Egyptian Economy - Western Business Opinion.

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Egyptian Economy - Western Business Opinion.

Post by Hafiz » Sun Aug 21, 2016 4:57 pm

About 2 weeks ago the London Economist took the axe to Egyptian political and economic management.

Some of the content is relatively new, and quoted below, but new and surprising is the tone which is savage for a sedate business magazine. This is a weekly magazine costing 5 stg or more ($11 AUS) and avidly read by senior corporate and political decision makers but its language, on this occasion, pulls no punches.

The government has now responded, conceded no just criticism and al Ahram has misreported the whole issue in a way which advantages the government and denigrates the motives of this great magazine. Al Ahram’s coverage of the issue is at: . http://english.ahram.org.eg/NewsContent ... g-Egy.aspx

These is unity amongst thieves because Masry/The Independent (has its owner, Diab, been imprisoned yet for economic crimes and possession of illegal weapons) runs a similar line: http://www.egyptindependent.com//news/w ... t-responds

Interestingly the government disputes none of the evidence put by the Economist and its main argument is that Sisi is not responsible for everything. Tell that to his hyper-active PR department.

The local coverage completely ignores the Economist emphases of the dangerous youth/unemployment bulge.

The Economist chart on relative youth unemployment for Egypt and the region is ominous:: http://cdn.static-economist.com/sites/d ... woc916.png

Here is what the Economist says:

“In most countries a youth bulge leads to an economic boom. But Arab autocrats regard young people as a threat—and with reason. Better educated than their parents, wired to the world and sceptical of political and religious authority, the young were at the forefront of the uprisings of 2011. They toppled rulers in Tunisia, Egypt, Libya and Yemen, and alarmed the kings and presidents of many other states.

Now, with the exception of Tunisia, those countries have either slid into civil war or seen their revolutions rolled back. The lot of young Arabs is worsening: it has become harder to find a job and easier to end up in a cell. Their options are typically poverty, emigration or, for a minority, jihad.

This is creating the conditions for the next explosion. Nowhere is the poisonous mix of demographic stress, political repression and economic incompetence more worrying than in Egypt under its strongman, Abdel-Fattah al-Sisi.”

The Egyptian petro-dollar/handout strategy is derided:

“The regime is bust, sustained only by generous injections of cash from Gulf states (and, to a lesser degree, by military aid from America). Even with billions of petrodollars, Egypt’s budget and current-account deficits are gaping, at nearly 12% and 7% of GDP respectively”

The management of the currency, food prices and the ill-conceived mega-projects (including the ‘new capital’) are singled out for special mention.

Here are some further choice quotes in language uncharacteristic of this normally cautious magazine:

“Even Mr Sisi’s Arab bankrollers appear to be losing patience. Advisers from the United Arab Emirates have gone home, frustrated by an ossified bureaucracy and a knucklehead leadership that thinks Egypt needs no advice from upstart Gulfies—mere “semi-states” that have “money like rice”, as Mr Sisi and his aides are heard to say in a leaked audio tape.”

Another Economist article on the same theme in the same edition is at: http://www.economist.com/news/middle-ea ... 042ad12e30 which makes the startling allegation that the World Bank is declining to help Egypt and that the African Development Bank may be poised to do the same.

Significant quotes with new information in the second article include:

“Mr Sisi has trumpeted various mega-projects, such as expanding the Suez Canal, to pump up national pride—and his ego. But, they have done little to boost the economy. Revenue from the canal has actually fallen since the expansion was completed last August.

A related project will create a special economic zone, supposedly with fewer regulations and lower taxes than the rest of Egypt, along the canal. The head of the zone, Ahmed Darwish, has insisted that “we are completely independent of the government decision-making process.” Still, few companies have signed up to join the zone—perhaps because Mr Darwish’s claim has already been undermined by the government’s decision to raise the corporate-income-tax rate, even in special economic zones, from 10% to 22.5%. Compare that with Dubai’s Jebel Ali port, where companies will pay no tax at all for 50 years.”

and

“Egypt comes a woeful 131st in the World Bank’s ease-of-doing-business ranking. An investor must get permits from 78 different official bodies to start a new project, according to the government. Its promise of a “one-stop shop” to replace them all, made 18 months ago, has so far come to naught.”

Bloomberg is slightly less caustic and accusatory: https://www.bloomberg.com/view/articles ... si-s-fault. and its similar timing and tone is surely a conspiracy against Egypt. :D

Media coverage is not reality but no international company is going to invest much whilst the two most esteemed business magazines in the world are so scathing.



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Re: Egyptian Economy - Western Business Opinion.

Post by newcastle » Sun Aug 21, 2016 5:31 pm

The Egyptian riposte to The Economist article was - to be generous - feeble.

It would have helped if the FM spokesman, Abu Zeid, could have identified areas in which The Economist was giving incorrect facts or analysis.

"Abu Zeid also dismissed the magazine's claim that Egypt’s economy is sustained only through "generous injections of cash from Gulf states (and, to a lesser degree, by military aid from America)," saying that this could not be farther from the truth.

"It seems The Economist failed to notice the decline of US aid to Egypt in recent years. We are not counting on help from anyone."

Really??

Egypt is on the verge of bankruptcy DESPITE massive cash injections. And where have the billions it has received gone?

Abu Zeid continues in the vein of denial but stops short (surprisingly) of accusing The Economist of being a Zionist/MB funded rag intent, alongside other "foreign forces", of undermining Egypt with lies.

He'd have done better to have hoped nobody important was reading The Economist that day, rather than trying to demolish the case it puts and thereby adding fuel to the fire.

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Re: Egyptian Economy - Western Business Opinion.

Post by Major Thom » Sun Aug 21, 2016 10:11 pm

Interesting reading to say the least.

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