Archive of ‘UAE’ category

The EEDC and Obstructionism


As the events of the Egyptian Economic Development Conference have come to a close, with over 1700 investors’ attending and $50 billion dollars of aid, investments and pledges made to Egypt, it’s time to take stock of what it all means to Egypt, both domestically and internationally. While many of you outside of Egypt might not have heard of the conference or even wonder about the significance of an economic conference to begin with, the view from inside Egypt could not be more different. For the majority of the Egyptian public, this was the most important event of 2015: It was Egypt’s coming out party; the social ball of the season, with the Egyptian government playing the role of the sole debutante.

The reception of the conference by the Egyptian public has been nothing short of positive, with the local media covering every detail and social media timelines positively buzzing with conversations on its organization, execution and the positive sentiments its attendees expressed regarding the future of the country. The amount of goodwill it generated towards the Sisi government could not be overstated, especially in contrast to the litany of news about daily bombings, austerity measures- both enacted and proposed- and horrifying deaths caused by ISIS or ISIS affiliates, the notorious Egyptian ministry of Interior, or incompetency and pure negligence. With the government hyping up the conference for the past few months as Egypt’s main chance of survival amidst a regional sea of chaos, its success in terms of drawing international figures, lack of organizational hick-ups and the absence of “security incidences” has made it nothing short of a triumph in the eyes of the Egyptian middle-class. For the first time in ages, Egypt looked- for a lack of a better word- shiny.

As far as Sisi and his government are concerned, this conference was a much-needed kiss of life. After a year filled with subsidy cuts, rising prices, embarrassing security leaks, and well-documented horrifying cases of human rights abuses both on the hands of the police and the judiciary, the government’s desperately needed an “achievement” to show the people. Sisi, on the other hand, needed to showcase that he had the international legitimacy that all of his previous predecessors’ – including Morsi and Mubarak-enjoyed. This event’s success would mark the end of Egypt’s international isolation since June 30, one that his critics attribute solely to his decision to run for office after deposing previous Islamist President Mohamed Morsi. By drawing in Western diplomats, MNC’s and heads of state, Sisi can finally silence his critics and showcase his ability to bring Egypt back into the international fold and bring in much needed foreign investments. It doesn’t matter that none of this would’ve happened if his regime wasn’t backed by Saudi Arabia and the UAE, who have certainly helped bring in the international business community; in the end, it’s Sisi who ended up getting all the credit. The Irony here is that, if you speak to the people involved in organizing the conference, it all almost fell apart thanks to Sisi’s government, specifically the Ministry of International Cooperation.

The story goes as follows: The EECD is officially the show of the Egyptian ministry of Investments, who worked closely with many in the Egyptian private sector and international consultants, to ensure that it all came out perfect, with the Emiratis footing the bill. However, in compliance to Egyptian bureaucracy, the UAE couldn’t pay them directly, so they have to send the money through the ministry of International cooperation, which is responsible for receiving all international aid and is supposed to act as a funnel for the money, and nothing more. However, anyone who works in civil society in Egypt knows that the MIC resents being simply a conduit between foreign donors and local partners, especially those who they had no influence in choosing or approving. So in order to gain influence, the Ministry of International cooperation end up doing the one thing they are not supposed to do: they obstruct.

The MIC either outright refuses to release the money, or delays it as much as humanely possible. Why? Some claim that they do so to earn as many interest points as they can on the money going through their bank-accounts, but the reality is that they do this because it gives them leverage and importance, a role if you will. This is their M.O. with all the local NGO’s for the past decade, and they didn’t change it when it came to the EECD’s money. They delayed the payment of the international organizers to the point that they- much to the chagrin of the UAE who had sent the money long ago- threatened to pull the plug on the conference mere weeks of its launch if they don’t get paid. It was then and only then that the MIC finally released the money, preventing the EEDC from becoming an international fiasco and ruining the hard work of everybody involved. To be fair though, the MIC isn’t the only government institution that used obstructionism as method for leverage and power when it came to this conference; the entire Egyptian state – with the exception of the ministry of investment- did in fact.

Foreign Investors have two main problems when it comes to investing in Egypt, and both were not addressed in the new Investment law: 1) The State’s land zoning and allocation: knowing which land in Egypt is allocated to which government body to facilitate the process of buying it, and 2) Being able to get their money or profits out when they chose to. The first problem exists because it would require the military to clearly state which land belongs to them and to allocate the rest to the different ministries and municipalities, which means that the military would have to publically state which land belongs to them, and to give up land under their control, neither of which they want to do. This leaves any potential investor without the proper information necessary to 1) plan his/her investment, whether it was industrial, real estate, touristic, agricultural, mining, i.e. any investment that requires land purchase, and 2) know which governmental body to go to in order to purchase that land they wish to acquire. This naturally limits potential foreign investors from investing in Egypt, which limits the FDI dollars sorely needed in the country to solve problem #2, being able to transfer foreign currency out. Both problems would be resolved if the military cooperated and the state created a clear land allocation map for Egypt, but the military obstructed for the aforementioned reasons, and the country ends up with only a fraction of the investments it sorely needs to jumpstart the economy.

The good news is, much like the MIC and the conference money, the military will eventually be forced to stop its obstructionism and work with the rest of the state to create that map, which would not only benefit foreign investors, but local ones as well. They will do so because they have no choice, and because goodwill and PR can only take you so far before economic realities slap you in the face, and they will sooner than later. The old state needs to learn that having their cake and eating it too will not work for long in a country this hungry, and that instead of using obstructionism to gain influence or retain interests, they might have to also work and compromise in order to get Egypt back on its feet. Egyptians have patiently accommodated painful austerity measures and higher taxes as part of the price to pay to get the country moving; its high-time for the government to do the same.