Cairo hosted the third Economist business-government roundtable last week. Wael Gamal reports In the opening session of the third Economist business roundtable with the government of Egypt held in Cairo last week, Nenad Pacek, the director of the Economist Corporate Network and Economist conferences, asked the participants to raise their hands in response to two questions: How many of you were optimistic about the future of Egypt three years ago and how many are optimistic now? The response was an overwhelming vote in favour of the new government and its policies. Pacek explained this widespread optimism by pointing out that only four years ago, "Egypt was seen as one of the poorest countries in the region investment- wise. But now everybody expects significant improvements in all the aspects of doing business." Still, the fact that this optimism could be limited to businesses seemed to be the preoccupation of the participants, mainly Egyptian businessmen and representatives of international corporations already operating in Egypt. The opening session changed its course from discussing the first six months of the new government and the issues of business openness, accelerating economic growth and the role of the private sector in the reform process to mainly focussing on the social and popular response to these policies. This element was reflected in the panelists' speeches. Both of Jean Philippe Courtois, the senior vice president of Microsoft Corporation and Iman Hill, the chairwoman of Shell in Egypt, stressed the social role played by the two multinationals in the human and economic development of Egypt. The keynote address of the Prime Minister Ahmed Nazif was no exception. Nazif stressed that the reform which has been rigorously implemented since the reshuffle has three layers: creating more jobs, raising the standard of living and achieving development. Nazif stated that the economy is doing better and used the trickle-down theory of economics to explain how the fruits of his policies will be for everybody. "Opportunities have been there for a long time. Now, they are more accessible because we created a different mood which is more business friendly and this delivered a more stable economy and better inflation rates. We are pro-business because we are pro the poor. When someone says we are pro-business, in fact he is recommending us," he said. Nevertheless, Nazif confirmed that the social role of the state must evolve. "The mistake of unconditional subsidies is over. We tried it for a long time and it failed. People have to earn their living. There is no free lunch. The government only interferes when there is a catastrophe," he stated. A restructuring of the subsidies system in Egypt has been a long- standing demand from the business sector, but consecutive governments were reluctant to tackle the issue out of fear of touching off political and social instability. In fact, the government of Atef Ebeid significantly increased food subsidies while trying to alleviate the effects of the pound devaluation. Since the installation of the Nazif government in the second half of 2004, the new proponents of a strict neo-liberal agenda began to move in the other direction, raising diesel prices. Other plans are also on the agenda to deal with the swelling budget deficit. Despite the consensus of business circles on wisdom of the move, it seems that the phantom of popular unrest is a chief concern, considering the anticipated effect of further price hikes.
