Port Said: Violence and Economics in Egypt's port cities

Published February 21st, 2013 - 08:52 GMT
Port Said's once-thriving economy took a further turn for the worse in the wake of last month's violence
Port Said's once-thriving economy took a further turn for the worse in the wake of last month's violence

Long known as the "city of opportunities" in reference to its prosperous business atmosphere, the old canal city of Port Said has suffered from increasing economic marginalisation since its notorious 2012 football disaster.

Leaving over 70 Ahly fans dead in Port Said Stadium on 1 February, 2012, the free-for-all that erupted after a league match hosted by local football team Masry has had severe economic consequences for the city.

Today, a year after the tragedy and less than a month after a controversial verdict of death sentences for 21 Port Said locals convicted of murder in relation to the case, the city is suffering from economic stagnation and soaring unemployment.

"Social and economic conditions in the city are simply unbearable," El-Badry Farghaly, a former Port Said MP, told Ahram Online this month.

"Since the match the economy has been frozen ...the youth are leaving the city because of a lack of employment opportunities."

According to an official at the city's governorate office, who spoke on condition of anonymity, there are currently almost 45,000 unemployed people in Port Said and 400,000 families unable to pay their monthly rent and at risk of eviction.

The famous Port Said "corniche" – a touristic walkway dotted with fish restaurants, hotels and cafes which was once a choice destination for holidaymakers and day-trippers – was almost empty on a recent weekend, with bullet holes apparent on nearby cafes and restaurants, and some buildings burned down or derelict.

The scene was a result of clashes that broke out in January between protesters and security forces at the Port Said Prison, after a court handed death sentences to 21 locals convicted of killing Ahly fans at the match last year.

Already struggling since the disaster due to unofficial commercial boycotts and the general atmosphere of economic instability in Egypt since the 2011 revolution, Port Said's once-thriving economy took a further turn for the worse in the wake of last month's violence.

Fishing, and smuggling

The series of events have taken a toll on production and business activities in Port Said, including its renowned fishing industry, which for decades has been one of the main pillars of the city's economy.

Located in the heart of the old town of Port Said and near the city's central prison, the epicentre of the recent violence, the fish market is festooned with banners and placards mourning the victims of recent events and pledging vengeance.

Trading activity, meanwhile, was almost absent, with stands literally empty of fish.

"We were being randomly fired at because of the proximity of the market to the prison," Amr El-Refay, a Port Said fish trader, told Ahram Online. "A fish seller has even been killed by a shot to the head. How does anyone expect business to thrive in those conditions?" he said.

El-Refay explained that Port Said's fish market had seen a slight recovery before the court verdict. "Our fishing business is dependent on customers who came from all over Egypt," he said.

"Just when things were beginning to return to normal after the match, what happened after the court sentence scared people away once more. I have not sold anything for the past two days," he added.

In general, fishing activity in Port Said has become much weaker since the January 2011 uprising, dropping by almost 60 percent – according to official figures – as fishermen have found more lucrative opportunities.

"Mainly because of a lack of governmental supervision, fishermen now would rather smuggle subsidised diesel to ships and vessels," Ahmed Salah, a member of the Port Said chamber of commerce, told Ahram Online. "It is less costly for ships and vessels to get fuel that way."

This illegal practice has dramatically affected the fish trading industry as the supply of raw fish dropped.

The Port Said fishermen's association estimates that almost 200 fishing vessels are no longer plying their normal trade after opting to smuggle diesel. Consequently, fishing traders are considering abandoning their business if the status quo remains unchanged.

"I am today obliged to sell fish just to cover costs. The business is not profitable any more, and of course there is negligence from the government concerning the smuggling of gas," Mohamed Shawky, another fish trader, told Ahram Online.

The Port Said fishermen's association has, since February 2011, called on the Egyptian government to put an end to diesel smuggling in order to save the industry. No serious action has been taken, however.

Industrial deterioration

Ranked first among Egyptian cities in 2010 by the United Nations Development Programme (UNDP) in terms of human development, which is measured according to life expectancy, annual income and educational attainment, Port Said has also witnessed industrial deterioration.

The now-beleaguered city was for a long time Egypt's main business hub, especially after it became the site of the country's first 'public free zone,' enacted in 1976 by President Anwar Sadat.

The free zone meant that the city was exempt from custom tariffs, an advantage (no longer available) that prompted the construction of factories that are today the main exporters of garments to the United States and Europe.

The Egyptian parliament issued a new law in 2002 with the aim of completely shutting down the free zone within five years, but has been postponing the decision ever since. However, the complicated legal situation meant that most of the privileges attached to the free trade zone effectively stopped in 2002, with the exception of a government subsidy for factories that export goods.

This combination of factors means that Port Said's industrial status is much less auspicious these days.

Egypt's Ministry of Manpower reported almost 30 factories had halted their production following the deadly events last month, with estimated daily losses of LE17 million. The same sentiments were echoed by Mohamed Gabr, deputy CEO of Lotus Garments Company.

"For almost one week after the violence, workers were unable to reach Port Said's investment zone [the free zone] due to the poor security that followed the deadly events," he said in an interview with Ahram Online. "All the factories went completely offline."

Production has until this day not returned to normal levels, with several factories under threat of closure.

"International clients are generally wary of importing from factories that are in unstable zones; they simply don't want to take the risk," Gabr elaborated. "Export factories will definitely be the most affected by these events," he said.

These factories employ almost a million workers from all over the country.

"Governmental policies are also not helping," stated Gabr. "The government's incentive to export has dropped since July 2011 from 6 percent to 4, with the government announcing on several occasions that it might further decrease."

"Many factories will not be able to sustain production if this happens."

Many local businessmen also decry the loss of privileges associated with the free zone status.

"Factories in the public free zone are losing their comparative advantage," Mohamed El-Masry, businessman and owner of Al-Shark garments, told Ahram Online.

"For instance the investment law stipulates that minimum working hours in factories are eight. However, workers are not legally bound by this law and work much fewer hours."

A feeling of persecution

Many Port Said citizens are convinced that the authoritihttp://www.albawaba.com/business/port-said-stock-market-466567es – whether under toppled president Hosni Mubarak or his successor Mohamed Morsi of the Muslim Brotherhood – have been persecuting the city for over a decade.

The sense of persecution dates from 1999, when a poor Port Said local, known as El-Arabi, approached Mubarak during a visit to the city and was shot dead by the presidential guard.

El-Arabi was accused of attempting to assassinate the president, although many in the city argue that the man was simply carrying a letter he wanted to give to the president.

Many residents believe that since that time, Port Said has been subject to government persecution.

"Port Said has been subject of collective punishment since the stadium incident," Farghaly, said in his trademark deep voice. These sentiments were echoed by several of his followers, who gathered around him during the interview with Ahram Online.

"It was sanctioned politically and economically; state authorities refused to allocate enough funds for the city's infrastructure, and the free zone was suspended one year later. Now the Muslim Brotherhood is following suit."

On Tuesday, the presidency issued a statement saying that draft legislation would be prepared to re-establish Port Said's duty-free zone. At time of publication, the details were still unclear, and it remains to be seen whether Egypt's once bustling trade hub can be saved from economic stagnation. 

© Copyright Al-Ahram Publishing House

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