International community backs Egypt’s quest for stability
In the Egyptian city of Port Said, riot police have arrested 14 people charged with causing disturbances at a rally protesting the latest reduction in customs tariffs imposed on ready-made textile imports. Rioters burned down signs hung in the city plaza and hurled stones at the Chamber of Commerce, until riot squads managed to reinstate control. The protesters were mainly clothing merchants whose businesses have been hurt by the government’s decision to reduce tariffs under regulations imposed by its membership in the World Trade Organization (WTO).
This most recent violence underscores the economic tribulations currently facing Egypt. Egypt’s economy has suffered dramatically as a result of the September 11 attacks on the US. The impact has been most significant in the tourism sector, whose revenues are expected to total a mere $2.6 billion for the 12 months ending June 2002, as compared to $4.3 billion the year before. With the weak price of oil also affecting revenues from crude, Egypt’s economy is forecasted to increase by only two percent in the current fiscal year (ending June 30), versus recent annual growth rates of around four percent.
In spite of these difficulties, Egypt holds an important geo-strategic position for other Arab states, the US and the EU, and is expected to receive substantial foreign assistance. Early next month, the government and the World Bank will host a donor conference in the Red Sea resort of Sharm Al-Sheikh. Egypt expects to receive $2.5 billion in the form of grants and loans from the 35 states and financial institutions invited to the conference.
Additional sources of aid are expected from other sources as well: The Arab Monetary Fund has granted Egypt $300 million, the African Development Bank has approved a $1.6 million, three-year soft loan and the United States has announced the provision of additional grants totaling $959 million.
Such generous assistance will be used to halt the currency crisis and to accelerate development projects. These schemes include a project in cooperation with the UK’s British Petroleum, Italy’s ENI, and Egypt’s Natural Gas Company to build a natural gas and derivatives compound on the Mediterranean Coast. The compound will produce 330,000 tons of natural gas per annum, in addition to 1 million barrels of other petroleum products.
The recent riots in Port Said demonstrate the fragile social and economic balance in Egypt. Unemployment, officially put at 20 percent, is surging as private firms slash payrolls, even as 800,000 jobseekers enter the fray every year. It appears that at present, the international community recognizes the serious nature of the economic crisis, and is prepared to offer generous assistance in an effort to maintain political stability and mitigate the influence of fundamentalist elements in Egyptian society. — (menareport.com)
© 2002 Mena Report (www.menareport.com)