Sisi’s reputation bound up in high stakes economic summit
CAIRO // It will be a high stakes weekend for president Abdel Fattah El Sisi as Egypt plays host to a high-profile economic conference in Sharm El Sheikh on Friday.
Mr El Sisi is counting on attracting billions of dollars’ worth of investments to prop up his country’s ailing economy as well as bolster his own standing at the three-day event.
Success of the meeting will directly reflect on Mr El Sisi’s power and influence, and failure – while not disastrous – will be both damaging and embarrassing for him.
Nearly 2,000 global investors, government officials, and corporate executives will converge at the Egypt Economic Development Conference at the Red Sea resort from Friday.
Among them will be some 25 heads of state, mostly from the Middle East and Africa, as well as the US secretary of state John Kerry and IMF chief Christine Lagarde.
President Abdel-Fattah el-Sissi will inaugurate the conference Friday in the Red Sea resort town of Sharm el-Sheikh. The former military chief has stressed that improving Egypt’s economy, which has been gutted after years of turmoil, is his top priority.
On the eve of the summit, Mr El Sisi ratified an amended investment law that aims to remove obstacles for foreign investors.
The conference, which will be attended by U.S. Secretary of State John Kerry and other western officials, is sponsored by Egypt’s Gulf allies the Emirates and Saudi Arabia, who have contributed at least $20 billion to help bolster Egypt’s battered economy. Foreign investment in Egypt has slowed significantly after four years of political and social instability that began when massive street protests ousted longtime autocrat Hosni Mubarak.
El-Sissi is keen to portray Egypt as having a business-friendly culture, and the amendments are designed to appeal to the top executives who will be in attendance, including BP Group Chief Executive Bob Dudley, General Electric Co. CEO Jeffrey Immelt and Siemens AG CEO Joe Kaeser.
“These are messages to the investors that the country is serious to opening up,” said Tarek Tawfik, a businessman and deputy chairman of Egypt’s Federation of Industries.
The amendments package trims corporate taxes to 22.5 percent, from as high as 30 percent previously, and facilitates settling disputes with investors. Sales taxes were dropped to 5 percent from 10 percent, and customs duties on equipment used for production were set at 2 percent. There were non-tax incentives to investors in labor-intensive industries.
Tawfik said the new measures also allow the president to give away land for development for limited periods, a move needed for the “interim basis to jump-start the economy.”
The measures also shield chief executives from criminal prosecution. Previously, senior officials in large companies could be prosecuted for legal violations by staff members.
Critics say the new amendments were drafted in a rush and already face major objections. The measures were passed in the absence of parliament, making them susceptible to criticism that they cater to special interests.
Egypt has had no parliament since 2012. Parliamentary elections were to begin this month but postponed after courts ruled the laws defining voting districts as unconstitutional.
The conference was first proposed by Saudi Arabia’s late King Abdullah as part of his support for the stability and economic recovery of Egypt after Mr El Sisi, as military chief, toppled president Mohammed Morsi of the Muslim Brotherhood in July 2013. The widespread protests that led to Mr Morsi’s removal were sparked in part by his failure to improve the economy after a year in office.
The UAE, together with Saudi Arabia and Kuwait, has poured billions of dollars into Egypt’s coffers in the past 18 months.
It is playing a leading role in the organisation of the conference, called Egypt the Future, and several of the UAE’s largest companies will be represented there.
The conference is meant to show the world that Egypt is ready to get back to business after four years of volatility following the removal of long-time autocrat Hosni Mubarak in February 2011.
It is toward that end that Mr El Sisi’s government has gone to great lengths to ensure that the conference is of great success.
Extra security measures are expected to be in place for the conference, with Sharm El Sheikh and roads leading to it on a near complete lockdown.
Television channels have been counting down to the start of the conference, while ads and nationalistic songs are repeatedly shown on local TV networks.
Some pop singers are even releasing new singles to coincide with the conference.
Still, the conference is taking place against a tense backdrop in Egypt.
While grappling with a slow economic recovery, Egypt is also facing threats from ISIL in the Sinai Peninsula and across its border with Libya, as well as a militant campaign of targeting foreign and local businesses.
Over the past month, there has been increased bombings in Cairo and elsewhere in Egypt, with mostly homemade explosive devices and flash bombs, all remotely detonated, causing disruptions to daily life. At least seven people have been killed so far in March in such bombings.
Foreign and local businesses have been the targets of recent attacks, with bombs going off outside the branch of an American fast food chain, as well as a branch of French supermarket Carrefour and the offices of French phone company Mobinil.
The campaign by suspected Muslim radicals appears aimed at undermining confidence in the security and stability of the country.
Mr El Sisi ran on a platform of security and stability when he won his landslide election nine months ago. There has been no known effect of the bombings on business or investors’ confidence, but failure to end the campaign or reduce the frequency of the bombings may have repercussions.
In a surprise move last week, Mr El Sisi fired his powerful interior minister who is in charge of the country’s police, naming him instead to the largely ceremonial post as adviser to the prime minister. Mohammed Ibrahim was replaced by another top police general, Magdy Abdel-Ghaffar, who had spent many of his years in the force serving in the much-feared State Security Agency.
Egypt’s economy has been severely crippled by the turmoil of the past four years, and foreign investments are drying up.
The urgency that surrounds investor conference in Egypt is unmistakable.
Mr El Sisi himself described it this week as “the key to Egypt’s future and the beginning of a long journey of development.”
* Additional reporting from Bloomberg and Associated Press