Egypt — January 2009

Sociopolitical Situation

Egypt has been pursuing an aggressive program of political and economic reform in recent years. Political reforms that began several years ago have not been met with enthusiasm across the population. Some groups have claimed the reforms reversed previous gains. The government has defended reforms to the constitutional system, saying they are only the first step toward a more democratic country.

Most political observers had a bit of scare with rumors of President Mubarak’s incapacity and even death. To the relief of most, these rumors proved false, but they certainly raised the question that had been highlighted in the past. Is Egypt ready to deal with such an eventuality? Observers assure that the ruling party (National Democratic Party) has a contingency plan, most likely in the form of a quick and smooth transfer of power to the president’s son, Jamal Mubarak. However, without the strongman figure at the top, there is room for some instability if the worst does happen.

The Egyptian government continues to play a significant role in regional politics, acting as an intermediary between Fatah and Hamas in Palestine and working to create better relations with Iran.

Economic reforms have been made to minimize the state’s role. More than 100 traditionally state-owned firms have been earmarked for privatization, a program that brought in $3 billion for the year 2007-08. A rationalization of the tax code has worked to encourage more investments, with 27 tariff categories cut down to six and a reduction of duties of around 75%. Programs have been put in place to encourage entrepreneurs in various sectors. On the other hand, tax cuts are being offset by the reduction of energy subsidy, a move that has affected consumers and is soon to hit businesses.

The world economic crisis has made a major impact on Egypt’s economy. Most alarming was the construction sector expansion rate, which slowed from 14% to 9.5% in the first quarter of 2008 alone. Foreign investment in real estate is drying up with the collapse in the credit market and the decline of investor confidence. The growth of the Egyptian middle class, which will ultimately drive a revived real estate market, is likely to slow.

Religious Situation

While Egypt is more tolerant of its religious minorities than other Muslim countries, strife between its Christian and Muslim communities provokes conflict continuously. Several incidents occurred recently, mainly in Cairo, where four Copts were killed and several homes of Coptic families were burnt. In the Minya governorate of Upper Egypt, men armed with automatic weapons attacked Abou Faran Monastery. Four monks were wounded and another three were kidnapped, beaten, threatened to death and later released. In addition, several attacks and harassments on churches and worshipers have been constantly reported in the last year.

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