Tag: economics

Lebanese fear ending up like Egypt

The economic side of Lebanon’s current crisis is examined at the Nation:

But in most conversations with people at the sit-in and protests, economic concerns quickly emerge: Siniora’s government is corrupt, has failed to reduce Lebanon’s crippling $41 billion public debt and has done little to improve people’s lives. Shiites are especially forgotten in the country’s economic planning. Many at the sit-in have been out of work for years, or lost their jobs after the recent war.

“Our country is getting poorer, and Siniora’s government is not talking about it,” says Hadi Mawla, a 22-year-old graphic design student who came from the dahiyeh on the protest’s first day, which drew hundreds of thousands to downtown. “Our standard of living is falling, while other Arab countries are improving. We Lebanese used to make fun of other Arab countries. Now they have great big cities like Dubai. And we’re going to end up like Egypt–with a very poor class, a very rich class and nothing in between.”

Nice to see the crisis being covered beyond the political element — at that dig at Egypt is rather amusing considering that the Egyptian government is always warning that it is afraid it will end up like Lebanon!

Also see: U.S. Readies Security Aid Package To Help Lebanon Counter Hezbollah

Who trains Egypt’s teacher?

From the Egypt Human Development Report 2005:

The Ministry of Education, as the main provider of in-service teacher training, does not have the capacity to cater for the training needs of all employees, even within the traditional parameters. This has led to the adoption of the ‘one size fits all’ strategy whereby all teachers receive the same training at the same time irrespective of the wide variation of their qualifications (only 46% of employed teachers are graduates of Faculties of Education).

Others are filling in, namely international IT companies, most recently under the Egyptian Educational Initiative. I wrote a piece on it for qantara.de, trying to show how these companies take over government tasks – out of their own interest, but for the benefit of school teachers (at least those who participate), I believe.

Excerpt:

Independently of the current initiative, Intel plans to train an additional 650,000 teachers on its own. The company has thereby shown itself to be even more ambitions than other businesses active in the IT field in Egypt.

The Egyptian Ministry of Education presents a rather different, seemingly uninvolved image. Its press spokesman referred to the participating companies and the responsible department head in the IT Ministry. In the end, he refused to answer any questions about the program.

(This week google announced another cooperation with the Ministry of Education, bringing its products to students in Egypt.)

The budget

Yesterday Hossam quoted al-Destour for some interesting figures about how much the interior ministry is spending. It’s worth highlighting that, in fact, a lot more than that is available. For several years now the Egyptian government has been improving its statistics gathering and dissemination, and a lot of these figures come from what is probably the most complete, transparent budget published in the history of Egypt, or at least in the history of Republican Egypt. It’s been done with USAID and other donor money and under guidance from the IMF, with the support, obviously, of the economic reformist in the cabinet. All of these people deserve kudos because this move towards transparency is part of democratic accountability.

In this budget, which is available here, lists all kinds of goodies. I didn’t get time to get to the nitty-gritty, but just on the first few pages you get some interesting figures about the presidency. On page two, it says the presidency got LE98m in FY04/05, LE121m in 05/06, and LE140m in 06/07. Considering how much traveling gets done by the president, these figures — around $22-25m — seem quite small. Maybe there’s another budget elsewhere, but it seems to me there are going to be some figures that are simply not reliable. Probably because the Ministry of Finance itself doesn’t have access to the real data.

There’s a lot of interest statistics in there, and someone savvy could really do something interesting with them. Let us know if you spot any other dodgy figure.

Are Egyptians being swindled of their gas?

The ECES has an interesting paper by Robert Mabro on a question that’s been bugging me for a long time: why is Egypt sticking (and hiding the facts and figures) about its bad LNG export deal with the Spanish firm Union Fenosa, which is causing it to lose money on the gas it exports?

There are EGPC supply contracts to Union Fenosa and Jordan. The prices are not published. It is said that the price to Union Fenosa is low. The highest number mentioned by observers of the Egyptian gas scene is $0.90 MBtu. Lower numbers, such as $0.65 MBtu are sometimes quoted. This is the price at the point of entry to the LNG plant. If these numbers are gross underestimates EGPC/EGAS would be wise to publish the true figures in order to set the record straight. It is true that in compensation for the low selling price EGPC/EGAS has provided some advantages such as delayed paying of their equity share in the LNG plant and the right to use up to 50 percent of the facility for their own exports under a tolling agreement. But what is the value of these advantages compared to the assumed loss on every Btu sold?

The sale price to Jordan is said to be set at $1.50 MBtu which is a more reasonable number. Yet one needs to keep in mind that Egypt purchases gas at the margin from foreign investors at $2.50/2.65 MBtu. To say that it gets 60-70 percent profit oil at zero price and that the average cost of acquisition is therefore much lower than $2.65 is the wrong argument. As discussed previously, in the case of oil the equity oil is a rent for the state not necessarily a fund to subsidize domestic consumption or exports. It is interesting to note a peculiarity in the agreement with BG for the development of gas fields dedicated to exports. There is a clause stating that if the netback revenue falls below the price at which the gas would be sold to EGPC for domestic use, EGPC would compensate the investor for the difference. Given that the investor was keen on the export option, the notion that he should be compensated whenever the domestic market becomes more attractive simply means that, as the English saying puts it, ‘he wants to have his cake and eat it too.’

. . .

We also have to allow for the factors that may have influenced the negotiations of the initial contracts—a multiplicity of objectives which were to be achieved all at the same time. Hence, perhaps, certain concessions on prices were made which may not have been the case given other circumstances.

Circumstances have changed. The information available suggests that all the contracts relating to the export of gas should be now re-opened and re-negotiated. This is possible whatever the precise re-opening clauses state. The fact that Egypt sells at a much lower price than that at which it purchases gas is sufficiently explosive to justify re-negotiation. The foreign companies involved in the contracts would be unwise to oppose a re-opening. Contracts are a formal framework for a relationship. It is the relationship that matters, and it will only work to the benefit of both parties if it is continually perceived as fair by both of them.

Syria: The wannabe China of the Middle East?

There are few articles in the Western mainstream press on single Middle Eastern economies, and this one by Damascus-based freelancer Gabriella Keller on the Syrian economy for the online edition of Der Spiegel is quite well researched and sharp. She argues that while the political leadership has realized the need to open up the economy, to substitute domestic energy sources and to build up a competitive private sector, the lower levels of the administration as well as certain clans are opposing any change.

Very much what can be observed in other Middle Eastern countries in their economic transition.

Some excerpts (own rough translation):

“At the highest level, we received a lot of support�, says Hanna [an investor that started a local production of La Vache qui rit]. “But the authorities on the lower levels have not yet made that about-turn. When we needed permissions, we had to get signatures at some 20 places. So everything took a lot of time and efforts.�

Continue reading Syria: The wannabe China of the Middle East?

TI and other corruption indexes

Al Masry Al Youm yesterday carried a nice photo series on its (print only) back page: Someone with a camera at hand observed a police officer stealing fuel out of one of the dark-blue police cars (“boks�). He then infuses it into a private car (probably his).

This rather amusing example ranks at the very bottom of the misuse of public funds (or materials), which is wide-spread in Egypt, as Transparency International’s Corruption Perception Index 2006, which was released two days ago, suggests once more. Egypt ranks 70th, with a score of only 3.3 out of 10 (last year it was 3.4).

Highest-ranking country in the Arab world is Qatar with a score of 6.0, the lowest is Iraq with 1.9.

I think corruption is still the best example for why economic reform can’t be sustainable without political reform. Countries with wide-spread corruption attract much less foreign investment, and innovative companies have lesser chances to gain grounds against the established ones. But in Egypt, corruption is too important for the regime to stay in power, so the fight against corruption will always serve only its own interests. So, Egypt just came in 165th on the World Bank’s annual “Ease of doing business� ranking.

Speaking of cars and corruption: The US scholars Ray Fisman and Edward Miguel published a study in which they draw a correlation between the amount of parking fines of foreign diplomats accredited at the UN in New York and the level of corruption in their home countries. In other words: ‘show me where you park, and I tell you how corrupt your home country is’.

Here is the link to the study (pdf-file): Cultures of Corruption: Evidence from Diplomatic Parking Tickets

Results: First Kuwait, second Egypt.

Welcome to Egypt

Peekaboolite.jpg

Remember the survey at the beginning of the summer that suggested tourists are unhappy with the way they’re treated in Egypt? If memory serves, it blamed overcharging service industry types for many visitors making Egypt a once-in-a-lifetime experience. After a weekend trip across the Sinai, though, I think there may be another culprit, and I think the little fellow behind his clipboard might know who it is.

Snapped lounging at a highway check-stop making gestures all-too-familiar to women around Cairo, he didn’t want his picture to be taken and wasn’t about to offer his thoughts on the macro-economic implications of the country being overrun by half-trained goons, but I think his input is clear enough.

I’m guessing that there are quite a few people in government here who are familiar enough with Europe—if only Switzerland—to understand that being openly harassed, be it by well-armed soldiers on street corners or by beltagui with guns stuffed into their jeans in the middle of the desert, isn’t something that is going to encourage tourists to make a return visit.

Pity that taxi drivers and waiters are so much easier to blame.

Software Arabization

Researcher Rashad Mahmood has written a well-researched article on the Arabization of software for the current issue of Business Monthly. It gives an informative overview on the history of attempts to bring software to the Middle East, and explains the main obstacles. Excerpts:

Despite the huge potential for Arabization, companies face several hurdles in adapting western software for Arabic users, says Maged Makram, localization project manager at Microsoft Egypt. “Arabization is much more challenging than converting to another western language. For example, if converting to French, a company simply has to replace the English text with French text, then do a quick check on the interfaces, and then they’re done. For Arabic, it is completely different. All screens need to be mirrored (switched to read right to left), icons and arrows need to be flipped, and menus need to be reversed.�

Another difficulty is the lack of agreement over PC-related terminology. “Some companies use one Arabic word, while others use another,� Makram says. For example, some software companies translate the word “disk drive� as “sawaq al-aqras,� literally “driver of the disk.� Microsoft, however, prefers “muharrik al-aqras,� literally “disk engine,� which is closer to the original English meaning. Such discrepancies can confuse users when switching between programs, especially those unfamiliar with computers.

….and on the English characters domain name system:

Perhaps the last major barrier to a fully Arabic Internet is the domain name system – traditionally the realm of English characters. As it stands, at least a basic familiarity with English characters is necessary to browse websites. However, the latest versions of web browsers such as Internet Explorer 7 beta and Firefox 1.5 make it possible to type in website addresses in non-English scripts including Arabic, Cyrillic and Chinese. These browsers have a built-in conversion tool that changes the non-English characters of so-called internationalized domain names (IDNs) into Punycode, an encoding system that lets browsers visually represent domain names in multilingual script.

The NDP’s electricity bill

Last week, Al Masry Al Youm summarized a report issued by the South Cairo Company for the distribution of electricity, that put the outstanding electricity bill’s by the NDP as well as ten government-owned newspapers at LE22 millions.

The NDP economic reformers in cabinet can talk about attracting foreign investment forever, it will never take off as they desire if they don’t get these hidden subsidies and irregularities inside the state economy fixed.

(The fact that this report gets public probably indicates that the Nazif cabinet is serious about putting the state press on a sounder economic basis and cut corruption and mismanagement there.)

To pay the bills of their own party would be a good start, too. It’s LE 59258.