Sadat's Egypt: A Balance Sheet

by Marie-Christine Aulas
published in MER107

We now know that the execution-style death of Anwar al-Sadat on the anniversary of the October war crossing was the prelude to neither a coup d’etat nor a popular uprising. Government institutions continued to function within the established legal framework and internal stability reigned. The trial of Khalid al-Islambuli and his accomplices also made clear that the assassination was not the work of an isolated or demented individual. It was carried out by a group with clear religious motivation; they sought to eliminate the leader but not to overthrow the regime itself.

Most striking was the silence of the population, unusual among a people not accustomed to hiding their feelings. The State of Emergency certainly did not restrain them, for in spite of a State of Emergency in October 1967 they poured into the streets to demonstrate their support for Nasser when he threatened to resign. Equally unusual was the decision of the authorities to hold the funeral far from any urban center. Few state offices or shops displayed the customary crepe-bordered portrait of the deceased. Few officials, teachers or employees of the government wore signs of mourning. People did not express their sorrow in the usual fashion—by composing dirges or by taking up the traditional and moving refrain of national unity, “Biladi, biladi." [1] On the contrary: as soon as the funeral was over, jokes sprang up on every side. These jokes (nukat), which well reflect Egyptians’ political views, vied in irony, sarcasm and scorn toward the deceased. Thus did Egypt break with its traditions, graphically displaying the changes that had taken place during the course of Sadat’s presidency.

Nasser’s Heir

Unlike Nasser, Sadat did not come to power in a revolution. Rather, his regime continued in the framework of the Nasserist system, while experiencing all the contradictions inherited from that system, especially the wrenching integration of Egyptian state capitalism into the world market. The Sadat era cannot be analyzed in terms of either continuity or disjuncture, taken separately. It was the outcome of a complex process, an unstable amalgam of many influences, both traditional and ephemeral, internal and external. The external dimension was especially complex, since powerful regional factors distort the pattern of relations between the advanced countries and the peripheral ones. Egypt is heavily influenced by the wealthy Arab oil states, and the Arab-Israeli crisis with its extensive great power involvement. The internal factors of the Sadat era involved the constant maneuver and struggle of classes and groups, the play of interests and ideologies, and the efforts of the regime to build a stable coalition around policies which were largely unpopular.

Anwar al-Sadat belonged to the group of Free Officers which deposed the monarchy on July 23, 1952, seeking to install a republic and to liberate Egypt from British control. The legitimacy of their regime was rooted in this anti- colonialist and anti-imperialist period when they rose to power. The Free Officers were neither bourgeois nor petty bourgeois in the traditional sense, for they did not own property. Nor were they proletarians. As military men, they belonged to an intermediate social stratum of state bureaucrats. They perceived the state as a rampart of national independence and made it their key political and economic instrument. Only with an enlarged state could these propertyless bureaucrats impose their will on society and break with the colonial past.

Their project led inexorably to extensive state control over the economy. This raised a powerful internal contradiction, since the regime lacked both the social base and the will to dismantle the old social order. The new state capitalism did not eliminate capitalist relations of production, but rather enhanced them in a new setting: the nationalized industry, the reformed agriculture, and the private sector which continued to flourish on a diminished scale. The old bourgeoisie regrouped so as to challenge the regime or subvert it, gaining new recruits from those corrupt Free Officers who amassed wealth in state offices.

Whatever their egalitarian aspirations and achievements—in education, work conditions, health and other social programs—the Free Officers were unable to define a coherent political project. [2] They wanted to be revolutionary at the outset, but their nationalism prevented them from having a clear understanding of Egyptian society and its class divisions. Nor were they able to grasp the emerging difficulties which state capitalism produced in their own ranks. By the mid-1960s, Nasserism had reached an impasse. [3] The large state sector was inefficient and lacking in dynamism; agriculture was lagging in spite of the Aswan High Dam; efforts to enlarge the domestic market by promoting the “Arab nation” had come to naught; the state bureaucracy was an economic burden and a source of corruption and tyranny; nothing was working very well. Though Nasser continued to be enormously popular, his project was no longer viable. A defiant symbol of radical republicanism and independence, he came in his later years to be cautiously dependent on the Saudi monarchy.

Sadat’s regime was heir to this internal evolution. The “open door” policy (infitah) followed trends already underway to restructure the system and escape from the serious crisis that had arisen. Officially proclaimed right after the October war of 1973, infitah was accompanied by a turning toward the West and away from the Soviet Union, dramatized by the earlier expulsion of Soviet military advisers and confirmed by the reliance on the United States as mediator in the October war. Infitah was defined by the appointment of ‘Abd al-‘Aziz Higazi as minister of the economy in April 1973. [4] Until his departure in April 1975, Higazi was assisted by Isma‘il Sabri ‘Abdallah, minister of planning, known for his “Marxist” approach. Their program was metaphorically titled “The Plan of the Economic Crossing,” in reference to the crossing of the Suez Canal in the October war. The goal was clear: to stimulate both the state sector and the private sector by attracting financial and technical aid from Arab and Western sources. According to the logic behind the new policy, Egypt was well endowed with labor power; with the help of Arab capital and Western technology it could embark on a road of development like that of Brazil or South Korea.

The Crisis of Infitah

As Sadat began to implement the new, more laissez faire policies of infitah, opposition developed among the working class, the intelligentsia, the state bureaucracy and other sectors of society. Even before the official proclamation of the new policy there were signs of worker discontent—the August 1971 incidents at the Helwan steel complex and also at Abu Kabir, and further incidents in March 1972 at the factories of Shubra al-Khayma. Later the resistance increased: in September 1974, there were demonstrations in the public sector companies and in the industrial suburbs of Cairo; in January 1975 there were worker demonstrations in Helwan accompanied by support from students; in March 1975 there were three days of riots in the textile center of Mahalla al-Kubra, where the workers occupied the factories; in March 1976 there were demonstrations in the center of Cairo by textile workers from the delta and a strike wave in a number of cities; in September 1976 the Cairo transport workers went out on a strike which was finally broken by the army. [5] In spite of these ominous signs, the Western bankers kept pressure on Sadat for further reforms: the International Monetary Fund demanded an end to state subsidies on foods and basic necessities as a condition of new loans. In January 1977, the government removed the subsidies and prices of basic necessities rose dramatically overnight. The masses responded with spontaneous insurrection, from Aswan to Alexandria, leaving no doubt that infitah was condemned by most of the population. Thrown on the defensive, the regime was forced to retreat; the subsidies were restored.

Not only was infitah massively unpopular—it was a failure in its own terms. Neither external nor internal investment dynamics materialized. Despite streamlined investment codes, the creation of free trade zones and other measures, foreign private capital was not attracted in sufficient magnitude. [6] Nor was it interested in productive investments, preferring banking, tourism and other services instead. Officials had no more success in mobilizing internal savings for directly productive projects. Even foreign grants and loans, so eagerly sought, remained unused in amounts that defy understanding. Egypt’s vast bureaucracy stood paralyzed between Nasserism and the new assumptions of infitah. Egypt was abandoning Nasserist “socialism,” but it was not evidently on the path of classic peripheral capitalism either.

Capital and Rent

An important shift was taking place in the Egyptian economy, distinct from the shift to laissez faire but parallel to it. This was the shift away from directly productive sources of income towards various forms of unproductive income, or “rent.” The main sources of this income were remittances of emigrant workers, oil exports, tolls from the reopened Suez Canal and tourism. In 1974 they accounted for only a third of Egypt’s foreign exchange earnings. By 1980, they had risen to 85 percent. Egypt, the classic cotton producer, the first industrial power in the Arab world, was becoming a rentier state with non-petroleum exports in serious decline. But Egypt was no wealthy rentier like some of its Arab neighbors. Its population was condemned to grinding poverty and its cities and infrastructure seriously dilapidated. Only yet another form of “rent”—massive foreign aid—managed to pay the soaring import bills.

The new Egyptian economy was not rent-based in the same way as the economies of Kuwait or Abu Dhabi, of course. Its productive sectors—agriculture and industry—were quite substantial. In fact, both sectors continued to expand, though not rapidly enough to forestall the crisis. [7] The new rent-based economy did not generally have a positive effect on Egypt’s capacity to produce, since non-productive income was far easier to come by. Much invested equipment was allowed to deteriorate. Money fled to the West through local branches of foreign banks. (Ironically, the foreign banks did the opposite of what they were supposed to do under infitah. They were supposed to be sources of new foreign investment; instead they drew domestic investment funds overseas. While domestic deposits in Egyptian currency drew interest at 6-8 percent per year, foreign currency deposits in foreign banks earned 18-22 percent per year.) Skilled labor of all kinds left Egypt for the Arab oil countries. The long-term effects began to show up in a serious way toward the end of the 1970s.

The state was increasingly less able to commit resources to productive investment, given the huge and growing cost of the price subsidy system. Underwriting seven basic commodities—wheat, flour, sugar, rice, cooking oil, tea and butane gas—cost the state over $2.9 billion in 1981. This was the largest single state expenditure. Yet popular pressure made substantial reductions impossible.

Nor could the state easily dismantle the Nasserist enterprises, as its top planners proposed. The authorities prepared to sell stock in some of these enterprises to Egyptian capitalists or to cede them to foreign companies under the guise of “joint ventures.” Resistance within the state bureaucracy blocked most of these plans. The public sector continued to occupy the dominant position in the country’s productive apparatus. Though the infitah had proposed to stimulate a private sector to compete with the public sector, none had developed in many leading branches of the economy. The state remained in charge by default.

State control proved its irrationality in agriculture. Long-standing laws required peasants to cultivate part of their land in cotton and gave the state monopoly of its purchase and sale. As production costs (wages, seeds, fertilizers and pesticides) rose with inflation, the state did not raise its prices accordingly. Rather than produce at a loss, peasants stopped growing cotton, cutting into Egypt’s most traditional export. From 1970 to 1976, cotton production declined nearly 30 percent. Likewise, government-controlled corn and wheat production lagged, while uncontrolled fruit and vegetable production grew rapidly. [8]

As the logic and the moral structure of Nasserism came unstuck, the level of corruption rose. Crude profiteering and not productive investment and entrepreneurship had become the order of the day. The logic of the rent-based economy was lost on no one, least of all those at the top of the regime and in the leading families. Osman Ahmad Osman, at one time in charge of the “food security” of the country, enjoyed a monopoly on the sale of certain basic food products produced by the state sector. He sold these items for several piasters more than the fixed price marked on the wrapping, thus adding to his large fortune at the expense of the nutrition of Egypt’s poor.

To balance the state budget and pay for food imports, the Sadat regime came to depend increasingly on foreign aid. Egypt imported some 60 percent of its food, at an annual cost of $4.4 billion by 1981. [9] Nearly half of all foreign exchange earnings went to pay for these necessities. The majority of the financing for this deficit came from the Arab oil countries in the early years of infitah. From 1973 to 1978, the total of gifts, loans and credits from these sources amounted to $17 billion. The donors intended such financing for productive investments; instead the Egyptian government channeled most of it into current state expenditures. The Egyptians actually built few of the proposed capital projects for which they had solicited funds, and this led to many disputes with their Arab partners. After the Camp David accords, the Arab governments suspended most of this aid. It was replaced by Western, particularly American, aid. Outside funds from somewhere were absolutely essential, since foreign businesses refused to invest and foreign private bankers were reluctant to lend. [10] In return for Sadat’s compliance with US policy in the region, Washington advanced him economic aid far larger than any other country (though less than Egypt needed or expected). In 1981, Egypt received $2.2 billion in Western aid, of which half was from the United States. Dependent on such aid and lacking a clear alternative Sadat was forced to make periodic political concessions of great significance, bartering the political and strategic weight of Egypt for the continued survival of his regime.

Infitah Capitalism

The Egyptian state was able to avoid any recurrence of the riots of January 1977, but it remained questionable whether this new system could continue while the state increasingly evaded its social obligations in such areas as health, education, housing and transportation, and did little to stimulate production. The state proposed that citizens abandon the moral economy of Nasserism, with its collectivist spirit, and pursue kasb (profit) in a manner similar to the state’s own search for income.

The dominant ideology exonerated the state of all responsibility for Egypt’s difficulties, explaining them as a consequence of the socialism of Nasser or his Soviet allies, of Arab ingratitude, or simply of the individual personal failures of Egypt’s citizens. The government’s campaign on birth control emphasized this latter theme, blaming most social ills on population growth and hence on the lack of family planning of Egyptian parents. [11] The government, in its various propaganda efforts, absolved itself: It promised prosperity through infitah and then through peace. It was up to the citizen to make money without interference.

The myth of Osman Ahmad Osman, [12] maitre d’oeuvre of the new economy and success symbol par excellence, played an important part in the construction of the new collective consciousness of infitah. Theoretically, anyone could become wealthy, or at least prosperous, as long as they had the ability and determination. The methods of advancement for Egypt’s Horatio Algers were either to go abroad to work or to participate in infitah at home on the fringes of legality. Opportunities were open, both in theory and to some extent in practice, to all classes of society.

The big multinational firms avoided Egypt for the most part. Neither Egyptian labor nor Egyptian resources were attractive enough to overcome the obvious risks and disadvantages. [13] Above all, perhaps, the Egyptian working class was not yet successfully incorporated into national life, remaining resentfully on the margins and prone to violent direct political action. Only in the services sector, where there were several middle-sized European enterprises, was a branch of the working class incorporated enough to play by the rules of international capital.

Though infitah did not attract much foreign capital, it did expand the internal market, particularly the market for imports. This happened in several ways. Income from rents was the major source of stimulus for this new market. Underemployed peasants, who had been largely outside the money economy, contributed greatly to the market when they went overseas as migrant workers. Their remittances were spent to buy everything from basic necessities to houses and to imported consumer durables. Increased state expenditures, based on the state’s share of the rents, was another stimulus. So were the quick profits of importers, smugglers and other agents of infitah. Rapid economic expansion, and especially import expansion, thus coexisted with the most serious economic weaknesses. State planners recognized this dilemma, noting in the introduction to the 1978-1982 Five Year Plan: “The economic problems of the Egyptian economy are endemic and extensive: crisis is always imminent.” [14]

Under infitah, a new Egyptian capitalism was born and developed. The origins of the new capitalists were frequently different from those of their Egyptians predecessors, who emerged from the landlord class. Nor were they as involved in production and entrepreneurship as the previous generations who had built the Bank Misr group and other enterprises. Few were interested in risk taking or real entrepreneurship when they could make a quick and easy fortune in services, legal or otherwise. The owners of some existing industries were forced to shut them down because of competition from imported goods and emigration of their workers. They, too, became recruits to infitah opportunities.

The new infitah capitalists were of three types. First, there were those from big landlord families who transformed themselves into international businessmen and deal makers, thanks to their name, contacts and knowledge of foreign languages. Then there were top executives of the public-sector firms who could use their influence in the private sector. Finally, there were those who rose from the bottom by various, often shady routes. Typical of the latter was Rashad Osman, whose ascent was reported in Akhbar al-Yawm in January 1981. Osman was an illiterate in his forties who hung around the docks of Alexandria without any known occupation. In 1975, he smuggled a large quantity of hashish into the country. With his profit, he began an import-export business and eventually accumulated a fortune estimated at several hundred million Egyptian pounds. [15] Before the Osman story was made public, film director ‘Ali Badrakhan [16] explored the same theme in Ahl al-Qima (People of Worth), a film about a petty thief who manages to amass a fortune in the flourishing black market of the Port Said free trade zone. [17]

Gains from infitah were not confined to such big-time profiteers. They penetrated all strata of society, though on a very selective basis. Doctors were able to raise their fees, teachers to give required private lessons, butchers to double the price of meat even though it was theoretically fixed. Likewise, the grocer could sell imported goods (which had no price ceilings) instead of Egyptian goods (which did). The taxi driver, the plumber, the hairdresser—those who benefited were those not on fixed salaries and not tied to the state or to productive occupations.

The majority suffered. For small peasant producers, artisans, state employees, industrial workers and impoverished urban unemployed, infitah was a disaster. [18] Its economic effects and its ideology threatened their survival, forcing many to emigrate and others to rebel on an individual basis through crime or spiritual retreat. Middle-level state employees, who had provided the Nasser regime with its social base, were among the most adversely affected by infitah. Their salaries were seriously eroded by inflation. Attached economically and politically to the state, they were horrified at the threat that infitah posed—and the disintegration that was already occurring—in the state structure. Many fought the new measures by bureaucratic resistance. Some sought to get on the infitah bandwagon by absenteeism to pursue new opportunities and by using the influence of their state jobs for corrupt gains.

Regional Dimension

The name infitah suggests the importance of external factors in shaping Sadat’s Egypt. The nexus of foreign influence grows largely out of the October war of 1973. The war brought important changes to the region, particularly the dramatic rise in the price of oil and the new level of United States regional involvement. In addition, the partial victory in the war by the Arab forces created an atmosphere favorable to economic and ideological change.

The oil price increase, and the development projects that followed, created a large demand for Egyptian labor in the Gulf states of Iraq and Jordan. [19] The internal economic crisis in Egypt deprived many people of their livelihoods and forced them to migrate to the new labor markets. The government gave this movement its blessings, removing all legal obstacles to emigration and actively encouraging it through special training programs, leaves for civil service employees, information offices and the like. Unlike Lebanese, Algerians, Moroccans or Turks, Egyptians had never migrated overseas before in such large numbers.

The tide of migrants quickly became a flood. By the time of the 1976 census, 1.4 million Egyptians were counted as overseas, including 600,000 workers, or nearly 5 percent of the active population. Since then, the number has grown rapidly. The Financial Times recently estimated the net increase at 150,000 per year. [20] The fourfold growth of worker remittances from 1976 to 1980 suggests that the number of Egyptians working abroad today is very large indeed. This may be one of the largest population movements in history.

Worker remittances quickly became a pillar of the new Egyptian economy, yielding more foreign exchange revenue through 1980 than even oil exports. In fact, official statistics tell only part of the story, since much of the remittances escape the regular banking system and enter the country through black market exchanges. By making emigration a main feature of infitah, the government seriously weakened the national economy. Engineers, managers, technicians and skilled workers, educated and trained at great cost, left the country even though their skills were badly needed. This sale of Egypt’s labor force was consummated at the cost of Egypt’s potential for internal production.

Remittances from migrant workers enabled families remaining in Egypt to increase their consumption in the spirit of infitah. Such consumption had many negative effects on the economy, especially the demand for imported consumer durables, and quality foods like eggs, milk and meat, which worsened the balance of payments. Very little of the remittances found their way into productive investment. They worsened inflation, promoted conspicuous consumption and set off a construction boom with all the attendant speculation. Migration also damaged the domestic economy by causing wage inflation and shortages of skilled workers in most branches. Under other circumstances, this might have stimulated investment in order to increase productivity. With the possible exception of agriculture, this did not happen, since investments were being absorbed in unproductive activities or overseas through foreign bank branches.

Migrants were recruited throughout the society, from university professor to bank teller to peasant to factory worker. Families with remittances (or migrants after their return) functioned as symbols of successful individualism, as justification for the individualism of the regime and its policies. The peasant who finally owned a brick house, the professor who could now drive his private automobile—both became proof that the regime was right to denounce the collectivism of the Nasserist past. The effect was to undermine collective and class consciousness, dampening political and labor struggles, especially after 1977. Many militant workers and students simply left—for Riyadh, Kuwait, Basra, even across the Atlantic.

Foreign Aid

Before infitah, Egypt was hardly a self-contained economy. Foreign trade as a proportion of national income varied from 36 to 43 percent in the period 1957 to 1964. [21] Infitah meant only secondarily more foreign trade; primarily it meant more foreign involvement in the economy. Under infitah, Egypt’s economy became increasingly integrated with the world market. Many Third World economies have traveled this path, after a period of nationalist state-sponsored development.

Countries which move toward a more “open” economy usually do so under the assaults of the multinational corporations. In search of raw materials, labor or markets, these corporations penetrate Third World countries economically and then acquire political leverage within them. [22] Egypt does not fit this classic pattern. Infitah was devised before the multinational corporations arrived, in order to attract them to Egypt in the first place. Since infitah did not achieve this goal, [23] the Sadat regime had to appeal for foreign aid as a source of investment income, which meant the continued predominance of the state in economic life.

The United States became the most important aid source, followed by the World Bank, the International Monetary Fund, Japan, West Germany and various Arab funds. As elsewhere in the Third World, the lending of the World Bank and the IMF sought to modify domestic structures of production and “decontaminate” the monetary system in order to assist the country’s reintegration into the world capitalist market. This program included the removal of price subsidies, devaluation of local currency, and encouragement of capital accumulation in private hands on grounds that this would spur domestic investment. They sought to weaken, but not destroy, the public sector and to construct an infrastructure adapted to the needs of private capital.

US economic aid to Egypt has reached over $1 billion per year, an amount which exceeds the aid given to all the rest of the countries on the African continent combined (although still less than US aid to Israel). By contrast with the multilateral aid, US aid is more political than economic, designed to advance broad strategic aims in the region as a whole. Its aims are quite plain and explicit: to separate Egypt from the socialist bloc, to limit any radical influence Egypt might have in the Arab world, and to use Egypt to attain US regional policy goals, including an American solution to the Arab-Israeli conflict. Aid was offered as an inducement for Egypt to sign the Camp David accords and the peace treaty with Israel. In this limited sense, economy has been in the service of politics and ideology, not the other way around.

The PL 480 food aid has been a very important part of the total US aid program, providing substantial quantities of Egypt’s imported food grains. The sums involved grew rapidly as Egypt’s food imports rose. While non-food aid was committed in far larger sums late in the decade, planning bottlenecks kept actual expenditures below the level of food aid. The PL 480 program is not grants, however, but loans, repayable since 1975 in US currency. A large debt is thus rapidly accumulating for this and other food purchases.

In addition to using aid as a political bargaining lever with the Sadat government, US authorities have used aid programs to accomplish social and economic changes in Egypt consonant with larger regional strategies. The most important effort of this type has been to promote the integration of the Egyptian and Israeli economies. According to Yusuf Wali, former adviser to the minister of agriculture, [24] plans for Egyptian agriculture call for American aid to improve the inputs (seed, pesticides, fertilizer, machinery), which will then be followed by Israeli cooperation in developing packaging, transport and export marketing facilities. [25] In this schema, Egypt’s agriculture will undergo further adjustment to world market demand. With Israel’s help, Egypt will gain improved access to the markets of the European community, benefiting from Israeli expertise and marketing channels. [26] Egyptian oranges already follow this pattern and transit through Israel; flowers and onions are to follow.

Some aid has focused on culture and ideology, particularly aid from the US government, private US foundations and universities. These efforts have been directed at influencing the Egyptian intelligentsia, the largest in the Arab world. It has sought particularly to win over intellectuals to infitah and to the peace treaty with Israel. This effort became all the more important after the internal crisis of January 1977. In 1978, for instance, USAID awarded $70 million to Egyptian institutes, research centers and universities for special research projects. Under these grants, professors could earn up to ten times their normal salary of 100 Egyptian pounds per month. [27] The Ford Foundation seconded the US government with its own awards, grants and research programs. The US government offered hundreds of “peace scholarships” to students. American universities invited Egyptian professors as visiting lecturers and researchers. Professors, writers, journalists and other intellectuals were invited to numerous conferences and symposia in North America and Europe. Such programs often were directed at establishing a dialogue between Egyptian intellectuals and their counterparts in Israel, to foster the “normalization” of relations planned in the peace treaty.

Such efforts have not been entirely successful. Resistance to cultural cooperation with Israel was very strong, leading to the formation of a Committee for the Defense of the Cultural Heritage. This committee, attached to the left opposition party, Tagammu‘, but open to non-party intellectuals, organized resistance to the cooperation programs. Professors refused to attend a reception at Cairo University in honor of Yigal Yadin, then Begin’s deputy prime minister. Press and film circles maintained a stony silence over the participation of an Israeli delegation at the Cairo film festival. So strong was the opposition that the Egyptian government felt unable to press for more signs of cultural “normalization.”

Political Life Under Sadat

Egyptian political life under Sadat reflected all the tensions of transition from Nasserism to infitah. Egypt abandoned Nasser’s one-party system but the single-party system reappeared in spite of Sadat’s talk about “democracy.” [28] Many members of the opposition and independent intellectuals were harassed and jailed. The problems of the opposition went beyond the lack of freedom of expression. Each major current suffered from its own serious weaknesses. The conservative and liberal oppositions did not function as oppositions, since they supported the government because of its pro-Western orientation and its liberalism. The Nasserist right had helped Sadat consolidate power by supporting his purge of the left in May 1971. The Nasserist left was blamed by Sadat as responsible for all the shortcomings of Nasserism. All the Nasserists were implicated by the evident failures of Nasserism, not least the forms of repression still in effect—control of the media and the unions, use of the secret police, and so forth. The Communists, most hounded of all, tried to organize for class struggle at a time of disorientation, when many workers were leaving. They were also in the awkward position of opposing the peace treaty with Israel when they had approved the original partition plan. None were able to rally the population to an organized mass opposition, in spite of the lack of mass support for the regime and its manifest isolation.

These traditional opposition forces were stymied by the new social equation of infitah, with its effects of demoralization and social atomization. [29] The old set of social values to which these formations referred was in retreat, with no compelling new alternative on the horizon and none even likely to appear. In this context, Islamic political beliefs took hold and spread rapidly. One form was quietism. This appeared in the mystical Sufi orders encouraged by the state, the preaching of Sheikh al-Sha‘rawi, the teaching of Mustafa Mahmoud on national televison, and the writings of the Pakistani Mawdudi [30] which appeared on newsstands all over Cairo.

Better known is the trend of activism. This included such groups as al-Takfir wa al-Higra, al-Jihad and Gama‘at Islamiyya, groups which came out of the Muslim Brotherhood. This Muslim activism was originally encouraged by Sadat as a means of containing the left. It seems he was hardly aware of the dangers it posed, though activists openly called for the “purification” of the regime. Realizing the growing opposition, Sadat struck in September 1981, jailing over a thousand people, including intellectuals and leaders of the secular opposition as well as Muslim activists. This blow only provoked his assassins. A month later, they confronted him, in his elaborate Western-made uniform, with a rain of bullets and the cry of “Long live Egypt.”

Endnotes

[1] “My Country, My Country,” a song written by Sayyid Darwish early in the twentieth century.
[2] See Afaf Mahfouz, Socialisme et pouvoir en Egypte (Paris, 1972).
[3] See Hossam Issa, “Les nouveaux nantis,” Democratie Nouvelle (February 1968).
[4] In April 1974, Higazi became minister of the economy in a cabinet in which Sadat was prime minister. In the following government, formed after the October war, Higazi became prime minister.
[5] Francois Rivier, “Politiques industrielles en Egypte: de Nasser a Sadat,” Maghreb/Mashrek 92 (April-June 1981), p. 59.
[6] The first major law encouraging foreign investment was actually Law 65 of 1971, but for various reasons it did not have much effect. Law 43 of 1974 was the first major legal instrument of infitah. It opened up a wide range of the Egyptian economy to foreign investment. Foreign capital was generally required to in vest jointly, either with the state or with private Egyptian interests. Foreign investment was encouraged by: 1) favorable tax treatment; 2) unrestricted repatriation of capital and profits; 3) guarantees against nationalization; and (4) special regulatory status. This law also created free trade zones. Law 32 of 1977 made modifications in Law 43 which were even more favorable to foreign capital, including a freer system of currency exchange. See Rivier, pp. 51-52.
[7] Between 1975 and 1979, Egyptian manufacturing increased its output by an average of 8 percent per year in real terms, electricity production rose nearly 12 percent per year and construction went up about 10 percent. Even agriculture, which lost 10 percent of its population between 1975 and 1978, much to foreign migration, increased its real output by about 2 percent per year. Productivity in agriculture may have increased as much as six percent per year as labor migration forced landlords to invest in agricultural machinery. GDP data prepared by Egyptian Ministry of Planning; on agriculture see estimate by Jim Paul in “Perspective on the Land Crisis,” MERIP Reports 99 (September 1981).
[8] Laurence Tubiana, “L’Egypte: agriculture, alimentation et geopolitique des echanges,” Maghreb/Mashrek 91 (Jan-March 1981), pp. 29 and 32.
[9] During the 1970s, Egypt became the second largest importer of cereals in the Third World after China. In 1979, it imported 5.5 million tons of wheat and wheat flour, as well as 800,000 tons of corn, for a total of 158 kilograms per capita. Tubiana, p. 24.
[10] Private bankers were prepared to lend in the context of strong foreign aid, however. An enormous $1.8 billion contract for the upgrading of Egypt’s telecommunication system, signed in September 1980, was financed by European banks.
[11] M. C. Aulas, H. Fahmi and A. Machour, “La campagne d’information sur le controle des naissances,” CEDEJ (Cairo, 1982) forthcoming.
[12] Eric Rouleau, “D’un scandale a l’autre,” Le Monde, May 15, 1981.
[13] At one time, of course, Egypt’s cotton resources were of great importance to foreign capital. British textile industries depended on Egyptian cotton when cotton from the American South was blockaded during the Civil War.
[14] J. S. Birks and C. A. Sinclair, Arab Manpower (New York, 1980), pp. 221.
[15] This case became a major trial after Mubarak became president.
[16] Badrakhan directed the film Karnak, which was an apology for the regime, in 1974.
[17] The free trade zone of Port Said was created for industry, but there are none there. The city has become a big marketplace for merchandise from all over the world.
[18] A study in 1980 by an Egyptian government office concluded that 28 percent of the population lacked the barest necessities for survival. This study was suppressed.
[19] Migration to the Arab countries may turn out to be only temporary, however, depending on the internal evolution of these economies. See M. C. Aulas, “Une nouvelle plaie pour l’Egypte: L’emigration,” Le Monde Diplomatique (March 1978).
[20] Financial Times, “Special Supplement on Egypt,” October 6, 1981.
[21] Gouda Abdel Khalek, “Looking Outside or Turning Northwest? On the Meaning and External Dimensions of Egypt’s Infitah,” Social Problems 28/4 (April 1981), pp. 394-409.
[22] Richard Barnet and Ronald Muller, Global Reach: The Power of Multinational Corporations (New York, 1974), p. 508.
[23] Seven years after the inauguration of infitah, the only substantial foreign investments have been in the banking sector. The manufacturing firms that have shown the most interest have been those affected by the Arab League boycott and hence unable to invest elsewhere in the Arab world. They include Coca-Cola, Ford, Colgate-Palmolive, Motorola, Cadbury, Schweppes and Xerox. None of the manufacturing projects has yet seen the light of day.
[24] Interview. Wali is agriculture minister in the new cabinet named by Mubarak in January 1982.
[25] M. C. Aulas, “La provocante modernisation de l’economie egyptienne,” Le Monde Diplomatique (March 1980).
[26] Israel is concerned about competition for its agricultural products in the EEC with the entry of Greece, Portugal and Spain into the Community. It has asked for preferential treatment.
[27] University pay is so low that a quarter of all professors have emigrated. ‘Amr Mohie El Din and Ahmed Omar, “The Emigration of Universities’ Academic Staff,” MIT Technology Program, July 1978 (mimeographed).
[28] M. C. Aulas, “L’Egypte et l’ouverture politique,” Le Monde Diplomatique (November 1976).
[29] M. C. Aulas, “La provocante modernisation,” op cit.
[30] Mawdudi, now dead, was in the pay of the British during the Indian independence struggle. He spread ideas that were anti-nationalist under the cover of Islam.

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