Dr. Nabil Fahmy, Minister of Foreign Affairs:
In addition to this political process, we were also faced with important economic challenges facing the Egyptian economy. I would emphasize that the current Government includes leading Egyptian economists with a reformist bent, including the Prime Minister himself Dr. Hazem El Beblawi, and Deputy Prime Minister and head of the Cabinet’s economic team, Dr. Ziad Bahaa El Din. This underlines the seriousness with which we are dealing with economic reform efforts, with a focus on re-energizing and stimulating the Egyptian economy.
A new economic stimulus package has been announced last month with the aim of extricating the economy from the aftermath of almost three years of politically-charged change as an expected result of the important political events since January 2011. This program comprises additional budgetary allocation of 29.8 billion Egyptian pounds (around US$ 4.6 billion) for the implementation of a package of public works programs and social justice spending designed to stimulate the economy and improve the standard of living and social services provided.
A solid component of this stimulus package has been the adoption of an historic minimum wage policy, affecting public sector employees, and to be gradually implemented through further negotiations, to cover all employment, including in the private sector.
The bulk of the allocation however is directed at tackling business disruptions and closures through injecting funds and providing new contractual opportunities in the construction sector – a major employer in the Egyptian economy. This also provides upgraded services to more depressed rural and urban areas in support of social justice concerns.
The funding for this stimulus package has been partly financed by the issuance of treasury bills. In this regard, let me underline the fact that despite current adverse credit ratings due to the political and economic developments in the previous three years of political change, yet Egypt has never defaulted on its debt payments. The Government has also had an excellent track record in averting trouble in the foreign exchange market despite coming under significant pressures. Indeed, this ability to stabilize the foreign exchange market while continuing to provide uninterrupted liquidity is testimony to the success of economic policy.
The Government is also undertaking a review of the situation of foreign investment that has been adversely impacted by political developments since January 2011. We are fully committed to finding solutions on a case by case basis, and we will spare no effort in mitigating any difficulty that foreign investors face, and to reach fair and prompt settlements to any existing disputes. We believe that by doing so, we will provide real credentials to entice further Foreign Direct Investment (FDI). We are also in the process of conducting a review of our legislative architecture designed to regulate and attract FDI, procurement laws, and land allocation legislation.
Let me emphasize that despite our transient difficulties, Egypt is an important emerging market. It possesses a diversified economy with a large, skilled labor force, and a sizeable market, with rich and diverse preferential trading arrangements in Africa and the Middle East. Furthermore, we are confident that the unfolding political roadmap will shift Egypt towards a new phase of sustained democracy and good governance leading to long-term economic prosperity.
We greatly appreciate the efforts of a number of countries, particularly Arab countries, in their support to the Egyptian economy at its recovery stage. Indeed, at this juncture, foreign economic support is essential to kick start the much-needed recovery. Europe has had a similar experience in post-WWII reconstruction. Once the recovery is on its way, the economy itself can shift to the construction phase, creating lucrative opportunities for cooperation and investment.
Concerning the role of BRICS in the region he highlighted that the most important characteristic of the emergence of BRICS as an economic bloc. It is perhaps the emergence of the BRICS, and more than any other global economic development in recent years, that symbolizes the qualitative shift characterizing recent developments in international economic relations. The effect of the emergence of the BRICS as a new economic force exemplifies the shrinking gap between the countries of the South and of the developed North, that for decades, have dominated the global economic system.
Indeed, the global economy is undergoing a fundamental shift in the balance of power at an unprecedented pace. The BRICS boasted a combined Gross Domestic Product (GDP) of US$ 15 trillion in 2012, accounting for a quarter of global GDP, and held an estimated US$ 4.4 trillion in foreign exchange reserves, combined with a total population of around three billion people, or nearly 40% of World population. This is in addition to advanced markets comprising complex trading relationships and increasing disposable income for their populations, creating a significant zone of growth.
The BRICS aims in general to substitute for Western dominance in decision-making in the international economic system. In this regard, the BRICS, with other developing countries have consistently called for the reform of international financial institutions. We must not fail to appreciate here that the global financial crisis that the world witnessed in 2008, and has only recently begun to recover from, was caused by weak regulation in the developed Western economies. This led to the creation of more representative tools in the management of the international financial system. BRICS have and are making an important contribution in this regard.
Having said that, let me take you a step back, and warn against any foregone conclusions about the rise of the BRICS and the displacement of Western economic power. Despite the dynamic nature of BRICS economies, yet figures cannot hide for long the glaring truth. As a start, the combined GDP of BRICS countries is still less than that of the United States (US$ 15.7 billion), or that of the EU (US$ 16.6 billion). Furthermore, we should not overlook the significant R&D spending, the creative power, and technological development in the west. The gap remains quite clear, and as such, no objective analysis can conclude that the BRICS will replace the position of the United States and the European Union in the near future in the global economic system.
Egypt, on the other hand, has much in common with the BRICS economies, and their aspirations for a just and representative global economic order. And as such, we are increasing our trade and investment relations with these emerging powers in our quest to diversify our global partnerships. What we have been attempting to do since the beginning, and I think we have seen a good measure of success, particularly recently, is to simply convey the truth behind recent events in Egypt as accurately as possible.
The Egyptian people took to the streets in the tens of millions to demand the removal of the former President, and I don’t think any government in the world would have been able to turn a deaf ear to protests on such a massive scale. As the security situation in Egypt improves, and it has improved and stabilized significantly, we have succeeded in conveying this fact to a large number of countries, who have eased travel restrictions to Egypt, particularly those concerned with Red Sea tourist resorts such as Sharm El-Sheikh and Hurghada, which are heavily secured and have not witnessed instances of violence. More than 20 million countries in Europe have eased such travel bans.
Japan is among the countries that have eased travel restrictions, and the Egypt Air’s Cairo-Osaka-Tokyo flights will resume this coming December, paving the way for Japanese tourism to return to Egypt, and allowing the experts of the JICA agency to come back and continue their operations in Egypt. We are in constant communication with the Ethiopian side; as a matter of fact the first call I made when I took office was to the Ethiopian Foreign Minister, and we’ve been talking consistently ever since. We agreed that it is important to overcome the mistrust that has characterized the relationship in this past period, and look to the future towards cooperation for mutual benefit.
I think it is important to work on maximizing benefit for both parties, to approach the Nile water issue with a win-win mentality rather than a zero-sum mentality. We have to work together to take advantage of our natural resources to achieve the aspirations of both peoples. The Ethiopian side understands the critical importance of the water security issue to Egypt, and is aware that we are looking to increase our share of water rather than maintain it, due to our growing needs and our exclusive reliance on the Nile for water resources. Of course, we acknowledge Ethiopia’s right to take advantage of the Nile’s resources, without causing harm to Egypt or any of the other basin countries.
Egypt’s foreign policy is formulated in line with Egypt’s interests and national security; our foreign policy is anchored on interest rather than ideology. We are looking to recalibrate our foreign policy in order to adopt a balanced approach with global and emerging powers alike; we are not aiming to replace one partner with another, but rather to expand our foreign policy options, in order to safeguard Egypt’s independence. We are open to engaging with any potential partners, as long as the relationship is based on cooperation between equals to achieve mutual interest.
One of Egypt’s main foreign policy objectives in the coming period is to regain our stature in the Arab and African spheres, owing to our essential Arab identity and our deep-rooted African affiliation, and to confront regional challenges as they relate to national security
From the very outset of the Syrian revolution, Egypt has supported and continues to support the Syrian people and their legitimate aspirations towards freedom, dignity and democracy. Egypt has consistently condemned the inhumane practices of the Syrian regime against its own people, and holds the regime responsible for its actions in resorting to violence, death, and destruction.
We vehemently refuse the militarization of the Syrian revolution, and reiterate our position that the crisis in Syria cannot be resolved through military means. We believe that the realization of the Syrian people’s aspirations will only be achieved through a comprehensive political solution in the context of the internationally-agreed upon Geneva 2 conference, paving the way for an inclusive transitional authority to establish true democracy in Syria.
