For inquiries about-or comments on-the content of the articles

For inquiries about-or comments on-the content of the articles
please contact the authors.
To contribute to future issues of the Chronicles or submit inquiries and
provide feedback on this one, please feel free to contact the Chronicles
Editorial Team at [email protected]
THE CHRONICLES, FALL 2009
EBHRC Team
Chronicles Editorial Team
Kismet El Husseiny,
Farida Makar,
SeifAllah Rabie,
EBHRC Faculty and Staff
AbdelAziz EzzelArab
Director, EBHRC, and Professor, Political
Science Department
Randa Kaldas
Associate Director
Karim Mohamed
Senior researcher
Malak Labib
Senior researcher
Reem Abu Zahra
Researcher
Naguib Megally
Transcriber
Hadeel Elshabba
Adminstrative Assistant
Board
Adel Gazarin
Board chair, and honorary member of the
Egyptian Businessmen Association
Samir Allam
Board member, and Head of the
Syndicate of Commerce
Lisa Anderson
Board member, and Provost, AUC
Heba Handoussa
Board Member, Professor of Economics,
Lead Author of Egypt Human
Development Report
Roger Owen
Board member, A. J. Meyer Professor of
Middle East History, Harvard University
Tim Sullivan,
Board Member, Professor of Political
Science and Provost Emeritus
Dina Waked
Board member, and SJD candidate,
Harvard Law School
THE CHRONICLES, FALL 2009
Steering Committee
Ibrahim Elnur
Associate Professor, Political Science
Department, AUC
Mahmoud Farag
Professor and Director, Engineering and
Science Services, Mechanical Engineering
Department, AUC
Walid Kazziha
Professor and Chair, Department of
Political Science, AUC
Hani Sayed
Assistant Professor, and LLM Director,
Law Department, AUC
Jayme Spencer
Senior Librarian and Director of Public
Services, Libraries and Learning
Technologies, AUC
Collaborating Scholars
Robert Tignor
Professor Emeritus, History Department,
Princeton University
Ellis Goldberg
Professor, Political Science Department
and Director, Middle East Center,
University of Washington
Robert Vitalis
Professor, Political Science Department
Roger Owen
Professor, Center for Middle Eastern
Studies, Harvard University
Affiliated Young Scholars
Table of Contents
Editor’s Note
4
Politics & Policy
40 New Law, Old Problems
Oral History
A Peak into the World of Oral History
6
44 Economic Stakes in the Golan Heights
A Step in the Right Direction
8
50 Agriculture for Export
Photo Essays
The Way I see It 11
May Forum Covergae
Sixth AUC Annual Forum on
theEconomic & Business History of
Egypt & the Middle East 13
In the Pipeline
More than Just Charity 16
Rising FDI & Economic Growth Rates;
55 Why are We Not Feeling It?
Has Women Oriented Aid Brought the
58 Desired Impact to Women?
Art
Through the Eyes of 5,000
64 Children
Steel Market in Egypt: A Case of
Power Abuse 19
Can Music of a Particular Region be
Reflected in the Region’s
69 Architecture
Politics of Economic Planning in
Egypt 24
Egyptian Entrepreneurs and Economic
Development 27
Industrial Research & Development 31
Historical Perspectives
Governmantality in Egypt - Part I 34
THE CHRONICLES, FALL 2009
Editors’ note
Dear Reader,
After three semesters of absence, we are thrilled to once again offer you this volume of
The Chronicles. This Issue does not only attempt to revisit the publication and present
it in a new form, it also aims at presenting the historical and the contemporary issues
of business and economic history from their social, anthropological, and political
dimensions.
The publication within your hands specially focuses on the ongoing problems
facing Egypt, and attempts to analyze their root causes. Problems tied to rent
and land control which date back to the policies implemented right after the 1952
revolution, are addressed by both Phillip Rizk and Salma Mansour, with the former
looking at the historical legislation applied to agricultural land affecting the fellahin,
and the latter addressing the laws attempting to regulate residential spaces in urban
cities. Malak Labib, a senior researcher at the EBHRC, presents us with excerpts
from her larger oral history based study on the politics and inefficiencies involved in
economic planning and Egypt’s numerous five year plans.
Menan Omar takes a deeper look at Egypt’s god given resource, agricultural
land, and argues how it could be used to propel economic development, while Zeinab
Abdalah presents an example of how the combination of resource availability and
political status have facilitated monopolistic practices and abusive capitalist behavior.
Meanwhile, SeifAllah Rabie analyzes the reasons why the lower and middle income
segments of the Egyptian society do not reap the fruits of foreign direct investments,
which the liberal economic model had promised.
Grassroots attempts at development are also addressed in the issue by
Yasmeen Khodary, who criticizes faltered top down developmental strategies
implemented in a failed attempt to empower women. However, Lauren Goering
presents us with an example of effective development efforts through the Zenab Kamel
Hassan Foundation.
Finally, we close the issue with an article based on Mahmoud M. Riad’s
research on the relationship between music and architecture, in which he presents a
refreshing analysis of why Islamic architecture is unique in its form and structure.
We have also included two articles discussing the epic conflict between the
Arab world and Israel. Sarah El Abd analyzes the reasons behind the stalemate in
the Golan Heights through the situation’s economic and political dimension, whereas
Yasmeen J. Khoudary offers the heartbreaking accounts of Palestinian children from
Gaza and their struggles between ambition and the harsh reality they are forced to
face.
We hope that this issue of The Chronicles will present an added value to you,
our reader, and that it will make for an enlightening and enjoyable read which will
trigger ideas and inquiries for further study.
On Behalf of The Chronicles Team,
Kismet El Husseiny
THE CHRONICLES, FALL 2009
Special Thanks to
EBHRC acknowledges gifts received by the center, which help in enhancing and
consolidating its activities. Among the donors are:
Sheikh Mohammed Bin Issa Al Jaber
Mr. Mohamed Attia Ali
Mr. Samir Hassan Allam
Mr. Wael Ahmed Amin
Dr. Adel Gazarin
Mr. Stephen Hanchey
Mr. Wael Ismail
Mrs Sandra McNabb
Dr. William Mikhail
Mrs.Inas E. Ragai
Eng. Hassan Ezz Eldin Rifaat
In addition to,
AUC Parents Association
Ahmed Esmat
Nadia Mohasseb
THE CHRONICLES, FALL 2009
Oral History
Peak
into the
World of
Oral
History
A
Randa Kaldas, EBHRC Associate Director
I
n 2004, the Economic and Business
History Research Center (EBHRC)
at the American University in Cairo
was established with the purpose
of compiling a depository of primary records, and firsthand accounts by creating records of oral narratives of people
who played pivotal roles in Egypt’s public
policy and enterprise. Oral history is recording interviews with eye-witness participants to get their personal testimony
on events of historical significance. While
this is the narrow definition of the term,
oral history includes the taped recording
(whether audio or video), the transcript,
in addition to using these in-depth interviews as a research method.1
In the last five years, EBHRC compiled over two hundred hours of oral
history from some 80 public figures and
officials in the economic and business
sectors. Five years since its inception,
EBHRC successfully passed an initial
experimental phase and completed its
institutional building. The next step is to
gain expertise in oral history, one of its
major fields of operation, to learn more
about oral history techniques, and the
use of oral history as a research methodology. To this end, in August 2009, as
EBHRC Associate Director, I went on a
two-week trip to the USA to visit the two
leading oral history research offices in
the world; the Oral History Research Of-
6
THE CHRONICLES, FALL 2009
fice at Columbia University (OHRO), and
the Regional Oral History Office at University of California at Berkeley (ROHO),
Additionally, I attended an advanced
summer institute in oral history to learn
the theoretical and practical framework
of the discipline. The Oral History Research Office
at Columbia University, the first oral history office in the world was founded by Allan Nevins in 1948. Nevins’s goal was to
have a full account of people’s participation in the political, economic, business,
and cultural life of the last six decades.
He fulfilled his idea and dream by creating an organization that would systematically attempt to obtain documents and
information from the lips of these prominent figures. One unavoidable limitation
of oral history is the frustration of the
race against time that such information
perishes with the appearance of every
obituary column. In 1954, the second
oral history research center, the Regional Oral History Research Office (ROHO)
was founded, followed by UCLA’s Center
for Oral History Research in 1959. By
the 1960’s, and with the invention and
availability of the easily accessible tape
recorder, the use of oral history as a primary tool to record the lives of people became widespread. While in the USA, the
emphasis was on interviewing the elite,
in the UK, oral history became a tool to
give a voice to the voiceless by recording
the lives of ordinary people2. Mary Marshal Clark, OHRO director
who carries the torch of oral history at
OHRO explains that she is still very guided by the founder of the OHRO, A. Nevins and his vision of building a historical
oral history archive on political history. A. Nevins was interested in traditional/
political elites who were not necessarily
celebrities or heads of organizations, but
rather he was interested in people who
were actually responsible for enacting
political change. OHRO has been part
of New York City for over 50 years, and
a lot of scholars resort to OHRO to deposit their interviews. The center also
Oral History
accepts donated interviews that enhance
their oral history collection. Depending on funding and budget constraints,
these interviews are transcribed and preserved. To-date, over 2,000 scholars and authors have cited Columbia University’s
oral history interviews in their books. Corie Trancho-Robie, assistant director
of OHRO, explained that even though
they are a private institution, their collection is a public archive, as the legal
release of the material is available to the
public and not only restricted to scholars. Through its web-site, OHRO provides a collection of transcripts and recordings and is hoping to make available
as much of its interviews as possible in
the future. With the same logic and enthusiasm
regarding the importance of accessibility
of oral history records to the public, Vic
Geraci, associate director of ROHO explained the importance of having a web
presence. ROHO now publishes most of
its transcripts (with legal release) online,
giving access to researchers, scholars,
universities, and schools. Vic Geraci
was very energetic about EBHRC’s
work in oral history as he laments
the absence of oral testimony coming
from the Middle East in the world body
of oral literature, as most other regions
around the world are by and large covered with oral history organizations. Oral history projects at both centers
are guided by very extensive research of
primary and secondary sources related to
their projects before embarking on meeting the interviewees. This enables the interviewers to ask the “right” questions;
questions, they know, have not been answered within the already written body
of literature, or those that help explain
the written documentation. While written sources might answer the question
about what happened in a certain event,
an oral history interview goes a step further and informs us, how and why it
happened and how it made people feel.
End notes:
1
Yow, Valerie. Recording Oral History.
p 3.
2
Charlton, Myers, and Sharpless. (Eds)
Thinking about Oral History. pp 9-12.
[email protected]
THE CHRONICLES, FALL 2009
7
Oral History
Step in the
Right Direction:
Participation
A
In
Advanced Oral
History Summer
Institute
Randa Kaldas, EBHRC Associate Director
In August 2009, as part of a
learning trip to the USA, I participated
in the Regional Oral History Office’s
(ROHO) Advanced Oral History Summer
Institute, August 10-14, 09, University
of California, Berkeley on the theory,
methodology, and practice of oral/video
history. The summer institute brought
together some forty participants: scholars and practitioners with a wide-range
of interests and expertise, from graduate
students just beginning their research to
scholars, and faculty trying to keep up
with the updates in the oral history techniques or to learn new research methodologies. The majority of participants came
from US institutions, with some international presence: Egypt (EBHRC), Turkey,
Japan, and Canada. Some of the Summer Institute sessions focused on the
nuts and bolts of oral history techniques,
such how to plan and organize an oral
history project, stage an interview, consider legal, ethical, and human issues in
oral history, and practice interviewing
tools. To that end, a daily session was
8
THE CHRONICLES, FALL 2009
dedicated to working in small groups
supervised by ROHO faculty. Other sessions focused on models of finished oral
history projects, the developments of
the historiography of Oral History, and
how the new era with the penetration of
new modes of communication,(facebook,
instant messaging), have created a new
language that is very difficult to interpret and keep up with, and which is not
recorded in most incidences. A comprehensive coverage of the Summer Institute
presentations goes beyond the scope of
this article, but it is important to mention two important concepts which were
covered in the opening and closing sessions of the Institute by Richard Candida
Smith, Professor of History and ROHO
director: interpreting oral history interviews and shared authority. The opening session, “Interpreting
Oral History”, presented the theoretical
framework of oral history that situates
oral history as a useful research tool. There are several layers to an oral history interview that are essential to its in-
Oral History
terpretation. First, the storytelling layer,
which is composed of the stories that
a group of people tell when narrating a
certain event. After interviewing a number of people from one group, the stories
start to become predictable. This layer
gives insight into what a certain group
of people have gone through in the past,
and how this past lives on into the present and how it helps them explain it. A
second deeper layer that you can draw
from an oral history interview is the personal evaluation. This is much harder
to reach as it depends on a growing trust
between the interviewer and interviewee
to a degree that allows the latter to start
evaluating their reality rather than narrate the accepted/official story. This
captures the continuous negotiation and
conflict between a person and his/her
community. The third layer in an oral
history interview is that of history telling. This level allows the interviewee-interviewer to have a dialogue which enables
them to rethink events and try to explain
why things changed when they did. Through the interviewer’s discussion
on the topic in a new way, and the interviewee’s revelations of hidden aspects,
the integrity of the interviewee is maintained by projecting their experiences
into a larger discussion with other scholars and if lucky with the public. Also,
there is no doubt that memory plays an
important role in an oral history interview. There is a wealth of literature on
memory studies and oral history, but it
would suffice for our purposes to point
out how it is important to realize that
questions to interviewees about an event
can cause confusion. Indeed, the confusion can be a result of the narrator’s
incapacity to have any physical memory
and to only remember “bullet points” regarding a certain event and a flood of details regarding another. In both cases,
the interviewee will need guidance from
the interviewer: encouragement and reassurance in the first scenario, and direction as to what to select to narrate in
the second one. Oral history is a pro-
cess based on a dialogue between two
people with two different modes of
thinking about the past. This brings us
to the dynamics between the interviewer
and interviewee.
While some people refer to the process of oral history as “the collection of
oral history”, many oral historians emphasize that the proper term is, “the creation of oral history records”. The logic
behind this term lies in the belief that
the oral history interview once finished
would never have existed the way it did
if it was not for a certain line of questions that the interviewer asks, (with his
background knowledge about the topic),
that in turn the interviewee answers with
his live experience about the topic. The
term “shared authority” refers to the
dynamic of the collaboration in the interview between the interviewers as an
authority based on research in a discipline, and the interviewee who brings in
a perspective based on intimate knowledge about the topic. In Richard’s closing
session at the Summer Institute, while
recognizing the existence of the concept
of shared authority, he noted the importance of thinking of the interview as a
dialogue and emphasizes the “shared”,
rather than “authority” meaning of the
term. Emphasizing “shared” means the
interviewer has to factor in both the interviewer’s and the interviewee’s motivations in this oral history. While the summer institute aims at
giving a practical guide to oral history
interviews, it is important to realize
that the immediacy of the situation
while conducting the interviews dictates how one will handle it. There is
no real checklist of what to do or say.
A lot lies on the interviewer/oral historian in how he/she handles the interview itself, decides who to include in the
interview process, and who to exclude,
how he/she plans to use the oral history
material, and how this oral history might
be transferred to others through other
mediums such as dialogue with other
scholars. Indeed, oral history comes to
THE CHRONICLES, FALL 2009
9
Oral History
existence as a dialogue between the interviewer and the interviewee, it goes beyond collecting stories and is an attempt
to reinterpret the past, offering new explanations to what happened. The summer institute was useful in giving a theoretical and practical framework to oral
history interviewing. Having said this, as
best put by Richard in his closing session, it also gave its participants some
food for thought. The institute did not
provide a check off list about oral history techniques, but rather a time release
capsule that will help participants have
new thoughts about how to do the work,
and how to deal with their everyday lives
with their colleagues.
[email protected]
10
THE CHRONICLES, FALL 2009
Photo Essay
Impressions
Menan Omar, BA in Economics, AUC.
[email protected]
THE CHRONICLES, FALL 2009
11
Photo Essay
Both images capture an assemblage of people rallied to mark the 4th anniversary of
the Iraq war that started in 2003, the first image being taken in Iraq and the other one
in Australia. Looking at the first image, I can see boisterous Iraqis waving with their
fists, chanting “Death to American” and outrageously slamming the American flag with
their slippers . Contrary to them, Australians who have also staged protests against the
war in Iraq are marching in an organized rally, which at first sight seems like a festal
gala occasion. The image with the marching Australians therefore leaves a more peaceful and calm impression, as opposed to that depicting the raving Iraqis. Juxtaposing the
two images has allowed me to point out a racialized message that promotes stereotypical
knowledge about the East. It is the Western non-violent, peaceful and hence civilized
manner (even when protesting) that gives them a superior quality that stands in vivid
contrast with the barbaric portrayal of the East. Western superiority is visually represented through a racialized image of the East that captures a scene of mere violence and
savagery, masses of people with stern faces waving with their fists; people who simply
do not understand any language but violence and therefore, portrays the quintessential
nature of Easterners as perceived by the West. In this sense, images are neither objective nor innocent, but rather a legitimate instrument that has judgment in it and reflects
our perceptions of what we perceive as the other. As Allen Sekula has put it very well:
“[…] photography is a language in itself, a means of establishing a relationship between
the white and the colored other hence, denying images their assumed objectivity”.
12
THE CHRONICLES, FALL 2009
May Forum Coverage
Sixth AUC Annual
Forum
on the Economic and
Business History
of Egypt
and the
Middle East
Saturday- Monday, May 9- May 11,
2009
Farida Makar, Chronicles co-editor, EBHRC.
I
n an attempt to understand the process of privatization in Egypt among
many other things, the Economic
and Business History Research Center
(EBHRC) held its sixth annual Forum
from the 9th to the 11th of May 2009, dedicating a large portion of its sessions to
the topic of privatization.
Lasting three full days, the forum explored relevant themes, created a platform for debate, and initiated discussion
among politicians, economists, academics and students. The first day of the Forum was dedicated, as indicated earlier, to privatization. In a closed roundtable discussion to
which a number of influential business
men, journalists and ex-policy makers
were invited, the topic was explored highlighting both the negative and positive
aspects of privatization as it took place
in Egypt. Broadly speaking, the attendees attempted to explain what happened
over the last thirty years and clarify the
change in economic policies during the
time period. Many participants indicated
that privatization took place without a
clear vision. Indeed, most participants
seemed to agree on the fact that the decision to embark upon the process of privatization was taken without a clear plan
or strategy, an almost sporadic move. Interestingly, the discussion also revealed
certain historical “facts” which were not
known to the rest of the attendees. For
example, it was disclosed that a committee entitled “partners in development”
THE CHRONICLES, FALL 2009
13
May Forum Coverage
consisting of four businessmen was established during the 1980s through a
ministerial decree with the sole purpose
of preparing the country for privatization.
The committee was in charge of gathering
information on privatization and exploring local and international case studies.
If anything, the discussion showed that
while in the 1980s, different conflicting
forces were struggling to shape the direction of the state, by the 1990s, the direction towards privatization was clear and
imminent, and policies were already being planned accordingly.
The second day of the Forum differed
in that it featured two oral narratives.
During the morning session, Dr. Abdel
Aziz Hegazy gave his personal narrative
illustrating the highlights of his career
in public policy. Dr. Hegazy, who gradu-
tucky Fried Chicken, Coca-Cola” type of
infitah which followed shortly after.
Later that day, Ismail Hassan shared
his experiences as Governor of the Central Bank of Egypt from 1993 till 2001.
In his narrative, Mr. Hassan explained
that he became Governor of the Central
Bank during a most exciting time period,
as Egypt was relieved from its external
debt after its participation in the Gulf
War. As a result, exchange rates, which
were previously set by the Central Bank,
were left to the market. Essentially, Mr.
Hassan highlighted the way in which
Egypt’s debt relief affected the economy
as a whole and the policies of the Central
Bank in particular.
Finally, the third day of the Forum
featured EBHRC’s research briefings as
well as the Young Scholars Conference,
“When something very big happens, like privatization,
historians and economists like to think you must have had
very big causes. That is not how it happened.”
~Kenneth Baker
ated from Cairo University in 1944 and
pursued his higher studies in England,
shared his point of views regarding the
Egyptian economic system as it evolved
over time. According to Hegazy, Egypt
has tested all existing economic systems
since the onset of the so-called modern
period, as such; it is an interesting case
for purposes of analysis. Dr. Hegazy then
proceeded to present a somewhat linear
view of the development of Egypt’s economic system since the time of Muhammad Ali. Finally, Dr. Hegazy explained
how Sadat’s Infitah policy came into being stating that he had a significant role
in launching the process. Serving as
Minister of Finance from 1967 till 1973,
he encouraged foreign investments in
Egypt. Yet he insisted that the form of
Infitah he embarked upon only encouraged very minor investments coming
from other Arab countries, pointing out
that he was not involved in the “Ken-
14
THE CHRONICLES, FALL 2009
giving the center’s researchers and affiliated young scholars the opportunity
to present the results of their research
thus far. Ranging from presentations
on the natural gas controversy in Egypt
, on production relations at the Egyptian
Iron and Steel plants, and on the national identity portrayed in the high-school
textbooks from the 1930s and 40s, the
sessions were the perfect space for the
young academics to receive feedback onand criticism to-their work.
More importantly, the third day was
marked by a joint panel entitled “Global
history, local history: Egypt in time and
space “two related lectures presented
by Professor Roger Owen and Professor
Robert Tignor. The lecture featured the
academics’ rare perspective on Egyptian
history as situated in the global context.
It also provided the opportunity for students, faculty and staff of the American
University in Cairo to engage with-and
May Forum Coverage
listen to-the distinguished guests.
All in all, the Forum proved to be a
great success as it drew a fairly large
audience and provided a platform for
debate. The unique gathering at the forum provided the perfect opportunity for
fruitful discussion and interesting factual discoveries about Egypt’s past. The
attendees may have not uncovered the
“big” causes behind the process of privatization in Egypt, but at the very least,
they came one step closer to doing so. [email protected]
THE CHRONICLES, FALL 2009
15
In the Pipeline
More
than Just
Charity…
The Zenab Kamel Hassan
Foundation...
An Interview with Dr. Tarek Ali Hassan
Lauren Georing, EBHRC Researcher.
“We are not a charitable organization; we are a development organization,” this is the way Dr. Tarek Ali Hassan describes the Zenab Kamel Hassan
Foundation for Humanistic Development (ZKH), “You do not need charity,
you have yourself, your skills, your body, your mind, your brain, your head,
your arms; you do not need charity, you need work”. The foundation was
created as a memorial to Zenab Kamel Hassan, the first Egyptian woman
to obtain a Bachelor’s degree in Science, and later became the first woman
appointed as junior lecturer in the faculty of science at the Cairo University
(at the time Fouad University)[. With the life she lived, she inspired her students, friends, and admirers to continue the legacy she began.
Zenab Kamel Hassan believed that,
“the wealth of nations is the wealth
of its people ‫ الثروة البشرية‬that the human
being is the wealth of a nation and
the human being means men, women,
and children”. Her passion to see people
reach their full potential and her pioneering spirit was evident in every facet
of her life. Evident even on a personal vacation, instead of going to a typical resort
place for their honeymoon, Zenab Kamel
wanted something more adventurous; so
her husband Dr. Ali Hassan took her to
visit the island of Dingway, located in the
northern Delta in Dakahliya. At the time
the island had no electricity, no fresh
clean water, no development, and no
infrastructure, but they fell in love with
the land and with what they referred to
as, “the heart of Egyptian civilization”;
the Egyptian peasant culture and way
of life. Zenab Kamel and Dr. Ali Hassan
looked past the wildness, (the overgrown
plant life and the abundance of wildlife) and saw the potential of the island.
16
THE CHRONICLES, FALL 2009
They began the process of reclaiming the
land and cultivating it into arable, agricultural land, which they found to be
very fertile because it was composed of
the silt from the Nile. Her son, Dr. Tarek
Ali Hassan, recalls as a child, summer
holidays were usually spent on the island of Dingway, “We [his siblings and
himself] were taught principles of respect
for humanity”. Dr. Tarek Ali Hassan remembers these summers as, “a lesson
in self dependence, independence, and
in ecology”. He attributes them with being, “fundamental in my formative concepts about progress and development”.
His father and mother set the example of
respecting, admiring, and learning from
all people around them. This reclamation
project, which began on a honeymoon,
became a lifelong project for them, “a
developmental impact on a personal, individual level, in the domains of health,
social development, education, behavior, and most of all nutrition”. Zenab
In the Pipeline
Kamel made many contributions to the
society around her: leaving her mark on
the scientific world by purifying proteins
to a degree that had not been recorded
before, being a role-model for the Muslim girls around her with her strength
of character and determination to live
by her beliefs in what is right, and the
impact she made while working at the
university to encourage not only a mixed
society for men and women there, but a
collegiate society: a society where males
and females share equal citizen rights
and equal rights to growth and fulfillment of their own potential. It was her
contributions to society and her passion
for all things in life that motivated those
around her into action after her death.
The Zenab Kamel Hassan Foundation for Development was established in
1994, by a group of her former students,
colleagues, and her son, Dr. Tarek Ali
Hassan, “First it was the love of people,
the love of land, and the love of the people of Egypt at the basis of the orientation of Zenab Kamel and Ali Hassan”.
This home environment for Dr. Tarek
Ali Hassan had a profound effect, and
it was the basis of this orientation that
became the groundwork for the initial
articles of the ZKH”; it would be an or-
ganization that, “supports excellence in
women, women in education, and initiation of prizes for top achievers in science
and chemistry (specifically because that
was her subject of study initially), sports,
arts, and theater”. The ZKH Foundation
offers the residents and families of Imbaba training for job skills, literacy, art
education, child labor awareness, and a
micro-credit program. They have a team
of dedicated community developers who
have been trained through workshops
and in-the-field experience, “we train our
employees to treat human beings as human beings, according to our orientation,
being the maximum value
in existence”. It is the same
respect for human life that
was taught to Dr. Tarek
Ali Hassan by his parents,
and the example he witnessed them live first hand
on the island of Dingway.
The Foundation strives to
teach, respect, and seek
out the potential of all the
clients and staff.
One strong program
that encourages potential
entrepreneurs to succeed
is the micro-credit program. Like the work being
done by Grameen Bank
in Bangladesh founded by
Mohammed Yunus, the
staff at the ZKH Foundation realized that
there was a parallel situation in Imbaba,
“We noticed that a section of the community had ideas, abilities, and a desire to work and produce, but they were
not financed”. The ZKH Foundation was
able to obtain a grant from the Egyptian
Swiss Development Fund to offer microcredit loans to businesses that were already operational.
Ever since the Foundation began the
program a few years ago, they have seen
a successful track record of over 6,000
projects be sponsored by the microcredit program, with the loan sizes ranging from 500 LE to 10,000 LE. “One of
THE CHRONICLES, FALL 2009
17
In the Pipeline
the reasons for the success of the ZKH
Foundation is its flexibility, and its deep
respect for the humanness of the populous and dedicated avoidance of the bureaucracy of the banks and other similar
institutions”, says Dr. Tarek Ali Hassan.
Another reason for the success of the micro-credit program is the staff and volunteer team, who are a vital element. “Your
team members have to be well oriented
and well enlightened into the process of
development. They have to love the people
the people they are helping and feel that
they want to help them help themselves
truly”. The process of extending microcredit loans is not viewed lightly in the
ZKH Foundation, “We see it as an integral
part of development and the deep faith of
the inherent potential of the members of
society that we are dealing with”. They
encourage the businesses to move from
the informal economic sector, to registering with the government and obtaining
the necessary permits, so that they can
become members of the formal economic
sector, “Therefore, through micro-credit
we were able to make a very significant
contribution not only to ideas, thoughts,
and concepts, but to economic development”. The economic development of the
area of Imbaba is critical to break the cycle of “deprivation, non-production, and
low income”.
The ZKH Foundation does more than
just offer workshops, skill trainings, and
micro-credit loans. They look to develop
individuals on a holistic basis, “we do
not only wish to see the area develop economically, but also develop culturally:
encouraging theater and music, participating in forums and debates, and finding avenues for expression of their social
and political views”. It is not just about
building a stronger economy in the
Imbaba area and establishing a stronger financial system, but it is about
developing an environment for children, women, and men to become active participants in the economy and
the community. If there is to be progress in the area of development, it must
18
THE CHRONICLES, FALL 2009
be recognized that, “[Personal] Growth,
[Economic] development, cumulative
learning experience and skills’ development are the keys”. If any of these elements are missing, the ZKH Foundation
believes that the progress made will not
be complete.
As his parents before him, Dr. Tarek
Ali Hassan has a passion to see everyone treated with respect, (regardless of
social or financial status), reach their
full potential, and be culturally dynamic.
Building on the ideas that were imparted
to him from his parents since his childhood, he continues the recognition that,
“the real wealth of nations lies in the human wealth: the people, their skills, their
ability to work and preserve, make success of a project or idea, and to develop
ideas of entrepreneurship. This wealth
does not only exist among the rich and
the high and magnate, but it also exists
amongst the poor and amongst the lower
socio-economic groups”.
[email protected]
In the Pipeline
W
Steel
Market
In
Egypt:
A
Case
of
Power
Abuse?
Zeinab Abdallah, Business Administration Undergraduate, AUC.
[email protected]
ith the increasing power of the
private sector in the Egyptian
economy, the need for rigid
antitrust laws is becoming increasingly
compelling. The Egyptian steel market
in specific is characterized by a lack of
effective anti-trust laws to control monopolistic practices and protect end consumers. The recent legislation of Law No.
3 of 2005 on the Protection of Competition
and the Prohibition of Monopolistic Practices has spurred a lot of controversy.
The popular trial coordinated by Muwatenin did Al-Ghalaa’ (Citizens Against
Increasing Prices ) against Ahmed Ezz
claimed that the market is left in the
hands of one strategic steel producer
who is blamed for the current persistent
increase in steel prices and accused of
manipulating the market to serve his
own enterprise interests. However, the
Egyptian steel scenario does not only
present an economic threat affecting
steel prices and market mechanisms, it
also has a political dimension questioning monopolies influence on the legislation of new anti-trust laws. This paper
aims at analyzing the integration of political power into monopolies’ strategies
and the development of what is known
as ‘Oligarchy’ structures. Monopolies,
like Ahmed Ezz, in Egypt owe their establishment and maintenance to their
dominant political positions within the
National Democratic Party highlighting a
case of power abuse.
The Law on the Protection of Competition and Prohibition of Monopolistic Practices was issued under Law No. 3 of 2005
in February 2005. The aim of the law on
paper is to ensure that economic activity
is not performed in a way that restricts
or prevents freedom of competition in
the market. Accordingly, the Antitrust
and Competition Protection Commission
(ACPC) was established to monitor the
appliance of the law and report cases of
monopoly in any sector. However, when
ACPC was first created, it was criticized
by opposition politicians in the Parliament for not being able to file a case
THE CHRONICLES, FALL 2009
19
In the Pipeline
against any of those accused of practicing monopolistic practices without the
approval of the Prime Minister. In fact,
the Minister of Justice gives ACPC very
limited power such as the ability to review company records while setting prices of basic products or necessities (including fuel, sugar, flour and other basics) remains in the hands of the cabinet
which again questions the authority and
legitimacy of ACPC. Therefore, it is clear
that the authority’s role is merely limited
to developing a database on the economic activity in the country and examining
any entities or practices that violate the
law1.
Conception of Law No. 3 of 2005: Under the law, activities hindering
economic activities or causing market
abuse are prohibited. This includes arrangements between competitors creating barriers of entry to the market, arrangements between a company and its
supplier that restricts the access of competitors to supply of raw materials, and
the abuse of market dominance and/
or illegal use of control by large companies2.
Ezz Steel is a clear case of monopoly and power abuse given Ahmed Ezz’s
dominant position in the National Democratic Party (NDP) and his involvement in
the legislation of Law No. 3 of 2005 as a
member of the competent committee for
legislation in this matter.
In assessing the Egyptian steel monopoly case, it becomes necessary to define the criterion for market dominance,
and in order to reach an understanding
of the Egyptian steel case there is a need
to examine Articles 6, 7 and 8 of Law 3
of 2005 which defines a ‘dominant’ producer as: 1. Exceeding 25% of the market
share.
2. Having an effective impact on the
prices or volume of supply.
3. Being immune to attempts of other
competitors to stop these monopolistic
practices and other restrictive economic
practices in the market.
20
THE CHRONICLES, FALL 2009
4. Refusing to manufacture or distribute a scarce product for a certain period
of time. 5. Discriminating between sellers or
buyers who have the commercial standards with regard to prices or conditions
in the contract
6. Selling products at prices below
their marginal or variable costs driving
small businesses out of the market.
7. Refraining to enter into sale or purchase transactions regarding a product
with any producer or totally ceasing to
deal with him/her in a manner that results in restricting this person’s access
to the market at any time.
8. Obliging a supplier not to deal with
other producers to restrict competition 9. Restricting the distribution of one
particular product on the basis of geographical areas, distribution centers or
agents3.
This law applies to all businesses engaged in financial and economic activities regardless of their legal stance. This
includes economic entities, federations,
unions and associations. The law as
shown above is mainly focused upon the
abuse of dominant positions and power.
Therefore holding 25% of the market
share is not a sufficient proof of monopoly.
The penalty for violating Articles 6, 7
and 8 of the law will subject producers
to a fine not less than EGP 30,000 and
not exceeding EGP 10,000,000. Furthermore, any other entity aware of the violations taking place, and contributing to
them, shall be subject to the sanctions
as well4.
Where Does Ahmed Ezz stand from
Law No. 3 of 2005? Rumors have been spreading that the
ruling political party (NDP) has been delaying the legislation of Law No.3 of 2005
because of one if its dominant members
has been accused of monopolizing the
steel market. Ahmed Ezz, the head of
Planning and Budgeting Committee at
the NDP controls 75 % of steel production
and has been blamed for the persistent
In the Pipeline
increase in steel prices. When examining
the case of Ahmed Ezz, it is important to
highlight first where he stands from the
law on Competition Protection and Prohibition of Monopolistic Practices and if he
is to be classified as a dominant monopoly under its articles. Given Ezz’s market
share in the steel industry he should be
considered a main market player, however, as mentioned before, the new law
does not tag any producer controlling
more than 25% of the market as a monopoly unless other monopolistic practices are executed (as identified above in
Articles 6, 7 and 8) such as price fixing
and restricting the availability of goods
in the market. According to the analysis
of Mr. Mohamed Zaki, a member of the
Planning Committee at the National Society of Economic Policies and a former
employee at Ezz group, Ezz should not
be classified as a monopoly in the steel
market. His rationale is based upon the
fact that Ezz produces 3 million tons
of steel whereas the total production of
steel in Egypt is 6.4 million tons. The local market consumes 3 million tons while
the remaining 3.4 millions are exported
abroad. Therefore, if Ezz’s share, which
constitutes 47% of Egypt’s production
capacity is eliminated all together, there
shall yet remain enough steel (3.4 million
tons) to cover the local demand by the
rest of the producers in the market. This
entails that other producers could fill in
the local demand, and hence Ezz business activity would not violate Article 8
of refusing to manufacture or distribute
a scarce product. Egypt’s production capacity shows that there is enough steel
available in the local market. In addition,
the Ministry of Trade and Industry has
further imported 2.4 million tons of steel
from Turkey to increase steel supply for
local consumption5.
In assessing the rationale demonstrated by Mr. Mohamed Zaki, it becomes apparent that it does not take
into consideration Ahmed Ezz’s market
share which have exceeded 62 % for the
year 20086. Thus plays the largest role
in affect pricing and local consumption.
For example, if Ahmed Ezz decided to decrease steel prices by EGP 150 per ton,
the rest of producers would be forced to
reduce prices by more than EGP 200 per
ton in order to be able to maintain their
market share. Therefore, even if Ezz production capacity represents only 47 % of
the total steel production, his dominant
market position still allows him to easily manipulate local steel prices affecting
other small producers and creating barriers of entry to the market. Ahmed Ezz has also been accused
of unjustifiably increasing steel prices by
an average of EGP 200 per ton in 2008
reaching a wholesale price of EGP 2,796
per ton and a consumer price of EGP
3,000. This increase in steel prices had
been justified by Ezz supporters stating
that an increase in the cost of production
occurred, by which pellets (one of the
raw materials needed for steel production) for example have increased by 53%
in 2008 in 3 short months. In addition,
they claim that Ezz Steel prices in Egypt
are lower than those provided in international markets. In March 2008 steel
prices were $785 while in international
markets they were $842, a difference of
$57 per ton. The question that remains
at this point is; why are Egyptian prices
being compared to those offered at the
international market in the first place?
A comparison of prices could only take
place among countries operating with
similar cost of production while producing at the same scale which is apparently
not the case7.
In addition, Ahmed Ezz has been accused of manipulating the market operations and transaction of Ezz El Dekhela
(where he owns 51 % of the shares) to the
best interest of Ezz Steel. In 2001, when
Ahmed Ezz was appointed as the Chairman for Ezz Al Dekheila, he reduced the
company’s steel production resulting in
a buffer of 54,000 tons of pellets. This
excess in raw materials was bought by
Ahmed Ezz to be used in the production
process at Ezz Steel at a price of EGP 68
THE CHRONICLES, FALL 2009
21
In the Pipeline
per ton of pellets. Moreover, if the sales
of both companies are compared, one
will notice that sales increased by 8 %
in Ezz Al Dekheila from EGP 7,897 million in 2001 to EGP 8102 Million in 2006
while Ezz Steel increased by 520%, from
EGP 3,123 million to EGP11, 643 million
in 2006. Additionally, some small steel
producer have filed complaints to the
Ministry of Trade and Industry against
Ahmed Ezz for selling Al Dekheila pellets
to them at a cost fluctuating much higher than the market prices. The ACPC announced in 2008 that it was investigating
the business practices of Ezz Al Dekheila
in the steel sector. Unexpectedly, the
investigations concluded in January
2009 that Ezz Steel has not violated
Article 6 of Law No.3 of 2005; prohibiting any existing agreements between
Ezz Steel and other companies working
in the steel sector aiming to restrict the
operations, production, distribution of
other steel producers in the market8.
However, the ACPC findings did not
change the public opinion vis-a-vis Ezz
as his market practices are still heavily
criticized. In an article featured in “El
Badeel” newspaper (A news paper that
is currently out of business), one of Ezz
Steel’s distributors is quoted insisting
that the cost of production figures and
claims of increase in raw material prices
is highly exaggerated. According to his
calculations, the cost of transportation
does not exceed EGP 60 while Packaging
and cutting only cost EGP 25 per ton.
Accordingly, steel end prices should go
down to EGP1500/ 2000 per ton in order
to reduce the exaggerated profit margin
achieved by Ahmed Ezz and other important market players9.
Ahmed Ezz is not only being criticized because of increasing steel prices but also because of the exaggerated
privileges he receives. His favorable
position in the NDP and his highly connected social and political network have
facilitated his business transactions
and discriminated against other market
players. According to an interview with
22
THE CHRONICLES, FALL 2009
Mr. Mahmoud Al Askalany, the founder of “Mowatanon ded el Ghalaa” (Citizens Against Increasing Prices), Ezz was
provided with loans that have exceeded
EGP 4 million, at the time whereby his
working capital had not exceed EGP 1
million. Other facilities favoring Ahmed
Ezz include subsidized energy and other services like Al Dekheila seaport and
a gas line costing EGP 160 million. Yet
these privileges never trickle down to end
consumers in the form of lower prices,
yet it only contributes to the excessive
increase of Ezz Steel’s profit margin The
question that arises is whether the government is turning a blind eye on Ahmed
Ezz’s operations in the market or whether this is a case of ineffective antitrust
laws. Furthermore, one should question
the extent to which Ahmed Ezz’s position
in the NDP has influenced the legislation
of Law 3 of 2005 on the prohibition monopolistic practices10. Addressing the Parameters of the
Law:
Examining the process of legislation
and the law’s final draft helps us understand its parameters and loopholes. The
final draft passed through many stages
as it passed through the Shoura Council (The Upper House of the Egyptian
Bicameral Parliament, the Consultative
Council), the government (Ministry of
Trade and Investment), and the Egyptian
People’s Assembly (The Lower House of
Parliament).
The government suggested increasing
the penalty stated in Article 22 (which
imposes a minimum boundary of EGP
30,000 and a maximum of EGP 10 Million) to a minimum of EGP 100, 000
and a maximum of EGP 50 million, or
10 % from sales revenue, whichever is
higher. A percentage of sales revenues
as a penalty for monopolistic practices
proved to be efficient in many countries
like Holland, Switzerland and Ireland
as they present a more severe and differential punishment based on factors
like the magnitude of monopolistic practices, size of the business and its sales
In the Pipeline
revenue. Further amendments included
Article 26 which states that in case of
any violation of Articles 6 and 7, the first
wrongdoer to inform the ACPC will be exempted from 50 – 75 % of the penalty
imposed in Article 2, depending on the
court judgment in each case, to encourage investors to report any monopolistic
practices. This is widely known as the
‘Leniency’ or ‘First to the Door’ Policy in
France, Germany, Japan, Australia and
Tunisia, which aims to increase transparency and early detection of monopolistic
practices in the market. However, the
final agreement was against Article 26,
which was later removed from Law No 3
of 2005. In fact, canceling Article 26, as
requested by Ahmed Ezz in the Egyptian
People’s Assembly is a move that makes
us question the legitimacy of the law itself. There is an issue here of a conflict of
interest between private enterprise and
state legislation, a business tycoon and
a suspect of monopolistic business activity, yet directly involved in legislating
anti-trust laws11.
Furthermore, the Shoura Council suggested increasing the penalty stated in
Article 22 to 15 % instead. When the law
was debated in the Egyptian People’s Assembly they proposed raising the penalty
barriers even further to be EGP 100,000
as a minimum fine and EGP 100 Million
as a maximum or 15 % of total sales revenue, whichever is higher.
When examining the various drafting
stages of the law as well as its final draft,
it is clear that all suggested penalties
were more severe than those imposed in
the final draft of the Anti Monopoly Law
which now restricts the punishment to
a minimum of EGP 30,000 and a maximum of EGP 10 million, and which removes the sales revenue percentage penalty. This clearly highlights the effect of
Ahmed Ezz’s involvement in the drafting
process and the extent to which the final
draft of Law No 3 of 2005 diverted from
People’s Assembly and Shoura Council
mandates. It is also considered to be
another weakness in Law No. 3 of 2005
because if monopolies are fined as a percentage of total sales revenue (10 % or
15% ) it will remain much higher than
the maximum penalty of EGP 10 million
imposed by Article 22 of the final draft of
Law No.3 of 2005.
Examining the EGX 30 index, it becomes clear that Ezz Steel is one of the
main market players with highest sales
records in the steel industry. A closer
look at the figures provided by the stock
exchange, and assuming that a 10% of
sales revenue penalty is enforced upon
Ahmed Ezz, this will add up to EGP 1.6
billion which is still much higher than
the EGP10 million imposed by Law No.3
of 200512. We are left to wonder whose side the
law is taking, the side of the end consumers or that of monopolistic practices
in the market. To what extent were the
articles of Law No.3 of 2005 put down
in favor of significant business tycoons
under the theme of ‘fair competition’ and
‘consumer protection’? If the Egyptian
government is willing to take active steps
to promote fair competition among all
producers then why does it continue to
turn a blind eye to Ahmed Ezz and many
other dominant producers in other sectors that are restricting free market practices? End Notes:
Khawaga , Laila. Monoplies in the Egyptian Market.Law 3/ 2005 Legislation. 2007. Print.
2
ibid
3
ibid
4
ibid
5
Zaki, Mohamed, May 2007. Interview.
6
El Madany Sherine, Daily Star News Paper. 21st
of July 2008. Retrieved from http://www.thedailynewsegypt.com/article.aspx?ArticleID=15212
7
Zaki, Mohamed, May 2007. Interview.
8
Askalany , Mahmoud . Oral Histroy interview.
March 2008 . Interview.
9
ibid
10
ibid
11
EL Sayid , Moustapha . Personal interview. August
2009. Interview.
12
ibid
1
THE CHRONICLES, FALL 2009
23
In the Pipeline
The Politics of
Economic Planning
in Egypt:
an
Oral History
Approach
Malak Labib, EBHRC Senior Researcher.
This research project, which was undertaken in the spring 2008 under the
umbrella of the EBHRC, deals with the
history of economic planning in Egypt,
relying on firsthand accounts of various
Egyptian decision-makers. I tried to array the accounts of figures who served in
major planning bodies that were established in the late 1950s and early 1960s,
namely the Economic Organization, the
National Planning Committee, and the
Ministry of Planning1. The objective was
not to provide a general assessment of
the economic policies of the Nasser Regime, but rather to examine the decisionmaking process in the economic sphere
and scrutinize the emergence and development of planning policies. Within
this perspective, adopting a qualitative
approach based on the analysis of oral
testimonies of actors who worked in economic institutions appeared as particularly relevant. It helped to shed light on
the relationship between the micro level
- i.e. the level of actors and their agency
- and the global political and economic
structures. The following excerpts are
24
THE CHRONICLES, FALL 2009
parts of a report that was written on
these narratives.
“In fact, a diachronic overview of the
actors’ education, political background,
and career, illuminates certain aspects
of institutional functioning and policy
formulation. Government should not be
perceived as a homogeneous actor or a
monolithic entity. Instead, its institutional
decision-making reveals a constellation
of various practices and representations.
Interviewing actors involved in decisionmaking at that time can be instructive
in this regard. In fact, the different and
sometimes incompatible accounts offered
by actors inculcate the various ways in
which they experienced, participated in,
and interpreted events and policies. Thus,
my aim in such cases is not to argue for
the ‘accuracy’ of one account over the
other; but rather to shed light on differing
viewpoints while the economic transformation was in process.”
“The experts we have interviewed give
special attention to the period 1957-1960,
during which the preparatory work for
the First Five-Year Plan was done. One
In the Pipeline
may argue that the significance of such
accounts partly lies in the fact that they
shed light on the shifting role of economic
expertise during that era.”
“A reading of the different accounts
seems thus to suggest that the emergence of economic planning was marked
by debates over its content and its raison
d’être. One may argue that these debates
reflected a profound transformation in
the way in which economists intervened
in the public debate. This transformation was marked by a tendency towards
a ‘technicization’ of economic expertise.
Economic policies tended increasingly to
be assessed against a certain “economic
rationality”, considered as supra-political.”
“Within that context, it is also important
to remember that the issue of economic development came to occupy a central place
in Nasser’s political regime. Economic
planning and industrialization were in
fact considered as the main instruments
for achieving national independence and
the driving force behind the formation of
a modern nation-state. In that sense they
played a key legitimizing role for the newly established regime and held a central
place in the political discourse. Fixation of
the general economic policies and ultimate
planning objectives, henceforth, came out
as matters of high political importance to
be determined exclusively by the political
leadership. Consequently, economic expertise was
essentially relegated to technical issues.
Even though, to the dismay of those experts; their technical advice had still to
conform to the general political framework
designed by the top leadership. This was
strikingly vivid throughout their assessment of the First Five-Year:” “The economists we have interviewed
do not agree in their overall assessment
of the First Five-Year Plan. While some
appear very critical of it, others consider
it a success since it was the first attempt
to launch a comprehensive plan. The critiques that were brought out during the
interviews addressed different aspects of
the Five-Year Plan. While some criticized
the pattern of industrialization that the
State opted for, others pointed to the fact
that planning policies did not encompass
all aspects of the economy. However, it is
notable that the main criticisms brought
up by the economists who have worked
in the National Planning Committee (NPC),
the Ministry of Planning and the Economic
Organization do not as much target particular policies followed in certain sectors,
as they target the manner the planning
policies were eventually designed and
implemented.
Most of the interviewees reckon that little use was made of the preparative work
done by the NPC in the drafting and the
implementation of the First Five-Year Plan.
Imam and Saad El-Din argue indeed that
the plan was not drafted according to the
scientific models elaborated by the NPC;
instead, it consisted of a series of projects
proposed by the different ministries, each
one for its own sector. According to Saad
El-Din, this was due to the fact that a conflict arose between the NPC and the political leadership over the goal of the plan,
namely its targeted rate of growth. ”
“In spite of these differences all the experts interviewed agree on the fact that
the first Five-Year Plan was elaborated in
a way that upheld speed at the expense
of quality. In fact, many of the projects
initiated by ministries were designed according to rough estimations and without
serious preparation. In his account, Imam
quoted El-Shafei words when he said
that “we have a plan but we do not have
planning”. Shafei meant that elaborating
a Five-Year or Ten-Year plan was not sufficient: what was lacking was a detailed
blueprint for each sector of the economy
and a continuous follow-up.”
“How did economic expertise evolve in
the context of the shift in the 1970s from a
centrally-led economy to an economic system dominated by the private sector? The
newly implemented open door policies
- Infitah policies- ended the domination
of the public sector on Egypt’s economy
and promoted domestic and foreign inTHE CHRONICLES, FALL 2009
25
In the Pipeline
vestments in the private sector. The State
started reducing its direct intervention in
the process of economic development\.
In this context, the planning apparatus
lost its role as the main producer of economic expertise within the State. Imam
and Aziz argue that drafting Five-Year
plans became extremely difficult since
the projects submitted by the different departments for future planning were to be
mainly financed by foreign investments.
As a result the main criterion for selecting
projects was no longer based on economic
development priorities but rather on the
availability of foreign investments.”
“In parallel, new forms of economic
expertise emerged in the context of the
redefinition of development on a global
scale, from a focus on economic growth
to sustainable development. In fact,
starting from the mid-1990s the Ministry was entrusted with the task of drafting the Human Development Report, in
coordination with the UNDP. Within this
framework, a new language of development has emerged in which the individual
became the central object of development
policies. This expertise has also focused
increasingly on small and medium size
enterprises, which came to be seen as the
main engine for economic development. Thus, the profile of the expert has
changed accordingly. The new experts
carve their careers in the hiatus between
local private enterprises, government
agencies, and transnational organizations and companies. It is their ability
to interplay as actors in these networks
that constitutes their capital.”
End Notes:
1
Eleven actors were interviewed as
part of this project: Mahmoud AbdelFadil, Sultan Abou-Ali, Samir Amin, Alfonse Aziz, Mohamed Dwidar, Ibrahim
El-Issawi, Mohamed Mahmoud El-Imam,
Fawzi Mansour, Essam Montasser, Ibrahim Saad El-Din, Ra’fat Youssef.
[email protected]
26
THE CHRONICLES, FALL 2009
E
In the Pipeline
gyptian
ntrepreneurs
& conomic
Development
Karim Badr, Senior Researcher, EBHRC
T
he development of Egypt elicited
vast literature in the economic
sphere; several variables have
been the focus of academic scrutiny such as economic growth, poverty,
employment, natural resources endowment and technology as being either
causes or ramifications of the development process. Nevertheless, entrepreneurship, one of the cornerstones to the
process of development, received the least
attention. Entrepreneurship is a product
of intertwining factors of which the political context, institutions, sociological
and psychological aspects play a huge
role. This research, conducted under the
auspices of the Economic and Business
History Research Center (EBHRC) tries
to address the importance of entrepreneurs through measuring their contribution to various economic variables such
as GDP, welfare, poverty alleviation and
employment creation. The research further attempts to define the main characteristics of entrepreneurship in Egypt in
historical and modern times. The Egyptian economy passed through
many structural transformations, from
a colonized capitalist system to socialist one and back to a capitalist system
by 1974. During the period from 1974
till date, radical swings from one type of
capitalism to another have taken place.
Each of these periods has propagated
different types of entrepreneurs, each a
product of a certain political context and
a construct of a different social class and
environment.
Prior to the summer of 1954, the Egyptian bus transportation service witnessed
severe deterioration resulting from the inefficiency and bankruptcy of the owners
and operators. The Egyptian government
embarked on several attempts to restore
the services and held negotiations with
Egyptian entrepreneurs such as Aboud
Pasha, and foundations such as Banque
Misr for that purpose. The negotiations
failed as the latter parties insisted on certain preconditions as profit guarantees,
laying off workers, and extending a one
million pounds loan. In summer 1954,
Abou Regela, an owner of a pre-1952 revolution transportations company, took
the responsibility of reviving the bus services upon the request of the Egyptian
government. He paid the accrued loans,
salaries and wages, and other liabilities
that were previously incurred. He imported 400 new buses in two years, at
a lower price than the government (300
pounds per bus as opposed to government buses that were valued at 3,750
THE CHRONICLES, FALL 2009
27
In the Pipeline
pounds). He had further trained workers
and drivers, and successfully built 400
highly equipped parking garages with
maintenance workshops, administrative
buildings, clinics, and recreational clubs
for employees. The total investments
of these garages reached half a million
pounds at the time. His buses transported around 13 million people per month.
The service witnessed drastic improvements as a consequence of the renovations and innovations made by Abou
Regela. During the tripartite invasion,
Abou Regela put all his buses under the
control of the army while he continued
to pay the expenses1. In a different political context and social class we find a different kind of entrepreneur with entirely
different characteristics such as Aboud
Pasha.
Aboud Pasha was a pragmatic entrepreneur, who had multiple business
activities in chemicals, petroleum, insurance, fertilizers, agriculture and contracting. He married the daughter of a
high ranking British officer who facilitated and opened many business opportunities for him with the English army
in Palestine. He also used his relationship with the British High Commissioner
to save himself from a scandal, in which
the Ministry of public works directly assigned Aboud Pasha some businesses,
circumventing all the bylaws and rules
that dictate conducting a tender. It is
speculated that Aboud Pasha overthrew
Helaly’s ministerial cabinet to avoid paying more than five million pounds in
taxes, resorting to bribing the king with
the five million pounds instead. Aboud
Pasha, was a member of the parliament
in 1942, his welfare projects did not exceed the construction of a sole school
and a hospital. His interest in politics
never exceeded the boundaries of his
business and its welfare2. In assessing entrepreneurship in
modern times, it is difficult not to look
closely at Mahmoud Al Araby, a living example of a self made Egyptian entrepreneur. This man with minimal education-
28
THE CHRONICLES, FALL 2009
al attainment, started to save his feast’s
monetary present (forty piasters) by the
age of five, to buy merchandise and sell
it with a markup (fifteen piasters). He accumulated the capital made to repeat the
process the coming feast. By the age of
ten, he came to Cairo to work in one of
the retail stores. Afterwards, he opened
his own store and partnered with some
of his friends who contributed with capital as opposed to his labor/effort contribution. Al Araby’s foundation, Toshiba Al
Araby, used to import home appliances
from Japan through a partnership with
the mother company, Toshiba. He then
started to locally manufacture some
components of these products, and he
launched a five year plan to manufacture
washing machine motors, air-conditions
and fridges’ compressors. Al Araby commented, “I know it is really difficult to
make a product that will be 100% made
in Egypt, but if we could reach 90%, it
would be a very good accomplishment”3.
The foundation now employs 13,000
workers, “they used to make 5,000
pounds and now their salaries have
reached 10,000 and 15,000 pounds. They
no longer have family problems, their
kids go to school and wives are happy,
they have good residences, so their full
concern and focus becomes their work.
Consequently, they have become experts
in the field, like the Japanese” said Mahmoud Al Araby4.
In contrast to the previous examples,
there are ‘destructive entrepreneurs’
who pursue rent seeking activities either
legally as monopolies and oligopolies or
illegally in the form of bribery, filching,
and forgery. Their entrepreneurship is a
product of a new system of rewards to
business activity, and a different political and institutional context. The notorious case of Mamdouh Ismails’ ferryboats
that depreciated and remained in service, cases of businessmen fleeing with
bank loans, oligopolies in steel and cement industries, and simple imitators
and franchise owners are few examples.
In the Pipeline
These activities raise many questions on
how a free market system could provide
incentives to evade such destructive behaviors. It would be inept to draw any
similarities between the above examples, as it would be irrational to group
them under one umbrella of entrepreneurs. Hence emanates the importance
of defining entrepreneurship.
The importance of defining “the entrepreneur” is undeniable; as it has crucial
repercussions on the policies administered; nevertheless, perceiving that an
entrepreneur is all-good should not be
axiomatic. First, let us start by reviewing the various definitions of an entrepreneur.
Schumpeter defines an entrepreneur
as introducer to new combinations in the
market; he clearly distinguishes between
an entrepreneur and an inventor or a
capitalist. An entrepreneur is never a
risk bearer as this is the main responsibility of a capitalist. The Schumpeterian
entrepreneur is one who realize entrepreneurial profits as a result of introducing
new combination such as a new product
, new production method, opening a new
market, conquest of a new source of raw
material. Novelty is part and parcel of
Schumpeter’s entrepreneurship and this
novelty is rewarded by temporary market monopoly till profit opportunities are
widely realized and the market attracts
new entrants5. In that sense, the Schumpeterian entrepreneur is a cornerstone
to the development process as s/he consistently disturbs the prevailing equilibrium and creates disequilibria, with her/
his innovation. Frank Knight introduces
the uncertainty bearer entrepreneur
motivated by profit “The venture itself
maybe a gamble”6. Edgeworth identifies
the role of the entrepreneur as an arbitrageur, coordinator or middleman who
links product market to factor market
and reallocates and combines resources
and factors of production7. Israel Kirzner
views the entrepreneur as someone who
is “alert to profit opportunities”8. In his book Entrepreneurship, Manage-
ment and the Structure of Payoffs (1993),
William Baumol classifies three types of
entrepreneurs: productive, unproductive
and destructive. For Baumol a productive entrepreneur is one who contributes
positively to the output of the economy
i.e. yields positive marginal product. An
unproductive entrepreneur, whether innovative or not, is one who does not positively contribute to the net output of the
economy, as self sufficiency production
or output is produced for self consumption. Finally, a destructive entrepreneur
is a rent seeking agent who misallocates
valuable resources9.
In comparing these definitions with
the above mentioned examples of entrepreneurs, we will find that some Egyptian entrepreneurs correspond to some
of the definitions while others cannot be
classified under them and thus create
their own set of definition for entrepreneurship. Abou Regela’s cost efficiency
and risk taking, and Araby’s continuous innovations can be easily classified
as productive entrepreneurs. However,
Aboud’s reallocations of resources and
contributions to marginal productivity
are intermingled with rent seeking activities. One can even ask how certain
economic and political settings could
encompass two contradicting entrepreneurs as Araby and Ismail. Therefore,
the question addressed in assessing entrepreneurship and its contribution to
the overall economy shall not be how to
increase the number of entrepreneurs
but rather how to promote entrepreneurial activities. This shift in paradigm shall
have implications on the measurement
and policies. For example, the following
question shall not be whether a certain
fiscal policy increases the number of new
businesses or enterprises rather shall it
promote more innovation, reallocation
of resources, and other positive entrepreneurial activities? Fiscal policies to
promote the investment climate such as
lowering taxes could increase number of
new businesses, yet it is not sufficient to
promote innovation, and genuine entreTHE CHRONICLES, FALL 2009
29
In the Pipeline
preneurship as defined by Schumpeter
and others.
While there is an extensive literature
on entrepreneurship in developed countries, the phenomenon did not attract
much attention in the developing world
and more specifically in Egypt. With the
exception of limited research, the role
of entrepreneurs in the development of
Egypt has been absent from development literature. Hence, this research
tries to address the importance of entrepreneurs through measuring their contribution to various economic variables
such as GDP, welfare, poverty alleviation
and employment creation. Furthermore, the research intends to question
the core of the entrepreneurial process,
innovation, by asking to what extent
Egyptian entrepreneurs are innovative,
according to the Schumpeterian analysis. The research intends to propose
policies promoting entrepreneurial innovative activities rather than merely those
facilitating the increase of business enterprises. Therefore, the third part of the
research intends to test the impact of the
economic settings “rules of the game” on
the entrepreneurial activity. What are
the rules of the game that produce more
of Abou Regela’s and Al Araby entrepreneurial behavior and less of Ismail’s or
even less of the imitating franchise businesses? In other words, how can the economic settings incentivize the creation of
productive entrepreneurial activity and
eradicate the unproductive and destructive activities? End Notes:
(Rowad al Istethmar – part 4 , p. 26 -29)
(Rowad Al Istithmar, part 2).
3
Business Today, April 2008
4
ibid
5
Schumpeter, J. 1934 (orig. 1912). The Theory
of Economic Development. Cambridge:Harvard
University Press
6
Knight, F. 1921. Risk, Uncertainty and Profit. New York: Houghton Mifflin Company
7
Edgeworth, F. 1925. Paper Relating to Political Economy. London: Macmillan and
1
2
30
THE CHRONICLES, FALL 2009
Co.Ltd.
8
Kirzner, I. 1973. Competition and Entrepreneurship. Chicago: Chicago University Press.
9
Baumol, Williamm. 1993. Entrepreneurship,
Management and the Structure of Payoffs.
Cambridge, Massachusetts. The MIT Press
[email protected]
In the Pipeline
different steps. It is not a
mere pilot laboratory associated with an industrial plant. Therefore, examining its history in Egypt
requires an in-depth look
at the different processes
involved. The process of
research and creation includes two basic elements;
the design and creation of
capital investment and the
know-how, or the unique
product-specific
idea.
Capital investment includes the design
and establishment of the factory building
and the design of the machinery within
it. While industrial research existed from
the beginning of the 20th century, capital
investment was only introduced in Egypt
in the 1970s.
This research, currently conducted at
the Economic and Business History Research Center (EBHRC), also tackles the
nature of the different scientific institutes responsible for providing the technical help needed. Such institutes existed since the mid 1950’s starting with
the Higher Council for Science and then
the National Research Center. Other
industry-specific research centers were
also created over the years from the late
1950’s until the 1970’s. In the 1960’s
such institutes were under complete
government control and were divided between the Ministry of Scientific Research
(established 1963) and the Ministry of
Industry. The oral narrative of different scientists and industrialists is the main tool
used in this research, as there has never
been an interest in recording this history. The vast majority of the available
body of literature, and data, is focused
on current indicators such as quantity
of registered patents rather than the history of the institutions producing such
research.
The research has not come up with
specific conclusions, however, there are
issues that must be highlighted when
Industrial
Research &
Development
Reem Abu Zahra, Researcher, EBHRC
Technology in industrial development could be viewed as an intermediate
product leading to the creation of other
products, and not as an end in itself.
Industrial research aims at presenting
a new idea whether it is an innovation
or whether it is providing a new way of
developing a product based on a unique
method. Even though it is a mere input
in economic activity, it is the single most
important determinant of the long-term
development of the overall industrial and
economic sectors. From a pure economic
perspective, purchasing the know-how
could be the most expensive step in the
entire industrial process. Most importantly, having the capacity to present a
unique idea also means that the producer or the owner of the idea has a comparative advantage that guarantees survival
in a competitive market.
The history of industrial research and
development (R&D) in Egypt is one of the
topics that have often been neglected in
scholarly literature. In fact, the lack of
industrial R&D has often been mislabeled as a problem of scientific research
and poor education, lack of governmental and private funding, and inefficient
government
management.
However,
upon looking at the history of scientific
research associated with the industrial
process, other political and economic issues were brought to the surface.
R&D is a fluid concept that includes
THE CHRONICLES, FALL 2009
31
In the Pipeline
discussing the history of R&D. In fact,
digging deep into these issues may be of
help in understanding the lack of industrial R&D in Egypt nowadays.
One of the most important subjects
at stake is the politicization of the issue
of technology transfer. Factories built in
Egypt since Mohamed Ali’s reign were all
imported from A to Z, even foreign experts used to run them. The first attempt
at “Egyptianizing” the industry was that
of Ahmed Zaki Pasha who established
seven factories, each with its own pilot
laboratory for research in the early 20th
century. For the first time, new Egyptian
products were introduced to the market.
But unfortunately, it did not last long.
The second attempt was associated with
import substitution industrialization policies (ISI) that took root in the 1950s and
1960s. Egyptian markets were closed to
foreign products, and the industrial sector was tightly controlled by the government, including the transfer of knowhow. In public sector industries, there
had been a strong movement aimed at
innovation and developing existing technology. The main drive behind such efforts was nationalistic in nature. However, the economic rationality of such
attempts have not been supported in the
research findings so far.
The second topic tackled by the research deals with the nature of Egyptian
research institutes and the bureaucratic structure governing them. Institutes
were established shortly before the 1952
revolution, and were developed during
the Nasserite period to mark the proliferation of different scientific as well as
industrial research institutes. Despite
the quality of research produced at
that point of history, different scientists
stressed on problems related to the bureaucracy and structure of such institutes that led to their scientific collapse.
Dr. Abd Al Fattah Al Kassas, a renowned
ecologist, highlighted an important problem, which is the constant change in the
structure of such institutes that caused
a great deal of instability.
32
THE CHRONICLES, FALL 2009
Another issue of serious implications
is how R&D as a concept is perceived.
How does the government or the Egyptian entrepreneur perceive it? How do
they view its role? Does it suffice to have
a technical office inside a factory responsible for solving problems? Or should
that office be responsible for generating
new ideas? Dr. Yousef Mazhar, a former
deputy in the Ministry of Industry argued
in his narrative that R&D is a very “fluid”
term, which means different things to
different people.
The research is also looking at the issue of technology transfer, and whether
buying the right to use technology guarantees the transfer of knowledge. The
narratives gathered so far suggests that
in many cases, this transfer was superficial. The passing on of technology is a
process that starts with “becoming aware
of the technique, acquiring it, adapting
it to the local market conditions, testing
and debugging it in the domestic contest,
and marketing it.”1
However, after the end of the Nasser-sponsored ISI policies, such transfer
was brought to a halt on the part of the
public sector as well as the private sector. The Egyptian government, as well as
entrepreneurs, began buying the right to
use the know-how without taking any interest in developing it. There are plenty
of examples in this regard, such as the
capital investment company EGYTALLEC, which is a public sector company
that hent into partnership with another
Italian Company. Looking at the division
of labor inside the company, one finds
that the Italian partner is the only party controlling the know-how. The Egyptian company controls 51 percent of the
shares to maintain a grip over the administration, however Egyptian caliber
were composed mostly of engineers responsible for implementing the projects,
and the technical knowledge was in the
hands of the Italian partners.
These are some of the issues raised
when trying to examine the history of
industrial research and development.
In the Pipeline
Although it is debatable whether the existence of sophisticated R&D in a developing county, which is still struggling to
achieve true economic development, is
enough to lift its population out of poverty, the nature of the issues raised reveals
other serious political issues as well.
End Notes:
Tuma, Elias H. 1987. Technology Transfer
and Economic Development: Lessons of History. The Journal of Developing Areas 403428.
1
[email protected]
THE CHRONICLES, FALL 2009
33
HISTORICAL PERSPECTIVES
Governmentality
in Egypt’s
Countryside
Philip Rizk, Film Maker & AUC Graduate Student
“War making and state making… qualify as our largest examples of organized crime….
A portrait of war makers and state makers as coercive and self-seeking entrepreneurs
bears a far greater resemblance to the facts than do its chief alternatives: the idea of
a social contract, the idea of an open market in which operators of armies and states
offer services to willing consumers, the idea of a society whose shared norms and
expectations call forth a certain kind of government.”
- Charles Tilly1
The Egyptian state’s economic policies
are crassly re-shaping the landscape
of Egypt’s countryside, in a show of
force that is revealing the priorities of
the current trend of governance. I will
address the land reform law of 1992
and Egypt’s economic infitah as the
main nexus bringing about such social
reordering. I will posit that in this process
the Egyptian government is unilaterally
“rolling back” or reducing its role in the
pseudo-social contract of 1952, rather
than re-negotiating it. The second party
in the ostensible “contract,” though far
from voiceless, is consistently ignored
and suppressed, deeming the concept
of contract a rhetorical masquerade.2
The result is soaring levels of poverty
and unprecedented gaps in inequality
between rich and poor, largely between
members of the government, its related
business associates and a small class
of upper class professionals on the one
hand and the rest of the population on the
other. One of the hardest hit groups due
to the restructuring of Egypt’s economic
landscape are the countryside’s fellahin.
Focusing on rural communities I will
34
THE CHRONICLES, FALL 2009
argue that they must resist the ongoing
exploitation by demanding the Egyptian
state to realize the foundation of the
1952 pseudo-social contract.
My written words bear a searing sense
of dissonance regarding the targeted
unit of analysis. My opening statement’s
use of the concept of state requires
some deeper critique. Weber’s classical
identification of the state as having a
monopoly on legitimate violence portrays
the state as a monolithic entity- an
abstraction. I will address and adopt
much of Weber’s claims regarding the
process of legitimation and yet, I must
differ with his presentation of a “state.”
In examining the actions of a deemed
vivid “state” I will need to bracket the
content of the said unit of analysis.
Derek Sayer considers the state itself an
“ideological project, not an agency with
such projects.”c Sayer is building on the
analysis of Philip Abrams who saw the
necessity to unveil the mask-like nature
of the state. For Abrams,
HISTORICAL PERSPECTIVES
“[t]he state is then, in every sense of the term a triumph of concealment. It conceals
the real history of relations of subjection behind an a-historical mask of legitimating
illusion… The real official secret, however, is the secret of the non-existence of the
state…[I]t is just the centrality of the struggle that the idea of the state… contrives to
mask…In sum: the state is not the reality which stands behind the mask of political
practice… it is itself the mask.”
I will address some of the dimensions of
the Egyptian “state’s” governmentality in
rural spaces of Egypt and thereby seek to
assess the “social contract” of “state” and
society, in this case the Egyptian “state”
and the rural landscape of Egyptian
society. In this paper I will furthermore
refer to the process of infitah in Egypt
rather than “economic liberalization”
or the “opening of markets” in order
to highlight the contextual reality of
this economic phenomenon in the
specificity of Egypt. The terminology of
“economic liberalization” too often acts
as a generalizing smokescreen regarding
the role of governments in a deemed
“economic” affair, rather than revealing
“state” and non-state agents as part
and parcel of a process of re-shaping an
entire social landscape. Foundational to
the discussion in this paper is the fact
that in the process of Egypt’s infitah the
institutions that make up the “state”
have not strictly “rolled back,” rather
government policy has merely reduced
their responsibility towards the Egyptian
populace while retaining large and
mutable forms of control.
I. GOVERNMENTALITY VIA LAND
REFORM
“I hope that some people would not
think that the purpose of this law is to
give the landlords a sword to hit the
tenants neck with, for the law has come
to achieve balance and justice between
the two parties.”
- Atef Sidki, former Egyptian Prime
Minister5
In 1952 Egypt witnessed a social contract
between the leaders of the revolution
and the Egyptian populace. The ensuing
state-building-process, though revolting
against its former occupiers, was heir to
the occupation’s same foreign imaginary.
Ensuing was a variance on a differing
vision, yet one of governmentality and
mechanization of the governing process
all the same.6 As part of what was
considered a radical agrarian reform the
new cabinet confiscated land from the
royal family distributing it to landless
farmers, while setting a ceiling of 300
feddan per family (in 1969 to be reduced
to 100) on the size of land plots.7 Nasir’s
reforms introduced agricultural credits,
which enabled the “state” to replace
the power of landowners,8 enabling the
process of reform to be co-opted by a new
ruling elite surrounding president Nasir,
who would in all practical matters replace
the old bourgeoisie.9 While Nasir’s land
distribution program was limited in its
scope, the true gift of this pseudo-social
contract for rural inhabitants was a rent
perpetuity, which prohibited landowners
from forcing tenants off the land they had
worked often for generations. Although
a social contract was not in actuality
negotiated between the two parties, the
only dimension of contract it invoked was
a certain degree of regard and provision
for the rural populace in exchange for a
muted criticism of government policies.
In the mid 1950s, the new Egyptian
leadership quickly silenced unions after
their imposition. The “state’s” provision of
significant social protection increasingly
came at the cost of the demobilization of
the peasantry, thus revealing the façadelike nature of the implementation of
social contract.10
Inheriting the authoritarian nature of the
deemed social contract, the “state” went
THE CHRONICLES, FALL 2009
35
HISTORICAL PERSPECTIVES
on to re-formulate the relationship with
the peasantry in subsequent decades.
The Sadat and Mubarak governments
would gradually replace any element
of benevolence with a program of
economic structural adjustment in
which labor was to be regulated on
behalf of capital.11 In this process rural
communities’ theoretical renunciation of
certain “rights” or imposed agreementthe receipt of benevolence- under the
original social contract were discarded
and thereby became unbounded bodies,
dispensable within the social structure.l
In this transition the discursive language
of contract became void of all meaning.
To these ends the “state” would allude to
a number of primary justifications: first,
a crude articulation of too many people,
with not enough land.13 Second, the
rhetoric of “downsizing” the government
in order to give free reign to the “market.”14
Third, defining modernization as a
purely urban process, thus excluding
any rural dimension.15 And lastly,
opposing the representation of farmers
and workers due to their stated inability
to participate in the economic debate,
to represent themselves or to formulate
economic policies.16 The re-formulation
process of the pseudo-social contract
was affected by two principle factors
for rural communities, land laws and
infitah, which entailed Egypt’s economic
opening to world markets at the cost of
the farming community.
In 1992, after years of political debate,
the Egyptian parliament passed law 96,
which would come into full effect five
36
THE CHRONICLES, FALL 2009
years later. Reem Saad describes the law
as exposing that the Egyptian government
was “more interested in the land than in
the people.”17 Through the new law the
Egyptian “state” forced tenants off of
land that in most cases they had lived
on and planted for generations. By
demonizing the rural tenants as greedy
and using the “state” media to paint the
incidents in their favor the Egyptian
government was able to carry out this
process with minimal social backlash.18
Towards this end the government
created “reconciliation committees” that
acted as key protagonists in the “state”run media to convince the unaffected
populace of the effectiveness and
goodwill of the new land law.19 In reality
“state” agents supported landlords and
threatened and tortured dissidents,
forcing unwilling tenants off their land.
The media, furthermore functioning
as the “state’s” mouthpiece, warned of
the upcoming violence and chaos that
would ensue playing into the plan of a
populace’s perception of legitimacy of
the “state” agents use of force to counter
such ‘incivility.’20 The rhetoric of the
law “returning land to its landowners”
acted as a further façade of the reality
of landownership- the land owners had
actually never lost ownership of the land
in order to now have it ‘returned’- and
aided the “state’s” propaganda efforts.
In a further step of governmentality the
“state” revived the feudalistic nature of
rural co-operatives, which Nasir had
moved from feudalistic landlord control
to “state”-control, in a form of “state”
feudalism carried out by large landowners
with links to the government.21 Erian
Nasif, an Egyptian lawyer who has
represented farmers throughout his
career, describes the co-operatives as a
“back” that farmers had grown reliant
on, it was Sadat that pushed for their
invalidation as they were perceived as
an obstacle to USAID’s economic “state”
planning.22 Although Anwar El-Sadat
was not able to cancel the co-operatives
completely, his government was able to
HISTORICAL PERSPECTIVES
use them as a means of “state” control,
rather than a backing for Egyptian
farmers, which many of them desperately
needed. Thus the co-operatives became
a mechanism of control whereby the
government could set prices, regulate
the activities of farmers and implement
its policies in line not with the needs of
the rural communities but with their
task of reshaping the Egyptian economic
and social landscape.
Instead of negotiating with the farmers
regarding the new law it was almost held
a secret from them until implementation.
In the spirit of Nasir the “state” made
decisions on their behalf without informing
them, yet in contrast to Nasir’s intentions
they had little concern for the welfare of
the rural communities. Overnight the
great leviathan made thousands landless
and without income. It was the very
same “state” institutions that took away
the security for the subsistence of so
many farmers that Nasir’s reforms had
provided. This commercialization of land
countered the internal logic of the ethics
of the farming communities of Egypt for
whom land could not be considered a
commodity, like fertilizer or seeds. For
farmers land simply require a different
mode of analysis.23
The redress of the 1952 agrarian law was
considered important for heybat al-dawla
(the state’s prestige) in an effort to attract
investors and deduce from Egypt’s deemed
socialist/ communist/ Nassirist past.24
For the government’s perception was that
these investors would bring Egypt onto
a track of modernization and progress,
this was the sought-after prestige. Sadat
was interested not only in a purposeful
rolling back of the “state”, but the legacy
of the person of Gamal Abdel-Nasir for
the sake of his own persona’s- and the
“state” he represented- sought after
legitimacy.25This process necessitated
the imposition of private property to
attune to world standards of economic
reality. Under Nasir land ownership
had entailed a collective element in that
“owners” owed their tenants employment
or half the land if they were to sell it.
Sadat on the other hand implemented
full ownership in the Western sense of
private property.
In this transition trans-national concerns
took precedence over national priorities,
mirroring a global trend of acquiescence
to global economic bodies like the IMF
and World Bank and the policies they
promote. Such steps lead into the second
dimension of the governmentality nexus
of Egypt’s countryside, economic infitah.
II. GOVERNMENTALITY VIA INFITAH
“We cannot imagine a free state that does
not produce its own food, and we cannot
throw this responsibility on the peasant
if we do not provide him with stability on
his land.”
- Ali el-din Saleh, president of Misr AlFatah party26
Pierre Bourdieu describes neoliberal
economics as embedded in a certain
cultural worldview where national policies
are dictated by organs of trans-national
governance like the IMF and World Bank.
In this particular milieu such an attitude
acts as “economic common sense” linked
to the “social and cognitive constructs
of a particular social order.”27 This order
furthermore rests on two postulates. One,
that the economy is “a separate domain
governed by natural and universal laws,”
and second, that the market is “the
optimum way of organizing production
and trade.”28 The universalization of this
particular imaginary has caused rise to
a significant shift in the prioritization
of the act of governance. With the
increasing reordering of the nation and
its orientation, the efforts of the “states”
have shifted from local to trans-national
priorities. In the art of governance
legitimacy is consequently sought in the
trans-national arena, rather than being
negotiated among a local constituency.
Hereby, the “state” has sought to reconfigure its ability to “spatialize its
authority.”29
A Structural Adjustment program in
THE CHRONICLES, FALL 2009
37
HISTORICAL PERSPECTIVES
Egypt first instigated by president Anwar
El-Sadat in the 1970s and 80s enforced
the conceptualization of infitah.30 IMF
and World Bank policies succeeded
in reducing subsidies and increasing
food prices.31 Throughout that period
investment in agriculture was neglected
for the sake of sought after foreign
investment and heightened export.
Rather than investing rising oil revenue
in local sustainability, Egypt began to
increase food imports.32 An attempt at
privatizing the fertilizer market caused
such an incessant price increase that
the government had to regain control.33
Furthermore, agricultural prioritization
shifted from cotton and wheat to meat,
poultry and dairy in order to adapt to
Egypt’s new eating habits.34
As a further result of law 96, which
returned land to landowners, new
hired tenants increased the growing
of cash crops in order to balance the
unprecedented and extremely high
rent prices. Due to infitah Egypt has
increasingly had to import principle
items such as wheat- becoming one of
the world’s principle wheat importing
countries- in order to sustain national
intake. In 2002 Egypt was producing more
animal fodder than human consumable
food while increasing its loans in order
to afford its ongoing dependency on
imported wheat.35 The announced
increase of peasant incomes under such
economic policies in the form of wealth
“trickling down” from landowners to
farmers never materialized.36 Joan M.
Nelson explains, “in the early 1980s the
international financial and development
agencies pressed debtor governments to
subordinate virtually all other goals to
stabilization and adjustment.”37 Rather
than recognizing that economic decline
and increased inequality and poverty were
caused by unequal access to resources
Egyptian economic policies further
pushed for large development projects.
As the government divested itself from
its previous duties, a liberalization of
markets, privatization of “state” assets,
38
THE CHRONICLES, FALL 2009
land tenure reform and incorporating
Egypt into the world economy were
heralded as the new economic strategy.
Even USAID has admitted that these
efforts of structural adjustment in Egypt
have failed to reduce poverty or increase
the country’s export performance.38
CONSEQUENCES AND
CRIMINALIZATION
The “state” does not advertise the negative
consequences of economic national
policies while its media celebrates
their supposed advantages. Ray Bush
describes the case study of one tenant
family whose landlord tripled their rent
causing them to leave the rented plot, sell
their livestock, remove their daughters
from schooling and seek alternative and
precarious livelihoods.39 R. H. Tawney
describes the conditions of peasants as
standing in the water up to their necks
where “even a ripple is sufficient to drown”
them;40 in some cases such as this one
it is hard to measure where the waves
have reached for though the family may
be able to survive the drowning they are
now forced into slums, seeking alternate
often informal means of survival. In its
search for legitimacy the “state” renders
illegible social movements that resist the
oncoming waves of structural violence
by accusing the victims themselves of
violence. Consequently, any opposition
to the land tenure act was labeled as
“lawless” and its perpetrators as carrying
out “terrorism.”41 By further demonizing
the protagonists of resistance as
“weeping for Abdel-Nasir,” the “state”
referenced the Nasirite/ “socialist”
versus capitalist dichotomy to arouse
suspicion and antagonism among the
Egyptian public.42 Likewise state-agents
pointed to opposition movements like
the Muslim Brotherhood as the prime
movers behind illegitimate resistance in
an act of scapegoating that functioned
as a means to the “state’s” ends.43 The
government’s labeling of farmers’ actions
of resistance as “criminal”- this being
their only available reaction to state
exploitation as their words fell on deaf
ears- mirrored the deemed state-led
violence as “legitimate.”44
ENDNOTES:
1
Cited Brown, 1990: 214.
2
Saad 2002: 104.
3
Sayer, 1994: 371.
4
Abrams, 1987: 77, 79, 82.
5
Egyptian Prime Minister Atef
Sidki on the occasion of closing the
parliamentary debate confirming law 96
of 1992, Al-Ahram, 2
­ 5 June 1992, cited
in Saad (2002).
6
Gupta and Ferguson, 2002:
989.
7
Beinin, 2001: 132ff.
8
Bush,
9
Nasif, 2002: 35.
10
Beinin, 1987: 430ff; Bush,
2007:94.
11
Bush, 2007: 23.
12
Caldeira, 2001: 368.
13
Mitchell, 1995:
14
Bush, 2000: 236. This returns
to the reason I use the terminology
of infitah rather than “economic
liberalization” to describe contemporary
economic reforms that have and are
taking place in Egypt. The diminishing
role of “state” process is a smokescreen
for foreign investors and a stated
desire to emulate other localities of
perceive economic success. In reality,
the Egyptian “state” is not shrinking
or “rolling back” but re-formulating its
responsibilities under its previous social
contract. Not unlike the “liberalization”
trope in other context the government
chooses in which sectors and processes
to diminish its role and where to retain
or extend its arm of domination. ElGhonemy argues that the market
mechanism does not even exist in many
poor countries (2002: 10).
15
Bush, 2000: 246.
16
Nasif, 2001: 44; Bush, 2000:
246; Saad, 2002: 104.
17
Saad, 2002: 104.
18
Saad, 2002: 104.
Saad, 2002: 118; The
GoE’s utilized strategy hearkens to
Wittgenstein’s “language games”
whereby the “state” uses its monopoly
on language to discursively determine
the use and meaning of language.
Reconciliation committees had nothing
to do with “reconciliation” but acted the
role of legitimization for the “state’s”
economic exploitation of the rural
periphery.
20
Saad, 2002: 120. Countering
Machiavelli’s description of the prime
responsibility of the prince or ruler, Ibn
Khaldoun highlights the importance of
the perception of the ruler’s legitimacy
and goodwill more than the actuality
thereof (Issawi, 1987, 99-139).
21
Bush, 2007: 94 citing Saad
2002; Nasif, 2002: 46.
22
Nasif, 2002: 47.
23
El-Ghonemy, 2002: 5.
24
Saad, 2002: 119. Such language
personalizes the “state” by referring to it
in terms descriptive of the human body.
25
Bush, 2007: 94.
26
Ali el-din Saleh, Misr al-Fatah,
30 March, 1992 (Reem, 2002: 111).
27
Bourdeiu, 2005: 10.
28
Bourdeiu, 2005: 11.
29
Gupta and Ferguson, 2002:
996.
30
Bush, 2007: 17.
31
Mitchell, 2002: 214.
32
Bush, 2007: 95.
33
Mitchell, 2002: 261.
34
Mitchell, 2002: 217.
35
Mitchell, 2002: 215f.
36
Beinin, 1999: 99.
37
Cited ibid..
38
Bush, 2000: 237; Bush, 2007:
96.
39
Bush, 2000, 242.
40
Cited Scott, 1976: 3.
41
Bush, 2000: 240. See note 15.
42
Ibid.
43
Saad, 2002: 119; Bush, 2000:
241.
44
Brown, 1990: 3ff.
19
[email protected]
THE CHRONICLES, FALL 2009
39
POLITICS & POLICY
New Law,
OLD PROBLEMS:
The Egyptian Rent Control Dilemma
Salma Mansour, Financial Analyst, Citadel Capital
Introduction
The use of the term ‘Housing Crisis’ in
Egypt can be traced back to over five
decades ago and has continuously been
part of the national economic and social
discussion since that time. One of the
key pillars of discussion remains to be
the rent control policies adopted by the
Egyptian government and their changed
implications over time. In order to evaluate
the efficacy of such policies, one must first
consider the underlying constitutional
issues, the economic structure that
dictates policy outcomes and empirical
findings that show particular results
of the policy in the Egyptian context.
During the process of research, there
were two problems worth noting. First,
typical of developing countries, there are
few and limited empirical studies due
to the unavailability and inaccuracy of
data, in addition to lack of government
transparency. Second, in the interest
of unbiased academic examination of
the issue, the author of this paper has
made reasonable efforts to find studies
supporting rent controls, but was unable
to find ones explicitly upholding this
position published during the last three
or four decades. This may suggest the
difficulty of finding evidence in support
of rent controls strictly on economic
grounds.
I. History of Rent Control Policy
40
THE CHRONICLES, FALL 2009
The evolution of the Egyptian rent
control policy can be tracked by
surveying the changes made in relevant
statutes overtime. These fall under four
categories. The 1919 to post World War
II era witnessed the first abolition of
landlords’ right to evacuate tenants,
save the case of non payment, along
with two episodes of forced rent payment
reduction of 15% to 20%. During the
socialist
Nasser
era,
construction
companies and over 60 residential
complexes were nationalized, in addition
to yet another forced rent payment
reduction of 20%. Most importantly, this
era witnessed the passage of a statute
allowing the inheritance of rented units,
which permitted the continuation of rent
control implications across generations,
and prohibiting Key Money.The Sadat
Open Door Policy era, although generally
colored by economic liberalization efforts,
was one during which the government
passed a statute that allows tenants to
re-rent or exchange the unit they occupy
without referring to the landlord. This,
combined with the rental inheritance
law marked almost the full elimination
of landlord rights over their property,
while still deeming them responsible for
its maintenance. However, one attempt
at policy reform was the exemption
of luxury housing units from rent
controls, although this can be seen
as a modification that favors the poor
over the rich. Finally, the Mubarak
POLITICS & POLICY
administration, after maintaining the
bulk of the aforementioned laws for
over two decades, passed Rent Law No.
4 of year 1996 which exempts units
erected from that date onwards from
rent controls1. Hereafter, this law will
be referred to as the “New Law”, while
the earlier set of statutes impeding rent
increases and tenant mobility will be
collectively referred to as the “Old Law”.
Stated Policy Objectives:
A frame of reference for policy evaluation
can be established by listing the policy
objectives proclaimed by the government
as the driver of rent control policies.
According
to
Allam,
government
objectives as listed under the Ministry
of Housing mandate are as follows2: 1)
To provide a healthy residence to the
Egyptian citizen, 2) To guarantee that
assistance reaches deserving citizens,
3) To establish a national housing policy
in line with national plans, 4) To make
a positive contribution to the housing
sector to accomplish social and economic
development, 5) Controlling the problems
of inflation, 6) To create job opportunities,
7) To encourage investment in real estate,
and 8) To preserve the housing stock.
It is also important to consider tenant
objectives, also listed by the government:
1) The right to a healthy resident
appropriate to one’s needs with a legal
entitlement, 2) Free mobility from one
house to another, and 3) That housing
and utility costs are within reasonable
limits relative to income. As for listed
objectives of investors, what concerns
us is the need for proper return to
encourage investment in the housing
sector. Let us now examine the various
rent control implications and how they
eventually move the housing sector away
from these objectives.
Unjust & Uncompensated Transfer
from Landlords to Tenants
The combination of rent laws above has
lead to sharp and unfair disparities in
economic outcome between landlords
and tenants. It has primarily lead to
situation where tenants have quasi
ownership of the property, where they
exercise control over it while baring little
or no corresponding responsibilities. This
constitutes an unjust and uncompensated
transfer from landlords to tenants and
leaves landlords with no opportunity to
earn a fair return. According to Allam,
one of the major unfair outcomes of the
rent policy is that many landlords who
own priceless property in high traffic
Cairo areas are finding it hard to finance
housing for their own children due to low
rents and cannot use their own property
as it is illegal to evacuate existing
tenants. Other peculiar outcomes are
seen in cases where a landlord owns
rented space overlooking the Nile River in
Zamalek, the Cairo equivalent of Upper
West Side Manhattan, and receives
between $2-5 in rent under the Old Law.
This leaves landlords in a situation where
their revenues have severely decreased,
while likely reaction to exit the market
is impeded by the provisions of the Old
Law. It is worth noting that Egypt’s owner
occupancy ratio is 32%. The remaining
68% is rented, and the majority of these
units fall under the Old Law, indicating
the scope of the problem. In addition to unfair and impractical
implications of the law, there exist
loopholes that allow favoritism in
application and often results in lengthy
and costly litigation between involved
parties. The party with police or political
connections usually gets the upper hand,
extending the injustice and disproving the
proclaimed policy objectives. Also, since
tenants exceed landlords in number,
policy revision carries risks of political
unrest due to the particular sensitivity
of the housing issue, which suggests
that the authorities would appease the
masses at the expense of landlords’
property rights.
THE CHRONICLES, FALL 2009
41
POLITICS & POLICY
Circumventing the Law: The Illegal
Practice of Khelew (Key Money)
lowering costs by omitting expenditure
obligations of maintenance and repairs.
There continues to be several ways by
which market players successfully and
repeatedly circumvent the rent control
to fulfill their needs that continue to
exist regardless of the imposed statutes.
Khelew is the Arabic term for Key Money,
which is the illegal practice of buying out
old tenants of a rent controlled estate.
Old tenants receive a negotiated incentive
payment from new ones, usually with
the help of the landlord himself who
receives a commission of the payment in
compensation. Such transactions often
include a paid middleman as well. Such
transactions are made possible by the
Sadat era statute allowing tenants to rerent the housing units they occupy.
Further Circumventing the Law: Under
Maintenance Effect on Buildings:
As stated in Fahmi’s article, this
contributes to the situation where
“There is no housing available in Cairo
today which is affordable for the average
citizen to rent”3. Khelew payments
are considerable, and their informal
nature contributes to making them
too expensive for the needy masses. It
is often the slim middle class or more
affluent families that take advantage of
this illegal window. This practice may
involve appeasing the local authorities
and tapping connections with the police
force or political relations. Therefore,
this activity not only undermines the
rule of law but also boosts the size of
the informal sector which has many
problematic implications on the housing
sector and the economy at large.
Khelew can be viewed as an indirect
mechanism for the landlords to partially
restore equilibrium rent. The will of
economic agents cleverly and creatively
prevails, especially when government
regulation is highly unfair and impractical.
Khelew arrangements make up one side
of landlords attempt to restore balance
to their cost-benefit equation. While
receiving Key Money boosts landlords’
actual revenue, the other end involves
42
THE CHRONICLES, FALL 2009
Since rent revenues are about three
decades behind costs to landlords, it is
quite irrational for them to voluntarily
cover maintenance costs of the rented
property. Also, since the old rent law
provides a quasi ownership status
for tenants, to allocate spending to
maintenance would be like giving tenants
a handout over and above the benefits
they already receive in the form of low
rent and control over property they do not
actually own. Many landlords experienced
a sharp decline in their source of
income due to the cap on rents and are
therefore unable to source funding for
maintenance4. By ignoring maintenance
spending, landlords attempt to bring
down their costs as close to the revenue
level as possible, as a natural reaction
to the mismatch between benefits and
obligations for landlords.
As noted by McCall, there are additional
reasons why landlords are not willing to
invest in maintenance and repairs under
the Old Law. First, to the discredit of
legislators, it is much more economic
for landlords to pay the resulting fine
than to do necessary repairs. Second,
it is in line with the strategic interests
of landlords to let buildings under the
Old Law deteriorate until they become
inhabitable, so they can sell the land
at market price yielding vast multiples
of the controlled rent return revenues.
Finally, landlords may skip repairs as
to deteriorate the unit enough to force
tenants to leave. They can then re-rent
the space either informally or under the
New Law.
The overall outcome of this was
accelerated deterioration in the quality of
buildings, as reflected in the dilapidating
Cairene architecture and lower quality of
life for tenants. Moreover, tenants often
POLITICS & POLICY
have to pay for repairs themselves, or pay
illegal fees to landlords to do it for them,
which raises their costs considerably.
In effect, tenants are likely to end up
paying the full rent, if not more, despite
the rent control, because the need for
maintenance spending continues to exist.
This has the dangerous effect of further
undermining the rule of law in addition
to the damage of housing stock among
other disadvantages of the policy.
ENDNOTES:
1
Fahmi, Wael and Keith Sutton.
“Greater Cairo’s Housing Crisis:
Contested Spaces from Inner
City Areas to New Communities”. The
International Journal of Urban Policy
and
Planning. Volume 25, Issue 5, Pages
277-297 (October 2008)
2
Allam, Ahmed, Mohamed Al-Zaafarany
and Esmat Abu-El-Ela. Mushkilat aliskan fi Misr
(Translation: Housing Problems in
Egypt). 2002.
3
Ibrahim qtd. in Fahmi, Wael and Keith
Sutton. “Greater Cairo’s Housing Crisis:
Contested Spaces from Inner City Areas
to New Communities”. The International
Journal of Urban Policy and Planning.
Volume 25, Issue 5, Pages 277-297
(October 2008)
4
Niebank, Paul. “The Politics and
Economics of Rent control”. The Rent
control Debate. 1985.
[email protected]
THE CHRONICLES, FALL 2009
43
POLITICS & POLICY
Economic Stakes
in the
golan heights:
Constraining the
Peace Process?
Sara El Abd, Economics Undergraduate, AUC
Since the Golan Heights were lost by
Syria in the 1967 Six-Day War, the land
has been under Israeli occupation; and
despite international criticism, Israel
annexed the Golan Heights in 19811.
Although the territory is merely 460
square miles, it offers political, economic,
social, and strategic significance to
Israel; making it increasingly difficult to
cede to Syria in exchange for peace and
fully normalized relations.
Israel gains in economic terms from
the Golan, specifically in regards to
agriculture, tourism, and water access.
The Golan is rich in farmland and water,
two commodities that are scarce and dear
to the State of Israel2. Since the failure
of the peace negotiations in Geneva in
2000, talks have come to a deadlock.
This situation gives rise to two important
questions: Is pushing for peace talks
with Syria in Israel's national interest
economically and politically? And are
the predicted economic losses associated
with the return of the Golan the main
obstacle hindering the much-anticipated
peace talks between both states?
44
THE CHRONICLES, FALL 2009
Israel's Economic Gains from the
Golan Heights:
Since occupation, Israel has used the
fertility of the Golan landscape to enrich
and expand its agricultural sector.
Fertile land, such as that of the Golan
Heights, is an essential asset because
over half of its land is arid or semi-arid
desert3. Approximately 40% of Israeli
beef, 30% apples, 38% wine exports,
32% potatoes, 23% corn, 50% cherries,
41% wool, 28% eggs, and 6% of milk of
the Israeli domestic market come from
the Golan4. Maintaining control over this
piece of land allows Israel greater selfsufficiency, producing almost 70% of all
its food requirements. Israel's agricultural
revenues from the Golan amount to
approximately 500 million Shekels. It is
clear that the Golan is very valuable to
Israel in agricultural terms because of
its contribution to the national economy;
giving up such agricultural land would
be a huge cost to Israel not only because
of loss in revenue, but it will also disturb
"the economic balance [by] affecting
the agricultural distribution5." If such
POLITICS & POLICY
crops cannot be grown in the Golan,
relocating would come at a cost to Israel,
especially as it strives to develop its
agricultural industry despite its scarce
water supply.
Furthermore, the Golan is a popular
tourist destination in Israel that
contributes to Israel's rapidly growing
tourism industry and ultimately the
national economy. Outdoor traveling and
activities such as skiing, snowboarding,
rock-climbing, etc…are common sources
of revenue;6 as are its national parks,
reserves, and archaeological sites.
Tourism revenues coming directly from
the Golan amount to approximately 150
million Shekels per year.
The most important reason why Israel
is holding on to the Golan Heights is
because it serves as a gateway to water
access. Approximately 400 meters of the
Golan borders the Sea of Galilee. This
strip of land has been a key factor in
previous Israeli-Syrian peace talks and
it is evident that Israel is desperate to
remain in control of it.
The 1999-2000 Syrian-Israeli peace
talks discussed Syria exchanging peace
in return for the entirety of the Golan.
The talks failed when Ehud Barak, the
Israeli Prime Minister at the time, refused
to return the 400 meters that bordered
the shore of the Sea of Galilee7.
In terms of production, 50% of mineral
water in Israel comes from the Golan
Heights. The watershed of Lake Kinneret
provides Israel with one-third of its
fresh water supply, and "Israel cannot
exist without it."8 The reason why Israel
blooms in the south is because of the
water coming from the Galilee; this is
what turns the Negev Desert, half of
Israel's territory, into productive land9.
The importance of the Golan cannot be
understated because it affords Israel
total command of the Galilee Basin, east
as well as west.
The Position of the Current Israeli
Government Concerning a Peace Deal
with Syria:
In George Mitchell's recent visit to Syria,
he pointed out that the Syrian government
had an "integral role" in reaching peace
in the region10. US officials have recently
proposed a plan that entails a vision of
Syrian-Israeli peace that transforming
the Golan Heights into a demilitarized
nature reserve, or a "peace park" that
would open to visitors during the day11. Currently, Frederic C. Hof, conflict
resolution expert and senior adviser to
Mitchell, is in the process of presenting a
draft plan for Syrian-Israeli peace which
targets finding solutions to the Golan
dispute. Hof's ideas were published in
a report called "Mapping Peace between
Syria and Israel" which is famously
known for envisions of turning the Golan
into an environmental reserve12.
Despite US efforts, the new Israeli
government's position reveals that
an Israeli-Syrian peace deal looks
unlikely. Netanyahu's stance is that
"if there is a territorial compromise,
it is one that still leaves Israel on
the Golan Heights and deep into
the Golan Heights". The government
will only agree to negotiations with "no
prior conditions," but, at the same time
wanting to remain in control of much of
the territory for "strategic, military, and
land-settlement reasons…needs of water,
wine, and landscape"13. This presents an
obstacle to the negotiations as Syria has
maintained that peace will be possible
only if Israel withdraws entirely from the
Heights.
In April 2009, Foreign Minister
Lieberman stated that he was willing
to start negotiations with Syria if there
are no preconditions or ultimatums.
Bashar Al-Assad demanded going back
to the 1967 borders and giving up the
Golan Heights as a pre-requisite for
Syrian-Israeli negotiations, claiming that
THE CHRONICLES, FALL 2009
45
POLITICS & POLICY
if Israel refuses to give up Heights, the
territory will be taken by force14. Some officials, such as former Israeli
Defense Minister, Shaul Mofaz, believe
that the Golan Heights are a strategic
asset that Israel must not hand over
to Syrians because they are not ready
for peace and cannot be trusted. Mofaz
bluntly stated that Israel could achieve
a state of peace and coexistence with
Syria without having to cede the Golan
Heights15.
From
previously
unsuccessful
negotiations, it is evident that Israel
demands that Syria disengage from
Iran, close the offices of Hamas and
Islamic Jihad, and play a positive
role in persuading them to accept a
peaceful solution and cooperate with the
Palestinian National Authority in return
for ceding any piece of land16. Obstacles in Syrian-Israel Peace
Negotiations:
It is clear that Israel does indeed gain from
the Golan Heights in economic terms.
Specifically, it earns approximately 1.6
billion Shekels from it per year. However,
when looking at the bigger picture, its
contribution to the national economy only
0.00275% of the 582 billion ShekelGDP.
Therefore, the agricultural and tourist
gains are not the issue per se; they are
part of the issue. Israel can afford to
give up this small percentage of GDP
considering the main sources of revenue
come from industry, IT, diamonds, etc.
However, the heart of the conflict is over
security, water, and territory.
The Israeli government will never make
any territorial concessions before being
fully guaranteed security from Syria and
intermediaries such as the US and UN.
This includes Syria cutting ties with Iran,
Hamas, and Hezbollah. The economic
losses of tourism and agriculture can
be sacrificed but security and water will
not. Regarding water, Israel cannot exist
46
THE CHRONICLES, FALL 2009
without the supplies from the Sea of
Galilee and Lake Kinneret. Syria claims
that water arrangements will be inclusive
in a peace agreement, along with security
and fully normalized relations17.These
arrangements must be upheld with full
backing and approval of intermediaries
such as the US, UN, and EU, for there
to be any hopes of successful talks this
time around.
The economic price Israel would incur
will be relocating the 40,000 settlers
who have been residing in the Golan
since 1967, and compensating them for
such. All the revenues coming in from
Golan agriculture and farmland will be
lost, forcing the Israeli government to
turn additional desert land into land
convenient for agriculture.
The political price for Israel is significantly
greater than the economic price. In a
recent interview I conducted with Shani
Cooper-Zubida, spokesperson for the
Israeli Embassy in Cairo, she explained
that the debate over security creates
the biggest divide within the Israeli
state. Netanyahu's present right-wing
government was elected based on its
security promises to the public. The
motto of the government is "security will
lead to peace18." The Israeli government
prioritizes security first, peace second
(not the opposite). The greatest fear of
the public and the government is that
what happened in the Gaza Strip will
happen in the Golan Heights if it were
to cede it to Syria. Upon the withdrawal
from the territory, groups such as
Hamas or Hezbollah could threaten the
Israeli population with missile fires,
thus deterring the Israeli government
as they are held responsible. More
importantly, the prime minister does not
want to jeopardize his re-election and
anger the hawkish coalition. It is almost
guaranteed that within months or even
weeks of ceding the Golan, the coalition
government in Israel will collapse;
similar to what happened after Oslo and
POLITICS & POLICY
the disengagement from Gaza. Moreover,
the significance of some of the Zionist
ideology streams cannot be ignored as
there are numerous Israeli citizens who
truly believe that the Golan historically
and rightfully belongs to Israel. Although
they are not the majority of the population,
they do reflect the mindset of part of the
population, not to mention the Knesset
as well. The main cause for hesitation on the
Israeli government's side is the political
price they will have to pay, not the
economic one. The general sentiment of
the population can be seen in the May
2009 polls of The Jerusalem Post that
showed that the majority of the Israeli
population was against withdrawing
from even part of the Golan. When asked
"should Israel agree to concessions on the
Golan Heights in return for full peace with
Syria, that includes diplomatic relations
and adequate security arrangements?"
52% said that Israel should not give up
any territory on the Golan Heights19.
Such polls leave the government in fear
of sparking a political earthquake within
Israel if the expectations of its people are
frustrated as a result of the sacrifices that
would be made for peace negotiations
with a country seen as distrustful. Regarding turning the Heights into
a peace park, Ammar El-Arsan,
spokesperson for the Syrian Embassy
in Cairo, firmly told me it is "a big no."
The land is unlawfully occupied Syrian
territory that must be returned to Syria.
Arsan further explained "the only lines
acceptable are the June 4, 1967 lines…
Syria will accept negotiating on other
things, not this." It is unlikely that the
Syrian position will budge because
the "land for peace" principle has been
the basis of negotiations since 1991.
Moreover, Syria has the backing of
the international community. Israel is
occupying the Syrian territory of the
Golan Heights despite UN Security
Council Resolutions 242 and 338. For
the Syrians, illegitimate occupation
means no peace, said El-Arsan20.
Pushing for Progress:
After realizing the absolute complexity
of the situation, one begins to question
the likelihood of successful peace talks
in light of current US efforts. Although
the Obama Administration has been
shuttling envoys back and forth in the
region hoping to spark negotiations, the
international community is unlikely to
see results that quickly because such
negotiations take several months or years
before agreed upon and finalized. It is
unmistakable that the US is pressuring
the Israeli government hoping that it will
have rippling effects on Israeli public
opinion, making them more open to the
concept of territorial concessions.
In the short-term, there is no reason
why Israel should push forward and
be enthusiastic over negotiations.
Maintaining the status quo is in Israel's
national interest. It will gain from the
fresh water supply, tourism, agriculture,
and security from the quiet border. Also,
the UNDOF forces in the Golan are doing
their job and there is no threat whatsoever
from Syria over a pre-emptive strike21.
The Golan border is quiet and free from
instability, much more so than the
Egyptian-Israeli border; and it is likely to
remain so unless terrorist groups from
Syria attack Israel and provoke Israel
to strike in return22. To put it frankly,
Bashar Al-Assad's threats of taking the
Golan by force are not taken seriously.
The present coalition is maximizing
Israel's present national interests without
looking ahead.
However, in the long-term, Israel is
not protecting its national interests
whatsoever because although it thinks
it is guaranteeing the security of
the population now, later it cannot.
Despite what the government thinks,
time will not solve their problems with
their neighbors. The anger of extremist
THE CHRONICLES, FALL 2009
47
POLITICS & POLICY
organizations will culminate and may
very well trigger another war23. No one
can avoid a sudden war in the Middle
East, such as what happened in Gaza in
2008/9 and Lebanon in 2006. The degree of sacrifice during negotiations
from both sides will depend extensively
on public opinion. The Arab population is
now very accepting to the "land for peace"
propositions with Israel. In contrast, the
majority of the Israeli population is not
convinced with this concept. They are
convinced with exchanging peace for
peace or security for peace. Therefore,
the issue lies within the Israeli public
themselves because they are not ready
for fully-fledged peace, leaving the
Netanyahu government no choice but to
reflect their desires. The main question for Israeli politicians
is whether or not their country can
withstand the losses associated with
ceding the Golan. And the main question
for Syrian politicians is how much longer
will they passively keep promising their
people the return of their land without
any action to show for it?
Both Lieberman and Al-Muallim claim to
be willing to negotiate over the Golan, but
there are no clear prospects foreseeable
from either side. If both Israel and Syria
continually pursue their short-term
national interests devoid from long-term
peaceful resolution attempts, Israel will
never cede the Golan and militarized
groups in Syria and elsewhere may
actually use force in an attempt to regain
sovereignty over the occupied territory
causing a more wars and disruptions.
48
THE CHRONICLES, FALL 2009
End Notes:
1
BBC News (2009), "Regions and
Territories: The Golan Heights"
2
Tristam (2008), "Syria, the Golan, and
Peace with Israel"
3
Israeli Agriculture (2008), "Examining
Israel's Agricultural Community"
4
Cooper-Zubida (2009), Media and
Public Affairs Spokesperson, Embassy
of Israel Cairo
5
Ibid
6
Levit (2008), "Israel's Tourism
Industry: Recovering from Crises and
Generating Growth", p 10
7
Tristam (2008), "Syria, the Golan, and
Peace with Israel"
8
Cooper-Zubida (2009), Media and
Public Affairs Spokesperson, Embassy
of Israel Cairo
9
Ibid
10
BBC News (2009), "Israel Must Stay
'Deep in Golan'"
11
The Age (2009), "US Wants Golan to
Become a 'Peace Park'"
12
Christian Science Monitor (2009),
"In Israel, US Envoy Maps Peace With
Syria"
13
BBC News(2009), "Israel Must Stay
'Deep in Golan'"
14 BBC Monitoring Middle East (2009),
"Israeli Foreign Minister Says Ready to
Talk to Syria if no Preconditions"
15
BBC Monitoring Middle East (2008),
"Israel Must Not Cede Golan Heights
as Syria 'Cannot be Trusted'-Minister,"
June 3, 2008
16
BBC Monitoring Middle East
(2009), "Writer Says Syrian Demands
Hampering Return of Golan Heights"
17
Al-Arsan (2009), Spokesperson,
Embassy of the Syrian Arab Republic,
Cairo, Interview
18
Cooper-Zubida (2009), Media and
Public Affairs Spokesperson, Embassy
of Israel, Cairo, Interview
19
BBC Monitoring Middle East (2009),
"Israelis Opposed to Golan Withdrawal
in Return for Peace with Syria-Polls"
20
Al-Arsan (2009), Spokesperson,
Embassy of the Syrian Arab Republic,
POLITICS & POLICY
Cairo, Interview
21
Cooper-Zubida (2009), Media and
Public Affairs Spokesperson, Embassy of
Israel Cairo
22
Schieder (2009), The Washingtn Post,
"Netanyahu Gets More Time, Hopes to
Forge Broader Coalition"
23
Cooper-Zubida (2009), Media and
Public Affairs Spokesperson, Embassy of
Israel Cairo
[email protected]
THE CHRONICLES, FALL 2009
49
POLITICS & POLICY
AGRICULTURE
FOR
EXPORT:
Redefining Egypt’s Economic Outlook
Menan Omar, BA in Economics, AUC
Our global age has witnessed
a pronounced contrast between the
opulence of developed countries and
the grim plight of least developing
ones. This growing disparity has been
further exacerbated by the international
community’s failure to maintain just
measures in sharing globalization’s
propitious benefits. With the creation
of the World Trade Organization in
1995, the international community
aspired at securing a smooth flow of
goods and services across the globe
by fully integrating all Member States
50
THE CHRONICLES, FALL 2009
into the multilateral trading system.
Nevertheless, discriminatory regulations
have obstructed free trade and have
resulted in severe repercussions for
developing economies. Furthermore, the
United Nation’s commitment to realizing
its auspicious Millennium Declaration
has been deemed as loquacious and
rather ineffective in combating noxious
diseases or eradicating poverty in the
world’s most afflicted regions. In light of
these events, many developing economies
have been trapped in cycles of despair
and gloom.
POLITICS & POLICY
Despite a number of remarkable
initiatives taken by developing nations,
such as the Group of 20 initiative that
emerged to “translate a vast range of
developing countries’ interests into
concrete and consistent proposals”1,
many developing countries like Egypt
have been echoing with the dependency
theory chorus, arguing that economic
flourishing is conditioned by the
development and expansion of core
economic powers2 or have been lamenting
their exploitive colonial history. In this
sense, they have come to blame their state
of underdevelopment on conspiratory
motives outlined in hidden agendas of the
world’s leading powers. Instead of taking
proactive steps towards progress, these
countries have sought external factors
to justify their misery. They have chosen
to drown in waves of grief and sorrow
and have forgotten that being dependent
or underdeveloped “does not indicate
that [their] relation to the international
economic system is immutably fixed”3.
On the other hand, many
others have assumed that “today’s
underdeveloped countries are still in
a stage […] through which the now
developed countries passed”4, and
sought the ‘magical cure’ against
underdevelopment followed by their
predecessors.
In
pursuing
heavyindustry development strategies, also
known as the Big Push, China plunged
into one of the most tragic periods of its
history. In 1960, a full-blown famine
burst into China, resulting in significant
starvation and excessive mortality rates5.
The Chinese experience has rendered the
ubiquitous gospel that industrialization
is synonymous with economic growth as
fallacious. The world’s severest famine
in the twentieth century6 was not only
a result of fallacious assumptions but
also an acute jeopardy of the Chinese
agricultural sector.
Similarly, the Egyptian economy
sought certain strategies, at a point in
time, which led to the inflation of one
inefficient sector, during that particular
period, and the neglect of others. By doing
so Egypt joined the ranks of developing
nations, who prolong their state of
underdevelopment and incompetence in
the international market.
Following
its
Russian
role
model in the 1950s and 1960s, Egypt
has experienced a stage of intense
industrialization and nationalization.
This has greatly inflated the public
sector leaving behind highly protected
and inefficient industries, such as
automobile production. Additionally,
Egypt was seduced by windfall gains
from oil, labor remittances, the Suez
Canal and tourism. The 1990-1991 Gulf
Crisis is an example “of how dependent
the Egyptian economy has become on a
variety of rent incomes that are subject
to factors over which Egypt has little
control”7. Egypt’s folly in administrating
these gains has increased its already
hopeless external debt and its sluggish
economic performance8. Having been
tainted by Rybczynski’s “Dutch Disease”,
Egyptian policy-makers resorted to
the country’s productive sectors in the
hopes of repaying its external debt,
stimulating its stagnant economy and
restoring the economy’s competence in
the international market. It was then
that Egypt took serious and proactive
initiatives to exploit its lucrative agrarian
sector.
Egypt’s agriculture is the main
pillar upon which ancient Egyptian
civilization blossomed and has been a
fundamental source of wealth throughout
history. The land is not only blessed with
“prodigious fertility that is cyclically
renewed by the annual flood of the Nile
[but also] a toiling peasantry”, both of
which are fundamental for the continuity
of Egypt’s agricultural life9. The Pharoes
devised catchment basins and dykes to
trap the flood and channeled water into
their fields, thus securing an enduring
agricultural economy”10. The expansion
of this sophisticated irrigation system
preceded under Muhammad Ali in the
early nineteenth century and allowed
THE CHRONICLES, FALL 2009
51
POLITICS & POLICY
for multiple cropping as well as “the
expansion of cotton cultivation as a cash
crop”11. With the cultivation of longstaple cotton, Muhammad Ali reaped
unprecedented gains from external trade
of this competitive primary commodity12.
His grand efforts culminated with the
construction of the High Dam and
ambitious land reclamation projects in
the 1960s that allowed for a doubling of
the rice and sugar cultivation areas as
well as an increase in maize yields and
hence, an increase in the nation’s wealth.
13
. Thus, it is Egypt’s agricultural sector
that has been “consistently capable of
generating enormous surplus, thanks to
the copious waters of the Nile”14.
Despite the sector’s indisputable
avail, long decades of neglect have
constrained
Egypt’s
agricultural
productivity. The lack of “adequate
water management and improved
drainage facilities have resulted in
immense water losses. Furthermore,
inadequate machinery necessary for
timely land preparation and harvesting
as well as insufficient support for
agricultural research and development
countermand the rather unique [and]
favorable factors” necessary for the
overall success of agriculture15. Other
factors, including losses from diseases
and pests constitute serious constraints
to the maximization of crop production
in Egypt16. In combating various soil
insects and nematodes, Egyptian farmers
apply excessive amounts of chemical
pesticides that not only have devastating
long-term effects on the soil’s fertility,
but are also in violation of international
environmental standards. “Losses in
handling, packaging and marketing”17
are also among the serious challenges
to the potential gains from agriculture. Thus, Egypt’s lax attitude towards its
agricultural sector not only menaces
its productivity but also prolongs its
ineptness in the international market.
Yet, in light of the aforementioned
discrepancy between developed and
developing nations and the world’s
52
THE CHRONICLES, FALL 2009
“growing concern about the capacity of
agriculture to meet future food needs”18,
it is time for Egypt to join the fierce
competition on the world market. In
doing so, Egypt should attempt to turn
latent comparative advantages into
actual ones.
Policy Recommendation
Egypt can grow asparagus in
rather poor soil without the use of both
pesticides and chemical fertilizers19.
Nevertheless, it may be argued that
domestic demand for asparagus is low
and hence, not worth the investment,
so much the better. This would allow
Egypt to move forward from old
strategies of exporting residuals into
a new approach of “agriculture for
export”. After all, Denmark and New
Zealand are agricultural economies, but
are among the world’s most developed
and prosperous nations. The Peruvian
model demonstrates how “the growth
of the asparagus industry has created
a business that is a global player”20
as a result of “improved production
technology, cheap labor, and favorable
climate”21. Yet, contrary to Peru’s
recent experiment with asparagus, the
cultivation of this unique crop in Egypt
dates back to the times of the pharoes
who grew it to cure venereal diseases22.
Egypt should therefore revive its history
of being the ancient home of asparagus
by utilizing its abundant labor and its
alluvial soils in growing asparagus and
hence, reaping considerable profits from
exporting it to its major trade partners
and strengthening its international
competitiveness.
Not only would this approach
of agriculture for export provide Egypt
with a sustained source of income, but
also with the means of facing global
challenges. The tough environmental
standards set by the world’s leading
economies will not constitute a barrier
to Egypt’s entry into the world market.
On the contrary, Egypt would use these
laws as a means to further growth and
competitiveness. Peru, the world’s largest
POLITICS & POLICY
exporter of asparagus “has adopted
rigorous environmental standards on
environmental management practices
[…] to comply with import requirements”
dictated by the United States, Europe and
elsewhere23. Egypt’s position is infinitely
stronger, for unlike Peru, the cultivation
of asparagus is already compatible with
international ecological standards. In
this sense, the cultivation of Egyptian
asparagus is in accord with global efforts
to save the environment, such as the
United Nations Environmental Program’s
Green Economy Initiative24. Therefore,
agriculture for export proves that tough
environmental standards could well be
tuned to positive gains for Egypt.
Egypt should move forward
towards adapting innovative approaches
that promote economic prosperity and
strengthen their competitiveness in
the world market. A change of Egypt’s
mentality of exporting residuals towards
agriculture for export will certainly
stand Egypt in good stead. Egypt should
therefore invest in agricultural research
and technology and create incentives for
local entrepreneurs, not only to further
expand its strategy of agriculture for
export, but also to effectively address
growing concerns pertaining to the
global food crisis25. It is Egypt’s unique
geographical location at the heart of
the world’s trading route, its favorable
agricultural conditions and abundant
labor that could transform it into a
leader in agriculture and a potentially
developed country.
ENDNOTES:
“G20 – The Group of Developing
Nations with Special Interest in
Agriculture”. 24 Apr. 2009. <http://
www.g-20.mre.gov.br>.
1
Peter Evans, Dependent Development:
The Alliance of Multinational, State
and Local Capital in Brazil. Princeton:
Princeton UP, 1979.
Frank, Andre Gunder. “The
Development of Underdevelopment.”
Monthly Review, vol. 18, Sep. 1966.
4
Naughton, Barry. The Chinese
Economy, Transitions and Growth.
Cambridge, MA: Massachusetts
Institute of Technology Press, 2007.
5
6
Ibid
Amin, Galal A. Egypt’s Economic
Predicament. Leiden: E.J. Brill, 1995.
7
8
Ibid
Bowman, Alan K., and Eugene Rogan,
eds. Agriculture in Egypt – From
Pharaonic To Modern Times. New York:
Oxford University Press Inc., 1999.
9
10
Ibid
11
Ibid
Fahmy, Khaled. “The Era of
Muhammad Ali Pasha”. The Cambridge
History of Egypt. New York: Cambridge
University Press, 1998.
12
Bowman, Alan K., and Eugene
Rogan, eds. Agriculture in Egypt – From
Pharaonic To Modern Times. New York:
Oxford University Press Inc., 1999.
13
14
U.S. Department of Agriculture
cooperating with U.S. Agency for
International Development and the
Egyptian Ministry of Agriculture.
Egypt: Major Constraints to Increasing
Agricultural Productivity. Washington:
U.S. Department of Agriculture, 1976.
15
16
Ibid
17
Ibid
2
3
Ibid
Ibid
World Food Summit, Food and
Agriculture Organization of the United
Nations Online. 2 May 2009. <http://
www.fao.org>.
18
THE CHRONICLES, FALL 2009
53
POLITICS & POLICY
Interview with Prof. Adel A. Beshai,
Professor of Economics at the American
University in Cairo.
19
Peruvian Asparagus Importers
Association. “Evaluating the Impact of
Pending Free Trade Agreement Upon
U.S. Small Businesses.” Statement
of the Peruvian Asparagus Importers
Association Before the House
Committee on Small Businesses. 1
Nov. 2007. 1 May 2009. <http://www.
latradecoalition.org>.
20
Boriss, Hayley. “Commodity Profile:
Asparagus.” Agricultural Issues Center,
University of California at Davis. March
2006. 1 May 2009. <http://aic.ucdavis.
edu>.
21
Interview with Prof. Adel A. Beshai,
Professor of Economics at the American
University in Cairo.
22
Peruvian Asparagus Importers
Association. “Evaluating the Impact of
Pending Free Trade Agreement Upon
U.S. Small Businesses.” Statement
of the Peruvian Asparagus Importers
Association Before the House
Committee on Small Businesses. 1
Nov. 2007. 1 May 2009. <http://www.
latradecoalition.org>.
23
United Nations Environment Program.
“Green Economy Initiative.” 1 May
2009. <http://www.unep.org>.
24
World Food Situation. Food and
Agriculture Organization of the United
Nations, 2 May 2009. <http://www.fao.
org>.
25
[email protected]
54
THE CHRONICLES, FALL 2009
POLITICS & POLICY
RISING
FOREIGN
DIRECT
INVESTMENT (FDI)
ECONOMIC
GROWTH rates.
&
Why Are We Not Feeling it?
SeifAllah Rabie, Chronicles co-editor, EBHRC
“You cannot assume that economic growth will include everyone”
Minister of Investment, Dr. Mahmoud Mohieldin, in his speech during the Euro-Money
2009 conference1.
The Egyptian economic indicators at
the first glance are signs of reform and
development. Amid the current financial
turmoil Egypt remained among the top
recipients of FDI inflows in the region
according to the World Investment
Report issued by the United Nations
Conference on Trade & Development
(UNCTAD)2. The report is not the only
vote of confidence, as the International
Financial Corporation (A subsidiary
organ under the World Bank) has also
recognized Egypt as one of the global top
reformers in their latest Doing Business
Report3. Moreover, the International
Monetary Fund (IMF) stated that “growth
in Egypt has picked up steadily since
2004 making it one of the Middle East’s
fastest growing economies”4.
Although diverse sources from different
global entities have recognized the
economic progress in Egypt, a simple
question remains, why isn’t the
general population reaping the fruits
of growth and increased foreign direct
investment? The Egyptian Ministry
of Economic Development stated that
poverty rates declined by 18.9% in
2007/20085, however according to a
United Nations survey, “one in every
THE CHRONICLES, FALL 2009
55
POLITICS & POLICY
five Egyptians cannot meet their basic
demands”5. It is clear that there is a
disproportion between the advancement
in growth of gross domestic product
GDP and FDI, and the quality of life of
the average citizen. Despite the fact that
the growth rate for the year 2007/2008
has reached 7% and FDI inflows
exceeded USD 13.266billion, the level of
advancement in living standards, public
services, health services and other issues
pertaining to the quality of life has not
witnessed the same progress.
What is hindering the trickledown
effect?
The board of trustees7 at the General
Authority for Investment attempted to
answer this question through a study
conducted under the title “A Just
Distribution of the Fruits of Growth”.
One of the main problems mentioned has
to do with the proportion of investment
to the overall GDP, currently standing
at below 19%, which is in need of
reaching at least 25% in order to propel
advancement in the real economy. The
study further referred to the history of
the inverse relationship between private
and public investments. At peak times
of public investments, their private
counterparts declined immensely. This
phenomenon was most apparent during
the year 2001/2002, during which
public investments increased strongly
while private investments plunged to
23.5%. Both types of investment should
complement rather than substitute
one another; as the decline in public
investments indicates deterioration in
public services, and the fall in private
investments is an indication of a stagnant
business environment8.
Another reason for the crippled
trickledown effect is the distorted
geographic distribution of investments.
During the period from 2000-2007,
34% and 30% of new investments
were concentrated in Cairo and Giza
respectively. This saturation in only two
governorates was a major obstacle to the
56
THE CHRONICLES, FALL 2009
extension of the fruits of FDI to the rest
of Egypt9.
The study further drew attention to
a very important, yet often ignored,
aspect in assessing the larger growth
accounting framework: total factor
productivity10. It has been proven that
economic growth achieved during the
period from 1982/1983-2006/2007
was created solely through capital
accumulation. Thus real enhancement
of total factor productivity, which occurs
through widespread job creation, was
absent. In assessing the period from
2002/2003-2006/2007 we find that
the petroleum and energy sector, a
capital intensive sector with minimal job
creation, attracted the largest amount of
investments, constituting 28%. However,
investment in manufacturing and mining,
two labor intensive industries, did not
exceed 12.3% for the same period.
Other reasons such as the rise of the
informal sector and the scarcity of a well
educated labor force were mentioned. If
only 10% of the labor force is capable
of working in the so-called modern
economy11 while the rest is restricted to
jobs with low levels of productivity, and
hence lower salaries, then the effects of
the trickledown will remain withheld.
Even if the informal sector is capable
of alleviating un-employment to some
extent, it will nevertheless fail to provide
decent jobs that reap the fruits of growth
and investments13.
Dr. Mohamed Taymour, the Chairman of
Pharos Holding for Financial Investments,
and the founder of the renowned financial
services institution, EFG-Hermes, stated
that the obstacles facing the trickledown
effect of FDI and GDP growth rates were
all expected and made perfect sense. A
new investor would naturally choose
to set his business in an area that is
most developed in infrastructure, such
as Cairo and Giza, and would most
probably hire the skilled and educated
labor that constitute the minority of the
workforce14.
Cynicism and exaggerated optimism
POLITICS & POLICY
are swelling. Corporate executives and
government officials are more likely to
present the doubling growth rates and
FDI figures to magnify a success story
void of any failures. On the other end,
the general public is growing cynical
of the numbers and is continuously
suspecting their manipulation. In this
issue particularly, it is important to
understand that economic reform in
Egypt is in need of immense efforts
far beyond the doubling GDP growth
rates and FDI. Unless a clear strategy
resulting from a comprehensive vision
is adopted, the disparity in perceiving
economic development between the elitist
minority of executives and government
officials on the one hand and the general
public on the other hand will continue
to widen.
ENDNOTES:
1
Euro-Money
conference.
(2009,
September 29). The Minister of Investment
Speech.
2
UNCTAD . (2009). Transnational
Corporation, Agricultural Production &
Development. World Investment Report.
Unitied Nations.
3
International Finance Corporation.
Egypt. Doing Business Report 2009.
World Bank
4
International Monetary Fund (2008,
February 13). Egypt Reforms Trigger
Economic Growth. Retrieved from http://
www.imf.org/external/pubs/ft/survey/
so/2008/car021308a.htm
5
Egypt Information Service (2008,
December 24). Economic Development
Minister; Reduced Poverty Rate from
23.4% to 18.9% During Last Year.
Retrieved from http://www.sis.gov.eg/
En/EgyptOnline/
6
Thomson Reuters (2007, October
17) Poverty Growth in Egypt despite
Rapid Growth. Retrieved from http://
www.reuters.com/article/latestCrisis/
idUSL17749735
7
General Authority for Investment
GAFI (2009). Egypt’s Value Proposition.
Invest in Egypt. Ministry of Investment.
The Board of Trustees for the General
Authority for Investment is an independdent body from both the General Autthority for Investment and the Ministry
of Investment, and serves as a think
tank for both entities.
9
GAFI Board of Trustees (2009). A Just
Distribution for the Fruits of Growth.
Special Report
10
ibid
11
Total factor productivity is the level
of advancement in the general technical
expertise, education, health care, and
labor motivation to work.
12
The term modern economy is meant
to indicate economies based on advvanced technologies and skilled labor.
13
ibid
14
GAFI Board of Trustees conference
(2009). The contribution of Mr. Mohhamed Taymour during the Q&A sesssion
8
[email protected]
THE CHRONICLES, FALL 2009
57
POLITICS & POLICY
Has women
Oriented-Aid
brought the
desired impact
to women
?
The Case Study of «TWIEBS» project in
Mahalet Mahoom
Yasmeen Khodary, Ph.D, American University of London
with the Egyptian Ministry of Insurance
Introduction:
and Social Affairs to fund a number of
By the start of the 1980s, Egypt was
projects for “Training Women on Income
passing through a new phase where
Earning Basic Skills” (TWIEBS) located
it began to enjoy the fruits of peace, in
in Minia and Gharbiyah governorates.
general, and the peace treaty with Israel, in
However, a significant question that
particular. This phase was characterized
needs to be answered is "Were these
by relative stability, support from the
projects really able to solve women's
international community and increased
problems and vanquish the difficulties
international assistance. In such an
they encounter in their day-to-day life?"
atmosphere of peace and support from
Due to time and space limitations, I
the West, the number of foreign financed
attempt to examine the successfulness
projects in Egypt increased. Though
of only one project in this article, the
different in activities and strategies,
“TWIEBS” Project in Mahalet Marhoom
these projects attempted to reach the
village in Al-Gharbiyah1.
same objective: development.
Among such large-scale foreign assistance
to Egypt, many projects addressed
women’s issues and attempted to solve
their problems and difficulties. In 1987,
for example, the International Labor
Organization (ILO) signed an agreement
58
THE CHRONICLES, FALL 2009
Project Description:
On the macro-level or the long-term, the
TWIEBS project was designed to make
rural women i) better mothers, ii) more
skillful housewives, iii) more productive
workers and iv) more involved citizens2.
POLITICS & POLICY
In an attempt to achieve that objective,
other direct short-term objectives were
specified, such as overcoming women’s
illiteracy, providing women with basic
life skills that enable them to take
care of their children, manage house
responsibilities, and encouraging women
to participate in income generating
activities3. In addition, the project
targeted the unskilled and illiterate rural
women in Mahalet Marhoom.
The Community Development Association
(CDA) in Mahalet Marhoom was in charge
of outreaching the target group as well as
carrying out different project activities. In
an interview with Ms. Hind who works at
“TWIEBS”, she stated, "we offer illiterate
rural women some basic courses in
sewing, cooking, hand made crochet and
carpets. The timeframe of each course is
three months and the timeframe of all the
courses together is one-year. The number
of women at these courses ranges between
20 to 25 women or more. The courses are
useful as they instruct women on how to
make nice things for themselves and their
families".
Hind Metwally, a former TWIEBS trainee
stated, "I have attended the basic training
courses last year. The courses instructed
me on sewing and handmade crochet. Our
products are being sold very quickly. In
some cases, people reserve the products
in advance, even before they are made".
The CDA offers classes in marketing for
those who complete the first phase of the
training sessions. Such classes enable
women to sell their products on the local
market professionally. Ms. Hind added
that the TWIEBS offers two months
production courses. These courses
coach women on selling and marketing
their products. The number of women
attending such courses ranges from 7 to
10 women.
Afaf Sameeh, another trainee, explained,
"I have taken the basic training courses in
the CDA a few years ago. Last year, I was
involved in another course on production
and marketing. The course enhanced the
quality of my products and instructed me
on the rules of marketing and production.
However, I still prefer to bring my products
to the CDA as they know best how to sell
them".
Project strategy:
The TWIEBS strategy depends on
introducing a micro-finance program
that assists women in starting or
expanding income generating activities.
However, according to that program,
women are not given direct micro credit
in hand. Instead, the CDA buys them the
needed materials or rents a workplace
for them. In the interview with Ms. Hind,
she added that the CDA supports women
who want to start new projects as well as
those who want to expand their current
ones. It buys women 800 to 2000 pounds
worth of products or finds a workplace
for them. The women, however, have to
pay 25% of the paid amount as a deposit
and the rest of the amount within twenty
months with an interest rate of 5% on the
total amount of money. If a woman fails
to pay, she will have to pay a 15 pounds
fine after a warning is issued. If she fails
to pay the installment or the fine, her
guarantor - who must be a government
official - has to pay for her or pressure
her into paying. A face-to-face questionnaire with some
women who benefited from the project
asserted that they never personally
received the loans. They all agreed that
they chose their own area of interest
according to which the CDA assigned
a committee for them. The assigned
committee
accompanied
them
in
the process of buying their required
materials or resources, such as house
wares, groceries, electronics, silk, textiles
(the picture below), etc. The committee
consisted of three officials: An accountant,
an official responsible for buying assets,
and a sociology specialist.
THE CHRONICLES, FALL 2009
59
POLITICS & POLICY
Overall Assessment:
1- Objectives assessment:
When it comes to assessing TWIEBS, one
must pay attention to the way in which
its objectives were initially formulated.
The target group or the rural women in
Mahalet Marhoom were not asked about
their problems or their needs. Instead, the
employees in the Ministry of Insurance
and Social Affairs solely identified
the target group and formulated the
TWIEBS's objectives. In an interview with
Ms. Sa`deia Zaki, the General Manager of
the Women’s Department in the Ministry
of Insurance and Social Affairs and the
superior official in charge of TWIEBS,
she made this point clear. She was not
convinced of integrating the target group
in project identification4 and therefore,
the target group was not part of the
identification and planning phases.
However, refusing to integrate women
into the identification and planning
phases can not be traced to Ms. Zaki’s
personal conviction alone but to political
reasons as well. The project document5
asserts that all projects signed by the
Ministry “reflect, basically, the Egyptian
government development plans and are
being mobilized to achieve such plans”6.
These projects, thus, satisfy the
needs of the women as perceived by
the Egyptian government and not as
perceived by the women themselves.
This is not to say that the Egyptian
government
necessarily
perceives
women needs and problems wrongly or
differently to how women themselves
perceive them, however, in all cases,
women have to be incorporated in all
phases of identification, formulation,
and implementation. Ultimately, this
leads to success and the achievement
of participatory development, which
is defined by the World Bank as "the
process through which stakeholders
- or Women - influence and share
control over development initiatives,
and decisions which affect them”7.
60
THE CHRONICLES, FALL 2009
Accordingly, “TWIEBS” was planned and
designed without giving a genuine role
to the stakeholder. As a result, it was
designed to solve women's problems as
seen by the government and present the
solution to that problem as perceived by
the government and not as perceived by
the women themselves.
In addition to assessing the way TWIEBS
objectives were initially formulated,
it is equally important to find out to
what degree such objectives were
realized. TWIEBS aimed at overcoming
women’s illiteracy and providing them
with information and basic life skills,
encouraging women to produce and
take part in income generating activities,
facilitating women’s attainment of different
societal services and using such services
and increasing women’s participation in
community development8. In this regard,
all objectives were implemented except
for the objective of “overcoming women’s
illiteracy”. It appears from the interviews
that the project did not come up with any
significant literacy classes.
However, with regards to the rest of the
objectives, the CDA conducted sessions
on basic life skills that instructed women
on how to manage house responsibilities,
sew, cook, etc. It also conducted sessions
on marketing and production. Moreover,
it carried out an effective micro-finance
program which helped women expand
their small projects or creating new ones.
TWIEBS witnessed various success
stories, as it was able to increase the
family’s income, sustain a living for
a family member, or help the woman
become productive in and outside home.
In an interview with Fatheia Ahmed, one
of the project clients, she stated,
“I applied for the project loan from
TWIEBS in 1997. I had two kids at that
time. My husband’s work is one of the
main reasons that encouraged me to
get involved in a project. He works as a
government employee and therefore, by
POLITICS & POLICY
the age of 65, he will have to retire.. We
thought of running this project so that he
has a decent job to rely on and keep his
time busy after he retires. We rented a
shop in a nice area and I applied for the
project loan. The CDA bought us sugar,
tea, rice, beans, and other groceries. I
used to pay the month installments of the
project loan from the profits of the grocery.
Our shop now expanded and we bought
other types of groceries. The project has
been really useful and when my husband
retires next year, he will have a decent
place to work in and a monthly income to
support us.”
According to the face-to-face questionnaire
with a sample from the target group, it
appears that 77% of the sample used the
project loans to start new projects while
23% of the project clients were already
self financing their projects but hoped to
expand their business. These percentages
reflect the degree to which the project
succeeded in helping out those who
were already better off and that to which
it helped those who were really poor.
Women who had already started their
own projects before applying for the loan
were, relatively, better off compared to
others who had never engaged in income
generating activities before. Obviously,
the project succeeded with by 77% to
reach and assist the poorest groups while
the rest of the assistance went to women
who were relatively better off (23%).
2- Strategy assessment:
With regards to strategy, the project had
a major setback. The CDA failed to offer
women any sessions on how to run or
administer businesses. These sessions
could have explained market difficulties
and fluctuations to the women who
are starting new projects and those
expanding old ones. Some of the poorer
women’s businesses failed due to high
market fluctuations. My visits to two
project clients revealed this reality. In
the first interview, Ms. Safaa stated:
“I applied for the project loan from the CDA
more than a year ago. This is my fourteenth
installment to the project. I rented a store
and the CDA bought me the clothes I
needed in order to sell them in the store.
The store however is not running well (My
observation: I see the number of clothes
in the store do not exceed nine pieces for
women, ten training suits and outfits for
children. The clothes are old and full of
dust. The children clothes are outdated).
I have been paying the installments from
my own pocket for months now. I only sell
well duirng occasions such as the feast
where some people come to buy clothes
for them or their children. Only then can
I pay the installments from the store’s
profits. For this reason, this store did not
raise our living standards. We did not
buy anything new since we opened it. We
barely find something to eat. The children
clothes remain unsold.” In the second interview, Ms. Manal
stated:
I applied for a loan from the TWIEBS
project ten years ago. My project was to
buy goats. Two goats were bought in
order to sell the milk produced by them.
Later, the goats gave birth to other few
goats (her husband adds that one of the
newly born goats ate too much and died)
and, we had to slaughter the two goats
and sell the newly born goats because the
weather was so cold and I had no warm
place to keep them. We never thought to
extend the project or repeat the project
loan again. The whole thing was not very
successful in the first place. The borrowers were actually unaware
of market fluctuations and the risks
of their projects. They were also
interested in quick earning. It appears
from Safaa and Manal’s experience that
the officials at TWIEBS did not attempt
to offer women any advice on to the
type of project to embark upon, the
changing environment, or how to run
their projects. Currently, Manal and her
husband opened a shop where they sell
THE CHRONICLES, FALL 2009
61
POLITICS & POLICY
‘fool and tameia’ take-a-way sandwiches
for the people in the village. Their shop
was doing very well. More than thirty
persons came to buy their food while
we were standing in front of her shop.
People must be advised with regards to
their projects, especially if they are more
interested in fast earning and short-term
cash rather than long-term profits.
Obviously, the project adopted the
minimalist approach of providing only
income generating activities. This
approach does not tie credit to education,
health and other programs9, which are
essential to achieve overall development.
Even though TWIEBS focused on more
than one program; they were still all
circling around raising women’s income
through: microfinance, trainings in
hand-made products, marketing courses,
etc. All these programs were effective;
however, they did not attempt to improve
women’s education or literacy.
At last, the project strategy did not
reveal any attempt to impose any legal
consequences on women who delay
or refuse to repay loan installments.
In other words, there are no real legal
punishments for delayed payment of
loans. The CDA in Mahalet Marhoom did
not try to come up with an innovative
way to spread a sense of obligation
among women to repay installments on
time. They could have employed religion
or culture.
Concluding Remarks:
Projects completely devoted to carrying
out micro-finance activities usually
fall short in achieving “women’s
development”.
Supplying
women
with micro credit without knowledge,
education, awareness, and determination
does not easily or automatically lead
to improvements in the social, political
and economic aspects of women’s lives,
especially that the profits of women’s
projects are barely enough to satisfy
their families’ basic needs.
62
THE CHRONICLES, FALL 2009
Microfinance programs that do not offer
complementary activities and services
to raise women’s levels of education,
awareness etc. are not usually able to
improve women’s status. For example,
offering literacy classes to women can
definitely change their perception of life,
which ultimately changes them and their
families. Other services such as issuing
personal identification cards and formal
papers to women can also be of great
help. Clearly, this "out of the box" look is
what achieves ‘women’s development’ in
the larger sense of social, economic, and
political development.
Though TWIEBS strategy did not a
offer a competitive package that can
raise women’s overall status, it was
effective in the sense that it considered
sending a committee composed of three
individuals to supervise the process of
loan disbursing instead of giving money
directly to the women. This reduces the
possibility of women spending money
on items unrelated to their income
generating activities. This strategy
eliminated the opportunity for women to
spend their loans on consumer goods for
their home or their children, which are
activities unrelated to their projects.
Cases where women are not allowed
to receive money in hand are better
than other micro-finance projects but
unrealistic on the larger scale. The
strategy of accompanying women in
buying their products and supervising
the loan disbursion reduces the chances
of women spending their loans on items
that are unrelated to their project. In
addition, this strategy provides women
with the field experience and the financial
knowledge they lack because they will be
directly advised and guided. However,
it can only be applied in small places
or villages where the number of women
is limited and the ability to accompany
them in their spending process is higher.
In fact, it is very difficult to supervise the
POLITICS & POLICY
loan disbursion process in large areas
or cases where the number of targeted
women is in thousands.
Though the project continues until
today, there has been no attempt by the
CDA in Mahalet Marhoom to change
the implementation strategy of the
project to make it more participatory.
The CDA in Mahalet Marhoom was not
innovative enough to update the project
strategy, which was prepared 19 years
ago. It did not attempt to re-identify
women’s problems or asses their current
needs. In addition, it did not attempt
to engage the target group in project
implementation. The CDA still carries
out the same strategy that was written in
the late 1980s; the same one that lacks
participatory development.
[email protected]
THE CHRONICLES, FALL 2009
63
ART
the Eyes of
Through
5000
CHILDREN
Yasmeen J El Khoudary , Political Science Undergraduate, AUC
For the first time in almost two years,
I was fortunate enough to spend this
summer in Gaza with my family. I was
even more fortunate to enjoy anything
but a relaxing summer, thanks to Al
Mathaf (the Museum) and United Nations
Relief Works Agency (UNRWA) “Summer
Games” camp for children. Five thousand
children from different UNRWA schools
were sent on a trip to Al Mathaf, and I
was responsible for giving them guided
tours of the place and making sure they
had a good time.
Al Mathaf, Arabic for “the Museum,” is
the only “recreational, cultural house” in
Gaza, built in a compound that includes
a restaurant, café and a number of halls
next to the Mediterranean Sea. The
Museum itself includes ancient artifacts
and antiquities dating as early as the
Early Bronze age, the Middle Bronze
Age, the New Bronze Age, followed by
the Iron, Hellenistic, Persian and Greek
ages. The Roman and the Byzantine
eras follow, ending the display with the
Islamic Era. The displayed artifacts,
totaling 350, were all found in Gaza, and
64
THE CHRONICLES, FALL 2009
prove to the viewer the depth of our roots
in this land. Aside from the beauty and
historical importance of the pieces, Al
Mathaf strives to preserve and promote
our connection to the land. When my father and his partner built
Al Mathaf, their vision went beyond
a “recreational, cultural house.”
Their vision included planting hope
and optimism in the hearts of the 1.5
million imprisoned people of Gaza
and Palestine, and to show them that
“On this land is what deserves life”
(Mahmoud Darwish).
UNRWA launched its “Summer Games”
camp for children aged 6-15 on the 21st
of June, 2009. The camps were organized
at UNRWA schools located around the
Gaza Strip, offering students a variety
of activities such as Dabka (Palestinian
folklore dancing), swimming, arts and
crafts, etc…From the participating
schools, students who came from the
poorest backgrounds were chosen for a
trip to Al Mathaf.
When I was first offered this opportunity,
I was looking forward to getting a good
ART
grasp of the issues of the future generation
of Palestine through interacting with
the children. Were these children
comparable with others their age from
other Arab or non-Arab countries? Have
they been given the chance? Would they
able to develop their many talents and
skills?
The findings would come within the
following two months. Each day, two
UNRWA schools would send about 5060 students to Al Mathaf, once in the
morning and once in the afternoon.
The group of 50-60 would be divided in
two; one group would visit Al Mathaf,
while the other visited the playground
(each for thirty minutes) and then they
would switch before having lunch at the
restaurant.
The Children at Al Mathaf (the Museum
Itself)
As soon as the children set foot in Al
Mathaf, their eyes would be wide open
with astonishment. The high ceiling and
the high Roman capitals, the dim lights
shed on the ancient anchors, the oil
lamps seen through the display windows,
and the smell of the sea and ancient
history, all add a feeling of “holiness” to
the place.
The tour would start with a welcome
ceremony for the children to Al Mathaf,
providing them with a brief introduction
about the place: how the different
pieces that came from different time
periods prove our connection to the
land, why history should be studied and
appreciated, and how all these things
prove that our country is a beautiful
place, despite the war, the siege and
the occupation. A point that was highly
emphasized was that all the displayed
pieces come from Gaza and are ancient;
nothing was replicated, and nothing was
brought from outside Gaza, Palestine.
The children would then be ready to tour
the place and go through the different
eras, one by one.
Halfway through the tour would be time
to introduce the children to the ancient
pottery jars. Before beginning to explain
them, however, one child would raise
his/her hand and ask what/who broke
the jars that are shattered on the floor. I
would answer explaining that they were
broken during the last war, and that the
whole museum was as badly affected as
any other place in Gaza. The broken jars
were left on the floor as proof of that. None
of the children would have a reply, but in
the questionnaire that we gave them after
the tour, many displayed dismay at what
they saw. The pottery jars were used for
trade and were manufactured in a number
of countries along the Mediterranean
coastline and elsewhere. Upon pointing
out to the Persian jars, I would ask the
children about current events in Iran.
Their responses were varied. Some said
occupation, others said nuclear bombs,
while one explained that the jars were
used for making nuclear bombs. One of
the jars, which was particularly pointed
from the bottom, made the children
think of F-16 rockets. Ironically, it was
the Gazan jar.
The jars serve as evidence that
Palestine, at one point in time was
not under siege or occupation, and its
citizens were free to establish strong
connections with the outside world.
This led the children to imagine what
things were like back then, but it was
difficult to convince them that the jars
were actually found in Gaza, let alone the
fact that Gazan jars were found in other
THE CHRONICLES, FALL 2009
65
ART
countries lying on the Mediterranean
coastline.
Following the jars were the marble
stones, including two stones that have
a cross carved on them, because they
were used for decorating churches in
Gaza. When the children were asked
what these crosses symbolized, many
said “Christians” or “Christianity” or
“Church.” One unique child said “the
Red Cross,” which shows that the only
interactions that this Muslim child
had with non-Muslims were with Red
Cross aid givers. Following that section,
various pieces from different Islamic
periods were explained to the children. Religious tolerance and other lessons of
mutual respect and understanding were
also among the main topics discussed.
Interestingly, even though we always
stressed that the pieces were original
and from Gaza at the beginning of each
tour , we always had a child or two
randomly ask us where the pieces were
brought from, whether they were made
or replicated recently, or whether we
really got the pieces from Gaza. This was
disappointing because it showed that
the children did not believe that all these
beautiful artifacts come from the very
place that they live in.
Many children often felt irritated during
the tour. One of the supervisors explained
to me that those children could not stand
air conditioning because phosphorous
bombs directly affected their senses of
smell during the last war. The tour would end with a map of the
Levant. The map, and the story that is
told with it, are all based on Ms. Madeeha
Al Batta’s diary. Al Batta was 11 years
old in 1936 when she traveled with her
parents all the way from Khan Younis
in South East Gaza, to Beirut-Lebanon
and Damascus-Syria, passing through
countless cities and villages (many of
which were completely demolished and
destroyed 12 years later). When they
66
THE CHRONICLES, FALL 2009
traveled, they used various means of
transportation, including cars and the
railway that connected all countries of
the Levant together. (Worth noting is the
fact that the wood used in Al Mathaf is the
same wood that was used in the railway
before it was destroyed by Israel)
A major introduction to UNRWA’s school
curriculum was the “Human Rights”
program. After telling the children Al
Batta’s story, they would be asked to
compare the human rights that Al Batta
had in 1936 when she was their age, long
before the Human Rights Charter was
drafted, to the rights that they have now,
if any. The children would always list
the rights that she had (translated from
Arabic): Art. (3) “Right to life, liberty, and
security of person, ” Art. (13): “(1) Right
to freedom of movement and residence
within the borders of each state. (2) Right
to leave any country, including his own,
and to return to his country”, Art. (19)
“Right to freedom of opinion” (referring to
Al Batta’s diary), Art. (24) “Right to rest
and leisure,” Art. (26) “Right to education,”
Art. (27) “Right to freely participate in the
cultural life of a community,” and other
rights such as the right to play, breathe
clean air, health care. One child once
exclaimed, “My right to Jerusalem!”.
Differences
Throughout the summer, I noticed that
the students were always proud to
announce their affiliations including
their political and social ones, such
ART
as the Hamas/Fatah division and the
refugee/citizen division. The children,
no matter how young, always proudly
announced their political loyalties. They
also strongly reacted towards anything
or anyone that looked different or new
to them. They were surprised to see
my brother and I, for example, because
in their eyes we looked “different” (the
way we dressed, our hair style, and our
accent). They were also surprised to see
waiters in action. The whole place was
like a movie scene to the children; it was
something that they had only seen on
TV.
At the Restaurant
As previously stated, the children that
were sent to Al Mathaf came from the
poorest backgrounds. For some children,
the visit was their first time stepping foot
in Gaza City, or outside their refugee
camps. The children would be anxiously
waiting for their meal after a long hour of
tours and games. The restaurant would
have prepared a meal for each child- a
hamburger or a chicken sandwich served
with fries and salad, juice, and followed
with a piece of cake. Observations made
in the restaurant were as important as
those made in Al Mathaf itself.
One of the youngest children who visited
Al Mathaf was particularly quiet during
the tour. When I visited him at the dining
table, he looked very excited, and asked
me what the meal was. I asked him what
his favorite food was, he had no answer,
but explained that his mother usually
makes lentil or rice dishes that he likes.
He suddenly seemed to remember that
hamburgers were his favorite meal, even
though he had never had one before. His
excitement was immeasurable when he
learned that the restaurant was offering
hamburgers that day.
Other children looked puzzled when
they saw the food. They would ask if this
really is the food that they see on TV,
the “foreign food,” and whether the food
was imported from Egypt. Some would
instantly feel sick at the sight, smell,
and taste of the food because it tasted
and looked new to them. Others, out of
politeness and shyness would pretend
to be sick, or say that they ate before
coming, so that they could skip the meal
and have it packed for their families.
Some children would bluntly say that
they want to share the meal with the
family, and ask for wrapping.
These observations reflect a sad reality
in today’s Gaza. The young children
bear the heavy responsibility of feeding
their families. Eating and enjoying the
whole meal would make them feel
guilty about this “privilege” that they
are enjoying, while the rest of the
family, at least 10 other members, is
waiting for the lentils to be cooked
and shared.
Conclusion
One child, Awwad, was named after the
person who invented the oud. Awwad
loved history, and explained to me how
he goes to the local Saturday Market in
Rafah to buy old history books and maps
from an old merchant. This summer,
when Awwad visited Al Mathaf, he was
so enthusiastic and so well informed I
asked him to tour his classmates, which
he did without me asking and instead of
joining the others in the playground.
Mahdi loved Al Mathaf. He had a
question for everything. You could see the
fascination in Mahdi’s eyes, who was an
artist, and aspired to become a fashion
THE CHRONICLES, FALL 2009
67
ART
designer and study in Lebanon. Mahdi,
who was eleven years old, explained to
me how Palestine’s girls and boys are
very smart, and how, if given the chance
and if the borders are open, they could
be the masters of anything they choose
to do or study.
Anas is an eight year old child who visited
Al Mathaf. Anas had the answers, and
had the creativity. Anas loved Al Mathaf
so much that he asked me to give him the
exact address of the place. When asked
why, Anas explained that his father had
promised him a gift for being the top
student in his class. Anas said that he
wants his father to take him and the
family to Al Mathaf as his present, which
would give him the chance to explain the
artifacts and the history behind them to
the family.
Mahmoud was one of the few disabled
children who visited Al Mathaf. Although
Mahmoud was both deaf and dumb,
he was blessed with two beautiful eyes
that saw things in a very special way.
Mahmoud was an artist, one whose work
was already being displayed in different
art galleries. Mahmoud was asked to
paint a corner that he liked in Al Mathaf,
which he gladly did.
One girl told us about her experience
with the war. A boy expressed his loyalty
to the Popular Front for the Liberation
of Palestine (PFLP). A group of boys
passionately danced dabka, while twin
girls were entertaining the group with
jokes.
Gaza’s children are special, but in their
own ways. They have the talents, the
imagination, the creativity and the sense
of humor. But they also have the war
narratives, the martyred relative, and the
limits. In Gaza, we are complaining from
a siege that limits our movement, affects
the economy and harms our cause.
Yet, the deeper victims of the siege, the
children, are suffering much more than
68
THE CHRONICLES, FALL 2009
we are. These children are suffering
from a mental siege that disallows them
from seeing the life that lies beyond the
refugee camp.
For how long will these children be able
to share the smile, the laugh, and the
dreams? My biggest fear is that under
the current situation, it will not be too
long before these children are led to a
completely different path.
[email protected]
Can music of
a particular
region be
reflected in
the region’s
architecture
?
Mahmoud M. Riad, Architect/Principal, Riad Generations Architecture
Many scholars have discussed the
relationship between architecture and
music. Some discuss architecture
influencing music, as the evolution
of western classical music is largely
based on acoustical conditions of the
performance space. Others discuss
music influencing architecture, as the
use of music – or music theory principles
- in the design process has the ability to
expand the designer’s creativity (either
through synesthesia or algorithmic
design methodsa). However, most of the
discussion is aimed at understanding
the common values and characteristics
between both arts, like proportion or
rhythm, and not necessarily that one
art directly influences the other. While
these discussions have mainly used
western music as a foundation, the
research presented in this article aims
at investigating these relationships in
a non-western setting, transforming
such correspondence ideas between the
two arts into a regional study. Music
would be used as a cultural identifier,
to unlock "hidden dimensions" shared
in the region’s culture, to produce an
architecture fitting within the cultural
context.
The case study site chosen for this
exploration is historic Cairo, between the
Fatimid Walls, as this research calls for
a deeper understanding and evolution of
Cairo's heritage. For the past two centuries,
Cairo, like many third world major cities,
has continuously been abandoning its
cultural heritage and embarking on a
process of westernization – starting with
the Parisian inspired Downtown Cairo,
and fast forwarding to the American
Suburban town configuration, with the
faux Greco-Roman fashion makeovers, of
the 6th of October satellite cities. On the
other hand, those who seek to hold onto
the city’s identity are abusing traditional
69
ART
motifs in a manner that breeds cliché and absurdity; either by rejecting any claims for
architectural evolution, implying that the entire run of what they define as “Islamic
Architecture”b has been forever immune to development; or others who imply principles
of defamiliartization and critical regionalismc rather superficially, exploiting certain
forms used throughout our architectural history (domes, minarets, or even ancient
Egyptian temple facades) without fully understanding the circumstances of which such
forms were used in the first place.
The following article will attempt to address the issues of aesthetics and authenticity of
the oriental / Arab spirit (ruh el sharkeya) as cultural elements, in light of the authors
recent thesis exploration and research, titled Architecture: Music, City, and Culture,
at the School of Architecture, Planning, and Preservation, University of Maryland,
which explored possible connections between Egyptian / Arab music and Egyptian /
Arab architecture. This research and exploration attempts to provide designers in the
Egyptian and Arab world with abstract design processes that are not form based but
principle based. This article will document the first steps that were conducted in this
ongoing investigation.
Some of the initial experiments in applying architectonic form to music were through a
series of animations. Since all research on this topic use western music as a reference, it
was felt that comparing a western music piece with an Arabic piece was vital. The pieces
chosen were Pachelbel’s canon in Dmaj, and Um Kalthoum’s “Alf Leila we leila”.The music
was translated into a visual lexicon using two methods: rhythmical and algorithmic.
The rhythmical method assigns a column form for each note played and uses the time
duration of the notes to adjust the spacing between them– in other words, applying 3D
forms to the sheet music, yet it doesn’t distinguish between the musical instruments
in the piece. The algorithmic method assigns a specific value to each instrument and
attempts to emulate the performance of the instruments by emphasizing the musician’s
performance attitude, through musical techniques like vibrato and dynamics.
Figure 1: Visual representation of Pachelbel's Canon in Dmaj
70
THE CHRONICLES, FALL 2009
ART
Figure 2: Visual representation of Um Kalthoum's Alf Leila we Leila
Pairing these animations together was found to be very revealing. The initial expectations
were that the differences between the music in respect to rhythm and musical intervals
would be apparent in these animations… They are not… What is apparent however is
the extent to which the musical structures differ. The Canon piece is very cyclical in
nature, there is a simple chord progression acting as a central unifying element, and the
themes and variations are being applied on to it - whereas the Arabic piece is much more
episodical, consisting of various movements with different musical forms. Both musical
structures are very typical to their musical regions, as the cyclical nature of the canon
and fugue was introduced by J.S. Bach in the 17th century, and the episodical nature
(known in Arabic as Fasil) was originated in ottoman court music. The comparison
could be then made between this idea of musical structure with some of the architecture
of the same period - the Central “big room” space of Palladio, to the series of courtyards,
or episodes, of the ottoman house.
Figure 3: Comparisons between Palladio's Palazzo Antonini in Udine and Bayt al Suhaimi
in Cairo, paired with their respective visual animation representations
THE CHRONICLES, FALL 2009
71
ART
The linear sequences of the abstract animations start to suggest movement through a
path along the built environment. Such analysis animations could also be conducted
on real paths and streets, in order to translate it to the same abstract visual language
of the music animations. The street chosen to perform this task on is al Mu’izz street in
Cairo, the main thoroughfare and most preserved street of the historic city. Through
the analysis, nine different zones were identified. Each zone is an episode, with its own
identity, texture, and thresholds upon entering and exiting (the boundaries of each
zone are often signified by an opening of a certain view vista, usually a minaret, which
is often accompanied by a significant change in street width and a dramatic change of
character).
The next step in this process becomes site selection. The street has not been subject to
any significant urban planning reconstruction ever since the Ottoman Empire (1517 –
1798), and many historic buildings have been torn down, before it could be established
as a historic monument, to make way for disturbingly ugly low income modern housing
units. The ongoing masterplan process starts off by highlighting a few soft sites that can
be torn down and replaced by a series of urban design interventions. Each one of these
interventions would deal with the macro-function of the street, which is now a public
museum of Islamic culture, as well as the micro-character of each zone, all using ideas
of Arabic music in design generation.
Figure 4: Existing site plan with zones highlighted along with proposed thesis masterplan
The first zone, the moqadema / introduction, was the first site picked for further
exploration, in hope to return to the street later in the process. Using the episodical
ottoman house as a paradigm, the proposed building is set to explore ideas of the maqam
in Arabic music. The maqam is the foundation of all melody in Arabic music, while the
tetrachord is the most basic element of a maqam (a maqam is usually formed by two or
more tetrachords). Each tetrachord has a unique pattern of intervals and rules for how
72
THE CHRONICLES, FALL 2009
ART
you move between notes, thus maqams have very different kinds of structure, feel, and
importance in music than western modal scales. These tetrachords and maqams are
in the center of this architectural exploration, as the project is taking these basic units
through juxtaposition, seeing how they interrelate in architectonic form.
There are many maqams, but the ones that I have chosen to focus on in this exploration
are Rast, Bayati, Hijaz, Saba, and Sikah; the same five that are traditionally used for the
call to prayer in Islam. Due to the structure and spacing of their musical intervals, each
of these maqams have different characters and personalities that can be translated in
architectonic elements: proportion, surface treatment, light, pattern, acoustics, materials
etc. The intent of this exploration is to create 5 different spaces that correspond to each
of the characters of these maqams, dictating the proposed building to be organized
around five clusters of rooms. The most contributing factor that led to the generation of
character is the application of the maqam interval proportions onto the vertical surface
of the rooms. Spatially, each room is manipulated to emulate the character of each
maqam. Upon entering the Northern gate, one finds themselves inside the Rast room.
The decision to place the room right in front of the gate was due to symbolic reasons,
as Rast being the most celebrated maqam in egyptian music, used in most nationalistic
and many folkloric songs.
Figure 5: Space based on the Rast maqam
The Bayati room is the room with many attitudes towards space, adhering to the notion
that Bayati is the maqam where many variations occur; scholars don't agree on a distinct
character, but many agree that the maqam has different flavors.
THE CHRONICLES, FALL 2009
73
ART
Figure 6: Space based on the Bayati maqam
The Hijaz room has a very distinct and clear difference between the smaller and larger
spaces, adhering to the Hijaz maqam interval pattern size (1/2 - 1 1/2 - 1/2).
Figure 7: Space based on the Hijaz maqam
Saba, the maqam attributed to music of sadness, is designed to utilize acoustics to
create a vast echoing room, with a minimal source of light creeping into the building
from the dome.
74
THE CHRONICLES, FALL 2009
ART
Figure8: Space based on the Saba maqam
Figure 9: Space based on the Sikah maqam
Finally, the Sikah room serves as a tight gallery space, peeking views into all the rooms,
adhering to the notion that the Sikah maqam has the narrowest range, and the Sikah
tetrachord is commonly paired with most of the other tetrachords, out of the five in
Arabic music.
Furthermore, during the research phase of the thesis, Architecture: Music, City, and
Culture, a number of studies were done using maqam intervals as visual proportion
systems on a number of minarets along al Mui’zz el din street. Proportionate systems
have been used throughout history as a form generator, and the following figures are
an exploration to test out if maqam intervals could serve as a useful design tool. On the
figures below, the first minaret iteration on the furthest left is the actual minaret, which
is then sectioned off with intervals to match a common maqam. The actual minarets all
fall under approximate correspondence to one of the maqams, and the next iteration
next to it depicts the minaret had it followed the ideal interval proportions of the maqam
(notice how very miniscule the change is between the actual and ideal iterations). The
following four minarets are stretched and distorted, depicting how each would differ in
character according to the maqam interval proportions being applied onto it. It should
THE CHRONICLES, FALL 2009
75
ART
be noted that this does not mean that these maqam intervals were explicitly used in the
design process, but it is further proof that such proportionate systems exist beyond the
realm of Arabic music, and could be manifest in other aspects within the Arab culture.
Figure 10: Maqam analysis on the minaret of al Najm al Deen Ayoub mosque
Figure 11: Maqam analysis on the minerat of Bab Zuwaila
Figure 12: Maqam analysis on the minaret of al Barquq mosque
76
THE CHRONICLES, FALL 2009
ART
The continuous challenge of this thesis
is the re-evaluation of the Islamic
architectural motif, while proposing a
different approach, one removed from all
religious justification, in understanding
abstract ideas within the Islamic culture,
promoting a process of modernization
that is devoid of westernization and true
to the authentic oriental spirit, al rouh al
sharkeya. The initial hope of was to find
clues within the region's attitude towards
aesthetics within the arts and culture, to
help push the architectural evolution in
a direction worthy of competing within
a global contemporary arena, while
still retained of cultural authenticity
and identity. This new paradigm of the
architecture has yet to be tested, as
what the thesis path lead to instead was
a method of deconstructing music to get
a better understanding about a region's
culture on issues that may have previously
overlooked or taken for granted. The result
architecture is meant to be conceived as
what critical regionalism would consider
a defamiliarization of music. Through
the use of proportional concepts of the
maqam, the visitor is challenged to
experience Arab music, and subsequently
Arab culture, in a strange – unfamiliar
way, slowly being more conscious of
its meaning. Unfortunately, much like
architectural globalization, there has
been a process of musical globalization as
well, and these concepts of maqams are
in danger of extinction. Therefore, such
defamiliarization of the musical concepts
only work then with repeat visitors,
after students and scholars come and
study these maqams over extended
periods of time, the building starts to
reveal itself. After such connections are
made, the student goes back out to rest
of the city to make further observations
within the urban native architecture - in
hope to understand themselves better
as Egyptians... in hope to understand
themselves better as Arabs.
occurring in the limbic system of the
brain, that means the mapping of one
sense onto another – examples of this
could be seeing colors when exposed
to sounds, or colored letters (For more,
see Cytowic, Richard E., The Man who
Tasted Shapes, G.P. Putnam's Sons,
New York, 1993). Algorithmic design
processes entails assigning specific levels
for each individual element in the design
equation, and let the resultant form be
dictated by the algorithm.
b It should be mentioned that many
scholars argue about the validity of
using the name “Islamic Architecture”.
As opposed to Renaissance Architecture,
that has an explicit canon of ideals and
principles, brought down by Alberti,
Palladio, Michelangelo …etc, such design
guidelines do not exist on Architecture in
the Islamic world as a whole, but exist
on a regional level. That is the reason
each region within the Islamic world
has it’s own autonomous character. For
more, see Frishman, Martin / Khan,
Hassan-Uddin, The Mosque: History,
Architectural Development & Regional
Diversity, Thames & Hudson, London,
2002.
c Defamiliarize” is a term used by Victor
Shklovsky, a member of the Russian
Formalist group in revolutionary Russia.
The concept was used as an artistic
technique of forcing the audience to
see common things in an unfamiliar or
strange way, in order to enhance the
perception of the familiar. The concept of
“Defamiliarization” in critical regionalism
is addressed in Tzonis, Alexander,
and Lefaivre, Liane, paper on Critical
Regionalism at the first International
working seminar on Critical Regionalism,
in 1989, College of Environmental Design,
California State Polytechnic University,
Pomona (Proceedings edited by Spyros
Amourgis)
[email protected]
ENDNOTES
a Synesthesia is a sensory phenomenon,
THE CHRONICLES, FALL 2009
77
Mission Statement
The Economic and Business History Research Center (EBHRC) is a research, teaching
and documentation center at the American University in Cairo (AUC). Established to
foster the use of business history in studying the economic and social history of Egypt
and the Middle East, the center undertakes projects in documentation, research, publlication, teaching and training that situate Egyptian or Middle East business history
within its broader social history context.
In pursuing its objective, EBHRC acquires, classifies and makes available records of
oral narratives and identifies collections of private papers and other selected documments. EBHRC promotes interest and provides support to outstanding students and
researchers in the social and economic history of Egypt and the Middle East. It aims
at furthering an interdisciplinary approach in its operations, particularly its research,
publication and teaching projects.
In fulfilling its mission, EBHRC operates on the basis of collaboration among scholars
and institutions. As one of the early institutional attempts to enhance Middle East
business history, EBHRC cooperates with interested parties in the large scholarly
community to this end. In so doing, EBHRC capitalizes on the strategic advantage
and in-house expertise of AUC and works towards achieving standards of excellence in
all its operations.
EBHRC contact information,
The Economic and Business History Research Center
The American University in Cairo
Rooms 2002-2006
2nd floor, research centers building, New Cairo 11835
Website: http://www.aucegypt.edu/ResearchatAUC/rc/ebhrc/Pages/default.aspx
E-mail [email protected]
Phone 20.2.2615.1367/ 1369
78
Designed By:
79
80