Mubarak sets out to tackle Egypt's economy

President Hosni Mubarak will soon decide on wide-ranging moves to cure Egypt's economic ills and bridge the gap between the haves and the have-nots. In his first policymaking address since he took over two months ago Mr. Mubarak said he would give top priority to improving economic conditions. Referring to the open-door economic policy introduced more than five years ago under late President Anwar Sadat, Mr. Mubarak expressed his awareness of its negative aspects, and staked his popularity on ''firm confrontation'' of economic problems.

This means projects ''will be aimed at meeting the basic needs of the working masses, not producing luxury goods that only a minority can afford,'' he said.

Responding to the President's call on specialists to help him deliver on his promise, Salah Sayed, head of the Middle East International Business Academy at the American University in Cairo, prepared a detailed paper with suggestions on how to solve Egypt's economic problems.

Dr. Sayed's paper, expected to be discussed at a conference Dec. 11, recommends:

* Tightening government control. The paper envisages central planning and suggests government control over prices.

* Protecting the market from foreign competitors. Dr. Sayed goes as far as calling to close the market from five to 10 years to protect locally produced goods and to raise taxes on importation of finished products.

* Limiting sudsidies. Dr. Sayed regards government subsidies of basic goods, ranging from bread to cheap fabric and cooking oil, as ''socially necessary'' but calls for confining it to the needy.

* Strengthening the government-owned public sector. Dr. Sayed suggested that with its share in total production under Sadat dropping sharply to about 30 percent last year, the government-owned public sector be granted the same facilities and benefits offered foreign investors under Sadat.

He warned, however, that the burden of the change he regards as necessary to rectify the economy does not rely on the government alone, or else ''it would fail.''

He also denied that tightening government control could scare some foreign, as well as Egyptian investors. ''We are not trying to persuade those looking for easy deals. In fact, we do not want them at all,'' he said. ''A law should be issued assuring Egyptian and foreign investors that their capital will not be affected by any changes in laws or circumstances.''

In preparation for the change, ''We will have to get rid of the pasha ministers,'' he said alluding to allegations of misuse of power by some ministers.

President Mubarak is still working with Sadat's ministers, but a Cabinet reshuffle, which seemed imminent a month ago, has been postponed until the end of January, well-informed sources say.

Evaluating Egypt's experience under President Nasser, Dr. Sayed said in an interview with the Monitor, ''Nasser led Egypt toward freeing its national economy and made the transition to socialism. But the role of national capital diminished when opportunities for investment were limited, and other restraints were imposed on its movement, and this was a liability.

''Then came Sadat opening the door, and realizing a 180-degree change, giving all opportunites for investors without asking for the nation's right in return.''

Sadat's open-door economic policy, encouraged foreign investment in Egypt through granting foreigners tax holidays of up to 10 years and opened the market for imports. The problem with this policy, Dr. Sayed said, was in the ''implementation.'' He sees the change that took place ''overnight'' as responsible for a 30 percent inflation rate.

Dr. Sayed says Mubarak's administration will probably strike a middle path between Sadat's liberal economy and President Nasser's strictly socialist economy.

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