William Wallis, FT Cairo correspondent, interviewed Ahmed Nazif, Egypt’s prime minister about political and economic reforms during a month in which the country is electing a new parliament. An edited transcript appears below
Financial Times: Are these elections any different from past elections?
Ahmed Nazif: Well there are many new phenomena taking place but they come with the change. First of all the fact that there is monitoring of the elections is new. We have about 50 NGOs with about 5,000 monitors that have been granted permission to fully monitor the elections inside and outside polling stations. Police and security forces have been neutral…There has been violence. The police have intervened, but again with the basic objective of providing a secure means for the voters to vote. Also new to Egypt is the use of transparent ballot boxes.
Financial Times: Are you disappointed that some of the more progressive members of the ruling National Democratic Party advocating change have been losing?
Ahmed Nazif: I would say that the elections have clearly shown that there is a vote for the new thinking, which is the new logo of the NDP. The NDP in the first round got around 70 per cent of the seats and combined opposition got 30 per cent, so it’s a clear shift but also one that gives a clear mandate to the NDP reforms.
Financial Times: Independent candidates running for the banned opposition Muslim Brotherhood have also made big gains. Is this something that could change the government’s mind about the role of religion in politics?
Ahmed Nazif: Who is the opposition? This is the question. We need to develop the political base in Egypt. Opposition should come from real independents, those not aligned to any political party, or from political parties – the ones that follow the rules of forming political parties. Now it’s coming from some block…promoting religion as a base for reforming and improving political life in Egypt.
One of the disappointments of this election is the poor showing of other political parties and in the absence of a normal opposition force… the alternative was to go for the more religious format. The Muslim Brotherhood is more of a brand than a political party.
Financial Times: But the Muslim Brotherhood does represent a clear current within society. Could you envisage them gaining legal status?
Ahmed Nazif: It’s dangerous to take this result and try to extrapolate from it a decision to have a political party. It’s important to stick to the basics. Our constitution is very clear… A party based on religious thinking is not allowed in Egypt and I don’t think it will be allowed.
In a way it’s healthy to have those people sit on a platform and explain more clearly what they stand for in terms of education, health reforms, unemployment. We have a program, and it would be interesting to see how they will criticise the government program in place. History says that when they were in parliament, they did not wildly oppose many of the things we are doing.
Financial Times: What will the government be doing in future to promote a more lively opposition?
Ahmed Nazif: I would say that the results of the elections will guide us into the importance of that. It would be out of place for the government to say it will help other parties to do this, but creating the environment for opposition parties to show their face clearly will be an important part of the next phase of political reform.
Now whether that is translated into a different election procedure using election lists (proportional representation) rather than individual candidates – that is something being debated now. The lack of representation of women is one of the disappointments of this election. We could use a quota for women… Also we need a different system for the distribution of power between the parliament, the executive and the cabinet.
Financial Times: Will ending emergency laws be an early priority?
Ahmed Nazif: If we manage to introduce the anti-terrorist act in place within a few months, this will be a priority.
Financial Times: On the economy, are reforms having an impact yet on the lives of Egyptians?
Ahmed Nazif: Well in inflation, we have exceeded all expectations and inflation now is below 4 per cent. We were able over the past year to increase real income by between 15-20 per cent through tax cuts and government salary raises, followed by other raises in the private sector. In all people are better off today in terms of income and prices in Egypt, and that’s felt. The other half of what’s needed is jobs.
Last year the economy grew at 5 per cent, and in the first quarter of this year we grew by 5.3 per cent. An increase of 1 per cent equals 120,000 jobs, which means we’ve created 600,000 jobs. The problem is we’re getting new comers to the market of about 600,000 per year. Official unemployment numbers for last year were 10 per cent. This year we got down by half a percentage point. At least we stopped its growth. I’m optimistic. 400 factories have expanded in the last year, which means 50,000 new jobs. Our objective is to get to 6 per cent (GDP growth) next year.
We have tripled FDI from $400m in non-oil investments to $1.2bn, and if you add oil to that, then you have over 2bn. Although we had the Sharm el Sheikh incident we hope to end the year with about a 5 per cent increase in tourism. 2004 over 2003 was an increase of about 25 per cent. We can recover and get back to numbers even higher.
Financial Times: How will you keep up the momentum? What’s coming next?
Ahmed Nazif: Our main assumption for the growth base is investments. So we’re asking what’s holding us back, what are the opportunities and what are the incentives we can offer… We still need to add (commercial) conflict resolution. One way is by introducing specialized courts that would bypass all the waiting lists of the normal courts, and with more specialized judges and arbitrators. Investors don’t want to be stuck in the courts for a few years. The other thing is land and the price of land and the title ownership and registration.
The third part is privatization and the fourth part is the financial sector. We have taken major steps in reforming the banking sector, by merging two of the large banks, the privatization of a third large bank (is on the way), and a lot of mergers and acquisitions have taken place in the banking sector. We are also building capacity at the Central Bank of Egypt and government-owned banks so that we can facilitate credit and loans and finance projects. There is major restructuring of the insurance sector. We’re finding new means for mortgage financing…
Financial Times: Will you begin addressing the subsidy system?
Ahmed Nazif: We expect results (on that front) in the coming three months. We have two other related reforms that that will be taking place; one is pension plans and social insurance, the other is health insurance. We’re trying to tie all this together so that our social spending will be more responsible in the next phase. We have no intention in reducing the level of subsidy, its just how to spend it in a better way. Given improvements in the economy, we will have more resources.
Financial Times: How do you envisage Egypt and Egyptian society and politics in 10, 15 years time?
Ahmed Nazif: Egypt is a regional leader. We don’t take that responsibility lightly. We intend to set an example in building a democracy that suits our environment, our culture, our ethics. It’s not going to be easy because it is going to be a transformation… We should expect a stable environment in which the basics of democracy, freedom of speech and expression, accepting differences are a way of life. On the economic side we have just begun to just scratch the surface of Egypt’s huge potential. It can have a much brighter future.