As It Shifts, Egypt's Economy Retains Oddities : The Two-Way Nearly 30 years in office, Egypt's President Hosni Mubarak has become a strong proponent of a market economy. Only vestiges remain of the state socialism that once defined Egypt. But the economy has unusual elements, at least to the Western eye.
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As It Shifts, Egypt's Economy Retains Some Oddities

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As It Shifts, Egypt's Economy Retains Some Oddities

As It Shifts, Egypt's Economy Retains Some Oddities

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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When Hosni Mubarak took control of Egypt in 1981, the world was a different place in many ways. For one, his country was a socialist state. But over the nearly three decades he's been in power, Mubarak has decided he prefers a market economy. Now enterprises that were once state-owned, like banks, are in private hands and that's something that's helped bring in foreign investment.


All that has earned the Egyptian president credit for turning his country's economy around. He has also earned some blame for corruption, and that's what we're going to look at today in our series about Mubarak's Egypt. NPR's Soraya Sarhaddi Nelson begins her report in Cairo's financial center.

(Soundbite of bell ringing)

SORAYA SARHADDI NELSON: This is the Egyptian Stock Exchange. It's said to be the oldest in the Middle East. Like so many key players in the Egyptian economy, the exchange blossomed under market reforms Hosni Mubarak introduced here in the late 1990s. There are other signs of economic success.

New construction is going up at breakneck speed along key Egyptian corridors and coasts. Foreign investment has shot up by billions of dollars in the past five years. The tourism industry has grown more than 150 percent in the past seven years, says tourism minister Zoheir Garana. He credits an intensive overhaul of Egyptian airports among other things.

Mr. ZOHEIR GARANA (Tourism Minister, Egypt): This has nothing to do with who was in charge. It's the whole policy of the country that actually made us achieve that. And definitely, yes, we have put strategies that do make us sustain this business.

SARHADDI NELSON: Well-to-do Egyptians say the strategies make their country much more livable.

Like the emergence of upscale malls, including this Cairo landmark called Citystars that was built by an investor from Saudi Arabia. Nadia Ibrahim is one of the shoppers. The 52-year-old businesswoman says she's thrilled to no longer have to go abroad to get decent clothes and goods.

Ms. NADIA IBRAHIM (Businesswoman): Well, all shopping is available here. Of course it is a bit more expensive, but it's OK. If you calculate the price of the ticket and the hotel, it becomes the same, and it's a good idea for Egypt.

SARHADDI NELSON: But she and other patrons acknowledge most Egyptians cannot afford to shop here. Looking at the price tags, it's clear why. The cost of one casual sweater on display is twice the amount of the minimum monthly wage here, even after it was increased by the Egyptian government last month, which was the first such increase since 1984.

(Soundbite of overlapping voices)

SARHADDI NELSON: Instead, less affluent Egyptians buy their clothing at black markets like this one near Cairo's Ataba Square. The illegal market is another byproduct of Mubarak's overhaul of the Egyptian economy. Here, vendors sell cheap clothes and goods, most of them made in China. They display their wares on plastic tarps. That way they can scoop up their things and run if the police turn up.

One vendor is named Hassan(ph). The 39-year-old asked that NPR only use his first name.

HASSAN (Vendor): (Foreign language spoken)

SARHADDI NELSON: Hassan says he has to sell goods here to feed his six children. He adds he would prefer if the government provided a legal space for vendors to sell their wares, even if they have to pay a small fee to do so. But he says the land the authorities have offered is far away from the city center where the customers are. Just like the mall in the market, their reaction to Mubarak's economic policies is a study in contrast.

The reforms have earned him praise from investors and the international community. But analysts say the president's economic policies have done little for most of Egypt's 80 million people. Mahmoud Sabit is an Egyptian historian.

Mr. MAHMOUD SABIT (Historian): It was going a lot of places for a certain clique, a narrow clique, who were extremely wealthy and were now making a lot more money.

SARHADDI NELSON: Former Egyptian ambassador to the U.S. Nabil Fahmy says Mubarak had no choice but the revamp the economy when he became president in 1981. Earning Western financial help depended on it.

Mr. NABIL FAHMY (Former Egyptian Ambassador to the U.S.): He inherited a country that was deeply in debt, that didn't have an infrastructure of any sort. You needed to go to Cyprus to make an international phone call if you wanted to do it on a regular basis. So you'd go there for a weekend and make all your phone calls.

SARHADDI NELSON: So the president set about making Egypt more business-friendly to lure foreign investment, says Ali El Din Hilal, a spokesman for the ruling National Democratic Party.

Mr. ALI EL DIN HILAL (National Democratic Party, Egypt): Mubarak's concept of national security is a mistake. It is to rebuild the economy, to rebuild the infrastructure, to modernize not just public utilities or water facility but to modernize the legal framework of the country - taxation law, civil aviation law, customs law. That means there are different laws regulating the economic social life of the Egyptians.

SARHADDI NELSON: Even more changes five years ago, including the appointment of new ministers to keep posts, lured a flood of investors. But experts say there weren't enough checks and balances built in to protect the public interest.

Nathaniel Heller is managing director of Global Integrity, an independent watchdog that tracks governance and corruption trends internationally.

Mr. NATHANIEL HELLER (Managing Director, Global Integrity): For instance, in the budget process for the government, the legislature itself has very little ability in practical terms to change what the executive branch proposes. We have a situation where the Egyptian equivalent of, say, the U.S. general accounting office was transferred from legislative oversight to the executive branch, which, of course, sets it up for political interference. So it's those kind of hardwired rules of the game that really create sort of a problematic atmosphere when it comes to effective anti-corruption.

SARHADDI NELSON: Not surprisingly, allegations of graft, shady land deals and conflict of interest abound. In a 2008 report, Global Integrity cited Tourism Minister Garana as an example of how the government fails to prevent top officials from engaging in conflicting business interests.

Garana's family owns a major tourism company. Garana told NPR he sold off his shares during his first year in office. More recently, local news reports say Garana is being sued over state lands that were sold without competing bids. The minister responds that the government is selling public land as it's empowered to do. He claims those suing him are working against the public interest.

Mr. GARANA: For me, this is a very simple act of terror to make people feel unsafe, unsecure as far as doing work within the legal frame that regulates that, and to not see our country growing.

Mr. KHALED ALI OMAR: (Foreign language spoken)

SARHADDI NELSON: But lawyer Khaled Ali Omar says it's Mubarak's government that is impeding progress. Omar heads the Egyptian Center for Economic and Social Rights and is involved in lawsuits over questionable state land deals. The biggest one involves a multibillion-dollar project on 8,300 acres east of Cairo called Madinaty, or My City. The courts ruled in Omar's favor, finding the government broke the law by failing to seek competitive bids.

Most of the land was more or less given away for free to the well-connected developer.

Mr. OMAR: (Foreign language spoken)

SARHADDI NELSON: The construction on the property hasn't stopped. Instead, the government is revamping the deal. Omar says he'll file a new lawsuit if the land is given back to the same developer on similar terms. But the lawyer worries that legal recourse will soon disappear if the new parliament votes to eliminate the need for competitive bids.

Soraya Sarhaddi Nelson, NPR News, Cairo.

MONTAGNE: Our series continues tomorrow with a look at Egypt's growing class divide.

You can visit Egypt's stock market, an illegal black market, and a glittering new mega-mall - that's Egypt's economy in pictures - at our website,

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