The Economist: Arrest of businessmen and military intervention further stifle Egyptian economy

A report by The Economist said the Egyptian government was “blackmailing” businessmen and investors. To acquire interests in their companies, as happened with the founder of Juhayna Dairy Company, Safwan Thabet, and his son Seif.

The magazine stated that the government had arrested Thabet after he refused to agree to cede a share of the company to a state-affiliated company, and arrested his son Saif after he refused to enter into the transaction voice.

In December 2020, the Egyptian Interior Ministry announced that it had “thwarted a scheme to fund terrorist activities for the Muslim Brotherhood, in which the founder of the Juhaina Company, Safwan Thabet, participated,” and months later she son arrested on the same charge. .

But in September 2021, Philip Luther, director of research and advocacy for the Middle East and North Africa at Amnesty International, said: “Safwan and Saif Thabet are being punished for daring requests from Egyptian security officials to praise Juhayna’s assets. give, to refuse. ” “They showed rare courage in resisting the officials’ attempt to blackmail them.”

The magazine pointed out that despite the lapse of more than a year since the arrest of Thabet and his son, the courts have not yet considered their case.

She pointed to another issue, which is the pressure that businessman Rami Shaath has been subjected to, to agree to give up a stake in his company for electronic devices to put the use of electricity, water and gas for state-owned companies on to track, in favor of a military company.

The magazine stated that when he refused, he was arrested on charges of “assisting a terrorist group” and spreading false news, for two years before being released after relinquishing his Egyptian citizenship.

“The army is pushing us”

“We started going bankrupt,” Shaath told the magazine. “Not because our performance was poor, but because the military put pressure on us.”

In turn, economic expert Rashad Abdo said this information was “incorrect”, adding that Safwan Thabet and his son had been arrested “for their involvement in terrorist cases against the Egyptian people.”

In statements to the Al-Hurra website, Abda said that “the countries are protecting the Egyptian people from the financiers of terrorism, and that is their right.”

Sisi appeared on television last December, putting three construction company owners under pressure to accept delays in state payments for the construction of roads and bridges. The businessmen smiled shyly and agreed, and the magazine wondered what would have happened if they had refused?

The newspaper also mentioned that the military controls the economy in Egypt and restricts competitive opportunities for investors due to the tax and customs exemptions it obtains. She noted that when a new state-owned company entered 2019 to sell meat, the Ministry of Agriculture banned private competitors.

Last year, the government launched the military-run Silo Food Industries Factory and used logos on its products similar to those of Juhayna.

In an interview with Agence France-Presse last November, Egyptian billionaire Naguib Sawiris stressed that the state should be a “regulator, not an owner” of economic activity, as competition between the public and private sectors from the beginning “is unfair.”

“Government-owned or military-affiliated companies do not pay taxes or customs duties,” said Sawiris, 67, who is one of the richest people on the African continent and the second richest person in Egypt after his brother, with an estimated fortune. at more than three billion dollars. reasonable.”

“The people trust the army

Under the regime of the former commander of the Egyptian Armed Forces, the army’s economy achieved remarkable growth as it was entrusted with many projects, and accordingly it established partnerships with private sector groups to participate in the implementation, including Orascom Construction, which is owned by the Sawiris family, according to AFP.

Al-Sisi said at a public conference in 2016 that the military’s economy represents about 2 percent of the national economy, adding: “We would like it to reach 50 percent.”

No official figures are published on the military’s financial situation, but Sawiris believes that “the (Egyptian) economy has recently been boosted by government spending on infrastructure such as new roads and the new capital, and that is the private sector. (companies) building these projects. ”

Sawiris said: “There is still competition from the government, so foreign investors are a bit scared, and I myself do not go into offers when I see state-owned companies,” as “the playing field is no longer level,” as he put it. .

Last December, Sisi said that the private sector is very involved in the economy, noting that one of the companies working in the field of construction has received investments estimated at £ 75 billion in 7 years.

Abdo stressed that the citizen trusts the projects implemented by the military because of their efficiency, cost and low corruption. He said that the military often does not implement projects themselves, but rather oversees them and their implementation to private sector companies. award to ensure integrity and quality in it.

He added that the private sector acquires great privileges when investing in Egypt, and questions the information on the exemption of the army from taxes and customs.

Despite GDP growth since the 2016 bailout, the economy is in “bad shape.” Egypt has failed to build up its manufacturing base, the current account deficit has widened to $ 18.4 billion, and the poverty rate has risen, according to the magazine.

Since 2016, Egypt has borrowed $ 20 billion (about 5% of its GDP) from the International Monetary Fund, making it the second largest recipient of the fund after Argentina in that period. It is also negotiating a new loan after the war in Ukraine forced nervous investors to flee, causing a severe currency crisis.

The International Monetary Fund praised Egypt for quickly taking painful (and unpopular) austerity measures. But he said the Egyptian government was suffocating the private sector.

The magazine confirmed that Sisi had succeeded in persuading friendly Gulf states to deposit billions of dollars in the central bank and promise investment, but “issues such as Juhayna are likely to encourage foreign investors to come”.

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