Sunday, October 31, 2010

The Gods of Parliament (Short Story 11th of October 2010)

In the hallowed halls of parliament, standing amidst his cabinet, the Prime Minister started his speech nervously, “We are proud of our country, of the recent reforms which have triggered an insatiable appetite in foreign investors. Investments are pouring in; this is our time, with a more promising future on the horizon.”

As soon as the word “future” was uttered, the walls of the building started to shake; thinking it was a mild earthquake, the PM paused till it passed, and then continued his prepared speech “The future is ahead of us, our youth are getting employed, and the quality of life is improving……..”

The session was over, and the Members of Parliament filed out of the building after listening to the entire speech. The hall became empty.

Inside the hall, a voice emanating from the parliament’s dome;

Why were you shaking?

We were shaking in fear

In fear, of whom?

In fear of the gods of parliament

Why fear the gods now?

The gods of parliament are un-satisfied; they can not bear any more lies in this house.

Has this not been the house of lies since its creation?

Lies in themselves are not a sin. The lie is a means to an end, and sometimes the end justified the means

Then, what brought on their wrath this time?

The lies they heard here were a means to a malevolent end. They saw justice withheld, and bad blood

They saw lies said without confrontation

They saw a weakening power of speech and a rise in the power of flatterers and the unworthy

The president’s chair was silent for the entire conversation between the furniture and the dome

And all of a sudden, facing the lights of the dome to complain to the gods, the president’s chair spoke:

We the furniture of parliament demand from your highnesses to withdraw us from a place that has forgotten why it was created

We the furniture of parliament state in regret that this parliament that started with a struggle to limit the powers of the monarchy is currently extending and blessing this monarchy

We the furniture of this parliament admit our helplessness and inability to redeem the polluted justice

We the furniture of this parliament are incapable of holding the curse or solving the riddles

We were born to be pieces of furniture, and we never complained

And there were always others to hear and see and say

And in their power of speech, we were able to survive

Please take us from here

In a split second the parliament exploded, and fire flames covered the entire place, with the exception of the dome, which the gods left

The gods left the dome in hope that one day people would remember why the parliament was created.

The dome is the only one that is destined to stay, and is the only hope that remains.

Saturday, October 30, 2010

Al Ahram Weekly Article 3 (4th March - 10th March 2010)

Small drops

SeifAllah Rabie examines what's hindering the trickledown effect of economic growth

Amid last year's financial turmoil Egypt remained among the top recipients of foreign direct investment (FDI) inflows in the region, according to the World Investment Report issued by the UN Conference on Trade and Development (UNCTAD). The report is not the only vote of confidence. The International Financial Corporation has also recognised Egypt as one of the global top reformers in its latest "Doing Business Report". Moreover, the International Monetary Fund (IMF) stated that, "growth in Egypt has picked up steadily since 2004 making it one of the Middle East's fastest growing economies."

Yet the question remains: What is hindering the trickledown effect? Why aren't investments surpassing the borders of Cairo and Giza? Why is the amount of jobs created far less than the amount of issued capital? The Board of Trustees at the General Authority for Investment attempted to answer some of these questions through a study conducted under the title of "A Just Distribution of the Fruits of Growth" . The main goal of the study is to analyse the factors hindering the trickledown effect.

According to the findings of the study, one of the main problems facing the trickledown effect is the proportion of investment to the overall GDP, currently standing at below 19 per cent, and needing to reach at least 25 per cent in order to propel development in the real economy. The study further referred to the history of the inverse relationship between private and public investments. At peak times of public investment, their private counterparts declined immensely. This phenomenon was most apparent during the year 2001-2002, in which public investments increased strongly while private investments plunged 23.5 per cent. Both types of investment should complement rather than substitute one another, as a decline in public investments indicates deterioration in public services, and a fall in private investments is an indication of a stagnant business environment.

Another reason for the crippled trickledown effect is the distorted geographic distribution of investments. During the period from 2000-2007, 34 per cent and 30 per cent of new investments were concentrated in Cairo and Giza respectively. This saturation in only two governorates was a major obstacle to the extension of the fruits of FDI to the rest of Egypt.

The study further drew attention to a very important, yet often ignored, aspect in assessing the larger growth accounting framework, which is total factor productivity. It has been proven that economic growth achieved during the period from 1982-1983 to 2006-2007 was created solely through capital accumulation. Thus, real enhancement of total factor productivity, which will only occur through widespread job creation, was absent. In assessing the period from 2002-2003 to 2006-2007 we find that the petroleum and energy sector, a capital-intensive sector with minimal job creation, has attracted the largest amount of investments, constituting 28 per cent. However, investment in manufacturing and mining, which are labour-intensive industries, did not exceed 12.3 per cent for the same period.

Other reasons such as the rise of the informal sector and the scarcity of a well- educated labour force were mentioned. If only 10 per cent of the labour force is capable of working in the so-called modern economy while the rest are restricted to jobs with low levels of productivity, and hence lower salaries, then the trickledown effect will remain stunted. Even if the informal sector is capable of alleviating unemployment to some extent, it will yet fail to provide decent jobs that reap the fruits of growth and investment.

Mohamed Taymour, chairman of Pharos Holding for Financial Investments and the founder of the renowned financial services institution, EFG-Hermes, stated that the obstacles facing the trickledown effect of FDI and GDP growth rates were all expected and make perfect sense. A new investor would naturally choose to set his business in an area that is most developed in infrastructure, such as Cairo and Giza, and would most probably hire the skilled and educated labour that constitutes the minority of the workforce.

Does this mean that we shall see the fruits of growth and investment in the near future, especially given the latest developments in infrastructure? How much of a time span is needed for the trickledown effect to take place in a country governed by free market policies since the early 1990s? How can the government move the market into strategic sectors that would help in propelling advances in the real economy? All these are genuine questions that need to be asked not only of the government, but also of civil society and the rest of the economic "intelligentsia" in the country, including prominent scholars and research centres.

Society is unfortunately withdrawn in either cynicism or exaggerated optimism. Corporate executives and government officials are more likely to present doubling growth rates and FDI figures to magnify a success story void of any failures. On the other hand, the general public is growing cynical of numbers and is continuously suspecting their manipulation. In this issue particularly, it is important to understand that economic reform in Egypt is in need of immense efforts far beyond doubling GDP growth rates and FDI. Unless a clear strategy resulting from a comprehensive vision is adopted, the disparity in perceiving economic development between the elitist minority of executives and government officials on the one hand and the general public on the other hand will continue to widen.

Al Ahram Weekly Article 2 (1 October - 7 October 2009)

Better than the Russians?

SeifAllah Rabie writes on the ins and outs of the Egyptian natural gas sector

As a curious member of the public following news of Egypt's political economy, I could not resist the temptation of trying to understand the story of natural gas in Egypt. Looking at the figures from the Central Bank of Egypt we find that petroleum and extracts constituted 14.2 per cent of the GDP for the year 2007/ 2008, standing as the second largest source of GDP (manufacturing, which holds first place, comprises 16.1 per cent).

In 2004/2005 oil and gas reached their peak, constituting the largest share of foreign direct investment (FDI) at 65.6 per cent, decreasing to 33.3 per cent of FDI for the year 2007/2008. This was due to a governmental move towards economic diversification, through which Egypt successfully raised its FDI from $2.1 billion to $13.2 billion, with oil and gas remaining a major contributor. As we chart these figures we find oil and gas part and parcel of Egypt's economic progress, and structure.

Upon digging further, we find that natural gas specifically is likely to occupy the lion's share in Egypt's energy sector in the foreseeable future as a result of major recent discoveries. The resource is also likely to play a huge role in key industries such as petrochemicals and hydrocarbons. Furthermore, the increasing level of global consciousness towards the environment is also likely to raise the level of demand for clean energy and therefore the importance of natural gas.

The more I dug into the facts and figures the more I found the story of natural gas in Egypt remarkable, though I couldn't determine whether it was a remarkable success or a remarkable failure. I am sure, however, that it is of great importance and worth close observation.

In its latest report about Egypt, The Financial Times recently hailed Egyptian authorities for their ability to double the production of natural gas from eight billion cubic feet in 2003 to 68 billion cubic feet in 2006, one of the highest growth rates of production in the world. Perhaps a more exploratory article could explain why it was eight billion cubic feet before and what happened to make it 68 billion cubic feet in just three short years.

Experts tell us that Egypt's natural gas production increased over 30 per cent between 1999 and 2007, one of the highest growth rates in production worldwide, higher than that of Russia which contains the largest natural gas reserves in the world, estimated at more than 1,680 trillion cubic feet (TCF), as opposed to the Egyptian reserves that amount to 58.5 TCF. The fact that we are having a higher growth rate than Russia, which is expected to grow by only one per cent for the coming two years, is striking and some readers may question our prominence as opposed to Russia in the oil and gas sector. The figures of production and FDI are at face value success stories. However, the devil is in the detail.

After reviewing the work of independent experts in the field, it is clear that the doubling rates of production, mentioned above, still do not solve the triangular riddle we find ourselves facing. The three angles of this triangle are production, the share of the foreign extraction company partner, and domestic consumption. In 2007, the production of oil and natural gas reached 76 million tonnes; the share of the foreign partner alone was 29 million tonnes, while our domestic consumption reached 60 million tonnes. An easy calculation shows that there is a deficit of 13 million tonnes.

This deficit entails that Egypt has to buy the difference of 13 million tonnes to satisfy its domestic consumption, so we actually buy this deficit from the foreign partner whom we sold it to in the first place. This entails a weaker position in negotiating prices and terms of agreement, bearing in mind that the pricing of natural gas is set through bilateral long- term contracts that are valid for 25 to 30 years at a time, unlike petroleum that has a unified cartel pricing system.

Amid such a deficit we get to hear about the Ministry of Petroleum's involvement in extensive exports of natural gas to Spain and Israel and several other countries, of which total Egyptian exports of both oil and gas mounted to about 30.2 million tonnes in 2007/2008. We also get to hear about cheap prices of natural gas export, when compared with international pricing levels, and the indebtedness of the General Authority of Petroleum to foreign extraction companies. Those issues are worth a whole new article, however the general question here is how far has the government been able to satisfy the domestic need for natural gas? And how is government policy taking into consideration the depletion of such an important resource in the near future?

The controversy in this matter is not only a problem of having a contract with an Israeli company -- which undoubtedly the public has every reason to resent -- but also the importance of transparency. And transparency is not just the claim of a democracy and its citizens to be fully aware of the actions of the state, but is also important because natural gas is a strategic resource, and is exhaustible, whether in 57 years (which is the optimistic government estimate) or in 10-15 years (the estimate put forth by experts), which brings us to the conclusion that in all cases it must be wisely used as a right of future generations.

So are we really better than the Russians?

Al Ahram Weekly Article 1 (28 May- 3 June 2009)

Those who paved the way

Egypt's banking system is rooted in the modern nationalist movement, writes SeifAllah Rabie*

The reception I got from the Khedive, when I had the honour of meeting with him to present my project, and the interest and determination I found on his part, ensures that the idea will be taken with care and initiative... I plead to the justice of those in charge to test both my project and the other one and choose the one closer to the interest of the country.
-- Amin Shumayyil in a letter to
Al-Ahram, 1879

With money being "the root of all evil" and paradoxically also the modern measure of all "success", over and above the current world economic crisis, in which banks have played the role of the main villain, and during which the banking system as a whole has come under severe scrutiny, it would be amiss not to take a look at the history of banking in Egypt.

All modern-day Egyptians crossing downtown have at some point or the other glanced up at the statue of Talaat Harb, maybe even taken the time to read the inscription beneath the statue, "Political and economic independence are soul mates, and it is our duty to enrich them with strength, power and resilience," and we all go along happily with the textbook idea that this great man was the "father of Egyptian banking".

This fact in itself is not to be totally discredited; Harb did have an enormous influence on the financial environment of 19th century Egypt. He founded Banque Misr in 1920, the first Egyptian national bank, but Harb himself mentioned others and gave them credit, at least for having national sentiment and national aspirations.

But as often happens, history has a highly selective memory and can at times be fickle about who to glorify and who to bury.

It must first be stressed that the idea of having a national bank was part and parcel of an Egyptian nationalist movement. It was a portrayal of its identity, character, desires and demands.

Into the spotlight walks a Syrian lawyer by the name of Amin Shumayyil, who came up with the idea of establishing a joint stock bank with a capital of LE14 million. The main objective of establishing the bank was to convert Egypt's foreign public debt into a domestic debt, and initiate a plan of liquidating it in a period of 28 years.

Actually, Shumayyil sent several letters to the Egyptian daily Al-Ahram under the title of Al-Bank Al-Ahli (The National Bank). Although the idea was welcomed by the Egyptian public and elite, it was too farfetched and not financially feasible, and was left to gather dust in economic drawers of the time. Still the question remains as to the character of Shumayyil. An article in Al-Ahram of 10 April 1879 opined: "verily, there are experienced and capable men among the children of our tongue, who are able to amend any aberration should the justice of decision-makers permit them to act."

Shumayyil stands out as an interesting example, although he was Syrian by birth and a Christian by faith. Nationalist measures at the time placed him (as well as his famous brother Shibli Shumayyil) as active contributors; therefore it seems that happenstance rather than territorial or religious identity formed the bond.

But Amin Shumayyil was not the only active mind at the time. Two other men put their heads together and came up with a very unique document known as Manshur Inma Al-Mal (The Communiqué on the Nurturing of Wealth) . These men were Omar Pasha Lutfi and Mohamed Pasha Sultan. Both belonged to the elite class of the 19th century and played active roles in the nationalist movement.

Whereas Shumayyil went into details in his proposal of establishing a national bank, Lutfi and Sultan viewed the issue from a more ideological perspective. The document focussed on the village debts crisis, which was threatening the peasants' possessions of agricultural land. The document also had a religious leaning, starting off by showing how the establishment of a national bank was actually in line with God's will, and moreover was a religious obligation.

The first line of the communiqué reads: "God in his highness did not create any of his creatures except to bear fruit and to be useful, God does not approve of leaving his gifts buried in the ground without bearing fruit..." On the other hand, the document showed the significance of the contribution of large enterprises (such as their suggested national bank) to Western economic and political power. The authors of the document did not find contradiction between religious justifications on the one hand and emulating the Western/European model of economic advancement on the other.

Reading Manshur Inma Al-Mal a very important point comes to light. It is difficult not to notice the significant difference between the nationalist sentiments of the 19th century and the nationalist sentiments of contemporary Egypt. The nationalist movement was led by the traditional elite, wealthy landlords, Western educated intellectuals, and men who had benefited from the social system that preceded European control. Therefore, their nature was far from radical, and was able to accommodate European economic prototypes within their nationalist demands.

The document does not portray the West as the villain and the East as the victim, but rather shows the West as a model of commercial superiority with their large corporations, unlike the East that stuck to the traditional pattern of small enterprises, where business is mainly dependent on an inheritance from one generation to the other.

It is obvious that the nationalist movements of the 19th century focussed on realising the potential of Egypt, and cementing its economic independence and power. The absence of Egyptian national banks was viewed as leading to a situation whereby most of the land became mortgaged to foreigners, and Egypt lost its economic independence.

The document went further in showing how the proposed bank would conform to Islamic Sharia law. It established the fact that lending money was in itself legitimate and that lending profits fell in the same category. Banking was presented in this document as mean for liberating peasants from usury. It was claimed that a national bank would help rescue the mortgaged lands from foreigners, and the pricing of the loans would conform with Islamic jurists judgement that have approved the rate of 15 per cent, unlike the actual percentage that peasants used to borrow at, which ranged from 30-40 per cent.

The precursors to Talaat Harb are the ones who took the initiative to look into the future, establishing the ideological base for banking in Egypt and giving it the legitimacy we depend upon today. Acknowledgement of their contribution in history is crucial in helping us understand the nationalist approach that took root in the early 19th century, and might give us some food for thought amidst the current turmoil.

Yes Prime Minister (Review & Reflections)-27th of September 2010

“A Prime Minister is the only top job that does not require past work experiences,” said Sir Humphrey, the prime minister’s permanent secretary, reflecting the cynical view of an old appointed bureaucrat deeply rooted within the British civil service. In watching the play Yes Prime Minister in one of the old and small theaters of London, Gielgud, one observes the conflict between civil servants and politicians, resulting from their conflicting views and backgrounds. A civil servant like Sir Humphrey is likely to have served many prime ministers knowing the rules of the game fully and totally disinterested in public appeal for him self, unlike the prime minister whose political future is at stake.

Sir Humphrey like a lot of other civil servants elsewhere knows how to please his superiors using sophisticated rhetoric. A direct question does not necessitate a direct answer. He has developed over the years of his experience an exceptional ability of drawing a distinction between his opinion about his superiors and his role in flattering and providing close advice. This prime minister is like all his predecessor incompetent prime ministers, they are not made to run the country. They are mere puppets to do what they are asked to do from their civil servants.

Sir Humphrey’s lack of trust towards the prime minister reaches the extent of which he asks his principal private secretary to physically damage his blackberry sim-card, which is helping him in communication, and thus may be a tool in helping him run the country which is not a fortunate scenario to both secretaries. The prime minister’s actions and talk throughout the play reflect his ignorance, hesitation and lack of both confidence and competence.

At the mid of the play a moral dilemma occurs, whereby the Prime Minister’s competence is at risk, and the entire office’s morals are proven feeble. In an exchange for a 10 trillion dollars oil pipeline supply deal with the so-called country Komranistan they are required to provide Kormanistan’s foreign secretary with a perverted ‘treat’; a teenage girl for the night. The consequence of this request is the core of the drama and comedy that are to take place for the rest of the play.

In the events of the play flattering politicians, customizing rhetoric to legitimize hidden agendas and deceitful deeds and actions are some of the characteristics among others that were portrayed in a comic way in criticism to the British political and governmental system. After watching the play it becomes possible to accept that even the so-called democratic virtuous system of ‘Great Britain’ that has occupied our textbooks during college years as the classic parliamentary system, a mentor to all other parliamentary systems suffer from the same problems as the rest of the world.

The ‘symptoms’ of incompetent political leaders, corruption in political offices, lies that have probably been invented by politicians, immoral actions and decisions are not peculiar to the British political system or to any other system elsewhere. There is not a single government amid the financial turmoil that did not claim that they were the best to recover from the crisis. Political leaders of the most affected countries by the financial crisis would claim without stumbling that they owned the most resilient financial systems. A vicious cycle of lies, an everlasting conflict of interest between civil servants and politicians, significant conflicts between deeds and words are all common characteristics for most of governments of the world. The real major difference between governments does not lie within governments or political systems as much as it lies within the checks and balances system that surrounds the system.

At the beginning of the play the Prime Minister’s principal secretary questions in disbelief “Why on earth would one choose to be a prime minister?” which resembles the hardship involved in holding a public office. The prime minister was the most infuriated throughout the play due to the excessive scrutiny he is put under from the media. If the lie uttered from the political leader is confronted with BBC’s hard talks, and the decision taken is closely analyzed and heavily criticized by the Economist, and the mere rumor about the Prime Minister’s office is published in the Daily Mail. If University students could represent a real threat to the political system and civil society organizations are the first to jump at the throat of the political leader in any wrong doing. If the right checks and balances system occurs represented in the media, journalism and all the other means, political villains are likely to remain contained.

A political leader in a developed political system is continuously under scrutiny and criticism. If he goes right, there will be those demanding a change in his orientation, and if he goes left the rightists will stand in his way. A whole process of an effect and counter effect, with all entities in the civil society seeking to demand their rights fully produces an end result that is likely to develop a mature political system. The business community should defend their capital rights aggressively, the journalists should demand their freedom rights fully, human rights organizations should be alert at each violation, writers should write extensively from all streamlines. It is only when the surrounding civil society and opposition is well substantiated do we reach political maturity. In which case it will be hard for the political leader to stay more than his terms allow, even if the constitution or state laws allow for indefinite rule. The leader is at the end a human being, and there is no human being capable of tolerating this amount of scrutiny and criticism for more than the ones allotted in developed nations. This in my humble opinion is the route to political development.

Never Die & Never Live (Short Story) Oct.2010

Never Die & Never Live

Down in the drain, up in the sky, we’re destined to live and never die, said Mugasa the leader of the tribe.

In a deeper & lower voice, like whispers in the ears of the crowd; we are to live and never die.

The tribe in unison said after him in a grandeur voice;

We are to live and never die.

We are to live and never die.

A faint smile was drawn on Mugasa’s face and he said; our success lies in our survival. We never sought glory or glamour, and we shall never seek them.

Whoever gained from these qualities? Whoever gained from being loved or in love? I am the eldest amongst you, and my age in millions of years is the source of all wisdom.

I have seen the dinosaurs rising and falling. I have seen the wild tigers of the forests tamed in the zoo, I have seen the king of the jungle helpless in a cage.

Abandoned we are, from cradle to youth to death, if death ever happens. Never take care of your young, or they will take care of you. A vicious cycle of care and in whose interest is this care and love?! We do not need care or love; all we need is to fly.

Never fly too far or too high. Fly in circles, never in a certain direction. Flying in a direction is a stance, and we never take stances or make decisions, this is the secret of our might.

From the back of the crowd a young fly protested: My fellow flies, I shall remain the way I am. I will mate when I need or want, and I shall not await your dark season of mating. I do things differently, and shall remain the way I am. I declare my disobedience to Mugasa the king of flies, and my disobedience to the larger empire of insects, the Mediocity Empire.

I shall love and hate and I will not leave my children to your fate. I will do it my way, and who knows, perhaps one day I will be your king, and have the power to change you from inside.

This was not the first time for Romeozo to shock Mugasa’s audience.

As he stormed out, the rounded hall fell silent. They could not withstand Romeozo’s ideas.

They never reacted to him, because they had learnt never to react, yet they were astonished that Mugasa never reacted to him as well.

He was known as ‘Romeozo the Hero’ in the kingdom of flies, a charismatic, revolutionary, impulsive young male, widely known for his stubbornness and his continuous efforts to breach state laws.

Why does Mugasa the Almighty never react to this rebellious, immature fly? No body knew!!

The meeting of the leader with his citizens had to be brought to a halt, due to the intensive waterfalls which flowed through the entire hall during that time of the day. They all rushed out of the hall.

Mugasa walked into the grand pipe room with his shrewd minister Medosa.

Medosa, confusedly asked; your highness, why are we not getting rid of Romeozo, He is losing his sanity everyday.

He is a young soul, leave him.

And how many young souls did we get rid of?!, said Medosa sarcastically. Why do you insist on not getting rid of him? Rebellion is contagious your highness! If the Grand Empire smells the rise of a rebellion, they will overrule us. With a flap of your wing, this maggot could be demolished. The trap is ready, similar to the other traps we have done before; luring him into the hands of the humans, and let them get rid of him and end this menace.

My order to you Medosa is to leave him. Do not even disrupt his rebellion.

“As you wish my Lord”, said Medosa in disbelief as he turned to leave the King’s private room.

A few days afterwards, the news about Romeozo’s death was everywhere. Romeozo was dead and no body knew how or why.

As soon as the news arrived to Medosa’s ministerial office, he ran to the king’s private place next door.

You did it almighty, you did it yourself. I was sure you were going to get rid of him sooner or later, said Medosa in a pleased voice.

I did not Medosa! I did not, the king chuckled.

Then who did it, who killed him?

He killed himself!

Why would he?

Did he not announce out loudly that he is born to live, love, hate and rebel?!

Yes he said, he will mate when he feels like it, he will…

In a stuttering voice he said, He will…

He will do what Medosa? Snapped the king loudly.

He will “god forgive him and god forgive us all” disobey you and disobey the Medio-City Empire, I really do not know how he dared say that out loud.

He died because he decided to die, King Mugasa explained. If you succeed you fail, if you love you hate, and if you take a decision, you take a stance and if you take a stance, you create both enmity and adoration. Romeoza left our almighty Kingdom that has survived on such wise principles.

I did not kill him, because the million years of my wisdom foretold his eventual death. Romeozo and all his predecessors are destined to die eventually in the Medio-City Empire. There is never a need to kill a dead body.