Is post-revolutionary Egypt a land of opportunity for US investors?
Egyptian finance officials, in Washington to press the IMF and World Bank for debt relief, appeal to US political and business leaders to get off the sidelines and invest in the 'new' Egypt.
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The new Egyptian government is seeking about $3.5 billion in debt forgiveness from the United States. Some US officials and analysts have suggested that any reduction in Egypt’s debt is likely to wait until after the country’s first post-revolution elections later this year, as a means of spurring a fair and transparent electoral process.Skip to next paragraph
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And then, the US is likely to want to see just what kind of government the Egyptians deliver, some regional analysts say.
But Minister Aboulnega cautioned against the US and other economic powers sitting on the sidelines instead of aiding the transition from the outset. “If, God forbid, we go wrong in Egypt,” prospects for the whole region will be greatly diminished, she said.
Radwan acknowledges that the short-term prospects for Egypt’s economy are not good. Tourism has almost dried up, as it has in neighboring Tunisia, which is also undergoing a political transition. In addition, the government is being forced to boost spending as a result of steadily rising food prices.
As a result, he says, a growth rate of 3.5 percent before the political upheaval has plummeted to between 1 and 2 percent. Meanwhile, Egypt needs sustained growth of about 7 percent to create the jobs necessary to satisfy an often well-educated but under- and unemployed youth population.
Still, some representatives of the US business community are encouraging businesses to look beyond the short-term uncertainties to the opportunities a transitioning region presents.
“We see a lot of opportunity across an entire region that is undergoing significant change,” says Myron Brilliant, senior vice-president for international affairs at the US Chamber of Commerce. The bottom line for any US business investing overseas is “to make money,” he acknowledges, but he says the US private sector can do that even as its investments play a role in transforming what has been a lethargic, overly bureaucratic, and inefficient region.
“If these conditions are going to get any better, it’s going to have to be because the private sectors are part of the process,” he says.
A recent trip to Jordan convinced Mr. Brilliant that not only do opportunities await US business in such sectors as tourism, infrastructure, and health care, but that the Jordanian government and others in the region are aware that their transitions cannot just be political but must include changes in everything from foreign direct investment regulations and economic transparency to reducing trade tariffs.
Public sector role
One impediment to business expansion that discourages foreign investors is the overbearing role of government in economic activity. “In too many of these countries, the public sector plays too big a role in the economy,” says Lionel Johnson, the US Chamber’s vice-president for Middle East affairs. “They must change the ratio of public to private.”
But that won’t happen overnight, even in the most reform minded countries, these specialists admit. And waiting for it to happen before getting in the door may only leave the terrain clear for other economic powers – think China here – whose track record suggests little interest in fostering reform and democracy’s bloom.
“If we don’t step in,” says Brilliant, “you can be sure others are going to step in and seize the opportunities.”