Hatem El-Qaranshawi, an economic adviser to Prime Minister Atef Ebeid, feels that the media does not portray the Egyptian economy accurately. Omayma Abdel-Latif interviewed him Hatem El-Qaranshawy, policy adviser to the prime minister, wants to dispel many of the media- perpetuated rumours that surround the Egyptian economy. These are, that the economy is in tatters, that corruption within the administration has reached levels unheard of in Egypt's history, that the government's rosy reports on the Egyptian economy conceal the gloomy truth and, most importantly, that a marriage of sorts exists between the state and Egypt's business elite. An academic and economist, 57-year-old El- Qaranshawy strongly believes that mistakes have been made in the past, but that one should not remain captive to this past. He also believes that economic realities should be understood in context and without ideological interpretation. El-Qaranshawy was a professor of Economics at the American University in Cairo (AUC) for 14 years. He also served as a dean at the Faculty of Commerce in Al-Azhar University. Four months ago, El-Qaranshawy was selected to be a policy adviser to Prime Minister Atef Ebeid. He currently helps shape debates on the state of the Egyptian economy. Nevertheless, he is keen to disassociate himself from government affiliations. "I am not here to defend the government," El-Qaranshawy told Al-Ahram Weekly. Revelations of corruption in the top government bureaucracy, which have become an almost daily occurrence, invite questions about the evasive attitude of many government officials. According to the annual report of the Administrative Prosecution Authority (APA), a governmental monitoring agency, there has been a sharp increase in the number of corruption cases involving the administration. In 1999, there were 66,422 cases registered. A couple of years later, the number rose to 85,855 cases. El-Qaranshawy, however, has a different view. The increasing number of corruption cases, he explains, is not necessarily because corruption has reached unprecedented levels. "When we say that in the last few months or so the size and volume of corruption is tremendous and increasing, this needs to be qualified. This is probably because of increased action against corruption. The result being the increased number of cases seen in the last few months. Some of the cases presently under investigation have been in the press for a number of years, while others are still in court. One should deal with such matters with objectivity," said El- Qaranshawy. But why is the public overwhelmingly convinced that these cases are mostly politically motivated and that only a fraction of them are actually reported, with a blind eye being turned to most.? "You started with the assumption that there is selective reporting of corruption cases," said El- Qaranshawy. "I cannot answer this simply because I do not know. I would assume that whenever there are grounds for a case, the government supports it." But are these cases politically inspired? "Again, I cannot answer this but I don't believe this to be the case. Cases should be reported only if the allegations are well founded. I know this does not necessarily mean that all cases end up being reported but this could be because some of them are difficult to prove. Some cases simply take longer to prove," he said. There is also the perception that these corruption cases are being used to purge the government and administration of corrupt elements. However, some observers argue that the system itself creates the circumstances in which corruption is nurtured. "When we say that the system has allowed and helped to generate the circumstances for corruption, I think this is a bit of an exaggeration. Haven't there been corruption cases in the United States? The cases of Enron and WorldCom, were these not corruption-related? Can't we criticise the petroleum business in the US for being corrupt? Of course not. Why is there corruption in the US? Is it because an Egyptian government is ruling there?" he said. "Based on the cases of Enron and WorldCom, does this mean that the system in the US facilitates corruption?" he added. But surely there are guarantees within the system which allow for these cases to be exposed? "After how many years do they get exposed? What I want to say is that corruption is not related to a particular system of government. There have been cases in the US, in the West more generally, and in places such as Malaysia and Indonesia. These have different governmental structures and different business environments. Again, this is not to defend what happened. I believe mistakes have been made but we should not remain captive to what has happened in the past. We should learn our lessons and move on," El-Qaranshawy said. So, in your view, what are the factors that have led to an increase in corruption? "A major factor relates to the complex procedures for processing transactions in the government and banking system". The more complications there are, El-Qaranshawy points out, the less transparency there is. "Of course, there is a human element. We have to accept that there will always be some people who benefit from certain access to the administration. They then use this to make illegitimate gains." These complications, says El-Qaranshawy, wedded to a lack of transparency, are likely to increase the chances of corruption. He suggests that one way to fight back is through "streamlining transactions". He cites the example of the Egyptian customs, about which there have been many complaints of corruption. According to El- Qaranshawy, the customs laws have not only been modified, but the whole system was completely restructured. A similar process is being undertaken to combat corruption in the banking sector where "new rules are being discussed". "Some issues are being seriously looked into, such as Central Bank supervision, the role of banks and boards of directors. These are going to be reviewed to learn from the experiences of the past few years," he said. El-Qaranshawy acknowledges that the Egyptian economy is still going through a "transition period" which has taken slightly longer than anticipated, "because of social factors". But other societies also have the same complicated procedures. Isn't corruption more to do with transparency? "The fact that there are no corruption cases in other countries doesn't necessarily mean that there is no corruption. It often exists but is not confronted. Besides, there are international agencies that assess and estimate the degree of corruption in societies and I don't think that Egypt is at the top of the list," he said. According to the International Transparency Agency's latest report, Egypt was in 66th place out of 160 countries. El-Qaranshawy's response was; "I definitely agree that we do need more transparency and streamlining of transactions." However, in his view, transparency is not a crucial element in preventing corruption in, for example, the banking sector. "Sometimes I am amazed by what the press write about transparency in the banking sector. Does this mean that if a client goes to a bank, the manager should hold a daily press conference to report his transactions to the press?" he said. "When we say that each bank should have a manual, a procedure, and criteria that are universally agreed upon and we subject this process to internal and external auditing, there is an element of assessment here. This is extremely important for combating corruption in the banking sector." Transparency, however, is crucial when it comes to governmental transactions. "There are sectors in desperate need of transparency. Whereas, in other sectors, transparency remains less important than other corruption-combating techniques," he said. But isn't it already too late to reform the banking sector given the amounts of money that have already been taken out of the country? "Let's not underestimate what happened, but how much are we talking about? 30 per cent of the allotted credit? The figure might be staggering to some people because they don't know what the exact volume of transactions was. One has to compare the alleged figure that went out with the total credit granted during this particular period. This is not to underestimate what happened or to say that we should not face it or allow it to happen again. There is no question about it, we have to recover the money that went out. However, exaggeration does not help," he said. El-Qaranshawy is also keen to put an end to "over- legislation". "Sometimes we use legislation as a way of tackling economic problems and overuse it. I believe that over-legislation during the 'open-door' period has led to greater corruption. You asked me why we are late in issuing a new law for the banking sector. Should we issue a new law or say, 'No, there is over-legislation, so we should stop issuing any laws.' I believe, if we reduce the number of laws and carefully study the existing laws, this would be a key element in tackling corruption." The relationship between the state and the business elite was an area El-Qaranshawy did not want to venture into. In his view, it is no more than media hype. When asked whether the currently strained relationship between big-business and the state would lead to a divorce between the two parties, El- Qaranshawy said, "you are assuming that there was a marriage in the first place. I have no comment on this. This is yet another media rumour." He would not elaborate any further. For the time being, this relationship does not seem to be one of the priorities on the prime minister's agenda. According to El-Qaranshawy, the number one priority is combating poverty and unemployment. Poverty, he says, is an issue which this prime minister is not taking lightly. Other objectives include; "streamlining transactions in every aspect and consolidating laws that deal with citizens. When a private citizen faces trouble obtaining a licence for, let's say, a small business, this is as important as a large corporation trying to establish a multi- million dollar investment. Also, we need to cut the red tape, giving way to more participation on all levels. This will hopefully reduce corruption still further," El-Qaranshawy concluded.
