If you dig deep enough, you'll find that to every battle, conflict, and row there is an economic cause. Class conflict, international confrontations, border disputes and ethnic strife are all about money, irrespective of what the parties involved may say. Doctrinaires opine and theorists present neat arguments, clerics cite holy books, and jihadists invoke old ideas, but whenever a man comes at you with a gun, orders tanks to move, or sends in a drone to eliminate foes, a quarrel over wealth and power lies beneath. Writing in the 1930s, the Egyptian writer Salama Mussa said that culture was a reflection of the economy. If you wanted another kind of culture, he said, you had to do something about the economic set-up. Once people have access to jobs of a certain nature, get a different education, and have an altered distribution of wealth, their mindset changes and so does their culture. According to Mussa, if you want people to show an interest in culture, you have to encourage theatres and publishers and provide better schooling. People will appreciate what they understand, he pointed out. Societies that have numerous scientists and artists are the ones whose business and public reward science and art, Mussa said. The moment the economy grows, culture has every chance of development as well. This is why the flourishing of culture happens in times of economic growth. Prosperity tends to favour refinement in the arts and science, though this is not always or necessarily the case. The Industrial Revolution in Europe brought with it immense wealth, but it also destroyed some of man's most cherished cultural institutions. Artisans and masons, people whose work involved not only the creation of beauty but also personal growth, were undercut by the mass production of factories hiring semi-skilled labour for monotonous jobs. The repetition of the machine age replaced the creativity of the personalised products of the pre-industrial past. The creation of wealth focused on quantity, and much of the satisfaction that had come from earlier cultures was sacrificed in the process. Centuries before the Industrial Revolution changed the face of Europe and ultimately the world, Egypt went through a series of cultural changes of its own. The Graeco-Roman conquests in antiquity brought about a new pantheon of deities, blending with the old practices of the nation. When Alexander the Great came to Egypt in 330 BCE, he dabbled not only in theology, declaring himself an ascendant of the God Amun, but also with the economy. He ordered a special coin to be minted with his face on it and wearing a crown with two horns – the insignia of Amun, the chief god who was associated with the horned ram. A few centuries later, another wave of invaders came from the West, and these too had their own economic aspirations. The Fatimids, believers in Shiite Islam, managed to stay in power in Egypt for two centuries (969-1171 CE). One of the first things the Fatimid caliph Al-Muizz did after ordering the building of Cairo was to mint gold and silver coins, dinars and dirhams, bearing his royal insignia. The dinar, weighing 5.4 grams in gold, was equal in value to 14 dirhams, weighing 3.3 grams in silver each. Fatimid rule only came to an end when the European Crusades, conflicts that set the tone for all religious conflicts to follow but in fact were mainly contests over the control of the Mediterranean, taxed the Fatimids' administrative and combat abilities. Egypt was a prize for which both the crusaders and their foes – an alliance of emirates in what is now Syria and Iraq – sought to get on their side. However, throughout the Crusades, trade often proceeded as usual between the competing lands of Islam and Christendom, and some say that the Renaissance that took place in Europe centuries later was a result of the exposure of the West to the erudite traditions of the East. Another war six centuries later brought cultural stimulus in the other direction, this time from the West to the East. Mohamed Ali, an Ottoman commander of Albanian origin who was sent to Egypt to establish Istanbul's power in the wake of Napoleon's expedition to the country in 1798, managed within a few years to become the country's uncontested ruler. Paying only nominal allegiance to his Ottoman masters, Mohamed Ali started on an ambitious programme to change the face of Egypt, both in the cultural and economic domains. His grandson, Ismail Pasha, continued this programme with a single-minded determination to turn Egypt into a part of Europe and Cairo into a capital like Paris. In his memoirs, Nubar Pasha, an energetic Armenian who served under seven members of the Mohamed Ali dynasty and was Egypt's first prime minister, recounts how Egypt's quest for modernity invited financial calamity. It was Nubar who negotiated a deal granting Egypt special status in the Ottoman Empire on Ismail's behalf. Under this deal, Egypt was entitled to pass its own laws, negotiate its own international agreements, and create its own system of capitulations, a set of privileges for foreign nations designed to stimulate investment and trade. Nubar Pasha was not only involved in promoting independence from the Ottomans, but he also dabbled in stimulating home-grown industry. He is credited with the creation of the first purely Egyptian shipping company, and some say that he was the first to coin the phrase “Egypt for the Egyptians,” which became the rallying cry of the nationalist movement a few decades later. In his memoirs, Nubar recounts that during a phase of financial mismanagement in Said Pasha's time government departments got into the habit of writing cheques to debtors without coordinating with the treasury. As a result an army of grocers and butchers would surround the treasury building every day, asking for their payments. The mismanagement continued under Ismail, whom Nubar faults for spending more on pomp and fanfare than on serious development. It was in Ismail's time that the Suez Canal was opened in a magical ceremony that further depleted the country's budget, ultimately forcing Ismail to sell Egypt's share in the Canal to the Europeans. While Ismail managed to create the seeds of a westernised Egypt, one in which the elite spoke French and vacationed regularly in Europe, the price was high. Semi-independence from the Ottoman Empire was bought with hard cash. In return for granting Egypt its special status, Istanbul demanded that the annual tribute that Egypt paid its nominal master be increased from 80,000 to 150,000 purses. Later, and in order to meet his financial obligations, Ismail told the country's landlords that anyone ready to pay more taxes for six years would have their taxes slashed in half indefinitely afterwards. The man who handled Ismail's treasury was Ismail Al-Mufattish, a childhood friend of the khedive and a man of few scruples. During his time in office, extra duties were imposed on every aspect of the economy, from the consumption of tobacco to boats sailing on the rivers. Flogging was a common method of collecting taxation. But even Al-Mufattish's harsh measures couldn't satisfy the needs of Ismail's expansionary programme. Eventually, it became clear that Egypt was going to default on its debts. Foreign powers decided to take charge of the country's finances, and in 1876 they placed Egypt under virtual receivership through the creation of a Debt Fund, or Caisse de la Dette, as it was commonly referred to. Egypt at the time owed 32 million pounds sterling to one bank at seven per cent annual interest. To ensure that this debt was paid, the bank demanded control of the public revenues of the railway services and a wide range of local taxes. As the foreigners scrutinised the government's expenditure, gross financial irregularities came to their notice, and Al-Mufattish was blamed for them. Whether he was crooked, or just cruel, is a matter for historians to debate. But the khedive wasted no time in dismissing him from his service, and according to one story ordered his assassination. From then on, the khedive was living on borrowed time. Faced with demands for fiscal and administrative reform, he sent for his estranged subordinate Nubar Pasha. The latter was brought back from Paris and appointed prime minister, and he started working with French and British representatives to find ways of paying back Egypt's debts. His two senior assistants were the new finance minister, an Englishman by the name of Charles Rivers Wilson, and the public works minister, a Frenchman by the name of Belignieres. As part of the required fiscal reforms, the khedive was asked to give up his extensive property, which brought him annual revenues of 420,000 pounds sterling. However, even with these reforms in place four years later the British occupied Egypt, and the entire government system underwent further reforms to meet the needs of the British Empire. Later, during World War I Egypt had no choice but to tie its monetary system to that of England. On 2 September, 1916, the Egyptian government made banknotes legal tender as well as gold coins. But most of the gold was held in England, and shipping was impossible because of War conditions. So the Egyptian National Bank, which operated as a central bank at the time, started using British bonds instead of gold as collateral for the money it was printing. Under British rule, the country lost even the symbolic independence it had had up to 1882, and the national movement that demanded the end of the British occupation stressed the need for political independence. The country's most brilliant industrialist at the time, Talaat Harb, started a series of companies seeking to give ordinary Egyptians a better grip of their own economy. Harb, who created Banque Misr among other companies, often used to say that economic independence was the road to political independence. At first, foreign bankers thought little of Banque Misr. But when the bank, established in 1920, managed to increase its capital ten fold to one million pounds sterling within a few years, it won the trust of locals and foreigners alike. Today, as was formerly the case in Ismail's time, Egypt is being asked to reform its finances. The IMF has demanded financial reforms as a condition for lending Egypt US$4.8 billion. While economists say that the IMF loan is not significant because of its size, it does tell investors that Egypt has a workable administrative and financial system that they can trust and therefore it should be pursued by the government. Once again, politics and the economy are working together. Egypt is not averse to reforming its economy. But reform can mean different things to different people. We need to balance the budget, no doubt. But we also need to do it in a manner that doesn't hurt the poor, instigate class conflict, or alienate investors. Egyptian economists, just like those who were alive in the time of Nubar, are sceptical about the country's prospects. But thanks to the generous help of the Gulf countries, and the latent energies of this country, we may yet surprise the world once again.
