No factories, no problems: The logic of neo-liberalism in Egypt

Review of African Political Economy

Volumn 26, Issue 82, 1999, Pages 455-468

  Mitchell, Timothy ^a  

^a NEW YORK UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ECONOMIC POLICY; FISCAL POLICY; IMF; NEOLIBERALISM;

EGYPT;

EID: 0033397812     PISSN: 03056244     EISSN: None     Source Type: Journal    
DOI: 10.1080/03056249908704412     Document Type: Review

References (28)

1. The Toshka scheme, named after the depression through which the Nile waters would be pumped, was later given the more formal title of Southern Valley Development Project.
2. Prince Al-Waleed bin Talal bin Abdul-Aziz Al-Saud was ranked by Fortune Magazine as the second richest person in the world after William Gates. His assets, mostly in listed US shares, included ownership of 5 per cent or more of Citigroup, Saks Fifth Avenue, TWA, Apple Computer, The News Corporation, and Daewoo, among others.
3. Sun World is a subsidiary of Cadiz Inc. The parent company agreed to a separate joint venture with Kadco to pursue related projects in the area. Economist Intelligence Unit (EIU), Country Report: Egypt, 3rd quarter 1999, p.25; http://www.sun-world.com.
4. The Egyptian state funds were promised by the National Bank of Egypt. Prince Al-Waleed was expected to keep a twenty percent share, but shortly after the deal with Sun World was announced he appeared to be facing financial difficulties following the failure of other major investments. Economist Intelligence Unit (EIU), Country Report: Egypt, 3rd quarter 1999, p.25; 'Prince Alwaleed: Still Stellar?' The Economist, 2 October 1999, p. 74.
5. The Egyptian state funds were promised by the National Bank of Egypt. Prince Al-Waleed was expected to keep a twenty percent share, but shortly after the deal with Sun World was announced he appeared to be facing financial difficulties following the failure of other major investments. Economist Intelligence Unit (EIU), Country Report: Egypt, 3rd quarter 1999, p.25; 'Prince Alwaleed: Still Stellar?' The Economist, 2 October 1999, p. 74.
6. The import restrictions included much tighter limits on credit, abolishing duty-free imports, and introducing new and onerous customs inspections requirements. Economist Intelligence Unit (EIU), Country Report: Egypt, 1st quarter 1999, p. 33. Middle East Times - Egypt, 27 August 1999, from http://www.metimes.com.
7. The import restrictions included much tighter limits on credit, abolishing duty-free imports, and introducing new and onerous customs inspections requirements. Economist Intelligence Unit (EIU), Country Report: Egypt, 1st quarter 1999, p. 33. Middle East Times - Egypt, 27 August 1999, from http://www.metimes.com.
8. Howard Handy and Staff Team, Egypt: Beyond Stabilization, Towards a Dynamic Market Economy, IMF Occasional Paper, no. 163 (Washington DC: IMF, 1998), table 21, p.50. For this paper, the number of Egyptian pounds to the US dollar is calculated at the average rate of 2.74 for 1989-90, 3.34 for 1991/92-93/94, and 3.39 for 1994/95-1997/98 (based on Handy et al., Egypt: Beyond Stabilization, table 1, p. 2).
9. On similar problems faced by the Indian state in the same period, and the importance of discipline, see Prabhat Patnaik and C P Chandrasekhar, 'India: Dirigisme, Structural Adjustment, and the Radical Alternative', in Globalization and Progressive Economic Policy (ed.), Dean Baker, Gerald Epstein, and Robert Pollin (Cambridge, 1998), pp. 67-91.
10. IMF, 'Egyptian Stabilization', p 35; Economist Intelligence Unit, Country Report: Egypt, 3rd quarter 1998, pp. 19-20. Other benefits were transferred to the banks in 1991, including a reduction in reserve requirements (a source of fiscal income) from 25 per cent to 15 per cent. Mohieldin, 'State Intervention', p. 13.
11. IMF, 'Egyptian Stabilization', p 35; Economist Intelligence Unit, Country Report: Egypt, 3rd quarter 1998, pp. 19-20. Other benefits were transferred to the banks in 1991, including a reduction in reserve requirements (a source of fiscal income) from 25 per cent to 15 per cent. Mohieldin, 'State Intervention', p. 13.
12. IMF, 'Egyptian Stabilization', p 35; Economist Intelligence Unit, Country Report: Egypt, 3rd quarter 1998, pp. 19-20. Other benefits were transferred to the banks in 1991, including a reduction in reserve requirements (a source of fiscal income) from 25 per cent to 15 per cent. Mohieldin, 'State Intervention', p. 13.
13. Of the 97 other companies in which the government sold shares, it retained a majority of the shares in eighteen, remained the largest single shareholder in a further twenty-five, retained significant share holdings in another twelve, and transferred twenty-eight more to 'employee shareholder associations', which in practice allowed continued control by the same managers. Fourteen companies were said to have been sold directly to large 'anchor investors'. EIU, Country Report: Egypt, 3rd quarter 1998, p. 19; EIU, Country Report: Egypt, 3rd quarter 1999, p. 20.
14. Of the 97 other companies in which the government sold shares, it retained a majority of the shares in eighteen, remained the largest single shareholder in a further twenty-five, retained significant share holdings in another twelve, and transferred twenty-eight more to 'employee shareholder associations', which in practice allowed continued control by the same managers. Fourteen companies were said to have been sold directly to large 'anchor investors'. EIU, Country Report: Egypt, 3rd quarter 1998, p. 19; EIU, Country Report: Egypt, 3rd quarter 1999, p. 20.
15. EIU, Country Report: Egypt, 3rd quarter 1998, p. 21. Business Today: Egypt, November 1988, p. 29. The EFG index is at http://www.efg-hermes.com/docs/ market/home.
16. EIU, Country Report: Egypt, 3rd quarter 1998, p. 21. Business Today: Egypt, November 1988, p. 29. The EFG index is at http://www.efg-hermes.com/docs/ market/home.
17. The popularity of MobiNil stock reflected the unexpectedly high demand for mobile phones among Egypt's 300,000 subscribers. They used their phones four times as often as the worldwide average for monthly minutes of use per subscriber. Following the privatisation of MobiNil (sold to the Orascom Group (on which, see below), in consortium with leading US and French telecom operators), the government licensed a second mobile phone operator, Click GSM, to placate the powerful Alkan group, which had lost out in the bidding for MobiNil. See EIU, Egypt: Country report, 3rd Quarter 1999, pp. 29-30.
18. In 1997, Holderbank, the world's largest cement maker with operations in sixty countries, including subsidiaries in Morocco and Lebanon, purchased twenty-five per cent of the Egyptian Cement Company, and began to build three new kilns near Suez. In July 1999, Lafarge S.A., the world's largest building products group and second largest cement maker, also operating in 60 countries, purchased 76 per cent of Beni Suef Cement, and was set to increase its share to 95 per cent. It arranged to sell on half its holding to the Greek cement company Titan, which already owned two cement importing facilities in Egypt jointly with the local 4M Group, Egypt's largest importer of construction materials. In late 1999, the government was negotiating the sale of Assiut Cement to Cemex of Mexico, the largest cement producer in the Americas with operations in North and South America, Europe, and East Asia, and the sale of Alexandria Portland Cement to Blue Circle Industries, the largest British cement producer with operations in Europe, Africa, and elsewhere. See EIU, Egypt: Country Report, 3rd Quarter 1999, pp. 20-21; http://www.holderbank.com; http:// www.lafarge.fr; http://www.cemex.com; http://www.titan.gr/en/news; http:// www.4mgroup.com.eg.
19. Masaka transferred sixteen per cent out of its twenty per cent holding to NBE Finance of the Cayman Islands, presumably an off-shore subsidiary of the National Bank of Egypt. Another two per cent went to the local joint-sector Suez Canal Bank. EIU, Egypt: Country Report, 3rd Quarter 1999, p. 27.
20. The estimate is based on the assumption that all the missing expenditure belongs to this group. The plausibility of the assumption rests on factors such as the character of the missing expenditures and the relative proportion of incomes that different groups spend on food. Ulrich Bartsch, 'Interpreting Household Budget Surveys: Estimates for Poverty and Income Distribution in Egypt', Working Papers of the Economic Research Forum for the Arab Countries, Iran and Turkey, no. 9714. Cairo, 1997, pp. 17-19.
21. Ngozi Okonjo-Iweala (Chief of Agricultural Operations, World Bank) and Youssed Fuleihan, 'Structural Adjustment and Egyptian Agriculture: Some Preliminary Indication of the Impact of Economic Reforms', in Mohamed A Faris and Mahmood Hasan Khan (eds.), Sustainable Agriculture in Egypt, Boulder and London: Lynne Rienner, 1993, pp. 127-39; p. 134.
22. An exception is the work of Prosterman & Hanstead, who are neither Egypt specialists nor social scientists, but hold positions in a school of law. Roy Prosterman & Timothy Hanstead (1992), Egyptian Development and US Aid: A 25-Year Perspective, Seattle: Rural Development Institute.
23. See Nicholas S Hopkins (1993), 'Small Farmer Households and Agricultural Sustainability in Egypt', in Mohamed A Faris & Mahmood Hasan Khan (eds.), Sustainable Agriculture in Egypt, Boulder: Lynne Ryner, pp. 185-195; and M Z Moussa & T T Jones (1991), 'Efficiency and Farm Size in Egypt: A Unit Output Price Profit Function Approach', Applied Economics, vol. 23.
24. See Nicholas S Hopkins (1993), 'Small Farmer Households and Agricultural Sustainability in Egypt', in Mohamed A Faris & Mahmood Hasan Khan (eds.), Sustainable Agriculture in Egypt, Boulder: Lynne Ryner, pp. 185-195; and M Z Moussa & T T Jones (1991), 'Efficiency and Farm Size in Egypt: A Unit Output Price Profit Function Approach', Applied Economics, vol. 23.
25. For a useful view of the arguments and evidence about landholding in development economics, see Debraj Ray (1988), Development Economics, Princeton: Princeton University Press, pp. 415-463.
26. EIU, Country Profile, table 28, p. 54. The World Bank and USAID have set up programs to provide loans to the small businesses and micro-enterprises denied access to the formal financial sector. But these programs ignore the question of redistributing wealth to create the demand for such enterprise.
27. Gamal Essam El-Din, 'MPs rage over erosion of parliamentary power', Al-Ahram Weekly, 7-13 January 1999:3.
28. For a discussion of the US democracy initiative, see Timothy Mitchell (1996), 'The 'Wrong Success': America's Fear of Democracy in the Middle East', (in Arabic), in Timothy Mitchell, Al-dimuqratiyya wa'l-dawla fi al-'alam al-'arabi, Cyprus: Dar 'Iybal.