The Standard 8 June 2014

22 The Standard June 8 to 14 2014
International News
Egypt turns
to Western
economic
advisors
Officials forecast economic growth at just 3,2%
in the fiscal year that begins July 1
Abdel Fattah al-Sisi
CAIRO/LONDON —
Western advisers are
drawing up plans for
reshaping the Egyptian
economy, sources
said, with the apparent blessing
of president-elect Abdel Fattah
al-Sisi who so far has spoken only
vaguely in public about reviving
the state’s finances.
The driving force behind the
consulting project is the United
Arab Emirates, which along with
Saudi Arabia and Kuwait has
showered Egypt with billions of
dollars in aid since Sisi removed
the Muslim Brotherhood from
power last year, sources familiar
with the exercise and businessmen
said.
If Egypt were to accept reforms
proposed by US consultancy Strategy&
and international invest-
JERUSALEM — The prime
minister and president of Israel
both spoke with Abdel Fattah
al-Sisi on Friday to congratulate
him on his victory in Egyptian
presidential elections and
to stress the importance of bilateral
ties.
The separate phone calls
came two days before Sisi was
due to be installed in office following
his comprehensive ballot-box
win last month.
Neither Prime Minister Benjamin
Netanyahu nor President
Shimon Peres spoke with
the previous Egyptian head of
state, the Muslim Brotherhood
leader Mohamed Mursi, who
was toppled from power last
ment bank Lazard, this could be
used as a basis for re-opening talks
on a loan deal with the International
Monetary Fund which ousted
Islamist President Mohamed
Mursi failed to seal, unwilling to
impose unpopular reforms.
Gulf allies opposed to the Muslim
Brotherhood have extended a
lifeline exceeding US$12 billion in
cash and petroleum products to help
Egypt stave off economic collapse.
The hiring of Lazard and Strategy&
— formerly called Booz &
Company — suggests the Gulf
states want to ensure aid is spent
efficiently in a country where
past leaders with military backgrounds
have often mismanaged
the economy.
“UAE are involved in the process,
as they are among the country’s
lenders. Lending money is
Israeli leaders congratulate Sisi
not enough in itself. You also need
to make sure the government has
the means to identify what needs
to change and execute it,” said
one of the sources familiar with
the situation.
An IMF deal could help to inspire
confidence among foreign
investors who have been unnerved
by three years of turmoil
and a range of other problems
ranging from costly energy subsidies
to a lack of transparency in
economic management.
It’s unclear if Sisi, who stood
down as military chief in March
before winning a presidential
election last month, has met the
Western consulting companies.
But advisers to the man who has
been de facto leader of Egypt
since Mursi’s fall have almost certainly
been closely involved in the
project, which has been underway
year by Sisi following street protests.
“Prime Minister Netanyahu
noted to the Egyptian presidentelect
the strategic importance
of ties between the countries
and in sustaining the peace accords
between them,” the Israeli
leader’s office said in a statement.
Peres’s office said that at
the end of their conversation:
“President Sisi thanked President
Peres for his warm words.”
Egypt and Israel signed a historic
peace treaty in 1979, an accord
seen by the West as a cornerstone
of regional stability in
the Middle East.
Although Mursi never threatened
to renounce the treaty, Israeli
officials were relieved to
see an end to his Muslim Brotherhood
rule and say that security
along the shared border in
the Sinai has improved markedly
over the past year.
“Israel is committed to maintain
the peace treaty between Israel
and Egypt and to strengthening
the cooperation between
our nations,” Peres’s office said.
It was not immediately clear
if any Israelis would be invited
to Sisi’s inauguration. The new
Israeli ambassador has not yet
presented his diplomatic credentials
in Cairo, meaning that
he has not been handed an invitation,
officials said. — Reuters
for several months.
The discussions are the strongest
indication that Sisi may restructure
an economy suffering
from corruption, red tape, high
unemployment and a widening
budget deficit aggravated by the
fuel subsidies that cost nearly
US$19 billion a year.
Officials forecast economic
growth at just 3,2% in the fiscal
year that begins July 1, well below
levels needed to create enough
jobs for a rapidly growing population
and ease widespread poverty.
The consultants have assigned
sector teams to look at issues
such as privatisations and other
reforms, said the source.
The toughest problem will be
the energy subsidies. Raising fuel
and electricity prices could provoke
unrest in a country where
street protests have helped to depose
two leaders in three years.
“This should be changed but
that’s a political decision. Lazard
and Booz can only make recommendations
but in the end the government
will decide,” said the source.
Interim president Adly Mansour
suggested in April that Egypt
was open to resuming privatisation
of state firms, a policy pursued
by President Hosni Mubarak
before his fall in 2011.
Timing of the announcement
of any reforms was “a political
decision,” the source said, adding
that it was not clear whether the
government would announce anything
before parliamentary elections
expected later this year.
A spokeswoman for Strategy&,
which was acquired by Price Waterhouse
Coopers in April, said
she could not comment. A spokesman
for Lazard also declined to
comment.
However, UAE minister of state
Sultan Ahmed al-Jaber, who handles
aid to Cairo, said his country
is “providing Egypt with technical
support for the development
of an economic recovery plan”.
In a statement emailed to Reuters,
he said the assistance the UAE
had provided included work by
“world-renowned consultancies”,
without giving further details.
The Gulf allies have indicated
they will continue to support the
new government, with Saudi Arabia
hosting a donor conference
shortly after Sisi takes office today.
During his election campaign,
Sisi did not spell out how he would
steer Egypt’s economy.
But businessmen who have met
Sisi say his calls for “hard work”
were a signal he was willing to consider
the kind of austerity measures
that past leaders have avoided.
The project began well before Sisi’s
election. “Booz has been working
for the past seven months on a
reform plan in collaboration with
the Egyptian military,” said Tarek
Zakaria Tawfik, deputy chairman
of the Federation of Egyptian Industries
(FEI), who said he talked
with the consultants this year and
met Sisi in May.
Although Sisi won strong public
support for removing Mursi,
failure to revitalise the economy
could quickly strip away his popularity
and bring Egyptians back
onto the streets.
The military, which has a budget
shielded from public oversight,
has accrued a business empire
ranging from bottled water to
petrol stations. It is regarded as
effective in implementing largescale
projects such as those funded
by the UAE since Mursi’s overthrow.
An army spokesman was not
immediately available for comment.
— Reuters
Nigerian newspapers accuse army of seizing copies
YENAGOA Nigeria — Three
Nigerian newspapers said
the army seized parts
of their Friday print-runs and
stopped distribution vans across
the country, with one accusing the
military of a rare crackdown on
the media.
The Ministry of Defence said
soldiers had searched a number
of vehicles for unspecified sensitive
material that it had heard was
being transported with the newsprint,
but insisted it had no intention
of stopping the newspapers
themselves.
The Punch, a widely-read daily,
reported on its website that distribution
of its edition and other
newspapers had been disrupted at
Lagos airport and other hubs in
moves “reminiscent of military
dictatorship in the country”.
Staff from The Nation and Leadership
papers said some of their
vans had also been halted without
explanation.
Nigeria came out of years of
military dictatorship in 1999 and
is now widely-admired for its outspoken
free press, with columnists
and cartoonists regularly lambasting
leading figures, including
President Goodluck Jonathan
himself.
The army has faced particularly
harsh criticism for its handling
of a mounting Islamist insurgency
in the northeast and its efforts
to free more than 200 schoolgirls
abducted by Boko Haram militants.
Earlier this week the Defence
Ministry issued a statement denying
local media reports that some
of its senior officers had been
court-martialed on charges of
backing the rebels.
Defence headquarters said the
newspaper searches “followed intelligence
report indicating movement
of materials with grave security
implications across the
country using the channel of
newsprint-related consignments,”
without going into further details.
The newspapers said on Friday
they had been given no explanation
for the stoppages. The Nation’s
edition led on suggestions
from an unnamed source that
the government might be ready
to free detained insurgents in exchange
for the adducted girls.
—Reuters