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US trade, not aid
Published in Al-Ahram Weekly on 31 - 05 - 2007

US Ambassador Francis Ricciardone focuses on trade rather than aid. Gamal Essam El-Din reports
On a visit to the Mediterranean city of Alexandria last week, US ambassador to Egypt Francis Ricciardone emphasised that, "Egypt is no longer in strong need for direct economic assistance from America or any other country. Egypt is not anymore a poor or underdeveloped country," added Ricciardone. "Egypt has achieved a great economic progress over the past 30 years and now it is more developed than the year in which USAID started implementing development programmes [1975]. As a result the emphasis in the future should be on boosting trade and investment relations between the two countries."
Ricciardone said this will not mean eliminating USAID programmes in Egypt altogether. In 1998, the US Congress decided that USAID economic assistance to Egypt should decline at the rate of $40 million (or five per cent) annually and that this aid will stabilise at around $407 million in 2009. Overall, the US currently gives Egypt $1.7 billion in annual military and economic assistance.
Economic and political pundits agree that the gradual decline in annual US aid to Egypt is really due to political reasons. Several congressmen cite what they call "Egypt's poor record in human rights and lack of political reform" as two reasons to cut off all US financial assistance to Egypt. Congressmen were angry that Ayman Nour, leader of the liberal Al-Ghad Party and President Hosni Mubarak's main rival in the 2005 presidential elections, was arrested and that the country is backing away from political reform.
Ahmed El-Sayed El-Naggar, an economic researcher with Al-Ahram Centre for Political and Strategic Studies, agrees with congressmen, and argues that as long as US congressmen continue voicing their objections to undemocratic practices in Egypt, the trade relationship between Egypt and the US will also remain on shaky ground. "Let us remember that Egypt's poor record in human rights, as described in the annual reports of the US state department and international human rights organisations, gave US congressmen a good excuse to reject signing a free trade agreement with Egypt," said El-Naggar. "Egypt lost a lot because of this rejection and I expect that political factors will continue to impact on economic relations between the two countries."
In spite of the above pessimistic remarks, Ricciardone expects the USAID economic assistance to Egypt will continue even after 2009. "I do not think that US congressmen will object to continuing the annual USAID economic assistance, especially after Egypt has shown its value as a strong partner of the United States," Ricciardone told journalists in Alexandria. Ricciardone argued that, "it is natural that USAID programme in Egypt face criticism in both the US and Egypt. We faced this criticism several times before and the two countries have been able to contain it." Ricciardone expressed hopes that the exchanges between Egyptian and American parliamentarians will help send a positive message about conditions in the two countries.
He is upbeat about trade and investment between the two countries, indicating that America is now one of Egypt's largest economic partners. "American investments in Egypt are now $6 billion while the volume of trade between the two countries has steadily grown from less than one billion some few years ago to now more than $5 billion," Ricciardone said. According to US Embassy statistics, the US is now the largest investor in Egypt after the United Kingdom. According to US Embassy statistics roughly two- thirds of total US investment in Egypt are in the oil and gas sector, as well as substantial investments in information technology, consumer goods, automobile and financial services. Ricciardone cites President Mubarak in his annual speech before the People's Assembly: Egypt wants to be more open to the outside world. "This is a very positive message to international investors, especially in America," said Ricciardone. He admits that many American investors have misconceptions about Egypt. "They believe that this part of the world is rife with religious extremism and lack of stability in political conditions," said Ricciardone.
In his tour of Alexandria, Ricciardone joined Governor Adel Labib in opening the Smart Business Centre (SBC). The centre got $140 million from the USAID, and aims to serve SMEs by reducing the issuing time for business licences. According to SBC Director Iman El-Shayeb, SBC is the first centre of its type in the Arab world, and will ensure new businesses get the permits and licences they need in one day in contrast to the previous system that used to take up to a year or more. Ricciardone believes that the centre is an exciting initiative for business growth and development in Egypt's number two capital.
Ricciardone also toured the industrial city of Borg Al-Arab, west of Alexandria. He joined Industry Minister Rachid Mohamed Rachid in inaugurating a new packaging line by Pregis USA at the Kobusch packaging plant. Kobusch is a joint Egyptian-American investment project. Ricciardone also visited the National Vegetable Oils Company (Cargill) which is another joint Egyptian-American investment project. Minister Rachid praised the development of Borg Al-Arab as a giant industrial city. According to Rachid, Borg Al-Arab is now a magnet for all kinds of investors, be they Egyptian, Arab or overseas. "As a result," said Rachid, "the government decided to extend a railway track between Alexandria and Borg Al-Arab to facilitate the flow of trade. We aim to make Borg Al-Arab a magnet for international investors from the US and Egypt, not to mention the Arab Gulf," said Rachid. He heaped praise on American investments in Egypt, emphasising that these companies have provided Egypt with technology transfer and highly-paid jobs for many young people. Rachid emphasised that future relations with the US should focus more on trade and exchange of investments. "We know that one day the annual US assistance will come to an end and that it is the trade relations that will continue."


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