Abdel-Wahab briefly
headed Al-Nasr Automotive Company
(1983 – 1984). Adel Gazarin, also an
engineer, who was at the helm of that
emblematic institution from 1968 to the
early 1980s seconded Abdel-Wahab's
charge that the administration of the
Egyptian public sector was politically
distorted. For Gazarin, the automotive
industry was an illustration of a whole
industrial process that was wrongly
aimed at complete import substitution.
He was particularly critical of the
famous Nasserist era claim that Egypt
would eventually build everything from
"the needle to the rocket" which he felt
led to politically motivated investment
which valued the symbolic above the
practical and the politically saleable
above the economically efficient –
which at Al-Nasr Automotive was mani fested in the bias towards passenger
cars. Though an advocate of the private sector, Gezarin refused to support
the so-called "Open Door Policy" instituted by President Anwar El-Sadat in
1974 – there he saw no sign of a framework in which the private sector could
play a role in industrialization - then relegated to a secondary role in favor of
more commercial activities. In the 1970s
“...In the literature
of oral history one
finds allusions to
the unique suitability of oral history to
the countries of
the South where it
is claimed that
oral tradition has
been more thoroughly embraced
because of the
absence of institutions that provide
raw material for
more traditional...”
there was little evidence of strategy for
industrialization.
Mohamad Elwi Taymour, chairman of
EFG-Hermes, Egypt's leading fund and
portfolio company and investment
bank shared Gazarin's disenchantment
with the politicization of public sector
administration in the 1960s. Taymour
had also passed through Al-Nasr
Automotive Company. His stay there
was brief, but the effect it had on him
was decisive. An eager young graduate in 1963, Taymour pressed his brother
in law, the influential nationalist writer
Mohamad Hassanien Hiekal to have
him placed at Al-Nasr, then a symbol of
the nation's industrial birth. He was critical of what he described as a rampant
predilection towards political rather
than economic or technical considerations in production. He cited one incident where the factory's painting
apparatus was permanently damaged
because of an order to spray the sheet
metal in spite of the fact that the chemical components of the paint had yet to
arrive from Italy. The administrators, in
lieu of a visit by a Belgian industrial
expert to the factory, ordered Taymour
to run the apparatus with substitute
chemicals that would give the impression of a functioning spraying mechanism – he followed the order and an
entire line of sheet metal was lost.
Disillusioned, he left the company and
the country. After spending time in the
United States and the Arabian Gulf,
Taymour returned to Egypt in the early
1980s armed with an extensive experience in fund management - there he
set up a financial analysis and intermediation company whose influence rose
steadily as economic transformation of
Egypt towards a market oriented economy became de rigueur. His firm
received numerous commissions to
study the mechanisms of capitalist
transformation including privatization.
This was a process to which successive
governments of Egypt in the 1980s and
90s were never commited, preferring
postponement to confrontation at any
price. Never more so, in Taymour's view,
then in the government's wasteful
defense of the Egyptian Pound, justifiable only as political denial of an economic pressure that the government
never sought to alleviate.
The government's protection of the
Pound contended Fouad Sultan was a
grave error illustrative of an administration forcibly pressed to implement an
economic liberalization in which they
never believed.
Sultan, who was
always a firm believer in, and persistent
advocate of, economic liberalism, was
the surprise member of cabinet as
Minister of Tourism and Civil Aviation
from 1985 to 1993 when he was brought
over from a career in banking at the
National Bank of Egypt and the
International Monetary Fund to head
what he was told was the "least distorted sector in the Egyptian economy."
Sultan had been allowed to write in
advocacy of economic liberalism in the
state owned press at the dawn of
Anwar El-Sadat's presidency. He was
writing from his turf in the Yemen where
he was the IMF representative at the
Central Bank of Yemen. His inclusion in
the same cabinet as Mohammad
Abdel-Wahab, over roughly the same
time span, suggests a level political disorder that bordered on the chaotic.
Whilst Abdel-Wahab was attempting to
rehabilitate the public sector, he was
advocating its dismantlement. Sultan
claims that the cabinet never held general policy meetings and that he proceeded to privatize several hotels not
as part of an organized policy, but simply because he was never questioned
about his decision to do so.
10
FROM OUR ARCHIVES
“...Abdel-Wahab
was one of the
architects of Law
no. 203 of 1991
designed to place
an "iron curtain"
between the
government, with
its inefficient
administrative
apparatus, and
the public sector
so that the latter
could "go as
private" without
having to be
actually sold. This
rehabilitation of
the public sector
he hoped would
save it from the
World Bank's
incessant pressure
to liquidate. ...”
The great discrepancy in policy on
part of government, and the regime
responsible for its appointment, was, to
Sultan -who claims to be an apolitical
advocate of economic liberalism who
was never interested in political liberalism - a simple failure of will. The contradictions could bare no political reading.
The economist Heba Handousa did
offer a political reading. Sultan, she
contended, was a test case by the
regime. His appointment to lead a sector that Sultan himself conceded was
relatively undistorted by public administration was, in part, a signal of intent.
Sultan would also bear the brunt of
public criticism should the inclination
11
towards a market orientation be greeted with hostility. Indeed a review of the
press from 1985 to 1993 reveals that the
Minister of Tourism and Aviation had
indeed become a hate figure for all
those suspicious of the government's
stated aims of economic liberalization.
The reaction to Sultan may have resulted in what Mohamad Taymour
described as a paralysis of a government unable, or unwilling, to pay the
political cost of full capitalist transformation. Taymour likened the Egyptian
government policy in the 1990s to an
aloof man sitting in bathtub where the
temperature is rising incrementally –
one moment is never drastically worse
than what had come before. In the
end the man finds himself burned all
the same.
The politicization of industrialization
was never in question for another
economist, the remarkable Ismail Sabri
Abdullah. Abdullah currently chairs the
Third World Forum and is widely regarded, across the ideological spectrum, as
one of the country's foremost intellectuals. It is in this capacity, as an expert,
that he sought to participate in the oral
history project. His reluctance to delve
into an extensive autobiography could
not curtail interest in his own journey: In
the post-revolutionary era of the 1950s,
Abdullah, then a left wing activist, was
subjected to severe intimidation and
frequent arrest – subjugation that was
curiously and intermittently interrupted
by Abdullah providing professional
advice on development and industrialization to Gamal AbdelNasser, in person. In between non-judicially sanctioned prison terms Abdullah headed
the Economic and Financial Division of
the
Economic
Development
Organization (EDO) in 1957, which, at
the time, was the principle planning
apparatus of the regime and was
responsible of surveying the economy
and collecting information – a pre-requisite for considered central planning.
Abdullah had seen in the Egyptian military a progressive class that was committed to transforming the country and
in doing so transform the coup of 1952
into a revolution. In contrast to military
service in Latin America, a necessary
stage in the life of young aristocratic
heir, the Egyptian army was shunned
by the landowning elites and
embraced by classes who would otherwise have had no access to education. It was a core of military engineers
who first led the move towards the
industrialization of Egypt.
For Abdullah, Gamal AbdelNasser was
a deeply pragmatic leader. He strong-
ly refuted the popularly held belief that
the nationalization of the Suez Canal
was an emotional act fueled by
nationalistic fervor. There were three
separate committees convened well
before the decision was finally made
to consider the technical, legal and
financial ramifications of nationalization. In contrast, the rule of Anwar ElSadat, wherein Abdullah was generally spared prison and appointed as
Minister of Planning besides – from 1971
to 1975, when he resigned – there was
a great ideological drive to dismantle,
starve of funds and atrophy the public
sector. It was an overwhelmingly negative policy designed to tear down public enterprise without providing an
alternative strategy for industrialization
– a capitalism that, with the demise of
the pre-revolutionary bourgeoisie, was
to be built without capitalists.
1. Samuel, Raphael. "Perils of the transcript."
in The Oral History Reader, edited by Robert
Perks and Alistair Thomson, London ; New
York : Routledge, 1998: P 389
2. Ibid.
MESA PANEL—NOVEMBER 20, 2006
Egyptian Business History: New
Sources, New Methods and New
Directions in Research
Organized by Roger Owen,
Harvard University
Chair: Roger Owen,
Harvard University
Discussant: AbdelAziz EzzelArab,
American University in Cairo
Robert J. Vitalis,
University of Pennsylvania
Captive Narratives: On the History of
Firms and States in the Middle East
(and Beyond)
Karim Mostafa El-Sayed
and Dina Waked,
American University in Cairo
Café Riche: In Pursuit of a NonQuantitative Business Model:
Implications of Macro Changes for
Small Eateries in Downtown Cairo
Dina Khalifa Hussein
and Lina Atallah,
American University in Cairo
A Brave New City! Heliopolis: Place,
Business and People
Mostafa Hany Hefny,
American University in Cairo
The Business History Voyager: Revisiting
Western Methods in the Light of Oral
History Accounts of Egypt's Industrial
Experience
INTERVIEW
When Firms
and Entrepreneurs
Cross Borders
Professor Geoffrey Jones
Shares his Experience
with Business History
Dina Khalifa Hussein, Project Officer, EBHRC
n Cambridge, Massachusetts
stands one of the most prestigious
universities in the United States and
the world today. Harvard Business
School (HBS) poses in glamour as
one of Harvard’s most sought after
schools. If the American empire today
rests on business foundation, then definitely the Harvard MBA graduates are its
future leaders. An interview with
Professor Geoffrey Jones, one of the
most prominent scholars of business history, unveils puzzling questions in the
field. Due to his generous invitation, we
sat for an hour in his office in HBS last
November and explored various questions such as: what is business history?
What are the big questions posed
through business history? What is the
impact of multinationals on host countries? How does studying business history
change the outlook of MBA students
and business practitioners? These are
only few questions that came up in a
rich interview that manifests scholars’
endeavors of understanding the world,
in this case, through looking closer at
business entities and entrepreneurs who
cross borders, impact cultures, and create markets that shape the world’s economic map.
I
EBHRC crew: Could you give us an
overview of your encounter with business history and your intellectual development?
Prof. Jones:
Cambridge University: Government and
Industry
I started in Cambridge in the history
department, where business history was
taught in the context of economic history, and history more generally. It was
there that I first encountered the work of
Mira Wilkins on international business. I
had begun my doctoral research on the
topic of the history of the oil industry. A
former head of British naval intelligence
told me that there was a very interesting
story about the British government and
its creation of the national oil company,
which we now call British Petroleum (BP).
He was thinking that I would look at it
from a political point of view. I actually
got more interested in the companies
themselves. So my initial work in business
history was focused on issues surrounding the relationship between government and industry. I remain interested in
this research area, although it has not
been the focus of my work for a long
time. Government is very important in
business, so you cannot really get a
sense of business history, without talking
about governments.
London School of Economics:
Comparative Studies and Multinationals
After some years at Cambridge, I decided to move to London School of
Economics (LSE), where a new unit had
been established to study business history, funded primarily by business. At LSE
my interest in comparative studies grew
because I had to teach a course on the
economic history of Russia, India and
Japan. This made me think of the role of
entrepreneurs and investment flows
across borders, and this has been an
important theme in my work. At LSE I
transitioned from oil to thinking more
generally about why companies in all
industries crossed borders, and their
impact. I did my first work on multinational companies at this time. I also
undertook my first commissioned company history, when HSBC asked me to
write a study of the history of their affiliate The British Bank of the Middle East,
which had originated as the Imperial
Bank of Persia. The resulting two-volume
study enabled me to go deep inside the
history of a banking institution, as I was
given privileged access to that bank’s
confidential archives.
University of Reading:
Conceptual Thinking
In the late 1980s I moved to the
University of Reading’s Economics
Department, then as now a leading
world center for the study of the multinational enterprise. I experienced a different set of intellectual influences.
Suddenly, I had no students who had
the remotest interest in history, so I was
obliged to consider new ways of teaching business history. I developed a whole
new course on the history of international businesses. I started to explore ways of
moving in the classroom between past
historical experiences and the present
day concerns of students in economics
and management.
The intellectual environment at Reading
had a significant impact on my work. It
has a long tradition and strength in international business, and a cluster of economists who focused on transaction cost
12
INTERVIEW
economics. The group included Mark
Casson, a pioneer in applying transaction cost economics to studying multinationals, and who later wrote an outstanding book on the economic theory of the entrepreneur. So, within this
environment, my work started to
become more conceptual, even if it
remained fundamentally Chandlerian
in its empirical nature. I became more
inclined to search for generalizations
and general patterns in the evolution
of business. It was in this environment
that I turned my detailed study of one
bank into a general study of British
multinational banking over 150 years.
In
the
resulting
book,
British
Multinational Banking 1830-1990, published in 1993, I used a variety of theoretical concepts including, transaction
cost and agency theory to try to
understand historical patterns.
At Reading, I also organized a series of
conferences, where I put together theorists and historians. The aim was to
encourage the historians to stand
away from individual details towards
searching for more general pictures. I
also wanted to challenge theorists to
look at what actually happened, and
the contingency of what did happen
in the specific environments. I held
conferences on branding and marketing, multinational banking and international trading, all of which followed this
format. I developed a pattern in which
I organized such a conference, which
would invariably be inter nationally
comparative and include theorists,
and I would then go on to write a
monograph, which used these insights
to understand the evolution of a set of
business institutions, such as trading
companies, over time.
Unilever
Over the years my research had shifted
from oil to manufacturing companies,
and then to banks and trading companies. My research on the latter culminated
in
my
Merchants
to
Multinationals book, published in 2000.
The Anglo-Dutch consumer products
company Unilever happened to own
one of Africa’s largest trading companies, and by co-incidence as I was
exploring
their
history,
I
was
approached by Unilever to undertake
a history of their company from the
1960s. This project, which resulted in
my Renewing Unilever book published
in 2005, introduced me to many issues,
which had not featured highly in my
previous work. It took me to corporate
culture and issues of human resource
management, and to questions such
13
as why women could not rise up the
hierarchies of this type of large companies. Moreover, the Unilever history
made me think more systematically
about organization and information
flows within companies. All these issues
definitely expanded my own research
agenda. Today they feature highly in
my on-going research agenda.
“... Government is
very important in
business, so you
cannot really get a
sense of business
history, without talking about
governments...”
Harvard Business School: MBA students,
business history and the beauty book
Towards the end of the 1990s, I
received a call inviting me to visit HBS.
After two years as a visitor, I accepted
a permanent appointment in 2002. At
HBS, you are faced with a different
teaching and writing challenge; how
to transmit complex historical processes to MBA students and to business
practitioners? This challenge has had a
major impact on my work. In 2005 I
published a wholly revised version of
my survey of the history of international
business, published originally as the The
Evolution of International Business
(1996). The new book, Multinationals
and Global Capitalism, shows many of
the changes in my approach which
have resulted in my sojourn at HBS. It
makes more intensive use of concepts,
and it is more global in its outlook. I
have written new chapters on the
organization of firms. Finally, there are
also multiple mini case studies scattered around the text, reflecting the
use of the case method at HBS.
My job at HBS has also opened up a
new set of research opportunities. This is
primarily because HBS is uniquely well
connected in the global business community. As a result, it is possible to
access executives and companies in
ways which are not replicable at other
institutions.
I am now writing a book on globalization and the beauty industry: The idea
of such a book originated through my
work on Unilever. Unilever began to
consider diversifying from its traditional
soap and margarine business into personal care from the 1950s, although it
was only in the 1980s that a series of
acquisitions made this wish a reality. In
studying Unilever’s strategy, I discovered how little serious business literature
existed in the beauty industry, as well
as its extraordinary growth and size
after World War 2. HBS is proving an
idea base to undertake work on the
beauty industry. I have already done
two HBS cases on the French beauty
company, L’Oréal and Shiseido, the
Japanese beauty company. In both
cases senior executives of those firms
have collaborated closely with me. I
hope in time to write a book on this
global industry since 1945.
In most of my previous research, I was
trying to understand the why question,
why do companies go international?
Then I spent quite a bit of time on the
how question, how did they organize
themselves? While exploring this issue, it
was brought home to me that while
the U.S. has been frequently used as
the benchmark for organizational
effectiveness, historically there have
been multiple ways in which firms
organized themselves, some of which
worked extremely efficiently on quite
‘unAmerican’ lines.
During my Unilever research, I really
started to think about the impact of
firms crossing borders, and the globalization process more generally. With
the book on the beauty industry, I am
going to look at how an industry
moved from being highly fragmented,
locally and culturally based, into a
global business with a few large global
players. I am going to look at what that
means for culture and society, people’s senses and personal identities. In
addition, I am going to study entrepreneurial reactions from companies
based in developing countries. Thus I
will not only focus on large western or
Japanese companies globalizing, but
on how Brazilian, Thai or Chinese firms
responded to that, and how they have
developed their own competitive
advantage. Can they survive or do
global giants wipe them out?
In the longer term, I want to write a
study of how much global firms have
contributed to the patterns of global
wealth and poverty that we have seen
over the last 100-150 years. Thus, my
focus and interest is heading towards
the question of “impact” of the companies.
INTERVIEW
EBHRC Crew: Was it generally the case
that business history developed through
historians rather than business studies
academicians?
Prof. Jones:
Yes,
this
is
usually
the
case.
Fundamentally, business history confronts
historical evidence and in doing so, it is
important to have professional skills and
understanding of historical material and
approaches.
I think business historians should be good
historians. But, I would add that business
historians will only make an impact if they
also conceptualize and generalize. That
is why I admire Alfred Chandler’s work so
much. He asks big questions, such as
what is the relationship between strategy
and structure or why do firms grow, and
he provides big answers. They can sometimes be contested, but they move the
debate on enormously.Therefore, I do
not think the future of business history is to
collect more and more data on individual institutions. Such research is of course
an essential building block, but business
historians need to use that information to
ask big questions.
EBHRC crew: Does the type of question
then differ from a business historian who
has a history background to one who
has an economics or business background?
Prof. Jones:
Actually, it depends on the business historian himself. I can think of business historians trained as historians who now use
standard social science methodologies,
employ the assumptions of neo-classical
economics, and exploit large data sets. I
can think of people trained as economists who write historical narratives of the
most traditional kind. In other words, pr ofessional training is not a once for all
experience. However there are certainly
many methodological tensions within the
discipline. There is a big difference
between a social science methodology,
which seeks to test theories on empirical
historical facts, and the classic historical
methodology, which starts by looking at
the evidence and tries to generalize
from it.
Issues of Methodology
The problem of social sciences is that it
has a methodology that is rather restrictive in nature. Historical methodology is
more similar to natural sciences such as
astrology and geology in the sense that it
is better able to deal with highly complex
situations in a world that is more complicated than a one in which the use of
multiple regressions can help us understand things. In the real world, chaos,
uncertainty and complexity drive events.
We need methodologies which can
understand this, not assume them away.
I have tried to put forward some of these
ideas in a forthcoming article entitled,
“Bringing (History) Back into International
Business,” in the Journal of International
Business Studies, co-authored by HBS colleague Tarun Khanna, an economist by
training.
“... I will not only
focus on large
western or
Japanese companies globalizing, but
on how Brazilian,
Thai or Chinese
firms responded to
that, and how they
have developed
their own competitive advantage.
Can they survive or
do global giants
wipe them out?...”
In general I think there are many opportunities for the research of business historians to reach wider audiences. There
has never been a time when social scientists have talked more often that ‘history matters’. The job of business historians and historians generally is to publish
research to show why it matters. The
problem with much business history at
the moment is that the books are too
long, too complex and often not
focused on a particular issue. There is
invaluable empirical research which
explores why entrepreneurs succeed,
why they came from some countries and
not others, and so on, but it is written in
such an inaccessible form that even a
professional like me cannot really draw
out general patterns.
EBHRC crew: Since you are currently
teaching business history to MBA students, what will business history contribute to the business practitioners?
Prof. Jones:
As I begin the course, I tell the students
that business history is not a course where
they get a set of tools that is going to
make them rich. It is a course that would
change their outlook. My course is on
global business history. Many MBA students have no idea that the world has
globalized in the 19th century, and then
this global world fell apart and is only
being restored over recent decades.
The course challenges students to appreciate that things change. Globalization
was not a linear process. Improved communications and transport were no guarantee of continuous globalization. In
turn, the course challenges the students
to consider if the present global economy might collapse in due course, and to
use history for signs. What is going on now
that would signal a reaction to globalization? The students come to realize that
reactions
to
globalization
occur
because there are more losers than winners. As future business leaders, they
need to make fewer losers and more
winners in the global economy.
The course highlights the importance of
ethics in business decisions, and the
complexity of making ethical judgments.
There is a case on multinationals in South
Africa during apartheid. We look at four
such companies, two which divested
and two which remained, and look at
both the ethical and commercial implications of their decisions. During class we
discuss the difficult issue concerning how
evil a government or regime must be
before a firm takes the decision to divest,
and whether such divestment helps or
hinders the people of a country living
under an awful political regime. Looking
at very concrete historical evidence
brings to the attention of our future business leaders such issues in a highly concrete and vivid fashion.
EBHRC Crew: Since you are interested in
the impact question and contextualization of business history, there have been
views on the separation of the private
and public spheres of business history. Is
business history apolitical? What do you
think of the justification to copy business
models in any country, under the banner
of economic liberalization?
Prof. Jones:
Business history provides much evidence
on the disastrous consequences of transferring management systems from one
country to another.
14
INTERVIEW
There is rich literature on the difficulties of
transferring American management
techniques in Europe after World War 2.
Management systems are rooted in their
context, and to seek to transfer whole
packages to other countries is a recipe
for failure.
Business history research on the impact
of multinationals shows that it is foolish to
assume that outcomes are always positive for host economies. There can be a
virtuous circle if the entrepreneurs and
other business elements in the host company respond in a particularly dynamic
way. This virtuous circle involves government, the public policy framework, local
entrepreneurs and foreign companies.
Foreign companies can transfer knowledge and information, but this is useless
unless there are local entrepreneurs who
respond and a government that provides the suitable context. In my MBA
class, we compare the strategies of
India and China. During the 1960s and
1970s most foreign companies left India.
This was regarded by many as one
cause of India’s slow economic growth,
as the country found itself isolated from
international flows of knowledge and
technology. Yet this era laid the foundations for the growth of powerful indigenous firms such as Tata, which are now
becoming globally competitive. India
has almost no foreign companies and
depends on indigenous entrepreneurship. In contrast, China is currently hailed
as a great success story due to the large
amount of foreign direct investment it
has attracted since the 1980s, and it
lacks the kind of strong domestic enterprises seen in India. Which is the better
model for sustainable economic success?
EBHRC crew: What can business history
contribute to studying the Middle East?
Prof. Jones:
Foreign companies dominated most of
the economies of the Middle East in earlier times, but this brought mixed economic results. Foreign firms enabled the
exploitation of mineral resources, which
transformed Middle Eastern economies,
but they captured much of the value
created themselves. They were also not
very good at diffusing knowledge to the
local economies. In Egypt, the Suez
Canal Company created an infrastructure, but operated in a system that
restricted locals from rising up the hierarchy. I think foreign companies have
been and remain important conduits of
technology, information and knowledge, yet the way they structured their
business in the past occurred within a
15
geopolitical system and thought process
that probably did not facilitate growth in
developing countries.
Local entrepreneurs
We also need to get into issues related to
the local entrepreneurs, their response
and their background. Where do entrepreneurs come from and how far does
their culture, religion or the social structure impact them and what they choose
to do and not to do? Clearly variations in
entrepreneurial skills play a significant
role in understanding why some countries are rich and others are poor.
Unfortunately we still lack convincing
explanations of the origins of entrepreneurship, and the reasons for variations
in its quality.
“... Why are some
cultures capable of
creating organizations that can
exploit knowledge
and transform it,
while others
cannot? ...”
Evidently societies and their entrepreneurs differed in their abilities to absorb
knowledge. The kind of knowledge that
was created with industrialization in
western counties from the late eighteenth century was rapidly diffused
about northwest Europeans, and the
colonies they created in North America
and elsewhere, but proved hard to diffuse beyond that, with the very significant exception of Japan. The primary
reason have been the inabilities of many
countries to create the organizational
forms that could exploit this knowledge
to generate wealth. Business history has
the potential to answer these fundamental questions about the drivers of
economic growth. What are the barriers
of diffusion of business and technological knowledge? Why are some cultures
capable of creating organizations that
can exploit knowledge and transform it,
while others cannot? The answers are
evidently to be found in the political systems, cultures and institutional structures
of countries, all of which are legitimate
subjects for business history to explore.
EBHRC crew: With the current trend of
studying multinationals, how much can
this tell us about the host country where
it operates?
Prof. Jones:
From the perspective of a country that
has poor surviving archival information, it
can tell us a lot. In the case of British
banks in the Middle East, the archives
contain millions of pages of documents
on credit transactions of Arabs and
Iranians. The problem, however, is that if
you read British colonial records on
Africa, for instance, you will be lead into
a direction that Africans are hopeless
entrepreneurs and that the culture is in a
dire need for the colonial regimes to put
things in order. If such material is used, a
lot can be discovered but within the
context of realizing the bias of the
source. It is not good to write the history
of the country through the eyes of foreign companies in a too literal way.
EBHRC crew: What do you think of relying on oral narratives as a source of writing history?
Prof. Jones:
Oral narratives are a great potential
source for business history, but they need
to be used with caution. One has to be
aware of people’s agendas and the
frailty of their memories. You cannot rely
solely on oral narratives for dates and
statistics, for instance. Nevertheless,
what any historian wants to do is get into
the heads of people. Oral history is very
good at that, but one has to constantly
remember that he is in a head of a person. If people are alive, it is quite irresponsible to write about something without talking about the people themselves.
GEOFFREY JONES IS JOSEPH C. WILSON
Professor of Business Administration at
Harvard Business School. He was the direc tor of the Centre for International Business
History at Reading University until 2002. He
previously taught at Cambridge, London
School of Economics and Reading
Universities in the UK. He is a business histo rian, whose main research interests focus
on international business and entrepre neurship, and the impact of multinational
firms crossing borders. His publications
include: British Multinational Banking 18301990 (1993), Merchants to Multinationals
(2000),
Multinationals
and
Global
Capitalism
(2005),
and
Renewing
Unilever:Transformation and Tradition
(2005) . He is currently working on a history
of the globalization of the beauty industry.
HISTORICAL PERSPECTIVES
Egyptian
Textile
Workers
in the Transition
to a Neo-Liberal Order
Joel Beinin, Professor of Middle East History, Stanford University
rom the mid-1950s to the present, despite the nationalization of most of the textile
industry in the early 1960s, the
encouragement of private
enterprise in the mid-1970s, and the
denationalization of a number of enterprises since 1991, one factor has
remained constant: the state has
attempted to assert full control over all
workplaces of any significance. Trade
unions have been tightly controlled.
Elections to local union executive committees have often been fixed. In 1987
the High Constitutional Court ruled that
the right to strike was constitutionally
protected. But striking workers continued
to risk
severe
repression.
Legislation adopted in 2003 formally
legalized strikes, but under severely
restricted circumstances. Labor news
has rarely been reported on the radio
and television and in the government
press. In the mid-1980s the legal leftist
weekly, al-Ahali, consistently covered
labor issues; and for several years in the
early 2000s Al-Ahram Weekly tolerated
more labor news than other government owned newspapers.
F
Egypt’s defeat in the 1967 Arab-Israeli
War undermined the legitimacy of the
Nasserist regime and exposed it to significant political and social criticism for
the first time since 1954. Since then
there have been sporadic outbursts of
collective action and strikes in response
to declining real wages in 1971-72 and
1975-76, reductions in consumer subsidies and the imposition of Washington
consensus neo-liberal policies in 1977
(the January food riots), price increases
and increases in workers’ contributions
to health insurance and pension plans
in 1984-89, and the privatization of the
public sector in the 1990s and early
2000s. Textile workers in the large public sector mills – the Misr mills in Mahalla
al-Kubra, Kafr al-Dawwar and Helwan,
and the ESCO mills in Shubra alKhayma and Qalyub – were prominent
in all these waves of protest and strike
activity along with other public sector
workers. Private sector workers participated much less active in collective
actions of any sort.
In the mid-1980s several “alternative” newspapers and organizations
emerged to give workers a voice outside the framework of the state-dominated trade union federations, which
had long ceased to represent them.
Veteran textile union activists, the late
Taha Sa‘d ‘Uthman and Muhammad
“... Egypt’s defeat in
the 1967 ArabIsraeli War
undermined
the legitimacy
of the Nasserist
regime and
exposed it
to significant
political and social
criticism for the first
time since 1954...”
Mutawalli al-Sha‘rawi were among the
editors of Sawt al-‘Amil (Workers’
Voice), which began publication in
1985. Sawt al-‘Amil sharply criticized
the historic absorption and repression
16
HISTORICAL PERSPECTIVES
of the labor movement by the
Nasserist state. It tried to connect the
workers’ movement of the mid-1980s
with the militant trade union upsurge
of the 1940s and early 1950s by publishing biographies of veteran activists
and other historical material. One of
its major projects was a series of articles presenting a legal case for the
innocence of Mustafa Khamis and
Muhammad al-Baqri – two textile
workers who were executed on
September 7, 1952 because of their
participation in a strike on August 1213 in support of the demand for a
freely chosen trade union for the workers at the Misr plants in Kafr al-Dawwar.
Textile workers at Mahalla al-Kubra
formed the core of an area-wide
organization, al-Fagr (Dawn), which
had several hundred members and
issued a newspaper with the same
name in the mid-1980s.
Another
regional newspaper of the period was
based among the textile workers of
Shubra al-Khayma (‘Ummal Shubra alKhayma). The fiercest confrontations
between workers and the state during
the 1984-89 strike wave were two sit-in
strikes at the Iron and Steel Co. in
Helwan in July and August 1989 (1). Its
leaders were among the founders of
the Center for Trade Union and
Workers’ Services. The Center subsequently established a branch in
Shubra al-Khayma whose primary
objective was to serve the textile
workers in the area. After the Iron and
Steel Co. strikes, the regime of Husni
Mubarak, became less tolerant of
labor dissidence, an aspect of its generally more repressive character in the
1990s.
This revival of labor militancy
occurred in the context of a structural
crisis of the textile industry concentrated in the public sector. The proportion
of textile workers in the industrial work
force began declining in 1960; the
absolute number of textile workers
began declining in 1976 (2). The index
of real wages of textile workers
declined from 100 in 1986 to 61 in 1994,
an even more precipitous decline
than that of the industrial work force as
a whole (3). Due to lack of capital
investment, productivity in the
Egyptian textile industry was actually
lower in 1999 than in 1985. It is now
much lower than in neighboring countries like Tunisia and Turkey. A quarter
of the machinery is outdated and
needs to be renovated or replaced (4).
Average wages of Egyptian
textile workers are among the lowest in
the world: 85 percent of wages in
Pakistan and 60 percent of wages in
17
India. A weaver in a well-run private
sector enterprise makes about LE 1,000
a month (including base pay of about
LE 500-600 plus incentives); a spinner
makes about LE 800 a month (including base pay of about LE 400 plus
incentives). It is, of course, not accidental that the lower paid spinners are
mostly women. Private sector textile
workers work twelve hour shifts and
rarely receive health insurance or
other social benefits (whose total cash
value is about LE 400 a month) despite
the fact that they are legally entitled
to receive these benefits. Wages are
about half this amount in public sector
enterprises, where daily shifts are 7
hours and workers receive time-and-a
half for overtime (5). Nonetheless, the
industry is globally uncompetitive.
Exports began to decline in 1990,
exacerbated by a global textile recession in 1991. The value of total production reached the lowest point
since government statistics began to
be collected in 1996/97 (6).
The private sector has been
encouraged by the state since Anwar
al-Sadat’s declaration of an “open
door” economic policy in 1974. There
was relatively little private investment
in any industrial sector in the 1970s.
Private sector investment in textiles
declined precipitously from 1983 to
1987. It grew following the 1991 Gulf
War, but stalled in mid-2000 (7). The
1991 Gulf War created the conditions
for Egypt to sign an Economic Reform
and Structural Adjustment Program
“... The pattern of
workers’ collective
action since 1971
indicates a
significant
disparity between
the work experience, trade union
and political consciousness, and
militancy of public
and private sector
workers...”
agreement with the IMF and the World
Bank. Law 203 of June 1991 was the
first tangible step towards privatizing
the public sector, which the international financial institutions had been
urging for over a decade. After resisting privatization since 1974, the leadership of the Egyptian Trade Union
Federation endorsed this legislation.
Several state-owned textile
firms were sold to Egyptian and foreign investors during the mid-1990s
spurt of private investment. They generated 12 percent of all proceeds
from the sale of public sector enterprises. From 1992 to 2000 the market
share of the private sector in cotton
spinning grew from 8 percent to 58
percent (8).
In response to the crisis in spinning and weaving, production of
ready-made garments became a
more salient factor in the textile industry. This replicated the practice established in the late 19th and early 20th
centuries, when competition from
imported European cloth led to a
decline in Egyptian spinning and
weaving, but a sharp rise in garment
production (9). In 2000/01 there were
209,272 spinning, weaving and dyeing
workers and 163,241 garment workers
(compared to 457,191 spinning, weaving, and dyeing workers in 1976).
Private investors are well-represented
in garment production. The value of
private sector garment production
increased nearly 30 percent from
1996/97 to 2000/01, while the value of
public sector production fell by
approximately the same amount. In
other words, neo-liberal privatization in
the garment industry did not result in a
substantial increase in the value of
total production, nor did it provide
enough employment opportunities to
replace the lost jobs in spinning and
weaving.
Moreover, the garment workforce is highly feminized, which has
resulted in lower wages, just as was the
case 100 years ago. Of all public sector garment workers, 51 percent are
women; 40 percent of all shirt makers
are women, all in the private sector;
and 52% of all other private sector garment makers are women (10).
Precise information about
working conditions in privately owned
textile and garment enterprises is difficult to come by. While they are
legally required to provide the same
social benefits and health insurance
as public sector firms, most do not.
They evade the law by bribing inspectors and producing for the local market, which requires lower standards of
SEMINAR
SERIES
HISTORICAL
PERSPECTIVES
“... the garment
workforce is highly
feminized, which
has resulted in
lower wages, just
as was the case
100 years ago. Of
all public sector
garment workers,
51 percent are
women; 40 percent
of all shirt makers
are women, all in
the private sector;
and 52% of all other
private sector
garment makers
are women...”
documentation than the export market.
Firms that pay social insurance benefits
must pay a severance package equal
to two months wages for every year
worked if they dismiss a worker. Firms
that successfully avoid paying social
insurance benefits are able to fire workers with no restrictions, a strong incentive
for illegal behavior (11).
Before enactment of the 2003
Unified Labor Law it was widely reported
that workers signed undated letters of
resignation when hired so that they
could be dismissed without receiving
severance pay if they “made trouble.”
Firms often hired workers on three-month
temporary contracts and fired them
before they became permanent. The
2003 legislation legalized indefinitely
renewable temporary contracts (12). This
means that many workers remain in
limbo for years living in fear of exercising
their rights and with no job security.
Several of the new private enterprises
are located in the new cities surrounding
Cairo. Workers are therefore cut off from
the social networks required to support
collective action; few private sector firms
are unionized.
By 1999, 137 of the 314 public
sector firms declared eligible in 1991 had
been privatized. Although the 1991 privatization legislation forbade mass layoffs after privatization of a firm, managers of public sector firms under consideration for privatization often attempted
to make them more attractive by reducing the workforce before the sale.
Anxieties about unemployment and
other possible consequences of privatization prompted a renewal of strikes and
collective action in the mid-1990s, with
major strikes at Misr Fine Spinning and
Weaving in Kafr al-Dawwar in November
1994 and Misr Helwan Spinning and
Weaving in August 1998. At the Misr
Helwan mill, the entire workforce of 8,700
was given a three-week vacation. Then
management announced that only
2,800 workers should return to work.
Rumors spread that the enterprise would
be leased to a private investor (13). Some
400 workers of ESCO’s Qalyub Spinning
Mill sat in at their enterprise for over four
months from February to June 2005
protesting the sale of their firm to a private investor because neither the government nor the new owner would commit to maintaining the level of their
wages, benefits, and pensions (14).
Despite the moves towards privatization, the textile industry remains the
core of the public sector. The single
largest state-owned enterprise is the Misr
Spinning and Weaving Company in
Mahalla. It employed over 20,000 workers in 2000 and generated revenues of LE
700.2 million. By contrast, one of the
most successful new private fir ms,
Alexandria Spinning and Weaving,
employed 3,200 workers and earned
revenues of LE 160.68 million. The recently privatized Arab Polvara Spinning and
Weaving earned LE 213.52 million (15).
The pattern of workers’ collective action since 1971 indicates a significant disparity between the work experience, trade union and political consciousness, and militancy of public and
private sector workers. Even among the
generally more militant public sector textile workers, gender, locality, the differential effects of foreign competition, the
particular commodity manufactured,
the fabric worked, and the political character of the local trade union leadership
all produced important differences.
Therefore, it is very problematic to define
a set of common experiences and a
consciousness that define “the” Egyptian
textile worker. The entire Egyptian working class has been disorganized over the
last three decades, and the long-term
effects of the efforts to re-privatize the
economy since 1991 are still not knowable.
END NOTES:
1. Omar El Shafei, "Workers, Trade Unions, and
the State in Egypt: 1984-1989," Cairo Papers
in Social Science 18, no. 2 (Summer 1995): 2229, 33-35.
2. Tamer Abdel-Kader, “State, Capital and
Workers’ Protests in Egypt,” (M.A. thesis,
American University in Cairo, 1998), 79.
3. Ibid., 84.
4. American Chamber of Commerce in
Egypt, The Textile and Clothing Industry in
Egypt (Cairo: The Chamber, August 2004), 70.
5. Interview with the owner of a private sector textile enterprise who wishes to remain
anonymous, Cairo, March 19, 2005.
5. Abdel-Kader, 81; Egypt, Central Agency
for Public Mobilization and Statistics, On-Line
Census of Industrial Production, 2000/01
“`Adad al-mansha’at wa-`adad al-mushtaghalin hasba fi’at al-sin wa’l-naw`.”
7. Abdel-Kader, 81.
8. Jolynn Khamky, "Liberalization to
Divestment: Egypt, 1960-2000," senior honors
thesis, Department of History, Stanfor d
University, 2003), 50, 65.
9. John Chalcraft, The Striking Cabbies of
Cairo and Other Stories: Crafts and Guilds in
Egypt, 1863-1914 (Albany: State University of
New York Press, 2004), 55-58.
10. Central Agency for Public Mobilization
and Statistics, On-Line Census of Industrial
Production, 2000/01 “‘Adad al-mansha’at
wa-‘adad al-mushtaghalin hasba fi’at al-sinn
wa’l-naw‘.”
11. Interview, Cairo, March 19, 2005.
12. Marsha Pripstein Posusney, "Globalization
and Labor Protection in Oil-Poor Arab
Countries: Racing to the Bottom?" paper presented at the conference on “The Jordanian
Economy in a Changing Environment”
(Amman: University of Jordan, July 22-23,
2003).
13. Agnieszka Paczynska, "Globalization and
Pressure to Conform: Contesting Labor Law
Reform in Egypt," paper presented at the DC
Area Workshop on Contentious Politics
(College Park, MD: University of Maryland,
October 23, 2002).
14. Joel Beinin, “Popular Social Movements
and the Future of Egyptian Politics,” Middle
East Report Online, March 10, 2005,
http://www.mafhoum.com/press7/231S24.ht
m
15. Khamky, "Liberalization to Divestment," 67.
JOEL BEININ is a professor of Middle East
History at Stanford University. He taught at
Stanford University since 1983. He was the
President of the Middle East Studies
Association of North America in 2002. His
research interest focuses on workers,
peasants, and minorities in the modern
Middle East and on Israel, Palestine, and
the Arab Israeli conflict. His publications
include: Workers on the Nile: Nationalism,
Communism, Islam and the Egyptian
Working Class, 1882-1954 (1987; co-authored with Zachary Lockman), The
Dispersion of Egyptian Jewry: Culture,
Politics, and the Formation of a Modern
Diaspora (1998). Workers and Peasants in
the Modern Middle East (2001.)
18
HITORICAL PERSPECTIVES
Railroads in the Land of the Nile
The Story
Egyptian
Railroads
of
Amr Nasr El-Din, Political Science Graduating Senior, AUC
19
n a daily basis, around 2.3
million passengers use
trains operated by the
Egyptian
National
Railroads (ENR) to reach
their destinations. In addition, more
than 11 million tons of freight is transported on an annual basis (1). Thus it
could be fairly said that the ENR plays
a major role in Egypt's economic activity. This role has been successfully fulfilled by the Egyptian railroad service
since it was first created more than 150
years ago.
O
The development of railroads in the
19th Century was initially and in most
cases dominated by economic factors. Railroads were used to exploit
natural resources and facilitate exports
and/or imports. It was a general trend,
especially outside North America and
Western Europe, to find major colonial
powers investing in infrastructure projects, especially railroads, to gain
access to natural resources and/or
facilitate penetrating local markets.
This happened in India, China and
other parts of the world (3).
The creation of Egyptian railroads was
a direct result of the massive changes
that took place in Egypt in the early
years of the 19th century. But despite
the long history of the ENR, and the
vital role it plays in the life of the country, little is known about this massive
establishment which employs around
90,000 people and operates a wide
network of routes which range from
fast high-density trafficked routes to
small lazy Delta branch lines (2). Its long
and interesting history is virtually
unknown to most Egyptians. This piece
is concerned with the history of the
Egyptian railroads and investigates the
reasons why railroads were introduced
in Egypt in the first place.
In the case of Egypt, the introduction,
building and development of railroads
was not intended as a service to the
Egyptian economy or as a means to
penetrate Egyptian markets, or even
exploit Egypt's natural resources; rather,
it was motivated by the desire of Great
Britain to gain political leverage in
Egypt in order to secure and strengthen
its grip on its main access route to India.
In pointing this out, I do not mean to
underestimate the economic rationale
behind the construction of railroads,
but rather to highlight the presence of
other factors that, in some cases,
played a decisive role regarding railroad development in Egypt.
The British Connection: The
British Interest in a
Permanent Route to Asia:
The British were primarily interested in
securing an access to their dominions
in Asia and creating a safe trading corridor to India, the largest and most
important British colony, or the jewel of
the British crown, as it was aptly
described at the time. Historically,
there were two main routes connecting Europe and Asia: the first was
through the Middle East and was mainly a land route passing either through
Egypt or through, what is now known,
as Syria. This famous land route which
encompassed the famous Silk Road
rapidly deteriorated in the years following 1498, when Vasco Di-Gama discovered the Cape of Good Hope. This
newly discovered naval route allowed
the British and other European powers
easy and unrestricted access to Asia,
avoiding the high tariffs they used to
pay to use the old land rout (4).
Moreover, the new route, though
much longer, was much safer than the
old one, which was prone to political
upheavals that could drastically affect
its accessibility.
HITORICAL PERSPECTIVES
The New
Middle Eastern Route:
The expansion of British and European
influence in Asia and their subsequent
entrenchment in their new colonies
automatically transferred European
conflicts and rivalry to the Asian hinterlands. This required a faster means of
communication to transmit orders as
evidenced by a report written by
Colonel James Capper of the East
India Company around 1738 in which
he says: “during the late war in India,
we frequently, had no intelligence from
England for eight to nine months; nor
did we hear of the rupture of Spain until
upwards of eleven months”(5). In addition, the ships used to maintain contact
between Europe and Asia urgently
needed massive re-supply stations
along the naval route, which entailed
huge economic and political costs.
These two factors highlighted the need
for a much faster route to reduce the
time and the number of supply stations
needed.
At the time, the main alternative to the
Cape of Good Hope was the Middle
East which was becoming more favorable not only on account of the time
factor, but also because the crumbling
Ottoman empire posed a lighter threat
to the European powers. In the Middle
East there were two main routes to
access the Far East; the first was by Sea,
to what is now known as Syria, then
through desert caravans to the
Ottoman provinces Baghdad and
Basra, up the Euphrates, then by ships
through the Persian Gulf to India and
the Far East.
The Egyptian Option:
Transiting Through Suez:
The second Middle Eastern route was
across the Mediterranean, through
Egypt to the Red Sea. It was a very old
route, which dated to the time of the
Pharaohs. Historically, this route used to
pass through the city of Pithon, better
known as Heroopolis, at the Gulf of
Heroopolis, before it dried and retreated to today's city of Suez, which was
connected to the Pelusiac Nile, one of
the many Nile branches that, also,
dried out. It was repaired and used in
Greek and Roman times, during the era
of Ptolemy and Trojan respectively.
Later on, after the Islamic conquest, it
gained importance not only as a trade
route between Europe and Asia, but
also as a passage to the Hejaz used
annually by pilgrims heading for
Mecca.
The route passing through Egypt possessed a clear advantage over both
the Cape of Good Hope and
Mesopotamian routes since it required
less time to cover. At the time sea travel was cheaper and faster than land
transportation, and the Egyptian route
entailed carrying goods between the
harbors of Alexandria and Suez – a distance much shorter and safer than
crossing the Mesopotamian desert. The
time factor was soon recognized by the
British; in a report by Capper he says:
“when the peace [referring to the
peace treaty between England and
Spain] was signed, the news of it was
transmitted to India, both across the
great desert [of Mesopotamia] and
also round the Cape of Good Hope.
Nevertheless it did not reach Madras
until the end of June… [H]ad the passage through Suez been available at
the time the dispatch might have been
sent from England to the scene of
action in 70 days”.
In 1768, and again in 1775, Capper
came to Cairo in an effort to negotiate
a treaty with Mohamed Abu Al-Dahab
that would open the “Sacred Sea” –
the Red Sea – to British ships in return for
200,000 pounds paid to the Egyptian
government per annum in the form of
duties. The Ottoman protest against the
treaty forced the British ships to stop
coming to Suez from 1779 (6).
In 1794, George Baldwin, the upholder
of British interests in Egypt, managed to
hold a new treaty with Mourad Bey and
Ibrahim Bey. This gave British ships the
right of free navigation, landing and
transit of goods, mails and passengers
and was later endorsed by a faraman
(official decree) issued by the Ottoman
sultan. Four years later, however, this
was disrupted by the French invasion to
Egypt in 1798 (7).
The Creation of the Modern
State: Mohammed Ali and
the Pillars of Modernization:
It is often said that the founding of the
modern Egyptian state and, therefore,
the beginning of the modern history of
Egypt dates back to the reign of
Mohammed Ali (1805-1848). The powerful government institutions, backed
by a powerful economic base that rested upon advanced industries and a
flourishing agriculture, created by
Mohammed Ali ensured that the government had sufficient financial
resources, which, in turn, guaranteed
the spread of its control over Egypt.
Increased
government
contr ol
improved security throughout Egypt
and made the Western powers, and
Britain in particular, more interested
than ever in benefiting from Egypt's
unique geographical position to secure
a permanent route to their Asian and
African colonies.
Renewed British Efforts to
Re-Open the Egyptian Route:
Britain's renewed interest in Egypt and
its desire to establish a faster link
between England and its colonies in
the Indian sub-continent is attested to
by a memorandum sent by John Barker
in 1815, the British Counsel General in
Egypt between 1828-1833, in which he
suggested using steam ships in the
Mediterranean and the Red Sea to create a faster link. In addition, a report
written in 1829 by lieutenant Thomas
Waghorn of the Bombay Marine stated
that a trip between London and
Bombay could take between five to
eight months under sail and up to three
months with steam ships through the
Cape of Good Hope (8). In contrast, a
trip through Egypt, using what was then
known as the “overland route”, could
take only 40 days, even without the use
of steam ships (9).
One could therefore conclude that
three main reasons led the British and
other western powers to favour the
Egyptian route. First, Mohammed Ali's
reforms, particularly the introduction of
new technologies, like the use of
steam-powered vessels in the Nile in
the 1830s with all associated advantages. Second, the increased safety of
Egyptian trade routes as the government's policing abilities improved (10).
Third, the fact that the Egyptian route
required much lesser time than its alternatives since the distance was much
shorter.
At the time the Egyptian route consisted of two main sections. The first started
in Alexandria where the commodities
coming from Europe were unloaded at
its port, to be loaded onto small vessels
which sailed through the Mahmoudiya
canal, dug in 1819, then through the
Nile to Cairo. The 269 kilometres long
trip took three to four days or according to some sources 42 hours of day
navigation to end its journey at the port
in Bulaq. Commodities, mail and passengers were then moved on to Suez
by desert caravans, which in fair
weather covered the 144 kilometres
distance in 16 to 18 hours (11).
20
HITORICAL PERSPECTIVES
Time for Railroading: The First
Trails to Establish a Railroad
in Egypt:
The above-mentioned facts encouraged the British to think seriously about
establishing a fast land link to connect
the two naval hubs in Alexandria and
Suez. Building a railroad seemed an
ideal solution, especially since the
Egyptian government would gain revenues from the duties on transshipment.
There is disagreement among historians
as to who first presented the idea.
Some sources suggest it was a British
firm, others, that it was Thomas
Galloway, a British engineer of Scottish
origins who used to work for
Mohammed Ali (12).
The massive project began in 1834, less
than 10 years after the inauguration of
the first railroad in Britain between
Stockton and Darlington. The first stage
was a 128-kilometer, single-track railroad
on the land section of the “overland
route” between Cairo and Suez. The distance would be covered in 6 hours, as
trains then could only run at a speed of
20 to 24 kilometers per hour (13).
Railroads as Means of
Political Influence:
The railroad project received huge
backing from the British government
since it meant less transit time and
increased security on its main trading
route to India. Moreover, all the essential equipment and experts would
come from Britain and it was automati-
“...The railroad
project received
huge backing
from the British
government since
it meant less transit
time and
increased security
on its main trading
route to India...”
cally assumed that Mohammed Ali
would resort to British capital to finance
this massive project. An Egyptian railroad built by Britain would not only
21
ensure the improvement of the overland route to India, but would, in addition, bring about a direct British involvement in Egyptian affairs which, if well
used, could be translated into political
leverage. The British keenness to manipulate the Egyptian railroad project for
political interests was further sharpened
by their fear that the French, who at the
time were heavily lobbying with
Mohammed Ali to approve their idea
of digging a canal between the Red
Sea and the Mediterranean, were
gaining political influence in Egypt.
The False Start: End of the
First Trials to Construct a
Railroad in Egypt:
In November 1834 Mohammed Ali
approved the construction of Egypt's
first railroad and sent Thomas Galloway
to Great Britain to purchase the essential equipment. By the end of the year
most of the equipment, including the
tracks, had arrived to Alexandria only
to be left in the their crates (14). The ruler
of Egypt had suddenly decided to drop
the project. A set of political debacles
and fear of foreign intervention are
believed to have made him change his
mind and put an end to this ambitious
project before it even started.
The fear of foreign intervention, political
or economic, could be partially
explained by the high cost of the project, which would have forced Egypt to
resort to foreign capital. Mohammed
Ali decided it was better and cheaper
to concentrate on digging irrigation
canals, since they could be dug using
local expertise and with minimal costs.
They would also be useful both for irrigation and transportation. Meanwhile,
the equipment that was shipped to
Alexandria was used to build small railroad lines on which the carriages were
horse-drawn.
The first of these lines was near the now
famous Cairo suburb of Maadi; the
short line used to run between the large
quarries and a small dock on the Nile
waterfront. It was used to transport rocks
needed for the construction of barrages
and other irrigation projects.
The second line was in Alexandria and
ran between El-Dekhla quarries and the
Alexandria harbor. Like its twin line, this
one was also used to transfer rocks and
building material needed for the expansion of Egypt's main port in Alexandria.
Another short line was built to connect
granaries in Alexandria with the port; 30
small carriages were used on it (15).
Egypt, therefore, entered the age of railroading in a de-facto rather than in an
official manner by 1835. Interestingly
John Galloway, the brother of Thomas
Galloway, re-offered the rail link project
in 1843 to Mohammed Ali who refused it
once more and on very much the same
grounds as before.
It could be assumed that Mohammed
Ali refused to build the railroad for its
possible political and economic consequences; but it is equally probable that
he realized that Egypt did not really
need a new, fancy and expensive
means of transportation. Yes, transportation has always represented a major historical challenge to humans and the
ease of transportation has always been
unanimously identified with development and prosperity.
Egypt is no exception; and its economic
history is very much related to the history and development of its local and
international transportation systems.
Egypt's geography and topography
played a major role in determining the
patterns of life and economic activities
of Egyptians. Egypt, or, to be precise,
the inhabited part of Egypt, is concentrated round the Nile, in its valley and
Delta. Most of this area is flat ground,
which allows easy overland movement.
In addition, the dependence of Egypt
on the Nile for water dictated, by
default, that most of its economic and
urban centers and agricultural land had
to be on or near the Nile's waterfront.
These factors, plus the navigability of the
river, greatly facilitated transportation in
Egypt. For thousands of years, the Nile
was Egypt's main transportation hub
and carried people as well as all kinds of
commodities, ranging from small bundles of wheat to the massive obelisks.
While the Nile and its branches provided
Egypt with an excellent internal transportation system, most of its meager
international trade, or, more precisely,
interaction with the outside world was
conducted through desert caravans or
large sea vessels (16). It should be said
that the Egyptian railroads during their
first days did not attract a large percentage of Egypt's internal transportation either in the form of passengers or in
the form of goods as many preferred
the Nile as a safer and more accessible
means of transportation.
In other words, internal transportation in
Egypt had always been adequate for its
needs and never constituted a major
obstacle to economic development. At
the time the railroad project was proposed, Egypt did not have a major
transportation problem. This probably
played a role in Mohammed Ali's decesion to turn down the railorad
HITORICAL PERSPECTIVES
offer twice. It would be more than 20
years before efforts to build a railroad in
Egypt were launched again.
The Start: The Beginning of
the Railroading Era in Egypt:
Passenger station, Egypt, Mass., July 9,
1955. Charles B. Gunn Collection (19880001.ph2139). Courtesy of
railroads.uconn.edu/. ../ma/egypt.htm
The Egypt-Suez Railroad Station (Published
by Arougheti Brothers) (Unused Postcard,
Undivided back). Courtesy of www.post cardman.net/ egypt_suez.html
The first Egyptian locomotive built by
Robert Stevenson and delivered in 1852
and it was used mainly for haling passen ger trains. Courtesy of www.geocities.
com/ amrsmodelrailroad/ha.html
The Cairo Railway station. Courtesy of
www.gasolinealleyantiques.com/
trains.htm
The British efforts to convince Egyptian
rulers to build railroads continued, and
with accession of Abbas to the
Egyptian throne, a new and more vigorous campaign to convince him to
approve the project was launched.
Unlike its predecessors, this attempt
succeeded, partly due to British efforts
to help Abbas
overcome the
Ottaman's refusal to his accession to
Egypt's throne.
In November 1851, the contract to
build the first railroad in Egypt was
signed between Egypt's forigen minister, Stephen Bek, and a representative
of Robert Stephonson, the son of
George Stephonson, the inventor of
the railroads. It would be a single line
from Alexandria to Cairo, then from
Cairo to Suez, following the footsteps of
the old famous overland route (17). In
April 1853, the first section, 105 kilometres long, between Alexandria and Kafr
Al-Eies on the western bank of the Nile,
was opened (18).
The first line between Cairo and
Alexandria was completed in 1855 with
the total cost of one and a half million
Egyptian pounds including the price of
the tracks, flanges, locomotives and
carriages. The second line between
Cairo and Suez was built between 1856
and 1858 and upon its completion a
modern railroad line now served the
overland route and its revenues helped
the finances of the Egyptian state. It
should be said that in 1869 and after
the opening of the Suez Canal, the revenues coming from the “steel” overland route declined and Cairo-Suez
railroad was closed. Consequently, the
number of foreign passengers per kilometre using the Egyptian railr oads
decreased to only 14 (19).
Britain's interest in creating and maintaining a link with its colonies in Asia
was behind the building of the first railroad line in Egypt. At that time, due to
its special geographic and topographic circumstances, and notwithstanding
all the benefits a railroad could bring,
Egypt had no great or urgent need for
one. It was built not to address the
social and economic needs of Egypt,
but because a foreign power, namely
Great Britain, decided that it was in her
interest to have it built. The story of the
Egyptian railways presents a clear
example in the history of international
railway development in which the
desires and interests of a foreign power
dominated the pattern of railroad
establishment and development.
END NOTES:
1. Gary Goldfish. Steel in the Sand, the
History of Egypt and its Railways: Dorset
Press, 2003.
2. Ibid.
3. Danial Thorner. "The Pattern of Railway
Development in India." The Far Eastern
Quarterly 14, no. 2 (1955): 201-216.
4. A.F.C De Cosson. "History of the Egyptian
Overland Route." The Egyptian State
Railroads Magazine 1, no. 2 (1934).
5. Ibid.
6. A.F.C De Cosson. "History of the Egyptian
Overland Route." The Egyptian State
Rialroads Magazine 1, no. 2 (1934).
7. Ibid.
8. A.F.C De Cosson. "History of the Egyptian
Overland Route." The Egyptian State
Rialroads Magazine 1, no. 2 (1934).
9. Ibid.
10. Gary Goldfinch. Steel in the Sand, the
History of Egypt and its Railways: Dorset
Press, 2003.
11. Sikak Hadid Masr Fi 125 Aamn 1852-1977
(Egyptian Railways in 125 Year 1852-1977):
Egyptian Railways Press, 1977. See also Gary
Goldfinch. Steel in the Sand, the History of
Egypt and its Railways: Dorset Press, 2003. p. 3.
12. Fatma Alam Al-Din. Tatur Al-Nakal Ua AlMuaslat Al-Dakhelya Fi Masr Fi Ahd Al-Ihtlal
Al-Biritani 1882-1914 (Development of
Internal Transportation System in Egypt
under the British Occupation 1882-1914): AlHaiea Al-Masrya Al-Ama Lil-Kitab (General
Egyptian Book Organization), 1989. See Also
Sikak Hadid Masr Fi 125 Aamn 1852-1977
(Egyptian Railways in 125 Year 1852-1977):
Egyptian Railways Press, 1977.
13. Sikak Hadid Masr Fi 125 Aamn 1852-1977
(Egyptian Railways in 125 Year 1852-1977):
Egyptian Railways Press, 1977.
14. Sikak Hadid Masr Fi 125 Aamn 1852-1977
(Egyptian Railways in 125 Year 1852-1977):
Egyptian Railways Press, 1977. p. 10.
15. Fatma Alam Al-Din. Tatur Al-Nakal Ua AlMuaslat Al-Dakhelya Fi Masr Fi Ahd Al-Ihtlal
Al-Biritani 1882-1914 (Development of
Internal Transportation System in Egypt
under the British Occupation 1882-1914): AlHaiea Al-Masrya Al-Ama Lil-Kitab (General
Egyptian Book Organization), 1989. p.39.
16. Goghrafya Al-Nakal Fi Masr (Geography
of Transportation in Egypt). Dirsat Fi
Goghrafya Misr (Studies in the Geography of
Egypt): Maktaba Al-Anglo Al-Masria (The
Anglo-Egyptian Library), 1987.
17. Fatma Alam Al-Din. Tatur Al-Nakal Ua AlMuaslat Al-Dakhelya Fi Masr Fi Ahd Al-Ihtlal
Al-Biritani 1882-1914 (Development of
Internal Transportation System in Egypt
under the British Occupation 1882-1914): AlHaiea Al-Masrya Al-Ama Lil-Kitab (General
Egyptian Book Organization), 1989. p. 42.
18. Sikak Hadid Masr Fi 125 Aamn 1852-1977
(Egyptian Railways in 125 Year 1852-1977):
Egyptian Railways Press, 1977.
19. Ali Basha Mubarak. Al-Kohtat AlTawfikiya Al-Gadida (the New Tawifkiya
Plans). 7 vols. Vol. 7.
22
HITORICAL PERSPECTIVES
The
Nurturing of
Wealth
The First Call
for a National Bank in Egypt, 1879
Abdelaziz Ezzelarab, Associate Professor of Economics, AUC and Director, EBHRC
n April 1879, a group of Egypt’s
social and political elite joined
ranks to issue a communiqué (or,
using the Arabic term, a manshur)
calling on the public to subscribe
to a joint stock bank for which they proposed the name al-Bank al-Watani alMisri (The National Egyptian Bank). This is
the earliest traceable call on the
Egyptian public to found a joint-stock
national bank. It may also be the earliest
call on Egyptians for public subscription
to any business venture, as the text of this
manshur strongly indicates. This document appeared in the Egyptian daily alTijarah under the title “Inma’ al-Mal” (The
Nurturing of Wealth) (1).
I
The status of Inma’ al-Mal, as one of the
earliest public subscription calls, would
alone give it a historic importance. What
I find very striking, however, is the way it
is imbued in an ideological discourse
that draws a connection between business organization, economic progress,
and global political domination and
makes of the project a national, religious, and historic duty all at once. Not
very surprising, though. The issuers of
23
“Inma’ al-Mal” knew that public subscription in a joint stock company was
an unorthodox business practice.
Consequently, they had to address this
practice in principle and apply an arsenal of arguments to impress on the public its legitimacy, viability, and historic
promise. We find a mix of all this in the
manshur (see the complete text and
translation below). In what follows, I will
attempt a basic reading of the main
lines of argument in this document, and
I will use ‘manshur’ and ‘Inma’ al-Mal’
interchangeably to refer to it.
Our analysis should begin by a look into
the immediate context. This was a power
struggle over the control of Egypt’s
finances and government that originated in the public debt crisis of the late
1870s. April 1879 could be situated within
a phase of Egyptian public debt history,
which started when interest payments
were postponed for the first time (April
1876), and ended with the promulgation
of the Liquidation Law (July 1880). The
dominant issue at that time was negotiating a plan for debt settlement, and the
general trend was one of transferring
control over Egypt’s finances and government to European powers, while curtailing the power of the ruler (Khedive
Ismail). This trend was briefly interrupted
in April 1879 when a National Front was
formed of a broad alliance of elite
domestic forces, led by large landholders, many of whom were senior state officials or MPs. The Front produced a
National Program (“al-La’ihah alWataniyyah”) which was a packageproposal in which domestic elites undertook to liquidate the debt within a framework of political restructuring that
involved sharing power with the Khedive.
Subsequently, a new cabinet took office
under Sharif Pasha, a veteran statesman
and a leading signatory to the National
Program, and a brief interlude followed
during which the cabinet strived to fulfill
the program. Within three months, this
attempt collapsed, European powers
took over again, and the Liquidation
Law was promulgated with debt settlement principles acceptable to European
powers. It was in the earlier days of that
interruption of foreign control in April
1879, within days of the National
Program, that “Inma’ al-Mal” was issued.
HITORICAL PERSPECTIVES
We can trace three general strategies
followed in the manshur in arguing for a
joint stock national bank. The first is
based on the historical record of
Europe. In this line of reasoning, Wester n
superiority is attributed to a single factor:
conglomeration of capital in large
incorporated structures. Capital conglomeration is seen as the main force
behind western industrial progress, the
prevailing pattern of East-West trade,
and western ability to extend their presence, hence political domination, to
every corner in the world (paragraphs 3,
4, and 15). A contrast is drawn here
between the spread of the joint-stock
model in Europe and the Eastern adherence to individually-owned enterprise
(viz. proprietorships) which culminates in
capital fragmentation, and hence losing ground to the West in production
techniques, trade, and political power.
Closely connected to this line of reasoning is Inma’ al-Mal’s discourse on the
institutional uniqueness and vitality of
banks, drawing again from the
European experience and emphasizing
a suggested link between the power of
respective European countries and the
strength of their banks (paragraphs 5
and 6). It is interesting to note here how
notions of current usage in global political economy find their way into the
manshur, as for example the allusion to
the pattern of trade and division of
labour on a global scale (paragraph 4),
and to the clout of the East India
Company as evidence for the power of
transnational companies (paragraph
15). It is also interesting to note how
Europe dominates the text, both by providing an inspiring historical model and,
as we will see, by being the adversary
against which the elites aimed at
national self-assertion.
Stemming out of this premise, the second strategy in arguing for the bank is
based on nationalistic grounds. Having
argued that political power is a function
of economic superiority, that the latter is
a direct result of massive capital mobilization, and that banking acts as the
vital link in making this mobilization possible, the issuers of Inma’ al-Mal make a
passionate argument that establishing
al-Bank al-Watani al-Misri is the means—
possibly the only means—for the economic and political salvation of Egypt
(paragraphs 8, 13, 16). Given the context, the public must have already been
prepared to accept that the ongoing
financial and political crisis was to a
large extent the making of foreign
banks. This feeling must have been
aggravated by a recent spread in the
“...The joint-stock
model is thus
elevated from the
realm of a rational
business choice to
a command on
the individual and
the community, on
the strength of its
role as an
organizational
pre-requisite for
the nurturing of
wealth....”
mortgage and loss of agricultural lands
to foreign moneylenders. An implicit link
may be impressed on the public here
between the preceding exposition on
the expansion of European banking and
the spread of foreign moneylenders in
the countryside. The public debt crisis
that created claims on the Egyptian
treasury was thus compounded by the
fear of loss of lands to foreigners due to
default on private debts. The manshur,
indeed, makes an explicit allusion to this
threat by warning against the repercussions of absence of national financial
institutions in order to impress on the
public the urgency of that venture
(paragraphs 7, 10).
As if the nationalist duty, backed by
European historical experience, was not
enough motivation, Inma’ al-Mal delves
into a third line of reasoning of a presumably stronger binding nature: religion. Interestingly, the issuers of the
manshur not only found a need to borrow from this frame of reference, but
they also apparently believed that this
connection must be established at the
outset. Their point of departure, therefore, was to begin the manshur by arguing that a religious obligation was
incumbent on individuals and on the
entire community to develop Godgiven resources beyond their natural or
raw state (‘al-halah al-fitriyyah’—see
paragraphs 1 and 3)—in other words, an
obligation of nurturing natural wealth.
Here, the significance of the title they
chose for their manshur becomes evident. Proper fulfillment of this command,
the argument continues, is only possible
through applying the principle of cooperation. To impress this on their readers,
the issuers spread this argument in various parts of the manshur, using different
synonyms for ‘cooperation’: al-ishtirak,
al-ta‘awun, al-takaful, al-ittihad etc.
(paragraphs 2, 3, 4, 7, 15). Within this discourse, collective capital mobilization is
then projected as an incidence of such
cooperation (paragraph 4). The jointstock model is thus elevated from the
realm of a rational business choice to a
command on the individual and the
community, on the strength of its role as
an organizational pre-requisite for the
nurturing of wealth.
Given fears of inconsistency between
religious teachings and the charging of
interest, however, a general argument
for joint stock structures would not alone
resolve doubts regarding the legitimacy
of banks. Here, the manshur moves in
two interrelated directions in order to
resolve this issue. One is by applying the
principle of utility in explaining banks’
vitality to economic activity, and it
reaches here the extent of describing
banks as a public blessing (‘rahmah lilnas’—paragraph
6).
The
other
approach is to directly employ opinions
of Muslim jurists who distinguish usury
from legitimate banking profits, with
moderation as the yardstick (paragraph
9).
The argument for establishing al-Bank alWatani al-Misri, thus, is carefully knit as a
national duty that fulfills God’s commands in nurturing wealth, that is consistent with Islamic law, and that would be
a landmark in emulating European institutional models which account for so
much of Europe’s progress and clout.
Clearly, these strings of reasoning are
mutually reinforcing and interconnected. Interestingly, while the issuers of the
manshur emphatically resort to these
justifications, they allude to the Bank as
a commercially viable project in an only
brief and in-passing fashion, and do so
only towards the end of the manshur
(paragraph 14), adding the quick
caveat that commercial viability is the
least important factor in establishing it.
Did this reveal a keenness in safeguarding the projection of the enterprise as a
nationalist, religious, and historical quest,
keeping the ‘misgiving’ of mundane
motivations away from it?
24
HITORICAL PERSPECTIVES
What we have at hand, thus, is not only
a proposal for emulating a superior business-organization model predicated on
the drive for material progress, but, a
call impregnated in a mix of religious
and nationalist duty to which the public
should not, or would not, be expected
to respond by a mere rational calculation of risk-reward prospects only. In a
certain way, this reflects the issuers’
awareness that their call was an extraordinary initiative: a move outside the
adopted practices, a challenge to existing power relations, and a quest for self
assertion. To succeed, an appeal to
decision making on the basis of extrabusiness considerations was crucial.
Perhaps this could also explain the confident rhetoric in the manshur where it
makes a promise for further nationalist
success and self-assertion (paragraph
11) in an apparent reflection of the prevailing political context and the interim
elite success in the National Front.
Even though the call for al-Bank alWatani did not succeed, the ideological
significance of Inma’ al-Mal remains
upheld for various reasons. First, the
manshur expressed an urge that seems
to have existed at that time among a
circle of large landholders, merchants,
intellectuals, members of the parliament, and holders of key official positions (2). From this perspective, it stands
as evidence that the drive and vision to
establish a joint-stock national bank had
“...As if the
nationalist duty,
backed by
European historical
experience, was
not enough
motivation, Inma’
al-Mal delves into
a third line of reasoning of a presumably stronger
binding nature:
religion...”
25
“...[The immediate
context of the
manshur] was a
power struggle
over the control of
Egypt’s finances
and government
that originated in
the public debt
crisis of the late
1870s....”
existed long before the ultimate establishment of the first joint stock Egyptian
national bank, Bank Misr, in 1920. The
failure in ‘catching up’, at least in this
instance, was not due to a lack of
awareness, knowledge, or entrepreneurial drive but a product of other factors, including the prevailing balance of
power.
When Tal’at Harb quoted the entire text
of the manshur in Ilaj Misr al-Iqtisadi aw
Mashru‘Bank al-Ummah (‘The Economic
Remedy of Egypt or The National Bank
Project’) at the beginning of his campaign for Bank Misr some thirty five years
later, this stood as further proof for the
continuing ideological relevance of
Inma’ al-Mal. But the context also suggested further parallels with 1879. Harb’s
treatise on the need for a national bank
was a product of the Egyptian National
Conference of 1911, a platform that
involved broad elite mobilization of a
similar nature to the 1879 National Front.
Notwithstanding important differences
in instigating factors and purposes, both
forums carried a sense of an opportune
moment of national mobilization.
Subsequently, the idea went dormant
for a few years and was resurrected only
within the euphoria carried in the 1919
national uprising. Was this further evidence that projects such as the national bank could only be carried in a context of some extraordinary set of circumstances that defy the usual state of
affairs? Were the issuers of Inma’ al-Mal
justified in betting the success of their
bid for the national bank on the air of
national mobilization that prevailed in
April 1879?
The preceding textual study of the manshur provides only limited insight into the
immediate and long-term factors that
could account for the formation of that
call. But it opens up a whole set of investigations. How and when did the elites’
awareness of Western modes of business
organization begin? What were their
earlier encounters with European
transnationals?(3) Could the drive to
establish a national bank be interpreted
as an elite ambition to promote their
share in the domestic market by getting
into business activities that Western capital had thus far monopolized? What
insights does this give us about the
dialects of Egypt’s integration in the
world market as a cotton exporter several decades earlier? Finally, to conclude with a grain of salt, how much of
Inma’ al-Mal could be taken to reflect
the ideology of the economic and political elite, and how much of it should be
credited, instead, to remote learning by
the community of intellectuals who
were beginning to use the spread of
Arabic newspapers in the late 1870s to
articulate and spread their own visions
and views?
END NOTES:
1. Inma’ al-Mal’ was reproduced in full and
identical versions in Salim Naqqash, Misr lilMisriyyin (1883) and Tal‘at Harb, ‘Ilaj Misr alIqtisadi (1913). The latter was Harb’s treatise
on the necessity of a national bank, and was
published at the beginning of his campaign
for Bank Misr.
2. For details, see the discussion and citations
in chapters 5 and 6 in AbdelAziz EzzelArab,
European Control and Egypt’s Traditional
Elites – A Case Study in Elite Economic
Nationalism (Edwin Mellen, 2002).
3. We already know that some large
European corporations were active in fields
bearing direct contact with the public since
the 1830s. The East India Company operated
shipping lines since 1834, Lloyd since 1838,
and The Peninsular and Oriental Steam
Navigation Company since 1840. Also, banks
and companies owned by foreign capital
were being locally incorporated since the
mid 1850s. The Egyptian Company for Steam
Navigation was established in 1854, the Bank
of Egypt in 1856 and the Anglo-Egyptian Bank
in 1864. Egyptian elites themselves were starting to participate with foreign capital in some
business concerns. See EzzelArab, European
Control, p. 130 and n. 24 & 25.
HITORICAL PERSPECTIVES
Manshur “Inma’ al-Mal”
(Translation)(1)
[1. The Nurturing of Wealth
is a Religious Command]
God in His highness did not create any of His creatures except to bear fruit (yuthmir) and to be useful.
He does not approve of leaving His gifts buried in
the ground without bearing fruit; verily, what He
approves of is the cultivation of those gifts (yustath mar) so that they would grow and benefit the public. As people endeavour to nurture His gifts, the
fruits (al-thamar)(2) would surely yield [private material] gain (naf‘)(3) to their owner and God’s contentment to the public, and He would increase their
wealth and put more riches in their hands.
[2. Cooperation in Nurturing Wealth
as a Command]
People on this earth, notwithstanding their various
kinship relations and kinds, act in collaboration and
combination (mutakafilun mutadaminun). They ar e
all commanded to work together and to cooperate
(ma’murun bil-‘amal wal-ta‘awun) in what they do:
the rich furnishes the poor with his wealth [as capital], and the landowner hires the landless [as a
labourer] in his agriculture. Science guides them all
in using that wealth and in cultivating the land, the
mother of all wealth, in the proper way. Had it not
been for that cooperation (al-ta‘awun), mankind
would not have reaped from his labour or from his
wealth or from the earth that the Creator extended
under his hands more than what other creatures
obtain from hunting with their own claws or from
what the land yields by mere coincidence.
[3. Cooperation is the Key
for Material Satisfaction]
Don’t you see that the people of the central parts of
our continent, notwithstanding the fertility of their
soil and the abundance of minerals in their lands,
can barely reap enough food for their day from the
riches with which God endowed them because of
their repulsion of each other, their separation, and
their ignorance of the benefit of cooperation (alta‘awun) and of the power of unity (al-ittihad)?
Don’t you also see that there are other nations who
have similarly not achieved [material] satisfaction in
spite of being far from that primitive state [of central
Africa] or perhaps even approaching civil perfection (al-kamal al-tamadduni)(4) ? Verily, don’t you
see how there are many of the Eastern nations of
old, well established civilizations who are in need for
the West in anything that goes beyond the natural
produce of land, from the most complex to the sim-
plest products? [Don’t you see how] they seek assistance [in everything, from] a machine to plough the
land to a sewing needle, as a result of sending their
crops [to the West] in the raw state (al-halah alfitriyyah) at minimal prices and getting them back in
a transformed form in the manufactured, decorated, civilized state and consequently at multiple
prices?
[4. Economic Cooperation
and Creativity: East versus West]
God has privileged the East with the most fertile soil
and the most precious mineral. There are many rich
[people] of substantial incomes and abundant
monies in there. Its peoples, however, were not
guided to the most proper way for cultivating and
nurturing their lands’ wealth. You find them confined
in their commerce to what their ancient ancestors
practiced, separated in their enterprises as if they
fear that profits (al-barakah) would evaporate if
they get into companies. [This is the case] in spite of
the gains (barakat) from joining up in businesses (alishtirak fil-a‘mal) that was demonstrated to them in
the peoples of the West, who bewildered the inhabited lands and opened up vast regions with their
commercial companies and who were so creative
in founding and diversifying such companies to the
extent of creating commercial companies, industrial companies, and financial companies or banks,
which are the subject-matter of this statement.
[5. The Vitality of Banking
to All Business Activities]
It is evident that banking is the link between various
kinds of companies, commerce, and crafts and is
the inevitable intermediary between [idle] capital
and the gainful [use] of it. Without banking, a large
proportion of the world’s wealth would remain neglected without cultivation. Think of an owner of a
vast property which yields a rent in excess of his
needs and who has the habit of using that excess to
buy new property. What would he do with the
excess cash if it so happened in a certain year that
he could not find a piece of land suitable for purchase and if there was no trustworthy bank where
he can keep his money as a fruitful deposit, available on demand, subject to his instructions, once he
needs it? And suppose, on the other hand, that
another property-owner or merchant or craftsman
had a need for a sum of money for a specific term,
how would he procure the funds if there was no
bank that would lend him on conditions suiting his
interests? [If] such a person in need knew of the
excess available with the [first] property owner, he
26
HITORICAL PERSPECTIVES
would request it from him by way of a loan. But who
would ensure that that person of abundance would trust
him for his money or would agree with him on the terms?
The bank is, hence, the closer intermediary between
both because it accepts the money of the former and
lends it to the latter at [mutually] agreeable terms. And
since the bank is liable for the creditor’s money, it is careful not to lend it except to trustworthy people. This is an
obvious primary advantage of banking, and is the basis
for measuring all transactions between merchants and
craftsmen [on the one hand] and capital owners [on the
other]. It is evident from this example that the establishment of banks was a blessing for the people (rahmah lilnas) and a major factor of facilitating their dealings and
of making their prosperity possible.
[6. Banking and National
Economic Power]
As for public interests, the advantages of banking are
too evident to require any verification. Those interests
require financial means and administrative capacities
that individuals cannot afford. Surely, if banks were omitted from European countries they would all become like
a bird with a broken wing, or an unarmed soldier, or a
horseman with amputated legs. [If this happens,] the
power which made Europeans possess the seas and the
deserts and control the world’s commerce and which
made it imminent for all [business] interests contracted
anywhere in the world to pass in their hands would be
gone. If we look to the status of each of the European
countries separately, we find that each of them maintains the independence of her important banking institutions. The most independent with their banks are the
happiest of them. They enjoy the most extensive commerce, the most successful industry, the strongest clout,
and the most forceful authority because capital is the
basis of enterprise (al-mal asas al-a‘mal ). If it is not within reach, you cannot avail yourself of it when you need
it most.
[7. The Threat of the Loss
of Land to Foreigners]
Our condition is a fair testimony to the validity of the preceding [argument]. If we had an autonomous financial
power, we would have been able to recover vital interests which sadly remain impaired [by way of mortgage]
to foreigners. We all fear the loss [of those interests and]
long to the day of regaining [them.] None of us alone is
capable of bringing this closer by even one hour. But if
we act collectively, the achievement of that end would
be subject only to our determination. Why, then, don’t
we make this effort if rescuing our land costs nothing
more than getting together and cooperating (al-ijtima’
wal-ta‘awun) to establish financial companies that
could achieve [ends] which individuals cannot reach?
Should we wait while most of our soils are mortgaged to
foreigners until that day when these are sold at the
cheapest prices while their owners are watching without
getting support from their brothers to keep their property ?
[8. Resolution to Establish
“al-Bank al-Watani al-Misri”]
God forbids it. We will not accept this while we have
27
amongst us zealous [people] who would sacrifice their
personal interests for the public good, and would spend
generously to achieve such [public] ends. Verily, we do
not accept it. We have seen how our enlightened people and elites were exploring ways for salvation until God
guided them to establishing a national financial company. This was proposed to them by some leading merchants, and they enthusiastically received it and moved
resolutely towards materializing it. It will come to existence shortly, adorned with a noble name, adopted as
a good omen; verily it is:
... Al-Bank al-Watani al-Misri
around which thoughts have often revolved and for
which souls have longed. All our national newspapers
had alluded to that idea, praised those promoting it,
and called upon people to support them. Subsequently,
they carried to us the good news that the idea won the
support of the elite of the country’s enlightened people,
the most notable of its notables, and a large number of
the most notable of our delegates and prominent men.
The bank has been the subject of various memoranda
and correspondence between many of the higher
authorities and none of them was but concurring, supportive, and wishing for success. No objection whatsoever was expressed by [our] countrymen because they
are certain that it will all be beneficial, and are confident
that it will fulfill the public interest.
[9. Conformity with Islamic
Law (Shari‘a)]
Someone might protest, fearing that the bank may contradict the regulations of the sacred law on the assumption that its dealings are bound to be usurious. [Such a
person] might tempt people to believe that countrymen’s support would not go beyond lip-service because
most of them are religiously forbidden from usury. We
[want to] reassure the protester and eliminate [such] illusions. The sacred Shari‘a has but forbidden pure usury,
which is not part of our bank. On the contrary, our bank
will do without it because it will be established for the
purpose of serving national interests with sincerity and
trust and in conformity with the religious doctrines of the
country. Its activities will be lending and commissionearning from buying and selling on the account of its
customers, all of which are activities that generate profits from [commercial] transactions and are admissible by
Shari‘a. The [legal] position of partners to such [transactions] is that of partners in commercial speculation
(mudarabah) which is a lawful partnership by the consensus of schools of Islamic law. Besides, commercial
transactions which involve an element of profit-making
through commercial credit (murabahah) are old estab lished and are abundantly explained in references on
Islamic law. In the opinion of al-Khassaf, an example of
legitimate transactions is
[when] someone sells a garment worth twenty dinars for a
price of forty, then lends the buyer another sixty, [this]
would bring the latter’s indebtedness to a total of one hundred dinars, although his total receipts were only eighty.
This is the school of thought
HITORICAL PERSPECTIVES
of Muhammad ibn Salama, the spiritual leader (imam) of
Balkh. Shams al-A’imma al-Hulwani used to issue opinions
in accordance with the opinion of al-Khassaf, and to say
that this is not a loan that generated profit, but is rather a
sale that generated profit (Ibn ‘Abidin, Radd al-Muhtar
‘alal-Durr al-Mukhtar, [The Answer to the Confused] vol. 4,
page 175) (5).
There is another chapter [in the same work,] (6) titled “If
the debtor repaid the debt or died before the maturity
date, the amount of profit made through commercial
credit should only be that part proportional to the
elapsed period.” [This chapter] contains the following
passage which is quoted from al-Qunya in the name of
Najm al-Din:
according to the later [jurists,] [if] the debtor repaid the
debt before maturity or [if he] died and the debt was taken
from his inheritance, the amount of profit on the commercial credit should be proportional to the elapsed number of
days. Najm al-Din was asked if this was also his opinion. He
replied that it was, and added that if the creditor took the
loan and the relevant profit before the maturity date, the
debtor has the right to retrieve that proportion pertaining to
the remaining days. END [sic.] The commentator mentioned at the end of the book that this was [also] the opinion of the late jurisconsult Abul-Su‘ud, who justified it on the
grounds of sympathy between both parties. I add that such
was the opinion of al-Hanuti and others. And in the
Hamidiyya opinions, he was asked if [a borrower] was
indebted to [a lender] by an identified amount of debt and
the latter charged the former a specific profit on that loan
that was due at the end of a year, then the [borrower] died
twenty days later and the loan became immediately
repayable by the heir[s,] should any part of the related
profit on the loan be paid? The answer of the later [jurists]
was that nothing would be taken from the contracted profit except an amount proportional to the elapsed days. The
knowledgeable Najm al-Din was asked whether he would
issue his opinions accordingly, and he said he would. Our
learned master of Anatolia, Abul-Su‘ud, has issued his opinions similarly. (7)
Whoever reflects on these excerpts would find that
they closely apply to the perceived dealings of al-Bank
al-Watani and would verify that the profits of the [proposed] bank are religiously lawful. It is well known that
profits on commercial credit had reached excessive
rates of reportedly thirty and forty percent during the
reign of the beloved Sultan Sulayman. As a result, the
imperial edict was issued in accordance with the opinion of our master, the jurisconsult Abul-Su‘ud, that the
repayment value of a loan of ten [units] should not exceed
eleven and a half as mentioned by Ibn ‘Abidin (volume 4
page 175).
[10. The Rescue of Peasants
from Usurious Practices]
The profits of the [proposed] bank will not [even] reach the
limit specified in references on Islamic law (fifteen percent). Indeed, it might not exceed half of this [rate]. This is
so because the prime concern of the bank is the public
good and the alleviation of the peasant’s sufferings by rescuing him from the unfairness of usurers who enjoy the
sweat of his brow and the riches of his lands. These usurers
seize the peasant’s toil as a cold booty by lending him
at the usurious rates of thirty and forty percent [per
annum,] and more than that in many instances, against
the mortgage of his land. When the date of repaying
the loan falls due, and after their greedy appetite is sat-
isfied by that sinful usury, they force him to sell his land
to them at whatever price they impose. The peasant
complies with this helplessly after being overburdened
by usury, which drags him to the ground and blocks the
doors of hope in his face. Whoever looks to the miserable status that the peasant reached, at a time when
he is the life and backbone of the country, would
ascertain that if this prevailed for a few [more] years,
the ownership of the Egyptian lands or of most of it
would be transferred to foreigners. Egypt’s son, God
forbids, would then be reduced to an agricultural
labourer on his and his ancestors’ own land.
[11. The Bank as a Demonstration
of the Revival of Egypt]
But there will be no more reasons [to fear] such outcome once public subscription for al-Bank al-Watani alMisri starts. The bank, God willing, will be founded shortly. This will please some souls and depress others. Those
who will be depressed are none but those whose souls
are full of hatred. They want to deceive [our] countrymen and frustrate their efforts so that they can continue to impose their excessive usury on those citizens who
need loans because they know that if al-Bank alWatani al-Misri is established, national business will be
switched to it and they will be deprived from their
excessive usury. We have seen them making unfounded claims that we are incapable of cooperating
whether to avoid harm or to realize gain, accusing us of
incompetence of establishing a national bank that
would save our country from the sufferings caused by
foreigners, [and basing these accusations] on the pretext of [alleged] ignorance, weakness, and poverty.
The nationals will cut their tongues with a sharp sword,
and they will taste this themselves, and will prove to
them that the nation which was the origin of civilization
and the educator of the world, since time immemorial,
cannot be accused of ignorance after it rose to
retrieve its previous glory and after it covered in a few
years, towards the cause of civilization, a distance
which no other nation achieved in generations. [The
nationals will prove] that the lands which endured the
inequity inflicted by the Mamluks and other warriors
and conquered all of them, and which sustained the
costs of wars and reforms undertaken by the beloved
Muhammad ‘Ali Pasha, the first Khedive of Egypt(8),
and which was not destroyed by taxes and various
excessive payments of the previous days, [that nation]
should not be accused of weakness and of poverty.
[12. The Necessity of Public Subscription]
But the responsibility of establishing our bank cannot be
the obligation of an individual or even of a few individuals of the nation. It is the obligation of all nationals to
unite and cooperate to found it, starting from the servant who [would] take one share to the rich master
who [could] participate in the thousands. This is an
advantage that would distinguish the bank from all
other banks and would guarantee its complete success, because all countrymen will endeavor for that
success and mobilize their efforts to attract people to it.
All people will, no doubt, prefer it over any other bank
because it is from them and for them: it will deal with
them in their own tongue, and will treat their business
with the same care they devote to it.
28
HITORICAL PERSPECTIVES
[13. The National Bank
and Economic Salvation]
Furthermore, the bank will benefit the country in vital
matters, and will enable countrymen to rescue many of
the country’s interests, like the Domain and Saniyya
lands (9), from foreigners’ hands. The initiation of efforts
to establish the bank coincides with the rise of the country’s enlightened people and the mobilization of most of
their efforts for this task. They have all determined that a
national bank is the only intermediary that will enable
them to accomplish their aspirations, since the existence
of a trustworthy guarantor is inevitable should those
interests be extracted from the hands of foreigners. This
can only be fulfilled by al-Bank al-Watani. Countrymen
should hurry and race with the founders in subscribing
for the bank and participating in it.
[14. The National Bank
as a Profitable Project]
We have frequently read in the national newspapers
that the country will not bear the existing unfairness, and
that it will undoubtedly rise to end it. These papers were
reflecting the aspirations of all countrymen. It is evident,
however, that we are addressing a cause of purely
material nature, in which tangible money is the only
thing that counts. If savings are not used in this way,
what would their benefit be? But the founding of the
bank will not deplete any such savings, since the bank’s
capital will be commercially employed in a profitable
manner for its owners and will generate public benefits
for the entire country, namely salvation from financial
enslavement to foreigners. Private gains become a secondary matter relative to this cause. These aspirations
are not far fetched because effort and perseverance
will guarantee the materialization of hope, and power is
in unity.
[15. The Significance
of the East India Company]
Whoever remembers that the British possessions in
India—whose border-lines circumvent half of the globe
and is among the world’s most fertile and most populated territories—were joined to the British dominions by the
efforts of a company established at the beginning of
the eighteenth century and initially capitalized at 30,000
pounds, would ascertain the validity of the argument
made in this treatise regarding the benefits of association (al-ishtirak) and will also ascertain that the power of
capital is through [employing it in] business (quwwat almal fil-a‘mal).
[16. Conclusion:
A Call to the Entire Nation]
We hope that this example suffices to incite the willpower of those who have not yet moved to serve their
country, and who ignor the power of unity. [May] it motivate everyone to support the establishment of al-Bank
al-Watani and to collaborate in founding it. There can
be no progress for the homeland without liberating the
peasant from the injustice of usurers, and there can be
no might or freedom for the state without extracting its
interests from foreigners’ hands. Both ends will not be
29
achieved except through the operations of al-Bank alWatani al-Misri. Therefore, princes, elites the wealthy
people of the country, and all those who care for her
interests, are called upon to immediately follow the
example of their good brothers who initiated the subscription, and to collaborate in establishing al-Bank alWatani al-Misri. Time is of gold, and cannot be retrieved
if it elapsed. God awards success to whoever seeks His
blessings and reward.
END NOTES:
1. A more literal, and more cumbersome, translation has
appeared as Appendix 2 in EzzelArab, European
Control. In the present translation, I am trying to give
preference to clarity of expression over literal accuracy
without distorting the meaning. Also, the original text,
annexed above, has very little punctuation. In the earlier translation, this is clearly revealed by insertions of
punctuation marks within square brackets. This is omitted
here in the interest of a less cumbersome form.
Substantial additions of words, however, are here
retained within square brackets. All aub-titles are my
own insertions.
2. Note the word “yuthmir” or “to bear fruit” and its derivatives “yustathmar” and “thamar,” which are used here
to describe the extraction of a physical outcome
(“thamar” or fruit) from economic endeavours. In our
present day usage, the word “istithmar,” which generically means the application of human effort to a given
resource for the purpose of extracting a fruit, is the term
used for “investment.”
3. The word naf‘, which I translated to “[private material] gain,” may be equivalent in our present day usage
to the term “profit.”
4. Clearly, “Inma’ al-Mal” makes a distinction here
between civil perfection and material satisfaction,
although the terms of this distinction is unclear.
5. This passage is not indented in the original text, but it
is inserted between quotation marks. The names in the
indented passage refer to Muslim jurists. I opted for an
abridged translation of Ibn ‘Abidin’s work.
6. The statement in the text is “There is a passage on
page 171 of the same volume in the chapter titled ...”
7. Again, this passage is not indented, but is inserted
between quotation marks. The names and titles in the
passage refer to Muslim jurists and writers on Islamic law.
I placed “borrower” and “lender” between square
brackets. The original text follows the convention of
using the Arabic names “Zayd” and “‘Amr” in referring
to hypothetical individuals by way of giving some example.
8. This is an obvious historical error. The title Khedive was
first given to Isma‘il (1863-1879) in 1867. Prior to this date,
Muhammad ‘Ali and his ruling descendants carried the
title of Wali (governor). The issuers of the manshur were
surely aware of this. However, they might have used
‘Khedive’ by way of showing additional respect to the
Muhammad ‘Ali family.
9. The Domain and Saniyya lands were originally royal
estates that were taken as collateral against Egypt’s
public debt in the 1870s. These estates were later sold to
private landholders and contributed to the expansion in
the property of the large.
HISTORY IN THE MAKING
Law
and
Economy in Egypt
Socio-economic Realities
of the New Parliament
Zeinab Abul-Magd, PhD Candidate, Georgetown University
“Through ‘law,’ the State…tends to create a social conformism which is useful to
the ruling group’s line of development.” Antonio Gramsci, Prison Notebooks
ovember and December
2005, witnessed violent parliamentary elections in
Egypt, which resulted in a
substantial change in the
political map of lawmakers as well as
the socio-economic structure of the
People’s Assembly. Although, the
National Democratic Party (NDP) kept
the majority of seats, 88 deputies from
the Muslim Brothers won, while the leftist
and liberal opposition managed to win
only 17 seats. The 2005 parliament
marks the emergence of new realities
that might affect the course of “economic reform” over the coming five
years, with the continuity of the domination of the NDP’s businessmen, the
existence of a considerable conservative opposition representing middle- to
upper-class professionals, and the
absence of adequate left-wing opposi tion representing the lower classes. By
and large, the history of the socio-economic structure of lawmakers reflected
the structure of the ruling elite and their
economic interests in the Egyptian state
since the parliament was first founded
in the 19th century till today. This article
attempts to trace the history of change
in this structure throughout the last century up until the present. Then, it deconstructs the new parliament to depict a
preliminary picture of the social background of lawmakers and how they
might affect the course of economic
change five years from now.
Changing Elites, Economies
and Laws
N
Egyptian Parlliment. Courtesy of
www.meib.org/ images/0308_dem.jpg
Egyptian Parlliment (closeup). Courtesy of
weekly.ahram.org.eg/ 1999/426/ec1.jpg
The Egyptian historian Ra’uf ‘Abbas
indicates, “if Egypt before the 1952 revolution was ruled by landowning bourgeois, the businessmen lobby today
dominates the party’s [NDP] structure
and the parliamentary life…they control the process of presenting projects of
new legislations and laws, previously
dominated by technocrats.”(1) Egypt
went through radical changes in its
political economy since its first parliament was constituted in 1866. It passed
through an agriculture-based liberal
economy from late nineteenth to early
twentieth century, a socialist economy
and state capitalism under Nasser in the
1960s, the open door policy under
Sadat, until it reached the era of the
structural adjustment and economic
reform from 1991 onwards. The socioeconomic structure of the parliament
reflected the state’s political alliances
and was tailored to fulfill the economic
policy adopted by the ruling elite. It has
been mainly family-based; the state coopted local big families whose economic interests met with its own. Even
the official name of the parliament
changed in a manner that is parallel to
perceived visions of its role in economic
life.
In the late 19th century, when the country’s economy was centered around
30
HISTORY
commercial
agriculture,
the
“Consultative Congress of Deputies”
was selected from elite families representing the Turko-Egyptian large landholders. Large landowners and the new
industrial bourgeois formed the majority
of the parliament deputies in the early
20th century, but they enjoyed no actual authority in legislation. Under the
socialist state, Nasser set the socio-economic order of the “Nation’s Council”
in accordance with his corporatist system, where the bureaucrats, technocrats, workers and peasants were
the main players. However, the president and executives, rather than the
parliament had the upper hand in lawmaking. The Sadat open-door policy
necessitated the incorporation of a
new elite of capital owners into the legislative body. The old elite of the socialist period allied itself with the new one
to enact laws transforming the system.
The “People’s Assembly,” from 1976 up
until the 1980s, dominated by the newly
founded National Democratic Party
(NDP), was more of a supervisory than a
legislative body, since the presidential
system made it a collaborating rather
than an autonomous institution. (2)
Businessmen emerged as a leading group
of lawmakers only in the late 1990s. They
have since capitalized on the economic
reform program to achieve personal interests that neither observe the dictates of a
market economy nor enhance economic development.
Enhancing development would have
been done through promoting competitiveness as opposed to monopolies
and expanding the job market rather
than generating unemployment. In
1991 the agreements on macroeconomic stabilization and structural
adjustment with the IMF and the World
Bank deemed the old socio-economic
structure of the Assembly unfit for the
state’s economic policy; a new elite
had to be co-opted to work on promulgating necessary legislations. Eberhard
Kenlie notes that, “a limited number of
owners of capital saw their liberties
extended and their position reinforced…it is difficult to see how the
regime could do without them and not
co-opt them in one way or another.”(3)
Consequently,
promulgated
laws
enhanced the benefits of capital owners at the expense of workers, peasants
and the middle class. For example, Law
No. 203 of 1991 that gave legal leeway
for privatization of the public sector led
to the sale of profitable state-owned
31
IN THE
MAKING
enterprises to businessmen at belowmarket prices. On the other hand, the
same law allowed laying off hundreds
of thousands of workers only to join the
unemployed(4). Similarly, Law No. 96 of
1992 librated the agricultural land rents
and led to the evacuation of around a
million peasants from their plots for the
benefit of old and new elite of large
landowners (5). The laws of privatization
and the reduction of subsidies led to a
decline in the standard of living of the
middle-classes, which is shrunk while
poverty continued to mount (6).
In 1995, 37 new businessmen joined the
Assembly. The parliament included a
total of 66 businessmen, 59 of whom
belonged to the NDP. The number of
businessmen in the 2000 parliament
increased to 71 members among
whom were 30 big businessmen. Gamal
Mubarak’s and his associated business
elite like Ahmad ‘Izz and Muhammad
Abu al-‘Ainin, appeared in the last
Assembly as main players. Heading
important legislative committees, such
as the Planning and Budget, the
Economic, and the Industrial committees, they interfered heavily to enact
laws pertaining to privatization that
served their own interests (7). Ahmad AlSayyid al-Naggar illustrates that they
imposed their vision on government
executives in drafting laws, such as
labor, mortgage, and tax laws(8). For
example, the Egyptian Unified Labor
Law No. 12 for 2003 maximizes the rights
of the enterprise owner at the expense
of the rights of the worker. It allows business owners to terminate labor contracts whenever they wish for unspecified reasons. The new Tax Law No. 91 of
2005 places all businesses that earn
more than LE 40, 000 per annum under
the same category. This allows large
businesses that make millions of pounds
annually to be subject to insignificant
tax rates and yet benefit from all industrial and commercial public services
that petty businesses and the lower
classes pay for from their small pockets.
Similarly, the new anti-trust laws did not
lay out enough regulations to end the
monopolies that already exist in certain
sectors whose owners partake in drafting the laws, such as Ahmad Izz (9). In
addition, businessmen keep the legislative agenda busy with law projects that
they would benefit from, and block
other law projects that might benefit
workers, peasants and the middle class
from being discussed (10). Laws relevant
to privatization and agricultural land
tenure were enacted in spite of the
objections of the few opposition members who represent the disadvantaged
lower classes. From the leftist opposition
parties, there were only two Nasseri
deputies and six from the Tajammu‘.
They raised fierce arguments about the
aforementioned laws, but the voice of
the NDP majority prevailed (11).
Deconstructing
the New Parliament
In the new Assembly of 2005, the list of
the NDP lawmakers consists of businessmen, government bureaucrats, and
former security and army officers. While
the NDP won 320 seats after it admitted
independents, the Muslim Brothers
(MBs) won 88 seats. The opposition parties retained a totality of only 17 seats,
including six from the Wafd, two from
the Tajammu‘, and two Nasserists but
no one from the Nasseri party. The
social background of the deputies of
each political camp is genuinely distinct: old and new elite of businessmen
and landowners belong mainly to the
NDP and the Wafd liberal party, and
they control around 50 per cent of the
“...After the recent
enactment of the
laws of taxation,
investment, and
labor has given
leeway to
businessmen to
avoid their dues to
public services
and limit the rights
of workers, more
laws related to the
programme of
economic reform
are waiting to be
issued....”
HISTORY
seats after their number in the
Assembly has doubled. Middle- and
upper class doctors, engineers and
other professionals belong to the MBs
and a few middle- to low-class
deputies belong to the left-wing opposition. No doubt that this social/political
anatomy of the new parliament will
affect the economic legislations in the
coming five years.
Outside large urban constituencies
such as those of Cairo, the criteria of
running and winning were family and
clan based – regardless of political
inclinations – for the NDP, the Muslim
Brothers, and the opposition runners
alike. Candidates of all political affiliations relied in voting on their hometowns, since they belonged to wealthy
or reputable families some of which
have kept parliamentary seats since
the late 19th century. They provided
community and charitable services in
their own villages or places of origin,
such as erecting schools and clinics or
distributing foodstuff and clothes. There
is no space for advocating any political agendas in such an environment. In
addition, instants of bribery are numerous in the case of the NDP candidates,
while some MBs candidates bought
votes through distributing charitable
items in villages and poor neighborhoods (12).
The NDP’s wealthy elite is far from being
a homogenous group. It consists of the
very traditional elite of provincial and
rural wealthy families, the conservative
old guards surviving from previous
regimes, and the new businessmen
elite affiliated with Gamal Mubarak’s
Lajnat al-Siyasat (The High Council for
Policies) in the party. The latter group
has gained enormous political power
since the late 1990s, and it is the most
assertive about liberalizing the economy. Gamal Mubarak and the business
elite affiliated to his council attempted
to construct a popular image during
the electoral campaign, but they
faced harsh failure and they ended up
irritating the public in the constituencies they visited with immature political
discourse and lead to the failure of the
candidates they meant to support (13).
Therefore, observers insist that the old
guard has regained some of their lost
power against the new business
elite(14). At any rate, old and new capitalists in this legislature managed the
vote through bribery; they spent millions to win seats and employed thugs
to intimidate and threaten voters. Their
declared agenda was designed for
their own business interests (15). The for mation of the central legislative com-
IN THE
mittees still reflect the domination of
the Lajnat al-Siyasat group, since
Ahmad Izz has been nominated once
more to head the Planning and
Budgetary
Committee
and
Muhammad Abu al-Inin is heading the
Industry and Power Committee. The old
and new elite will most probably collide, which might affect the acceleration of the course of economic reform
one way or another.
Although the current contr oversy
about significant representation of the
Muslim Brothers (MBs) in the new
Assembly shows concern about the
potential negative impact they might
leave on economic reform, the socioeconomic structure of those members
and their political discourse indicate
that their effect will probably be less
radical than imagined. The MBs bloc is
composed of middle- to upper-class
professionals such as doctors and engineers, who form the MBs prominent
members(16). Their vision of the needs
of the lower classes has a charitable
character framed by an “alms-giving”
perception of economic development. In general, their political rhetoric
pays more attention to cultural/religious issues. Matters such as confronting corrupt businessmen or
defending the rights of workers, peasants, and the middle class harmed by
new privatization laws hardly appear in
their discourse, as opposed to the issue
of application of shari‘a law and political freedom. This is evident in their performance in the last Assembly, as their
fifteen members focused their political
battles on banning books or movies
deemed violating Islamic law. In addition they argued for limiting women’s
legal rights, rejecting American grants,
prohibiting the import of meat not
slaughtered according to shari‘a from
the US and Europe, prohibiting dancing
schools, prohibiting bank interests and
similar matters (17).
The post-election political rhetoric of
the MBs leaders in 2005 is no exception
to the aforementioned general trend.
They campaign for changing the constitution, insuring that courts work in
conformity with shari‘a law, banning
alcohol and
gambling, etc¸ (18).
Furthermore, their current economic
agenda is oriented toward charity, as
apparent in their tactics of penetrating
poor neighborhoods through discount
clinics and educational centers
besides large-scale alms giving on religious occasions. For example, they ask
the rich to support the poor through
providing free health and social sup-
MAKING
“...The socioeconomic
structure of the
parliament
reflected the
state’s political
alliances and was
tailored to fulfill the
economic policy
adopted by the
ruling elite....”
port for the disabled and the unemployed (19). This agenda does not seem
to pose substantial threats to any
potential NDP plans to enact new laws
supporting the business elites’ vested
interests. In terms of the MBs campaigns against corruption, some
observers doubt such claim because
the MBs themselves followed the example of the NDP members in mobilizing
votes through bribery in some cons t i t u e n c i e s (20) .
After winning, MBs
fought for heading the education,
health, and human rights legislative
committees, but they succeeded in
heading the health committee only.
Some sources allege that the NDP will
utilize the MBs to pass new controversial
laws in economic reform using their
fatawa or religious support to appease
the public(21).
The scandalous defeat of the leftist
opposition parties, the Tajammu‘ and
the Nasseri in particular, left no serious
challenges to the NDP’s capitalists in
the Assembly. The opposition’s political
rhetoric insists that fraud was a means
deployed by the State to fail its candidates, including their leaders, while
independent observers affirm that the
defeat is attributed to entrenched
internal weaknesses in the parties. Only
two Tajammu‘ deputies, from the constituencies of Cairo and Giza, won to
32
HISTORY
IN THE
“... Outside
large urban
constituencies
such as those of
Cairo, the criteria
of running and
winning were
family and clan
based – regardless
of political
inclinations – for
the NDP, the
Muslim Brothers,
and the opposition
runners alike....”
represent the interests of workers and
peasants, and they are not even as
outspoken as their two former deputies
who lost their seats in Alexandria and
Port Said. The two leaders of the two
parties, Dia’ al Din Dawud and Khalid
Muhyi al-Din, failed to maintain their
seats, and thus serious objections to
new economic reform legislations will
substantially decline. Leftist opposition
in the previous Assemblies was weak,
but at least some politically active figures were there to question the power
of
businessmen.
As
for
now,
Muhammad Abd al-Aziz Sha‘ban, one
of the two Tajammu‘ deputies, stated
that the role of the secular opposition
will be more active in interrogating the
ministers and monitoring the government policy rather than playing a role
in drafting laws (22). As for the agenda
of the Wafd liberal party, it raises issues
of corruption and political development, but it does not go far in criticizing
the economic reform program compared to the leftist parties. Its deputies
do not genuinely represent the social
classes that are negatively affected by
the new laws of market economy. The
head of the Wafd representatives, Dr.
Mahmud Abaza, is an upper-class pro-
33
MAKING
fessional who relied in winning his seat
on the traditional power of his family of
large landholders in Lower Egypt. The
agenda
of
another
Wafdist,
Muhammad Shurdi from the Port Said
constituency, focuses on the rights of
merchants in the free trade zone in the
port(23).
After the recent enactment of the laws
of taxation, investment, and labour has
given leeway to businessmen to avoid
their dues to public services and limit
the rights of workers, more laws related
to the programme of economic reform
are waiting to be issued. For example,
new regulations with regard to privatization, restructuring the pension and
insurance schemes, and reforming the
financial sector are expected to
appear. If elite businessmen continue
to be the only powerful group dominating economic affairs in the
Assembly, while the leftist opposition is
considerably weak and the middle- or
upper class MBs are chanting with a
charitable vision of development, the
new parliament will continue enacting
laws serving the elite businessmen at
the expense of other segments of the
Egyptian society. Biased and unbalanced regulations should severely disrupt the course of economic development in an already underdeveloped
country. They have evidently led to
lowering growth rates, increasing the
budget deficit, and raising unemployment and poverty rates. The socio-economic structure of the new Assembly
demonstrates that no radical change is
likely to take place in the short term, as
the new deputies’ agendas pay little or
no attention to issues such as job creation, labor migration, or agricultural
land tenure. In such a political climate,
economic development seems far
from being an attainable goal.
END NOTES:
1. Al-‘Arabi, 4 April 2004.
2. See: Al-Sayyid Yasin (et. al.), Al-Ittijahat alJadida fi Majlis al-Sha‘b (Cairo : Markaz alDirasat al-Siyasiyya wa-al-Istratijiyya, 1976),
pp. 14-21; Noha El-Mikawy, “The Egyptian
Parliament and Transition to Liberal
Democracy,” American Arab Affairs, no. 36
(Spring 1991), pp. 19-21.
3. Eber hard Kienle, A Grand Delusion:
Democracy and Economic Reform in Egypt
(London: I.B.Tauris, 2001), p. 130.
4. See: Nahid ‘Izz al-Din ‘Abd al-Fattah, Al‘Ummal wa-Rijal al-A‘mal: Tahawwulat alFuras al-Siyasiyya fi Misr (Cairo: Markaz alDirasat al-Siyasiyya wa-al-Istratijiyya, 2003).
5. See: The Land Center for Human Rights
Peasants’ Report, Cairo, October 2004.
6. C.f: Dina Shehata and Manal Lutfi, “AlTabaqa
al-Wusta
wa-al-Dawla
fi
Misr,”Ahwal Misriyya, No.1, Summer 1998;
Muhammad al-Sayyid Sa‘id, “Ahwal alTabaqa al-Wusta,” Ahwal Misriyya, No.1,
Summer 1998.
7. Kienle, A Grand Delusion, p.59; Haytham
Jabr, “Rijal al-A‘mal wa-al-Siyasa fi Misr,”
Ahwal Misriyya, No.21, Summer 2003,
pp.134-135; ‘Amr Hashim Rabi‘, “Rijal alA‘mal wa-Tashri‘at al-Khaskhasa,” Qadaya
Barlamaniyya, No.40, July 2000. pp.6-11. For
more details about Mubarak the son’s political coalition of businessmen see: Mohamed
Menza, “Gamal Mubarak and Egypt’s NeoBusiness Community,” Chronicles, vol.1,
no.2, pp. 33-36.
8. Al-Ahali, 21 September 2005.
9.For details and other examples see:
Ahmad al-Sayyid Al-Naggar (ed.), Taqrir alIttijahat al-Iqtisadiyya, 2005 (Cairo: Markaz
al-Dirasat al-Siyasiyya wa-al-Istratijiyya,
2005), pp. 309-315, The Land Center For
Human Rights’ biannual reports on workers.
10. The Land Center for Human Rights
Workers’ Report, Cairo, October 2003.
11. ‘Rabi‘, “Rijal al-A‘mal,” pp.6-11.
12. C.f. The Land Center for Human Rights’
Election Monitoring Reports,
November/December 2005.
13. Ibid; Al-Arabi, 11 December 2005; Sawt
al-’Umma, 12 December 2005.
14. William Wallis, “A Problem Putting
Promise into Practice” Financial Times, 6
December 2005.
15. Al-Ahram Weekly, 8 December 2005; AlAhali, 2 November 2005.
16. Afaq ‘Arabiyya, 15 December 2005.
17. http://www.ikhwanonline.com/Article.
asp?ID=14787&SectionID=496; Al-Ahram, 9
December 2005.
18. The Daily Star Egypt, 9 December 2005.
19. Al-Hayat, 13 December 2005.
20. C.f. The Land Center for Human Rights’
Election Monitoring Reports,
November/December 2005.
21. Al-Ahali, 7 December 2005; Nahdat Misr,
11 December 2005.
22. Al-Masri al-Yawm, 12 December 2005.
23. Nahdat Misr, 19 Decmeber 2005.
HISTORY
IN THE
MAKING
Skirmishes
in The War for Drugs
A Report on
"Egyptian Pharmaceuticals
& TRIPs" Seminar
Mostafa Hefny, Project Officer, EBHRC.
T
he devil really is in the details.
The big picture is one of dramatic opposition. In the popular imagination, the battle
line is cruel and stark. On one side is a
corporate-governmental alliance, on
the other are two billion people in the
developing world without consistent
access to vital medication - more often
represented, if at all, by nongovernmental organization rather their own
governments. Those governments have
been reintegrated into a world economic system whose rules have been
laid and are enforced by the ravenous
alliance. In offices far above the population the system summons an arsenal
of legal chains and mantraps that are
finally distilled into that most odious of
documents: The Patent.
This representation maybe lacking in
nuance, but not irony. If the enforcement of the new world economic system has been cruel in its insistence on
the dismantling of social welfare systems in the countries of the south in
favor of unbridled market capitalism,
the maneuverings of this battle have
reduced representatives of the poor to
begging for the mercy of the market.
Along with a parallel, and not entirely
separate, North-South confr ontation
over agricultural subsidies in Europe and
the United States, the representatives of
the poor seem to be clinging to rules
laid out by the industrialized world – only
for them to change their minds and
demand a welfare program for a group
of multinational pharmaceutical companies who oversee a 450 billion dollar
industry that is the world's most profitable business.
On those terms the battle quickly
becomes apocalyptic. The representatives of the poor, be they the nongovernmental organizations or the
occasional government, can only
escape the repercussions of this
arrangement by dismantling the patent
system – the very paste that holds the
whole apparatus together. If, as the
multinational pharmaceutical companies continue to argue, patents are
necessary for the development of vital
medicines, then the only situation drugs
maybe made accessible to the poor is
one where there are no drugs to begin
with. For those concerned with the welfare of the populations of the south –
not to mention the local pharmaceutical industries under increasing pressure
to halt production of generic versions of
patented drugs – the task is one of rev-
olution, not tactical adaptation. If this
big picture is really an accurate depiction than clearly the whole debate currently underway is little more than nuisance to the multinational companies
whose victory has been declared by
this narrative – which has been ostensibly one of protest.
The fact of the matter is the confrontation continues. But if the big picture scenario leads to a dead end, a closer
consideration of the tributaries of this
conflict my yield a fresh narrative
stream. One such tributary is Egypt
where, as of the 1st of January of 2005,
the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights
(TRIPs) came into effect. The signs of
substantive repercussions of the
enforcement of the agreement on the
pharmaceutical sector became evident in the press early in the year with
consumers and then pharmacists inundating the press with complaints that
price of medicine had suddenly skyrocketed – including those required for
the treatment of chronic diseases. As
noteworthy of the number of complaints was the avenue. Indeed the
business daily, Al-Alam Al-Yawm-- normally a staunch supporter of every step
towards capitalist integration--privati-
34
HISTORY IN
zation undertaken by the Prime Minister
Ahmad Nazif's government, published
a number of these grievances. The frequency of commentary on the subject
was such that it was indicative of
important, and perhaps permanent,
changes in Egyptian pharmaceuticals.
The nature of the changes then
became the subject of a seminar on
"Egyptian Pharmaceuticals & TRIPs,"
organized on the 19th of September
2005 by the Economic and Business
History Research Center as the first in its
new “History in the Making” seminar
sessions.
The speakers, sought to represent differing points of view, were, first, Mr.
Ahmed El-Hakim the "Regional External
Affairs and Policy Director" of Pfizer. The
company, a global behemoth, is the
largest pharmaceutical multinational in
Egypt with LE 300 million in investments
and ambitious plans to expand. Mr. ElHakim was quoted in the press prior to
the session explaining his company's
intentions of increasing the size of its
investments in Egypt to LE 700 million
over the next few years and further
build on its 7 % share in the fragmented
Egyptian market, which is currently
worth 1.3 billion dollars annually. Also
present was Mr. Hossam Bahgat, the
director of the Egyptian Initiative for
Personal Rights (EIPR), an NGO whose
pioneering Health and Human Rights
program had recently published a policy paper
entitled “The
TRIPS
Agreement and Egypt’s Responsibility
to Protect the Right to Health”.
Concluding the list of speakers was Dr.
Mohamed Raouf Hamed a noted professor of pharmacology at the National
Organization for Drug Control and
Research and frequent commentator
on the sector. Dr. Hamed had recently
completed a booklet in which he
offered an analysis of what he identified as a crisis in Egyptian pharmaceuticals.
The case for the multinationals began
in economic terms. Respect for intellectual property rights as represented
by the TRIPs agreement is one of the
vital components of creating a healthy
business environment, argued ElHakim. Egypt, he asserted, needs 8 – 10
billion dollars annually in order to create between 700 thousand and 800
thousand jobs a year, a figure unattainable except by foreign investment
such as that carried out by Pfizer Corp.
Such investments, whether in infrastructure or in the development of new
drugs, is contingent on the protection
of intellectual property rights.
35
THE
MAKING
Reverting to a prepared presentation,
El-Hakim gave an overview of the medical leaps made by humanity in the
course of the 20th century. Citing the
elimination of diseases such as Polio
and Small Pox as global health threats,
he lauded the initiative of private
enterprise as the engine behind this
unambiguous progress in decreased
death rates around the world. Indeed,
he attributed 90 % of all new medicines
to private enterprise, a process composed of three demarcated steps: discovery, synthesis and formulation. The
first of these steps, discovery, is the most
important – dependent as it is on
investments in research and development. El- Hakim then described four
stages in the bringing of a new drug to
the market, which are completed
upon a positive answer to the following
four questions:
1- Will the proposed drug address an
unmet medical need?
2- Is it possible to produce the proposed drug in a laboratory?
3- Is it possible to conduct clinical
trials on patients?
4- Is there a sufficient return on
investment?
The world's base of biomedical
knowledge expands through the
investment of either government-funded research initiative in national health
institutes and universities or the independent research of private corporations such as that which El-Hakim represents. The mapping of the human
genome has exponentially increased
the possibilities of discovering new
medicines but has, in turn, increased
the costs of research and any resultant
discoveries. The process begins with a
consideration of more than 7 million
molecules and all the possible permutations and linkages with other compounds and genes and is narrowed
down, 12 to 15 years and "on average"
800 million dollars later, to one or two
compounds. It is a process whose primary feature is failure and elimination
of compounds whose potential has
gone unfulfilled despite large investments. Even when a drug successfully
navigates the obstacle course to the
market, a significant risk remains with
people’s reception of the drug. There
will always be a percentage of drugs
that, despite clinical trials and regulatory approval, must be recalled – with
the attendant cost of such a recall,
which must be absorbed entirely by the
pharmaceutical company.
It is these investments and the arduous-
ness of the development of the final
product – including years of clinical trials – that have been taken into
account by authorities in their formulation of legal protections in the form of
patents. The world has developed an
incentive system to encourage this
process and help alleviate the aforementioned impediments – the incentive system has been the protection of
undisclosed trade secrets with patents.
For Egypt, El- Hakim highlighted several
important dates in the protection of
intellectual property rights – the government's joining of the WTO in 1994.
Egypt exercised its right to a five year
"grace period" until 2000 when it was
obliged to protect undisclosed "trade
secrets". A further five year grace period was granted up to the year 2005
when complete protection was mandated by TRIPs. El- Hakim stressed that it
is only with complete compliance with
the protections of intellectual property
rights that companies such as Pfizer
may move some of their development
activities to Egypt, and added that
such compliance is already stipulated
in Egyptian Law 82 of 2002 and is not
only enforced by the new obligations
under TRIPs. This, he argued, would help
alleviate Egypt comparatively poor
exports of pharmaceuticals, which in
2004 amounted to a mere 41 million
dollars compared 261 million dollars for
neighboring Jordan. Ahmed El-Hakim
concluded his remarks by expressing
confidence in the government of
Ahmad Nazif and its willingness to
implement its obligations as mandated
in the agreement. But it was this very
government that
“... the system
summons an
arsenal of legal
chians [..] that are
finally distilled into
the most odious
document; The
Patent....”
HISTORY IN THE MAKING
was addressed, in a more critical light,
by Hossam Bahgat of the Egyptian
Initiative of Personal Rights (EIPR),
whose robust counterargument was,
surprisingly, centered on a call to
Egyptian authorities to implement the
TRIPs agreement as written!Bahgat
demarcated the divergence in bases
and goals of his organization and a
company such as Pfizer on the matter
of public health and intellectual property. Intellectual property rights had
never been targeted as an area of
study or advocacy by EIPR – but as an
organization concerned with the law
and the legal framework surrounding
issues of health and human rights it
became imperative to engage the
laws through which the state is required
to protect its citizenry's health – or to
put is more accurately, the citizenry's
right to health. International law does
not mandate state protection of citizens against contacting disease, but
their access to health care in the case
of ailment. For his part, Bahgat also provided four criteria with which the state's
obligation to uphold the "right to
health" is judged. In sum, the criteria
are legal test for the existence of this
right:
1- The quality of products and service
provided
2- The acceptability of the products
and service to the patients
3- The availability of the products and
service to patients
4- The accessibility of products and
services to patients. This in turn maybe
split into two types of accessibility:
access to information regarding the
product and service (in this case the
drug) and physical access to the drug
itself.
Regarding intellectual property rights
and the pharmaceutical industry, it is
the third and fourth criteria that are of
paramount importance. Availability
and accessibility are considered in
terms of whether there is discrimination
between the rural and urban population and between rich and poor. The
key determinant to the satisfaction of
both of these criteria is the question of
affordability. Hence, in considering the
question of intellectual property it is to
this concern that an organization such
as EIPR must turn. For EIPR, the concer n
with intellectual property is narrowed
to the question of whether its application results in medicine becoming
unavailable or otherwise out of reach
of those who need it. In the balance
are other concerns such as employment and return on investment, which
figures announced by El-Hakim with figures of his own, referring to the evident
case of HIV AIDS medication which
had cost 10, 000 dollars to meet the
annual needs of a single patient, a figure that has fallen dramatically to a
mere 200 dollars when chemically
identical generics became available.
The point here is not only the price discrepancy, but that this discrepancy
exists with regards to an unsubstitutable
life saving drug. Hence, in considering
intellectual property rights, Bahgat
asserted, an abstract argument cannot stand aloof of a reality whence
there are creditor nations and debtors
– where a third of the world's population is without access to basic medication. This reality includes other figures:
14 million people die yearly of infectious diseases – of those, 9 out of 10 live
in developing countries.
The cover of Raouf Hamed’s publication
The Structure and Legal Underpinnings of the
Egyptian Pharmacuetical Sector in the
Context and International Trade Agreements:
A Strategic Vision
are the avenue of those who represent
other interests, such as Mr. El- Hakim.
Those concerns must always be
weighed against the availability and
accessibility of drugs. This, explained
Bahgat, represents a significantly different approach to the question of intellectual property rights and their impact
on Egyptian pharmaceuticals.
The theory outlined by El-Hakim and
other representatives of multinational
firms is a form of contract between
those who discover a drug and the
public. The former agree to grant
access by the public to the drug in
return for remuneration over and
above that which they would have
received had they not been in possession of a patent. That is the theory and
accounts for the historical development of intellectual property leading
up to the TRIPs agreement, which,
Bahgat added, is essentially an organizing mechanism for this process in the
form a commercial contract.
In the real world no argument can be
made against the assertion that
patents raise the price of drugs. An
inquiry about the degree to which that
price elevation affects the availability
and accessibility of vital medication
must then be made. The unique characteristic of medicine as a product –
insofar as its consumption is seldom a
manner of qualitative choice but of
urgent need – must be made clear.
Bahgat offered to counter some of the
Bahgat proceeded to supply more figures. The first was a demonstration of
the portion of national budgets spent
on medication, which in the developed world is never more than 20 %,
whereas the figure is often as high as 66
% in the developing world. Moreover
the portion of that spending borne by
the population, rather than a state
funded welfare system, is between 50
to 90% in the developing world. The figures are inclusive of Egypt but not
exclusive to it. The problem is one of
North and South, and it is significant
that none of the great multinationals
that today control the global pharmaceutical industry are located in the
developing world.
The weight of these figures then makes
striking the balance between the private interests of the drug companies
and the public interest manifest in the
right to health all the more important.
Such a balance was struck, in Bahgat's
view, in the Doha declaration of 2001
in which the WTO recognized the danger posed by the TRIPs agreement to
public health. From that declaration,
Bahgat offered the following quote:
"The TRIPs agreement does not, and
should not, prevent member countries
[from] undertaking measure to protect
public health". Indeed, the TRIPs agreement provides sufficient flexibilities for
member states to intervene when a
drug is unavailable or inaccessible to a
portion of its population – even when
that inaccessibility is due to expensive
prices of drugs under patent- by providing "compulsory licenses" to domestic producers to manufacture generic
version of expensive drugs still under
patent protection.
36
HISTORY
IN THE
The flexibilities, stressed Bahgat, are not
limited to medical emergencies – but
to a broadly defined "public health
concern". Yet, these flexibilities as soon
as they were asserted in Doha came
under severe attack from another
organization, the World Intellectual
Property Organization (WIPO), a specialized United Nations agency separate from the WTO. This organization
introduced Substantive Patent Law
Treaty (SPLT), a proposed international
patent law treaty in which the room for
maneuver available for the governments of the developing world is greatly reduced. Still the SPLT is not the most
immediate danger to public health in
the developing world, but rather the
Free Trade Agreements currently
sought by the United States and a number of countries of the South, Egypt
among them. A component of this
agreement will be legislation on data
exclusivity – the data to which El-Hakim
had referred to as "undisclosed trade
secrets". This, argued Bahgat, would be
a deathblow to the production of
generic medicine. Under data exclusivity measures and attendant exclusive
marketing rights, domestic produces in
the developing world would not be
allowed to assert the clinical safety and
efficacy of generic versions of out-ofpatent products unless they conduct
their own clinical trials similar in scope
to those originally conducted by the
multinational. They will not be allowed
to cite the original drug's approval by
regulatory bodies to produce a generic version. Hence even after the patent
protection is removed the production
of a generic version, given the costs of
clinical trials and testing, will become
economically unfeasible in the developing world. These measures are now
part of a “TRIPs Plus” package included
in all proposed bilateral Free Trade
Agreements. They do not only point to
the medically unethical practice of
conducting test on human subjects
even when the results had already
been established many years earlier
but amount, in practical terms, to a
patent for drugs whose patents had
already lapsed.
Finally, Bahgat cast doubt of the oftmade assertion that patent protection
is vital for the funding of multinational's
research and development – an assertion he described as a "lazy argument".
The African market, which accounts for
little more than 1 % of the global market, would not significantly affect profit
margins of multinationals that spend
37
MAKING
more on marketing than on research
and development. Moreover, evidence from organizations such as
"Doctors Without Borders" suggests that
the criteria of return on investments is
the primary mover behind the allocation of resources of such companies.
This organization's "Working Group on
Neglected Diseases" concluded that
the most common diseases to the
African continent receive little or no
attention from global pharmaceutical
industry given the low purchasing
power of its population.
Ahmad El-Hakim denied the existence
of TRIPs Plus provisions. He was not,
however, aided in his defense by
Professor Mohamed Raouf Hamed of
National Organization for Drug Control
and Research who, citing his own studies and others, challenged the costs
multinationals claim to bear in the
development of new drugs. The figure
suggested by Hamed is indeed a little
less than 10 % of the figure announced
by multinationals i.e. around 70 million
dollars rather than the 800 million stated by El-Hakim. He pointed to the role
of combinatorial chemistry (the synthesis of molecules in a combinatorial fashion can quickly lead to large numbers
of molecules) in exponentially increasing the amount of possible compounds
from which new drugs are developed –
the result is an overstated number of
new compounds to which a firm lays
claim. The exaggerated claims of the
technical difficulty in the development
of new drugs and the inflated costs
declared by dominant multinationals is
part of an organized effort to construct
a psychological barrier to potential
competition from smaller firms in the
South. Yet, as critical as he was of companies such Pfizer, and their claims,
Hamed also criticized the vision – or
lack thereof – on the part of local
“... The frequency
of commentary on
the subject [of
TRIPS] was such that
it was indicative of
important changes
in Egyptian
pharmaceuticals...”
industry. Egyptian pharmaceuticals are
a conservative sector still imbued with
the 1960s mentality of import substitution, which, appropriate then, is out of
sync with the requirements of an era of
exposure. The very nature of the industry mandates that the approach be
progressive, that it aim to generate the
greatest possible value added or otherwise fade to oblivion. Hamed likened
the Egyptian pharmaceutical industry
to a lone King piece of chess board,
continuously being checked by a vast ly superior force, moving from one
square to the next hoping only for the
most ephemeral stay of execution. In
2000, Hamed was summoned by members of the National Academy for
Scientific Research to advise its members on their negotiations of intellectual
property rights with several foreign parties. Hamed conditioned his participation on the Egyptian side presenting an
alternative plan to ignite the domestic
pharmaceutical sector. When this
demand was disr egarded, Hamed
declined to participate – concluding
then, and now, that Egyptian pharmaceuticals are in a state of "strategic
retardation".
Hamed's damning judgment of local
industry brings to fore some of the
unexamined elements of this narrative.
In considering the state of uncertainty
to which Egyptian phar maceuticals
and the masses that depend on them
have sunk in 2005, perhaps a more traditional consideration of the development of this industry in Egypt is now in
order. One could perhaps account for
the odd pensiveness of local drug
companies – and the vagueness of the
position of some of the larger firms. A
follow up to this seminar must include a
representative of local industry. It is
noteworthy that much of the protest
against the implementation of the TRIPs
agreement and the prospective TRIPs
Plus provisions has come from the
Pharmacists' Syndicate and patients
rather than local firms. This anomaly is
likely to lead us back to the political
economy of Egypt – and the accelerated frenzy with which businessmen,
who now hold all of key ministerial posts
in government, have veined the executive and legislative apparatus. It may
well be the case that the local pharmaceutical industry is part of the portfolio of the very same interests who ar e
now pushing to topple the last remaining chess piece. That is the big picture.
Let us now consider the details.
HISTORY
IN THE
MAKING
Chinese
Boom
The
Real Estate
Lee Nunley, Economics major, University of Colorado.
ne of the hottest trends in
real estate investment
today has become the
Chinese urban market.
There are manifold reasons
for this shift in investment but as with
most booms, this one is motivated by
one factor: money. With cities like
Shanghai becoming some of the most
expensive real estate markets in the
world it is not surprising that foreign and
domestic investment is high and that
new high-rises are springing up all over
urban China.
O
This real estate boom may be
good news for the Chinese economy,
but it does raise many questions for the
developmental economist. With the
prices of houses rising in cities, can ordinary Chinese citizens still afford to live in
urban centers? Furthermore what sort
of implications does this real estate
boom have for those living in rural
areas? Will the Chinese economy
become more dichotomous with soaring real estate prices? What role do
foreign investors and businesses play in
this real estate expansion? Where does
all of the money for the development
of these areas go? Essentially, what is
the effect of this boom on ordinary citi zens? And, just as important for the financier lying dormant inside every
developmental economist as for the
developmental economist himself, is
this boom a bubble?
To answer the preceding questions it is necessary to delve into many
periphery aspects of the Chinese
economy. Also, since this boom is still
being played out it is important to look
at the economies of other states that
have undergone similar changes in
output, that is to say some of the NICs
(Newly Industrialized Countries). Let’s
begin with a brief history of real estate
and the market in China.
“... Of New Fortune
Magazine’s list of
the 500 richest
Chinese citizens,
94 of them are in
the real estate
business...”
A Recent History
of Real Estate in China
Though it is now possible for
people to own their own homes in
China (or at least practically own them
through long term land leases that
allow tenancy on land which is all
owned by the state), such was not
always the case. Private ownership of
homes in both rural and urban China
was legal until the Cultural Revolution
during the late 1960’s.
After the
Cultural Revolution, a split developed
between the rural and urban real
estate markets and forms of ownership.
In the rural areas, private ownership
continued as the normal means of land
tenancy. The cities switched to two
other paradigms of tenancy, neither
were private ownership. One was
employer-provided housing, which is
pretty self-explanatory - a person’s
employer owned their housing and in
return the employee paid a small rent,
which was hugely subsidized by his or
her employer. According to Yanrui Wu
in China’s Consumer Revolution, this
method was extraordinarily inefficient
because of issues involving labor mobility, retired workers and the subsidies
paid for housing employees (1). The
other provider of urban housing was
the government, which “it is estimated
provided about 15 to 20 percent of
urban housing.”
In the urban centers in China, a series
of developments in housing reforms
took place starting in the late 1980’s
when China was shifting to a more
market based economy. Most of these
reforms were aimed at changing from
employer and state provided housing
market to an individually owned private property market.
By the mid 1990’s, most of
China’s housing in the urban market
had been converted to private property, with some of it going to employees
where employers formerly provided
housing and some of it being sold to
the public by the state. What these
market reforms led to was a booming
real estate market. The boom was
augmented by the substantial lack of
appropriate housing demanded by the
Chinese; especially after the market
system took over and helped to
38
HISTORY
IN THE
increase the income of urban Chinese
citizens. In fact, “the average living
space per capita in urban China
increased from 3.6 to 7.1 square meters
during the period 1978-92. This figure
has increased to 8.5 in 1996.” (2). Such
a large change over a period of just 18
years is significant enough to imply that
a boom must have occurred After all, a
three-fold increase in the amount of
housing real estate is indicative of significant growth in construction. Rural
housing, which was consistently privately owned throughout the 20th century, continued developing while urban
housing stagnated due to inefficient
distribution.
In 1996 the average
amount of housing in rural China was
21.7 square meters per capita, three
times the per capita housing in urban
China in 1996 (3).
The reasons for this discrepancy are not very well documented in the
literature on development but one of
the major components is the value of
space in rural versus domestic situations. Since urban space is limited,
thusly more expensive (in terms of
opportunity cost since the state owned
all the land), it was more effective to
build smaller dwellings, which in the
context of the free market China with
higher incomes, were less appealing
for citizens. So part of the housing
boom is a result of the lag in housing
size and quality that was borne of the
inefficiencies of the Communist
regime’s housing policies in urban
China. Also private owners in rural
areas had incentives to increase home
sizes whereas renters in urban areas did
not, given that in the long run any
investment they made would not be
returned.
Commercial real estate was
also underdeveloped up until the early
1990’s, “non-residential buildings in
urban areas have accounted for more
than a half of the total floor space of
buildings completed during 19851996.” (4) This growth is indicative of an
increased business sector in need of
office space, which makes sense given
the privatization of industries during the
conversion to a market-based system
in the early 90’s, when the government
privatized 60% of industry throughout
the country. The trend of office building has however diminished somewhat
in the last 10 years. “The share of nonresidential buildings over the total floor
space completed by the urban nonstate sector in 1995 was less than 50
percent for the first time. This declining
39
MAKING
trend is to continue in the future partly
because of the government’s desire to
develop residential housing. As the
office and luxury apartment market
becomes more crowded, the residential housing sector will gradually
become the dominant player in the
Chinese real estate market. ”(5) Wu’s
prediction may have just recently started coming true.
Other Trends Contributing
to the Housing Boom
Besides housing reform, other
trends in China’s economy have
helped to create the current real
estate boom that is prevalent in
Chinese cities. Key to the real estate
boom has been the inexpensive mortgage rates kept low by high savings
rates in China (45% of income by some
estimates). Of course, without the
increase in income for the Chinese citi zenry the high savings rates that have
helped fuel this boom wouldn’t be possible, and for the income to have
increased so much the economy had
to grow at an extraordinary rate.
Currently, the Chinese economy’s GDP
is growing at a rate of around 8% per
year, a rate similar to that of South
Korea and other NICs during their rapid
development in the early 1990’s (6). This
has helped push the average per capita income up over 16% in just the last 10
years. Much of this income has been
saved in banks, which has helped to
lower the semi-free-floating inter est
rate to about 5%, near the stated goal
of the People’s Bank of China (PBC).
This low interest rate has allowed many
Chinese to purchase their own homes.
In some urban areas home ownership is
around 60% for newly developed commercial housing (7).
Domestic migration from rural
to urban centers has also spurred an
increase in the demand for urban housing. It is estimated that by 2020 up to
220 million rural Chinese will move to
towns and cities (8).
Foreign direct investment (FDI)
is also having a serious impact on the
Chinese real estate market. With the
prices of urban apartments jumping by
as much as 40% per year for some luxury units, it’s no surprise that foreign busi nesses and individuals are investing billions of Yuan into the housing markets
of major urban centers like Shanghai.
In fact some 15% of all money invested
in the Chinese real estate market is FDI.
Some cities, like red-hot Shanghai have
even higher FDI versus total investment
ratios, in Shanghai, 23.2% of money in
the real estate market is FDI, up from
8.3% in 2003 (9).
With all of these factors and
the possibilities opened up through
housing reform it is easy to see how the
Chinese real estate market has gone
from non-existent only 20 years ago, to
the newest trend in international real
estate investment. But the more important question, the one about how this
recent growth in the real estate sector
has affected the Chinese people is
more difficult to answer with historical
evidence and data.
The Current Boom
Margaret Pearson put it best at
the beginning of her book China’s New
Business Elite when she wrote, “The
transition from planned to market
economy that was initiated in China in
the late 1970s unleashed one of the
most rapid economic transformations
ever to have occurred, with changes
that have spilled over into the social
and political realms.”
The implications of China’s
explosive GDP growth and the accompanying changes that
resound
throughout the Chinese economy are
generally viewed in a good light by
economists, investors, the PRC government and the people of China. And
growth rates that are as immensely
high as those that have been produced in China for the last 10 years are
certainly
reason
to
celebrate.
Especially for those who have made
fortunes off the expansion - particularly the real estate boom.
“... By the mid
1990’s, most of
China’s housing in
the urban market
had been
converted to
private property...”
HISTORY
Of New Fortune Magazine’s list of the
500 richest Chinese citizens, 94 of them
are in the real estate business(10). At the
same time, “Some researches speculate that [the true profit margin] could
be 20% to 30%, or even higher,” per
property for real estate developers. For
those invested in the real estate market
there was more good news, “China’s
property prices rose by 12.5% [in 2004]
…. Among its major cities, Shanghai's
prices grew the fastest, by 19.9%. (11)”
Indeed, there are a plethora of business opportunities for the entrepreneur
in China, and the fact that real estate
is the second biggest market in China
today, behind manufacturing, doesn’t
seem to be stopping many investors
from entering the fray. But for a substantial number of ordinary Chinese
workers it is impossible to even consider
purchasing the luxury apartments that
make up much of the gains in the market.
The BBC News Online recently
covered the story of Song Yu and his
wife, a prime example of the Chinese
who are being priced out of the real
estate market amid the boom and
investments.
“Song Yu, a physician in a
Shanghai hospital, and his
wife are looking to buy their
first home. Song Yu earns
$1000 (£582) a month, which
is more than 10 times the
average Chinese salary.
Nevertheless, he's had difficulty finding an affordable
property in the city. ‘Five
years ago we looked at buying a terraced house for
3,000 Yuan ($371; £216) per
square meter but the deal
fell through,’ he says. ‘Now
that same house costs four
times the price, so we are
now looking at apartments
instead.’” (12)
Similar sentiments are being echoed
throughout the country as millions of
Chinese experience the hope of owning their own homes being taken
beyond their reach.
Stories like that of Song Yu are
the unfortunate consequences of real
estate booms all over the world, but in
a developing state where the per capita income is $5,600 at purchasing
power parity (PPP), it’s hard to believe
how expensive real estate has
become (13).
The new Tomson Riviera towers, which are by no means the standard of residential properties in
Shanghai, nevertheless, do represent a
startling new trend in China.
The
Tomson
Riviera apartments are
extremely expensive even by the standards of developed countries like Japan.
At the Tomson Riviera, apartments are
priced at around $13,564 per square
meter. That means that the smallest
apartment available (and the cheapest)
at the Tomson Riviera is approximately $5
million. At the upper end, prices top out
at $25 million. These are prices in a country where most people earn less than
$1,000 a month(14).
Disparity is quickly becoming
the
burgeoning
topic
of
the
Communist party’s concerns on development. Switching to a market based
system has enabled the accumulation
of vast amounts of wealth by Chinese
capitalists during the economic boom
that China has been experiencing .This
contrasts starkly with the development
of urban unemployment and poverty,
and most of all, with the lack of development in rural areas.
Economic Disparity
The economic disparity in
China, while still not as significant as in
many less developed countries (LDCs),
is growing rapidly. This has forced
China’s Ministry of Finance to issue
statements regarding the tribulations
that the Chinese economy faces during the process of expansion and
development. An excerpt from one of
these statements published in the
People’s Daily follows:
Five major problems in
China’s Income Distribution
1. A ceaseless widening of the
gap in income distribution
and the aggravated division
of the rich and the poor
This mainly manifests in the following ways: First, the difference of the population
income in general is getting
wider and wider from year to
year as indicated in the Gini
Index, which has already
exceeded the standard line
as internationally acknowledged. The index rate has
seen an increase of 1.62 times
within a span of 10 years with
that for 1991 indicating 0.282,
IN THE
MAKING
in 1998 0.456, in 1999 0.457
while the year of 2000 an index
rate of 0.458.
Second, incessant widening of
the
income
differences
between the urban and rural
population. 1990 saw an
income proportion of 1: 2.2
between the urban and rural
population; 1995 a rate of 1:
2.71 and 2000 1: 2.79 while the
year of 2001 it rose to a proportion of 1: 2.9;
Third, the income differences
are expanding from region to
region. In 2000, the average
population income in China's
east was 2.26 times that of the
west and it saw a three times
difference between the highest and the lowest. (15)
The Chinese government is fully aware
of the problems that introducing a market-based economy has created for
China. What are also notable are the
steps the government has taken
towards reducing disparity, mostly in
the form of policy implementations.
Regarding urban/rural disparities the Chinese government has taken
steps to reduce the amount of money
invested in real estate, which represents a large percentage of all gains
made by the urban populations over
the rural ones. Those policies are also
meant to keep the Chinese economy
from overheating and to prevent a
bubble from forming in the Chinese
real estate market - one that many
economists fear that this bubble
already exists. Policies are also going
to be a tough way of making up the
large difference between urban and
rural populations in terms of income.
Another article from the People’s Daily
about the discrepancy between urban
and rural workers had this to say about
the year 2004:
According to gover nment
statistics, the per capita disposable income of urban
residents stood at 9,422 Yuan
(1,338 US dollars) and the net
income of farmers per capita reached 2,936 Yuan (355
US dollars), an annual
increase of 7.7 percent and
6.8 percent, respectively, in
real terms. (16)
40
HISTORY
While official statistics show that the
rural segment of the population’s
income is increasing at a rate only one
percent less than that of the urban
population’s, there is a significant gap
to be made up which the government
will be hard pressed to do without
implementing policies that would likely
have disparate effects on the GDP
growth created by urban sectors.
Currently, Beijing’s social economic
policy, aimed at increasing the income
of farmers in rural China who represent
about two-thirds of the population, is
restricted to reduced or abolished
taxes on rural farmers and workers. This
policy is having an effect, “Per capita
disposable income of urban residents
and the per capita net income of rural
residents in China are expected to
increase by about 6 percent and 5 percent respectively in real terms this year
[2005]”(17). To eliminate the disparity in
income and wealth however, it would
take more radical policies including
wage redistribution which, as stated
above, would have disastrous effects
on the Chinese economy. Already the
PBC is instituting policies with negative
effects on the urban middle class
because of fears of a housing bubble.
Recently the PBC told banks they could
require a 30% down payment to grant
a loan, up from 20%, an amount meant
to help urban residents purchase their
own homes.
Urban disparity in wealth is
increasing too and it is proving harder
for the government to target and alleviate . The Ministry of Finance report on
income discrepancy had this information:
2.Concentration of amassed
wealth is more and more
increasing with the difference
of family fortunes tending to
become bigger and bigger
The latest statistics indicates
that the 10 percent of wealthy
families accounted for 45 percent of the total properties of
the urban population. That of
the 10 percent families with the
lowest income only came to
1.4 percent of the total properties and the rest 80 percent of
the population own 53.6 percent of the total family properties.
In the meantime, the financial
property of the urban population tends to concentrate
41
IN THE
MAKING
among those families with
higher incomes. The families of
20 percent of population owning the most financial properties accounted for some 66.4
percent of the total financial
properties of the urban population while the lowest 20 percent owning only an average
of some 1.3 percent of financial properties.
This goes back to Wu’s prediction in
1999 that after the commercial and luxury apartment markets were developed, the mid range-housing sector
would dominate. Indicators of Wu’s
trend are starting to be realized by the
Chinese real estate market though
there is debate on whether or not the
current cooling of the market is just a
slow down or the beginning of a shift in
the structure of the market.
The Gini Index shows 0.51 for
family properties among the
city dwellers at present in
China, an index indicating a
much higher than 0.32 the
average income of urban
population. (18)
Increases in disparity of wealth or property in cities is probably caused in large
part by the huge increases in property
prices in cities during the past 15 years.
Furthermore the government officially
ended its welfare housing program in
1998 While there is still housing for the
poor, the era of state-subsidized housing for those working in the government, public-institutions and nationalized industries has ended (19). Similar
moves by private employers have led
to an increase in the number of people
seeking housing and some of these
people have become rental tenants.
Increases in the number of people renting has contributed to the disparity in
wealth in cities and towns because the
landowning class tends to be dominated by a small wealthy group The existence of this group in China is confirmed by the excerpt from the
People’s Daily. Since the price of housing has increased so markedly in recent
years more money has been flowing
from the hands of renters to the hands
of landlords. Meanwhile the properties
owned by landlords have been steadi ly appreciating, thus contributing further to their wealth.
Concurrently,
many Chinese are being priced out of
the real estate market and therein shut
out of some of the gains being made in
real estate.
There is a secondary problem
of supply not matching demand in
many cities as well, which has
increased the price of middle and
lower range residences. The reason for
this is that much of the housing boom
has been oriented towards the luxury
apartment market, while a shortage of
housing for lower income groups,
including segments of the middle and
upper middle class, has developed.
The China Towers. Courtesy of
www.pilotguides.com/.../ c_china_towers.jpg
Prospects for the Future
The New York Times recently
ran an article that drove home the size
and scope of the Chinese real estate
boom. In “China Builds its Dreams, and
Some Fear a Bubble,” David Barboza
detailed the true extent of the boom in
a manner that makes it more
approachable on a human level, if
that’s really possible:
“This year alone, Shanghai will complete towers with more space for living
and working than there is in all the office
buildings in New York City. That is in a
city that already has 4,000 skyscrapers,
almost double the number in New York.
And there are designs to build 1,000
more by the end of this decade.”
The sheer size of this real estate boom in
terms of pricing and development is
truly unprecedented, that’s why it’s so
difficult to determine whether this is really a boom or a bubble. It’s also hard to
tell where all the money from this development will end up. Certainly much of
it is in the hands of the wealthy Chinese
investors and entrepreneurs who got
into the market early, but will they
spend this money in the Chinese economy or will it make its way abroad and
HISTORY
IN THE
nineties. The silver lining for China however is that it has both the experience
of the NICs to study, and a tighter control on speculation and investment.
The question is whether or not the
Chinese government has done what is
necessary to prevent the formation of
a bubble.
reinforce dualism and the underdevelopment of China? That question is the
one that haunts the Chinese government, in part because some theorists
believe that the current Chinese
regime will not be able to maintain
power if the newly formed dreams of
industrialization and the modernization
of China are unreachable for the
majority of the population. After all, it is
difficult to justify a Communist state
(China actually bills itself as a socialist
free market state) where there is an
increasing disparity in terms of wealth
between a small urban elite and everyone else.
What Now
For Chinese Real Estate?
A major concern among
economists and investors are the similarities between China and NICs like
South Korea and Japan. Writing on
“Shanghai’s Cautious Property Buyers”,
James Cotton had this to say in the
Asian Journal of Public Adminstration
back in 1999:
“Meanwhile in Japan, the
erstwhile power-house of the
regional
economy,
the
investment of surplus funds in
real estate had become an
engrained habit, a habit
which was copied especially
in Korea during the real
estate boom of the 1980s.
While it was recognized that
real estate was not generally
a productive asset, years of
inflating real estate values
led investors and banks to
assume that it would always
yield a generous return. This
assumption was transferred
to investments in Asia. This
system
unraveled
when
doubts emerged that the
loans advanced would be
repaid.” (20)
There are already murmurs about the
amount of money that banks have
loaned to real estate developers.
“Housing loans, including those to
property developers, stood at 2.6 trillion
Yuan (US$310 billion; euro250 billion) at
the end of 2004, accounting for about
15 percent of all Yuan-denominated
loans” (21) and “Currently, commercial
bank loans account for more than 55%
of all funds raised in real estate development(22).” With so much money
invested in the housing market real
estate investors can barely afford a setback. And the less well off would be
hurt
by
a
bubble
bursting.
Unfortunately for
MAKING
The Shanghi Towers. Courtesy of mishuna.
image.pbase.com/ 34/pnd1/large/313112...
them, there are indicators that the current boom will end just in this way, a
bubble bursting, a crash. . According
to the BBC, housing prices in Shanghai
are down by 10 to 15 percent, and in
some luxury buildings prices are down
by as much as 30%. Moreover, and
perhaps more salient is the fact that
“sales volumes are down by 70%”(23).
According to some, this decrease is just
the government’s new policy, aimed
at preventing a bubble by raising some
taxes associated with property investment rather than long term home purchases and increasing the interest on
mortgages, but others believe that this
is the sign of the end of China’s real
estate housing boom because of an
outstripping of demand. The concern
is that a situation like that in South
Korea and Japan in the early nineties
will develop and it will cause a major
recession, akin to the Asian financial
crisis in the late nineties. Here again
there is apprehension that a lack of
demand will lead to an excess of
vacant properties, which in turn will
result in a lot of unpaid loans- exactly
what a rapidly developing state with a
dependence on FDI does not want.
Unfortunately for China, there are
many similarities between its current situation and what the NICs experienced
in terms of financial problems and over
investment in real estate during the late
China will continue to be a
major powerhouse in the world econo my so long as other countries, particularly the US, continue to consume its
goods at an unprecedented rate. But
domestically China still has many issues
to deal with particularly the disparity of
wealth that is gaining momentum.
With that in mind it’s important for the
Chinese government and central bank
to keep a watch out for an impending
real estate bubble. If the current trends
continue however, the market should
realign with the demands of the majority, i.e. the middle class and lower class
“... A major concern among economists and investors
are the similarities
between China and
NICs like South
Korea and Japan.
Writing on
“Shanghai’s
Cautious Property
Buyers”, James
Cotton had this to
say in the Asian
Journal of Public
Adminstration back
in 1999...”
42
HISTORY IN
THE
MAKING
“... At the Tomson
Riviera, apartments
are priced at
around $13,564 per
square meter. That
means that the
smallest apartment
available (and the
cheapest) at the
Tomson Riviera is
approximately $5
million. At the
upper end, prices
top out at
$25 million...”
Chinese consumers, particularly as the
demand for luxury apartments falls and
the return on smaller homes becomes r
elatively higher. So long as a loan crisis
is avoided it seems unlikely that the
housing boom will result in any longterm negative effects for the urban
Chinese. For the time being however,
they will have to suffer through the high
price of real estate, but the free market
should eventually correct this and create housing in line with people’s
income. Important in the short term is
whether or not this increase in housing
price has eroded the standard of living
of the middle class Chinese consumer.
There is little information available on
this subject, but it is true that inflation
has been stable at just about 5% and it
doesn’t seem to be hurting the economy. For rural residents of China, the
housing boom may be more of a harbinger of an increased economic disparity to come. As income in China
increases, it is likely that urban housing
prices will continue to increase disproportionately to rural housing prices,
augmenting inflation and wealth in
urban China relative to rural China.
43
The question is whether or not this will
create “two Chinas” one rich and one
poor, or if it is a sufferable problem that
will present itself in any developed
economy with a large agricultural sector. After all, there is a dichotomy of
wealth even in the rural versus urban
United States.
In terms of a boom, it doesn’t
look like China is going to have a
severe bubble on its hands, mostly
because of policy implementation
aimed at preventing one. It does however look like overheated markets, like
Shanghai, are going to stagnate for a
long while to come.
One last thing about the
Tomson Riviera apartments, as of midNovember they had not sold a single
unit. It looks like the endless success of
the boom has finally come to an end.
ENDNOTES:
1. Wu, Yanuri, “China’s Consumer
Revolution,” Cheltenham, Uk: Edwards
Elgar Publishing 1999.
2. Ibid
3. Ibid
4. Ibid
5. Ibid
6. People’s Daily online (17/5/2004)
7. Wu, Yanuri, “China’s Consumer
Revolution,” Cheltenham, Uk: Edwards
Elgar Publishing 1999.
8. People’s Daily online (17/5/2004)
9. Edge Malasia (26/10/2005)
10. Ibid
11. Ibid
12. “Shanghai’s Cautious property Buyers.”
BBC News Online (16/11/2005)
13. CIA World Fact Book Online
14. See: “Shanghai’s Cautious property
Buyers,” BBC News Online (16/11/2005) and
Wen,
Xue,
“Foreign
Investors
Eye
Commercial Properties.” Shanghai Daily
Online (18/10/2005)
15. “Five Major problems in China’s Income
Distribution,” People’s Daily (19/6/2003)
16. “ China Expecting Rising Income for
Citizens, Report,” People’s Daily (7/3/2005)
17. Ibid
18. Ibid
19. “Preventing a Bubble in China’s Real
Estate ” The Edge Malaysia, (17/10/2005).
20. Cotton, James, “The Effects of the
Financial Crises in the Mature Asian NICs:
Enterprise Association and its Modifications.”
Asian Journal of Public Administration, Vol. ,
No. 1. June 1999.
21. “China Tightens Lending Rules to Slow
Boom,” Associated Press (17/3/2005)
22. “Preventing a Bubble in China’s Real
Estate ” The Edge Malaysia, (17/10/2005).
23. “Shanghai’s Cautious property Buyers,”
BBC News Online (16/11/2005)
IN THE PIPELINE
Egypt’s Trade Unions:
Reason for Hope
or for Hopelessness?
*
Jano Charbel, Freelance Journalist
gypt has witnessed
the
liberalization
of
certain
aspects
of
civil society over the
year 2005 which has, in
effect, widened the nar row margins of civil and
political freedoms. In
most cases these freedoms were seized and
reclaimed by activists.
Public gatherings, street
demonstrations, and the
monitoring of presidential and parliamentary
elections by NGOs and
the judges’ club are all
novel phenomena that
have surfaced throughout the year.
E
Nasser’s corporatist military regime which traded unions’ rights to
organize in return for job
security,
impr oved
wages and working
conditions – a new
authoritarian-populist
social contract was thus
established.
This new social contract
served in subjecting the
grassroots nature of
Egypt’s trade union
movement to state control and in setting the
guidelines for future
manipulation for the
next
half
century.
Having resisted trade
unions’ /attempts to
Facing the odds: workers contemplate the future at the outset of union
federate and confeder elections. Photo by Sherif Sonbol, courtesy of weekly.ahram.org.eg.
ate their organizations,
Egypt’s trade union
the military regime finalmovement, however,
has not directly benefited from this sequence of the events of 1952 and ly agreed to the establishment of the
wave of civil and political freedoms. The have applied since then, notwithstand- Egyptian Workers’ Federation (EWF) in
liberalization of civil society has not ing the recent emergence of move- 1957 (2) following the purge of all oppo translated into the liberalization of the ments such as Workers for Change (an sition forces from the ranks. Nasser had
trade union movement which remains intellectual-led labor activist movement been won over to the argument that
fettered to the state’s restrictive, inter- and one of several offshoots from the “one hierarchical union structure is less
ventionist, and manipulative legislation. Egyptian Movement for Change or of a threat than many small ones since it
Egypt’s trade unions continue to be Kifaya/Enough) and Railway Workers for is easier for the government to keep
dominated by the state and by the Change (a movement organized and undesirable elements out of a single
confederation, and since a handful of
National Democratic Party’s agents in led by railroad workers).
leaders is easier to manipulate than
the gover nment-controlled Egyptian
Trade Union Federation (ETUF), which is Civil society fell victim to the 1952 mili- many”(3). Since 1957, Egypt’s trade
the only trade union confederation tary coup, and has stagnated for over unions have been contained within the
allowed for by law(1). All unions must fifty years under emergency law. confines of a single top-down oriented
affiliate to the ETUF, and cannot organ- Political parties, NGOs, professional syn- power structure. In 1961, ETUF was
ize themselves independently outside dicates, and trade unions all lost their founded as the successor to EWF, and
the framework of the ETUF hierarchy. independence. In the case of trade inherited the same centralized organiThese restrictions came about as a con- unions, the freedom to independently zational hierarchy.
organize their affairs was smothered by
44
IN THE PIPELINE
“... ETUF is not a
federation of trade
unions, but rather a
pyramid-shaped
hierarchy by which
the NDP-controlled
leadership at the
pinnacle of the
pyramid manipulates the base and
keeps it in-check
according to the
guidelines and
policies of the
ruling party...”
Today, the nationwide hierarchy of
unions is based on a three-tiered pyramid-shaped structure composed of
approximately 1,900 local unions at the
base, with twenty-three general
unions/federations in the middle, and a
confederation council at the summit of
the structure. The ETUF has total of
about four million members (most of
whom are employed in the public sector).
45
and appointments. Workers at the
base of the hierarchy may only vote for
their own local union council; beyond
this level they have no say (4).
Egypt’s legislation on trade unions contradicts with its obligations according
to international treaties which the state
willingly signed and ratified. Many of
the provisions of Egypt’s labor laws and
trade union legislation are in direct vio lation of the ILO conventions including
those concerning the Right of
Association
&
Combination
of
Agricultural Workers (5), Freedom of
Association & Protection of the Right to
Organize,
the Application of the
Principles of the Right to Organize (6) &
to Bargain Collectively (7), Protection &
Facilities to be Afforded to Workers’
Representatives in the Undertaking(8),
and Tripartite Consultations to Promote
the Implementation of Inter national
Labor Standards(9). Egypt’s legislation is
also in direct breach of article 8 of the
International Covenant on Economic,
Social and Cultural Rights (10), and of
article 22 of the International Covenant
on Civil and Political Rights (11).
Egypt’s domestic legislation also
restricts the freedom of association,
notwithstanding the responsibilities to
which it committed. For example,
according to Trade Union Act 35/1976,
workers may not organize unions, federations, or confederations outside the
realm of the official ETUF structure.
Furthermore, other regulations stipulate
that a minimum of fifty employees are
required in order to establish a local
union council. This prohibits many workers, in the private and informal sectors,
from the ability to organize (12).
Labor affairs expert, Rahma Refaat, of
the Helwan-based Center for Trade
Unions’ & Workers’ Services, argues
“ETUF is not a federation of trade
unions, but rather a pyramid-shaped
hierarchy by which the NDP-controlled
leadership at the pinnacle of the pyramid manipulates the base and keeps it
in-check according to the guidelines
and policies of the ruling party.”
The right to strike, although it is allowed
under articles 192-201 of Unified Labor
Code 12/2003, is practically impossible
to exercise. To begin with, a total of
fourteen out of twenty-three general
unions and their constituent local
unions which are engaged in strategic
and vital enterprises (including bakeries, public transport, public utilities,
and pharmacies, amongst a host of
others) are forbidden from striking
under any circumstances.
The provisions of Trade Union Act
35/1976 and 12/1995, together with
those of Labor Law 137/1981 and
Unified Labor Law 12/2003, govern the
powers and functions of the unions.
Article 37 of Trade Union Act 35/1976
stipulates that federation and confederation councils are to be chosen
through a series of indirect elections
Those unions falling under the nine
remaining general unions which are
allowed to strike may do so only if the
respective general union authorizes a
strike by a two-thirds majority of the
general union council. According to
Kamal Abbas, the director of the
Center for Trade Unions’ & Workers’
Services, “not a single strike has ever
been authorized by any of the general
unions; and the provisions of the law
guarantee that no future strikes will
ever be authorized by the NDP-dominated general unions.”
Despite the ban on unendorsed strikes,
a large number of “wildcat strikes” – viz.
those
unauthorized by general
unions/federations – occur each year.
The most notable in 2005, were the
ESCO Textile workers’ strike (13), the air
traffic controllers’ strike (14), the metro
workers’ strike (15), and the Torah
Cement workers’ strike (16).
Other forms of workers’ protests, apart
from strikes, included the Alexandria
Port workers’ sit-in protest (17) and the
Ura-Misr Asbestos workers’ protest(18).
According to the statistics of the
Center for Trade Unions’ & Workers’
Services, nearly 100 other cases of
strikes and workers’ protest have
occurred throughout 2005 (19).
There were other acts of defiance by
workers and unionists who have
attempted to organize themselves as
independently as possible from the
ETUF structure. Redda Arabi, a
spokesman for the Railway Workers for
Change claims, “we established our
movement in July (2005) following
Prime
Minister
Ahmad
Nazif’s
announcements regarding plans to privatize certain sectors of the railways.
We know that the unrepresentative
and unresponsive Railway Workers’
Federation shall not assist us if privatization becomes a future reality.” Arabi
added “The Federation and the ETUF
are merely a façade for an organized
gang which seeks only its personal benefit; this dysfunctional system responds
only to the requests of the NDP and its
affiliated businessmen. It neither sees
nor hears us.”
“... not a single
strike has ever
been authorized by
any of the general
unions...”
IN THE PIPELINE
Throughout the month of May 2005(20)
the “Workers for Change” movement
raised demands regarding the right to
establish a new trade union federation
independent of state interference and
free from the Labor Ministry’s intrusions.
The then Minister of Labor, Ahmad el
Amawi, and the President of the ETUF,
al-Sayyed Rashid, however, openly
rejected this demand on the basis that
it would divide the national trade union
movement.
Rahma Refaat, is of the opinion that “a
small number of independent unions
may be more valuable than a large
number of unions which are organizationally paralyzed. Compare the few
autonomous unions that existed prior to
1952 with the many ineffective unions
of today. “The number of unions is not
an indicator of their quality.” Refaat
added that “the establishment of
unions that are organizationally independent of the ETUF and/or the creation of a new autonomous union confederation are currently unlikely, however. There are no political parties
demanding union independence, and
unionized workers are usually too
caught up in the grind of their labor to
strategize for the creation of new federations. Thus, there is virtually no pressure being applied on the state to alter
the status quo, nor are there even
demands for parliament to draft new
trade union legislation in place of
35/1976.”
What then is the forecast for Egypt’s
unions? Currently, with privatizations
and early retirement programs in effect
since the 1990s, the booming private
and informal sectors of the economy
employ about 75% of Egypt’s workforce while public sector’s share has
shrunk to nearly 25%. However, nearly
75% of the existing trade unions are
those organized in the public sector.
Khaled Ali, a lawyer with the Hisham
Mubarak Law Center, claims that the
current dynamics of Egypt’s trade
union movement are leading towards
a situation where “there are unions
without workers” in the upper echelons
of the ETUF structure by virtue of privatizing the public sector, and “workers
without unions” in the private sector.
In a surprise result al-Sayyed Rashid,
president of the ETUF and of the Textile
Workers’ Federation, and a labor MP
since 1990, lost his bid for a seat in the
2005-2010 Parliament. The recently
concluded parliamentary elections
produced a number of unforeseen
results (21). Similarly the 2006-2011 trade
union elections (22) may also hold a
number of unexpected surprises (23).
“... one hierarchical
union structure is
less of a threat than
many small ones
since it is easier for
the government to
keep undesirable
elements out
of a single
confederation, and
since a handful of
leaders is easier to
manipulate than
many...”
END NOTES:
* The contents of this article are based primarily on the findings contained in Jano
Theodore
Charbel,Trade
Unions
&
Professional Syndicates of Contemporary
Egypt: Regulations, Rights and Violations
(The American University in Cairo,
Department of Political Sciences: MA Thesis,
February, 2005)
1. Specifically by Trade Union Act 35/1976
2. The Egyptian Workers’ Federation was
founded one year following the establishment of the International Confederation of
Arab Trade Unions in 1956 which was headquartered in Cairo until 1978 – the new
ICATU
headquarters
are
based
in
Damascus, Syria.
3. Posusney, Marsha Pripstein: Labor and the
State in Egypt: Workers, Unions, and
Economic Reconstruction, (New York:
Columbia University Press, 1997) p. 67
4. In contrast to professional syndicates’
elections in which members are able to vote
for their regional syndicate councils as well
as for their general syndicate council.
5. (ILO Convention No.11 - Ratified by Egypt
as of 07/03/54)
6. (ILO Convention No. 87 - Ratified by
Egypt as of 11/06/57)
7. (ILO Convention No. 98 - Ratified by Egypt
as of 07/03/54)
8. (ILO Convention No. 135 - Ratified by
Egypt as of 03/25/82)
9. (ILO Convention No. 144 - Ratified by
Egypt as of 03/25/82)
10. (Egypt’s signature of the ICESCR:
08/04/67; Ratification: 01/14/82)
11. (Egypt’s signature of the Signature:
08/04/67; Ratification: 01/14/82)
12. This requirement may be considered prohibitive in comparison, for example, to the
situation in the UK and in a number of
Commonwealth states where the old provision allowing any seven persons to form a
union is still in force. World Labor Report
(Geneva: International Labor Office, 1985)
p. 11
13. Lasting from March – August 2005, and
involving 400 workers protesting the privatization of their factory
14. May 2005 – involving 150 controllers in
Cairo International Airport demanding pay
raises; the strike wave spread to other airports including Hurghada
15. November 24, 2005 – involving hundreds
of metro workers demanding the release of
an imprisoned co-worker
16. Ongoing since December 13, 2005 –
involving 2,000 cement workers demanding
a more equitable share in profits
17. October 23 - 25, 2005 – involving over
3,000 workers demanding their annual Eid
bonus which had been cancelled
18. September 2004 – September 2005
–involving fifty-two workers protesting
against unpaid wages, the loss of three coworkers to cancer and asbestosis, and
numerous maladies amongst the remaining
workers.
19. Strikes, protests, and other cases of workers’ unrest are usually not covered by the
official Egyptian media – whether TV, radio,
or printed media. If covered, they are usually condemned.
20. The demands for the establishment of a
new independent trade union federation
were first raised at a demonstration in front
of the Journalists’ Syndicate on May 7, 2005.
Most of those raising the demands were
intellectuals, professionals, and labor
activists – only a minority of those present
were actually blue-collar workers.
21. Including the victories of eighty-eight
Moslem Brotherhood candidates
22. Due to be held in October-November
2006; the Minister of the Labor Force is to
determine the exact dates of the elections.
23. Historically the Moslem Brotherhood has
not been a significant force within the trade
union
movement
–
although
the
Brotherhood is certainly a major force within
the realm of professional syndicates. It may
be far too early to speculate about the
results of the upcoming union elections.
46
BUSINESS
NOT AS
USUAL
Traditional
Crafts
an untraditional source of income
Karim El-Sayed, Young Scholar, EBHRC
“The life of my family now hangs by the thread I embroider”
– Ramba Behn, Dastkar Society for Crafts, Rural India.
ith the abolition of
most state-sponsored
development projects
in the less economically
developed
countries, the burden to satisfy the
needs of the world poor and marginalized came to rest on the shoulders of
the
civil
society
organizations.
Development agencies and volunteer
organizations faced the challenge of
filling the gap between the demands
of an ever-increasing population in the
developing world for employment and
social services and the shrinking efforts
provided by their governments.
W
Those governments’ concessions to
the World Bank’s incessant demands
for reform and restructuring meant
that the meager budgets presently
allocated for subsidized education
and health services are insufficient.
Increases in the cost of delivering
those services often mean that the
quality of the services provided constantly declines not to mention that
the number of people benefiting from
those public plans falls due to budget
limitations. More importantly, the dismantling of the ambitious public sector
cost many people their sole source of
income. Private investors strive to find
47
creative means to turn uneconomical
public enterprises that they acquired
through government-sponsored privatizations into profitable ventures, but
the most common recommendation
made by global consultancy firms is to
cut down on unnecessary costs and to
lay off staff employees. This means that
hundreds of thousands of able-bodied
employees lose their livelihoods; those
are also joined each year by files of
fresh graduates whose education
does not qualify them for a position in
the capital-intensive business environment.
While some of the civil society and
non-governmental organizations that
evolved in the developing world
attempt to fill the void created by the
government’s withdrawal by providing
subsidized health services and basic
education programs, an increasing
number of NGO’s have turned
towards income generating activities
as a more sustainable solution to that
problem. The direct link between
income growth and development is
debatable in development discourse;
nonetheless, many people still share
the viewpoint that the vast inequality
in income distribution is the crux of the
development question. In addition,
they argue that many of the problems
plaguing the vast majority of the world
population, like illiteracy, poor access
to health services, unemployment,
even racial unrest, are mere manifestations of that reality. Income generating activities, therefore, become a key
element in triggering the development
process and ensuring the empowerment of marginalized communities.
Professor Muhammad Yunus, “the
inventor of micro-credit”, developed
an income-generation framework that
comprised “giving tiny loans … to the
poorest of the poor in rural Bangladesh
without any collateral” to assist entrepreneurs who could not qualify for traditional bank loans to start their own
projects. This system, which is now
known as the Grameen Bank model,
has
five
million
borrowers
in
Bangladesh alone, and Professor
Yunus has helped export his model to
dozens of other developing countries.
The Social Fund for Development in
Egypt, which operates under the
direct supervision of the Prime Minister
and under the umbrella of the United
Nations Development Programme
(UNDP), works closely with NGO’s to
finance small and very small enterprises and projects adopting the
Grameen Bank model.
BUSINESS NOT AS USUAL
“... While some of
the civil society
and non-governmental organizations that evolved
in the developing
world attempt to fill
the void created by
the government’s
withdrawal by providing subsidized
health services and
basic education
programs, an
increasing number
of NGO’s have
turned towards
income generating
activities as a more
sustainable solution
to that problem ...”
Today, micro-credit borrowers venture
into almost every conceivable business
sector, even software development and
telecommunication enterprises. The
majority of the micro-credit entrepreneurs, however, continue to favor the
traditional sectors for their projects. This
can be attributed to the fact that the
early beneficiaries lived in rural areas
where the micro-credit system was first
introduced, but it could also be
because there was a trend to document and preserve traditional crafts at
the time the Grameen Bank experiment
began. The two schemes were soon
married. One of the projects that exem plify how income-generation activities
were closely linked to traditional crafts
“Fair Trade Egypt aims to empower local communities by offering disadvantaged arti sans marketing and support services” (Courtesy of Fair Trade Egypt Online).
was the “Craft as a window to job
opportunities for the poorest youth”
project championed by the UNESCO
under their ten-year plan for the
Development of the Crafts in the World
(1990-1999). This project sponsored
young craft workers, especially women,
to receive formal training “to enhance
their skills in producing and marketing
traditional crafts” with the objective of
“using creativity to alleviate poverty …
[and] to enable the youth to generate
their own income”. Grameen Uddog is
another example; this initiative combines the micro-credit system of the
Grameen Bank with an objective to preserve handloom techniques of producing textiles and rugs. Rural communities
have traditionally used their craft skills to
supplement their incomes, especially
during times of lean harvests. Traditional
crafts do not require expensive investments in capital goods or infrastructure
and can be produced using material
from the environment and skills that are
passed through the generations.
The early 1990s witnessed the infiltration
of the consumerist culture into almost
every corner of the world; with the fall of
state-capitalist regimes in Eastern
Europe and Asia and the spread of television broadcasting and advertising to
the remotest villages. Mass-scale production quickly replaced utility items
that were made by local artisans for
daily use. In Egypt, this process started a
little bit earlier. The relaxation of the
trade laws in the late 1970s allowed for
the introduction of foreign luxury goods
and western taste. More importantly,
the seasonal migration of large numbers
of Egyptian workers and farmers to the
Gulf countries strongly influenced the
taste of the Egyptian village, and detrimentally affected the livelihood of
many artisans. Those who had not
adopted the western taste could not
fight the temptation of the superior
quality of the machine-made utensils
and factory-produced linens and textiles making local crafts a thing of the
past. The philosophy of Fair Trade Egypt
attempts to counter that trend. Fair
Trade is a concept in trading practice
that was conceived in the Netherlands
50 years ago and represents an alternative trade movement which attempts to
empower local artisans from the developing world “[by ensuring] that at the
very least 25 to 30 percent of the net
profits go back to the artisans themselves”. Fair Trade Egypt, a non-profit
organization, is the local chapter
among more than 200 members worldwide all working under the auspices of
International Fair Trade Association
(IFAT.) It proclaims “[their] goal is to assist
the talented but struggling Egyptian artisans, who have been particularly hardhit by massive industrialization and globalization … by safeguarding techniques
and products that were on the brink of
extinction because of their mass-produced counterparts”.
The last decade has witnessed the evolution of other agents who have been
active in preserving local crafts, without
so much of the “non-profit” dimension.
Nagada presents itself as “a company
for design and crafts”.
48
BUSINESS
“... the designers,
also in an effort to
appeal to the
consumers’ taste,
have intervened in
the indigenous
creative designing
process and have
introduced their
own new motifs to
the textiles...”
The business venture, which gets its
name from a small village on the east
bank of the Nile between Qena and
Luxor, has a showroom in Dokki, and is
involved in “textiles, fashion, soft furnishings and pottery”. Michel Pastore, a
Swiss artist, was sponsored by the
Canadian government in 1991 to study
the feasibility of developing the textile
and weaving practices of the artisans
of Nagada, which have been constant
for over a thousand years. The
Canadian project lasted for only one
year. Pastore, however, partnered with
Sylva Nasrallah, a Lebanese fashion
designer, and formed a company
under the same name of the
Canadian-sponsored project. They
work on improving the quality of the finished goods and the production techniques to be more attractive to the
consumers. Unfortunately, however, the
designers, also in an effort to appeal to
the consumers’ taste, have intervened
in the indigenous creative designing
process and have introduced their own
new motifs to the textiles.
Dastkar (one who works with his hands:
artisan or craftsperson in the Hindustani
language) is the name of a registered
society that “aims at improving the
economic status of craftspeople thereby promoting the survival of the traditional crafts”. Six women founded the
society in 1981, and today it has fullfledged craft development activities all
over India. As the name of the society
suggests, and as they often assert, the
emphasis of their activities is on the artisan and not the craft. They admit that
49
NOT AS
USUAL
production for home consumption,
which used to be the only outlet for traditional crafts, is quite different from
commercial sale. Therefore, they
emphasize that “traditional craft skills,
however beautiful, needs sensitive
adaptation, proper quality control, correct sizing and accurate costing”.
When it comes to the creative process
of design, however, they remain quite
adamant about preserving the freedom of the artisan. They question the
problematic role of “the designer” and
even that of “the client”. Whose taste
should the final product express? That
of the consumer “who wants an exciting product at the most competitive
price” or the artisans “who need a market for [their] product as similar to the
traditional one as possible, so it does
not need constant alien design inventions, or conflict with the traditional
social, aesthetic and cultural roots it
has sprung from”. Significant efforts also
go towards the documentation of not
only the production process but also
the traditional design process and the
developments introduced. They are
building an archive of photographic
design and product reference with
actual samples of the traditional products.
More importantly, Dastkar does not
have any qualms about being involved
in “a commercial activity like marketing” in order to assist the artisans in infiltrating the market. Their stance on positioning or marketing the traditional
products, however, remains quite
steadfast. Since they operate with the
mindset that traditional artisans produced utility goods that could compete with mass-produced goods in
terms of quality, prices and functionality, they strongly oppose the idea that
“craft should be purely decorative”
and they find “the current much-used
terms ‘exclusive’ and ‘ethnic’” as misleading and inappropriate. In order for
the traditional crafts to survive and
maintain a sustainable track of development, the motivation should be to
deliver those goods to a much bigger
consumer base than just the tourists or
the urban elite who find them “exotic”.
This, unfortunately, is not the approach
used by Egyptian agents. An article in
the 16th of November 2005 issue of ilMasri il-Yum, entitled “il-Khiyamiyya: an
Egyptian creation only the foreigners
respect”, does more than just tell the
well-known story about the art form
that came to rely solely on tourists; but
it also shows how much that mindset
has influenced the development strategies. Asala is an NGO concerned with
the preservation of traditional and contemporary art forms, and through a
grant from the Agha Khan Foundation,
they designed a project for the training
of 80 young artisans. Mr. Seif il-Rashidi,
Executive Director of the training project, pointed out that the primary
objective of the NGO is to target a specific segment by marketing the products abroad and in tourist bazaars.
Similarly, the December 2005 issue of
Cairo Agenda, a monthly publication
addressed primarily to the expatriate
community in Egypt, chose Siwa
Creations as their pick of the month. A
shop in Zamalek that “gives you the
opportunity to buy a variety of exquisitely embroidered textiles and finely
crafted jewellery locally made and
internationally desired”. The business
venture employs Italian fashion designer Ermanno Scervino who designed the
collection of jewellery, clothes and bed
furnishings. The designer “commissioned workshops in Siwa to perform
the intricate embroidery for his new collections” which are marketed in international fashion magazines around the
world. The pictures of runway models,
accompanying the article, fail to
prompt any connections with Siwa.
We can save the purely intellectual
debate about cultural imperialism, the
exploitation of native cultures for monetary profits, and the negative effects
of the commercialization of those
native cultures on the identity of the
people themselves for another forum.
But on a more grounded note, it is very
unclear how much of the profits actually go back to the artisans themselves
with the popularity of Fair Trade projects which market themselves by the
uniqueness of the traditional crafts.
RESEARCH IDEAS
The
Laws of
Competition
The Debut of Antitrust Legislation in Egypt;
A Proposal for a Comparative Study
Dina Waked, LLM candidate, Harvard University
fter more than a decade
of debate, Egypt passed
its first antitrust law on 15
February 2005. As of the
16th of May 2005, the law
has come into force. Policy makers
argue that this law should take Egypt to
a new regulatory era where competition is protected and superiority in the
market is the outcome of commercial
and technical creativity, and not the
result of anti-competitive conduct or
structure. Many economists, lawyers,
and perhaps the entire business community were wondering when this longawaited, overdue law would finally
pass. Most developing countries by the
mid-1990s had adopted antitrust laws
and Egypt continued to lag behind.
However, it is important to note that
protection of competition was not
absent from the Egyptian legal domain
since various provisions in the civil and
criminal code deal with the antimonopoly in one way or the other –
this, importantly, was never under the
auspices of an antitrust umbrella.
A
The new legislation has been intensely
debated, both in support and condemnation, while it was still a draft law
and after it became adopted by parliament as law. Fuelling the debate is a
growing understanding that antitrust
law is a cornerstone in any economy
whose administrators wish to guarantee the efficient allocation of resources
and its operation within the boundaries
“... Egypt has been
anticipating the
antitrust law for
almost a decade
and a lot of debate
has surrounded the
issue of whether the
law will actually
promote or discourage investment...”
of Pareto efficiency. The most intriguing
characteristic of antitrust law is that an
economy can regulate the direction of
its market within the extremes of laissezfaire with minimal government intervention on the one hand, and in
planned economies with state involvement in the form of dosages of antitrust
applications on the other. The argument hence is that antitrust legislation is
the backbone of any legal order
designed to regulate a market and
assure an effective welfare system
where market failures are prevented.
In order to assess the implementation
of antitrust law in any country, one must
consider the implementation of the law
as the foundational determinant of the
way it will impact on an economy. In
order to investigate the implantation
mechanism one must look towards the
competition agency/authority responsible for implementing the law. Here is
where the newly passed antitrust law is
most intriguing, hence the focus on the
Egyptian Competition Authority-- hereinafter called “Authority”--that is created as the regulatory body supervising
the implementation of the law and its
procedural enforcement mechanism.
Article (8) of the Law no. (3) Ofof 2005
for Protection of Competition and
Prevention of Monopolistic Practices
establishes the competition agency as
“a public corporate body. […] [that]
shall report to the appropriate minister
who shall [in this case] be the primeminister.” The agency, which shall play
a pivotal role in regulating markets and
enforcing law, needs to be independent and impartial in order to be able to
undertake such regulatory functions.
However, there are doubts concerning
its true independence from the state
given the fact that it is a public body
that reports directly to the Prime
Minister, who in turn appoints its own
board of directors,(Article 8) Moreover,
it could represent an inherent flaw in
the regulatory structure proposed by
the law. However this specific relation
50
RESEARCH IDEAS
with the executive branch is implied in
the Egyptian constitution, which
requires any body to be politically
responsible in front of Parliament. In its
turn, the Parliament requires that a
member of the government (i.e. the
Prime Minister, his deputy, the ministers,
their deputies, etc.) must oversee this
body, since only government members
are politically responsible in front of
Parliament. Thus, to assure the compliance with constitutional requirements
this formation of the competition
authority has taken shape. The law
excludes the direct intervention of the
judiciary in enforcing the antitrust provisions, in cases of violations, by allowing
only the Prime Minister to raise the violation to court. It restricts the agency’s
punitive enforcement mechanism and
prevents recourse to private litigation.
Again, this is a result dictated by the
Egyptian constitution where no punitive
damages or fines may be enforced by
any other body than the Egyptian
courts. Thus, a question that arises in this
respect is not only the independence
of the agency but also the balance of
power between the judicial and the
executive body in implementing the
regulations set forth in the adopted
antitrust law. As can be seen from the
wording of the law, the competition
agency reports directly to the executive body, hence excluding the judiciary from the supervision of the implementation of the law.
An analysis of the impact of this
enforcement mechanism of the
authority becomes crucial to determine the extent this structure is expected to affect the regulatory approach
of the authority. In other words, one
must consider whether this specific procedural enforcement mechanism dictates a certain type of regulation that is
different from that adopted by other
competition agencies. It would also be
rewarding to analyse whether this law,
especially with the current structure of
the authority, would not merely substitute the direct intervention of the state
that prevailed in earlier decades with a
new system of intervention disguised
under the mask of the current antitrust
law; i.e. whether the antitrust law of
Egypt sets up a regulatory system that
only serves to mask a revisited state
intervention. This is an important investigation, especially as Egypt has been
anticipating the antitrust law for almost
a decade and a lot of debate has surrounded the issue of whether the law
will actually promote or discourage
investment.
The literature on this topic has theo-
51
retically anticipated the outcome thus
taking more or less hypothetical
approaches in analyses. Since the law
has passed and its repercussions are
currently available for assessment, it
offers some ground to start a thorough
analysis of the topic. Nevertheless,
since the outcome of the law cannot
be yet fully assessed, some parts of the
analysis must follow the same
approach undertaken by the preceding writers on this specific topic.
In order to draw conclusions about the
impact of the law, its study cannot be
restricted to Egypt. It must entertain a
general view of how the structure of
the competition authority and its regulation affects the investment and economic atmosphere in different countries. To offset the drawbacks attributed
to hypothetical analyses, one must use
a combination of a Policy Analysis and
a Comparative Approach. Perhaps it
would be rewarding to look into the US
antitrust law and compare the procedural enforcement mechanism of the
competition authority in the US to the
one established in Egypt. Moving on
from there, one should look into the EU
antitrust law and compare it to its
Egyptian counterpart with respect to
“... Many
economists,
lawyers, and
perhaps the
entire business
community were
wondering when
this long-awaited,
overdue law would
finally pass. Most
developing
countries by the
mid-1990s had
adopted antitrust
laws and Egypt
continued to lag
behind...”
enforcement procedures. The aim of
any comparison is to investigate the
differences between the US, EU and
the Egyptian antitrust law with special
emphasis on the procedural enforcement mechanism of the agency and
to asses whether these differences
affect the economy differently. In other
words, a comparison will illuminate the
differences in terms of economic performance that result through the adoption of different systems of regulation.
Taking into consideration the issue of
comparability, other developing countries that have adopted antitrust laws
should be compared to Egypt as well,
in order to be able to conclude
whether the adoption of antirust laws
had a positive or negative effect on
the economic performance of their
country and whether differences in the
competition authority’s enforcement
mechanism had any role to play in
such differences or similarities between
respective countries.
Summarizing the questions raised by
this article, the study must focus on the
procedural aspect of the competition
agency established under the newly
passed Egyptian antitrust law and to
assess, through a comparative study,
to what extent this specific enforcement mechanism of the authority will
affect an efficient implementation of
the law in Egypt.
In order to do so, the following questions play more than a guiding force for
the research in general: Is the Egyptian
antitrust law in line with the benchmarks set by the advanced economies
and the Model Competition Law? How
does the Egyptian antirust law compare with the emerging markets
antitrust laws? Is the lack of punitive
powers a fatal problem? Is there something wrong with the Egyptian antitrust
law’s enforcement mechanism of the
antitrust authority? Does the minimal
role granted to the judiciary have any
effect on the implementation of the
law? If yes what are they? What could
be the effect of these differences/similarities? Do these similarities/differences
prove that developing countries need
other antitrust laws than developed
world countries? Is development correlated with the antitrust law? Is there evidence that these are questions that
the current administrators and legislators have posed before passing the
law? What are the implications of the
answers of such questions?
*This article is part of the author’s LLM
thesis proposal.
BOOK REVIEW
The Story of an
Arab
on
Wall Street
The biography of
Alwaleed Bin Talal
Wael Ismail, Project Officer, EBHRC
t is hard to review a biography. Biographies
are about human lives and real people.
Their appeal to the reader is due to their
ability to make certain people more
accessible. The degree of accessibility
and accuracy will usually change from one
biography to another depending jointly on the
subject of the biography and its author. In 2005
Riz Khan, former CNN journalist, added a new
biography to this ever expanding and changing
form of writing in the book, titled, Alwaleed;
Billionaire, Businessman, Prince.
I
Book: Alwaleed; Billionaire,
Businessman, Prince
Author: Riz Khan
Publisher: Harper Collins
Arabic Translation: Arab Scientific Publishers
The seventeen chapter book is supposedly an
attempt to bring to light the elusive figure of
Alwaleed to both Arab and international readers. Alwaleed according to Khan is one of the
less known members of the notorious Forbes’ 10
richest men list. Unlike individuals, like Bill Gates or
Warren Buffet, Alwaleed is not that widely known
to the general populace. Khan’s interest in
Alwaleed supposedly began in 2002 when he
met him for an interview, but then things progressed to the current book, which is also
accompanied by a documentary. The book is
hardly just an attempt to bring to light one of the
world’s richest men, but is actually more like a
presentation of the credentials of Alwaleed to a
vast audience.
52
BOOK REVIEW
The book reconstructs Alwaleed’s life
through the author’s observations and
the testimonies of his closest friends,
family and business associates. The outcome of the compilation of these various accounts make the biography a
rather dull text to read. Alwaleed’s life
was turned into his daily routine of waking up and going to sleep and everything in between. Such details might
have been what the author considered
to be essential observations of his subject’s lifestyle that might reflect how
hard the prince works. That is not, however, what generally attracts readers to
such a book. It is worth noting that
other chapters dealt with Alwaleed’s
family ties and relationships, but the
statements made were put in a rather
general form without touching upon
anything particularly peculiar in
Alwaleed’s character. Khan attempts
to truly glorify the character of the
prince, an attempt that really causes
more harm than good.
Through out the book, Khan wanted to
underline the fact that the prince was a
self-made man, which is true to a large
extent, but his ties to the royal family
“... The book
reconstructs
Alwaleed’s life
through the author’s
observations and
the testimonies of
his closest friends,
family and business
associates. The
outcome of the
compilation of
these various
accounts make the
biography a rather
dull text to read....”
53
can not be kept out of the equation.
Unfortunately, Khan only mentions
them in passing; maybe in anticipation
of just such criticism.As a an example,
the picture at the back of the book
shows the prince leading heads of vari ous Arab states, Hosni Mubarek (Egypt),
King Abdullah (KSA), King Abdullah
(Jordan), Mahmoud Abbas (Palestine),
and the president of the United States.
This prestigious status is a right of his
royal standing and not something that
money can easily buy. Alwaleed’s connections are a central component of
his success story. The fact that he
refused to be just another Saudi royal
dependent on oil revenues does not
negate this fact.
The biography of Alwaleed Bin Talal,
the only Arab to make the Forbes 10
richest men in the world list could have
been produced with better craftsmanship. However, it sill remains an insight
into the life of one of the world’s richest
men;a window into the life of a Saudi
businessman who is currently the
biggest foreign investor in the US. The
life of Alwaleed, further highlights the
fact that business and politics at the
end of the day are two faces of the
same coin, this could not be more
apparent than when Alwaleed’s contribution to the city of New York after 9/11
was rejected by its mayor due to some
of Alwaleed’s statements about US foreign policy.
Biographies such as Alwaleed help us
better understand the mentality of businessmen or, in purely gender free bias,
business agents. The ability to truly
understand how these people think
and act is paramount to understanding
the ways firms operate especially in an
age where firms are literally playing a
larger than life role. In this matter, life history accounts, whether through biographies, autobiographies or oral history
records, will take center stage. Each of
these forms has to be taken of course
with its own pinch of salt. Such records
are not the Holy Grail that will easily tell
us how or why firms operate or act the
way they do. But they will help us make
more informed and educated conclusions and create assumption based on
reality rather than fiction.
In a field like business history and its larger context, economic history, individuals have for so long been kept out of
the literature. It is about time that we
bring them back in again. The use of life
“... former CNN
journalist added a
new biography to
this ever expanding
and changing form
of writing in the
book, entitled,
Alwaleed; Billionaire,
Businessman,
Prince...”
history accounts will not only help us
learn more about firms and the business
community, they will help us better plan
and formulate economic policy. If
economists truly understand the agony
of a father with children caught in a
recession without work, they will no
longer use with ease certain market
economy jargon, where the invisible
hand will work its charm yet again. The
role of scholars hence lies in producing
more biographies, using more accounts
based on the reality that lies there outside our window, not buried deep in
libraries in remote and inaccessible
places. It is amazing how we write
about our past without taking into
account the people who lived in it.
People of all status, central and marginal, should be brought back to the
rightful places at the heart of any historical exercise.
Alwaleed remains a biography with its
flaws, but one that can truly tell us
something about an era of business
expansion in Saudi Arabia after the oil
boom, the reaction to the reversal of
this boom, the role of multinational
companies in the Saudi economy, and
the role that the royal family can play in
enhancing the life of its subjects away
from the king and his heir. The biography is filled with untapped topics that
could have been explored in a much
deeper way, with the prince at its center stage. However, for the time being
at least, we have to settle for an interview that ended up being a book.
OUR ARCHIVES
T
he following are samples of the documents contributed to EBHRC
to be part of its archival depository. Donors of documents vary
from individuals to institutions. In addition documents received
vary from original to copy forms and some old documents were purchased from a collector of old papers and artifacts in downtown
Cairo. Donor name followed by a description of the documents will
be found below :
Aziz Sidqi:
Ministry of Industry Publications:
1.“al-Thawra al-Sina’iya fi ‘ahad ‘ashar
‘aman 1952-1963.” ( Eleven Years of
Industrial Revolution).
2. “Dalil al- Sina’a fi Misr fi thalathin sana
1952-1982” ( Guide to Industry in Egypt in
30 years).
Banque Misr Publications
1. Sixtieth Anniversary 1920-1980.
2.Diamond Jubilee 1920-1995.
3.Golden Jubilee 1920-1970.
4. Part 3 of Talaat Harb’s collection of
speeches 1939.
Café Riche Documents,
Official Douments:
1. Maslahit il-Dara’ib il-‘Aqariyya records
1905
2. Official copy of Maslahit il-Dara’ib il‘Aqariyya records 1907.
3. Récépissé de déclaration pour un étab lissement public: 16 October 1914.
4. Formal Declaration to the Office of the
Assistant to the Chief of Police: 9 May
1916.
5. Déclaration pour l’ouverture d’un étab lissement public: 9 May 1916.
6. Inspection Report: 16 May 1916: Chief
of Abdin Police Precinct.
7. Internal Note: Cairo City Police:
For/Commandant C.C.P.: 8 July 1919.
8. Internal Note: Confidential:
Commandant C.C.P.: For/Acting
Commandant C.C.P.: 20 July 1919.
9. Contract: 14 July 1921, Déclaration
pour l’ouverture d’un établissement pub lic: 4 November 1942.
10. Petition submitted by Mr. Abdel Malak
Mikhail Salib: 22 May 1962, which cites the
transaction contract with Avayianos, registered in 1962.
11. Letter from Russell Bey to Camp
Commandant of the British Officers, Head
Quarters: 26 February 1918.
Mohammad AbdelAziz Zayed
Papers/Reports:
1. Muzakira bi-Sha’n ’usus al-Tijarah alDakhiliyya wa al-Kharijiyya fi al-Mujtama‘
al ’Ishtiraki al-Dimukrati al-Ta‘awuni
(Memo Re: Foundations of Internal and
External Trade in the Socialist Democratic
Cooperative Society 1959).
2. Bahth ‘an Wasa’il Tanmiyyat al-Tijara alDakhiliyya wa Mada al-Nuhud Biha
(Paper on the means for Developing
Internal Trade and The Extent of
Promoting It) 1961.
3. Taqrir ’an Rihlat Mohammad AbdelAziz
Zayed Ra’is Majlis al-’idara lil-kharij ’an
al’Mudda min al-’usbu’ al-’akhir min
’uktubar hatta al-’usbu’ al-Thalith min
December Sanat 1965 (Report on
Mohammad AbdelAziz Zayed’s
[Chairman of The Alexandria Commercial
Company] Trip Abroad [Duration: Last
Week of October 1965 – Third Week of
September 1965]).
4. Taqrir ’an Rihlat Mohammad AbdelAziz
Zayed Ra’is Majlis al-’idara ila al-Yaban
wa al-Wilayat al-Mutahida wa al-Miksik
(Report on Mohammad AbdelAziz
Zayed’s [Chairman of The Alexandria
Commercial Company] Trip to Japan, The
United States and Mexico [Duration:
October/November 1966]).
5. Taqrir ’an Rihlat Mohammad AbdelAziz
Zayed Ra’is Majlis al-’idara lil-’aswaq alQutniyya fi ’urupa al-Gharbiyya (REPORT
Mohammad AbdelAziz Zayed’s
[Chairman of The Alexandria Commercial
Company]Trip to The Cotton Markets in
Western Europe [Duration: June 1968]).
6. Taqrir ‘an Ma‘rad Suq Bari b-Italya
(REPORT The Bari Exhibition, Italy
[September 1970]).
7. MINESTERIAL ORDER: The order is the
permission granted to Zayed to attend
the Bari Exhibition as Deputy Governor of
the Central Bank. Dalil al-Wukala’ alTijariyyin bil-Iqlim al-Misri, 1960 (Directory:
Trade Agents in the Egyptian Province,
1960.) The directory is published by “The
General Union of Chambers of
Commerce”
Purchased Documents:
1. Land Contracts: Three land contract
registered in the court of Alexandria in
1889, 1890 and 1893 under the Khedives’
government.
2. Stock Certificates: Credit Foncier
Egyptien 1951, Societe de Biere “Les
Pyramides” 1956, Egyptian Federation for
Agricultural Products 1943. Receipts: Three
receipts from the Piastre Project for the
Revival of Egyptian Industries (mashru’ il
qirsh).
3. Letter from Michel Politis to Assistant to
the Chief of Police: 9 May 1916.
ORAL HISTORY
RECORDS:
elow is a list of EBHRC’s oral
history interviewees. The list
excludes the interviewees of
theYoung Scholars projects.
B
INDUSTRY
Eng. M. Abdel Wahab
Eng. Fouad Abu Zeghla
Mr. Louis Bishara
Mr. Mounir Ezz El Din
Dr. Adel Gazarin
Eng. Abdel Moneim Khalifa
Mr. Ziyad Nashif
Mr. Bahaa Raafat
Mr. Hasan Ragab
Dr. Rouchdy Said
Eng. Ibrahim S. Mohamedein
Dr. Aziz Sidqi
PLANNING
Dr. Ismail Sabri Abdullah
EGYPTIAN
ENTERPREUNERS
Mr. Mansour Hasan
Mr. Mohamed Taymour
BANKING
AND FINANCE
Mr. Hasan Abbas Zaki
Mr. Mahmoud Abdullah
Dr. Salwa El Antari
Mr. Ali Dabbous
Mr. Mohamed El Barbari
Mr. Ali Shahin
Mr. Fouad Sultan
INSURANCE
Mr. Hasan Hafez
ACADEMIC , RESEARCH,
AND CONSULTANCY
Dr. Heba Handoussa
SMALL BUSINESSES
MAISON PAPAZIAN
Mr. Ashod Papazian
L’AMPHETRION
Mr. Adel To’ma
Mr. Henry Francis
54
Young Scholars’
Conference,
February 2006
Dates: Feb. 28
Time: 7-9 pm
PAPERS
TO BE PRESENTED:
"Economic Liberalization and Law in 19thCentury Egypt: A Discourse Analysis,"
By Zeinab Ali Abul-Magd, PhD.
Candidate, Georgetown University.
“Railroads in the Land of the Nile:
Egyptian Railroads and the History of their
Development”
By Amr Nasr El Din, poltical science,
graduating senor, AUC.
Third
AUC Forum on
Economic and
Business History of
Egypt
and the
Middle East:
T
he Third AUC Forum
on Economic and
Business History of
Egypt and the
Middle East is due to
convene in May 2006.
For further information
please e-mail:
[email protected]
“The Arab Bank: A Palestinian National
Bank of Jordan”
By Amr Ismail Adly, Economic Researcher.
The Ministry of International Cooperation.
Offices: Rooms 307, 313 A, 314, 315, Old Falaki
Telephone: 797 5603 / 5602
Email: [email protected]
Copyrights © EBHRC All Rights Reserved