The ruling NDP congress has declared its support for free market principles. Gamal Essam El-Din investigates the implications of this unprecedented move Until four years ago, the ruling National Democratic Party (NDP) used to boast that its economic principles remained true to 1952's 23 July Revolution. In its seventh general congress, held in July 1998, and entitled "The future of development in Egypt in the next century", the NDP emphasised that the government must be the major player in economic activities to cushion limited- income brackets from the vagaries of economic liberalisation. "The state has taken great strides on the road to economic liberalisation, but this does not mean that they should come at the expense of the government's role in achieving socio-economic development," the recommendations of the seventh NDP congress said. In its eighth general congress, held last week under the slogan "A new way of thinking in modernising Egypt", the NDP declared categorically that it believes in market economy solutions to achieve sustainable development and higher growth rates. More surprisingly, the NDP said it strongly recommends that the socialist principle of providing free public services, especially in the government- controlled sectors of education and health, be scrapped. "The NDP believes that opening the door for the private sector in public services will lead to streamlining the administrative systems of these services and an improvement in quality. This is because the NDP believes that a competitive market economy is the best way to achieve greater efficiency in the use of natural and human resources," the NDP's economic platform paper said. The NDP even went so far as to establish a new "Public Business Secretariat". According to the NDP's new internal regulations (Article No.56), the public business secretariat will be responsible for investigating issues directly related to private investor and business interests. "This secretariat will be directly involved in raising the awareness of the business community, the importance of their active participation in political life and encouraging them to join the party's ranks," Article No.56 said. The controversial article has also stated that one of the new secretariat's main objectives will be to ensure that the business community supports the NDP's candidates in parliamentary and municipal elections. "This will come through reinforcing the relationship between the ruling NDP Party and businessmen's associations and societies, raising public consciousness and broadening the scope of the role of the private sector in achieving economic development," the article concluded. Also worth noting is that the NDP secretariat-general now includes three business tycoons: Ahmed Ezz, Hossam Awad, and Hossam Badrawi. This has sparked fury among many NDP MPs. One MP, who asked not to be identified, told Al-Ahram Weekly that the concentration of greater power in the hands of a few businessmen raises doubts about the efforts to democratise the NDP's internal structure and attract more businessmen to the party. Ezz has been appointed chairman of the NDP's newly-formed secretariat for membership issues. Additionally, Ezz is chairman of parliament's budget and planning committee. Ezz is a strong advocate of privatising public services and phasing out state subsidies. However, he has faced attacks from opposition figures in the past on grounds of his deep involvement in monopolistic practices. Badrawi has been appointed chairman of the NDP's public business secretariat. Additionally, he is chairman of parliament's education committee, and has also been a vocal advocate of opening up the medical sector to private investment. Awad was appointed chairman of the NDP's youth secretariat. He is also chairman of parliament's youth committee and, as an accountant, is involved in a plethora of commercial activities, ranging from exporting and importing to stock brokerage. The NDP's economic platform comprises two principal parts. The first deals with the Party's main economic principles and challenges for the future, while the second tackles "the Egyptian economic equation". The Party's main economic principles emphasise Egypt's need to keep up with global developments. "This requires that the state adhere to liberalisation, attracting foreign investment and raising the competitiveness of domestic products on foreign markets," the Party's economic platform paper said. The paper did indicate that the NDP still strongly believes in the state's social role, but this must be revamped to include a strengthening of the state's role in fighting corruption and ensuring free competition. The paper added that the state must also be committed to protecting limited-income citizens and the poorer classes. "The state must develop new strategies to support limited-income classes, such as rationalising subsidies and creating greater job opportunities to help these classes raise their income and do away with subsidies," the paper said. As for future challenges, these include generating 800,000 new job opportunities annually and creating a more investment- friendly climate. "The private sector will be required to generate 80 per cent of targeted job opportunities. This is besides improving the skills of the Egyptian labour force," the paper stated. The second part of the paper deals with "the Egyptian economic equation". It is primarily focused on monetary policy and foreign exchange issues, as such declaring that the NDP is in favour of devaluing the Egyptian pound. "This is essential for raising the competitive edge of Egyptian exports on world markets, reducing imports and creating greater demand for local products," the paper said. The Egyptian economy has, thus far, managed to weather the impact of last year's devaluation (by 22 per cent) of the Egyptian pound against the US dollar. "Now, we have two options: either devalue again, and attempt to get the economy out of recession, or refrain from devaluation thereby stifling economic growth and exacerbating the unemployment problem," the paper said. The NDP's economic paper also urged the government to refrain from adopting regulatory and administrative measures to reduce imports. The paper also deals with private investment policies, fighting bureaucracy, modernising fiscal policies and marketing products. It affirmed the NDP's trust in the Egyptian private sector and its pivotal role in achieving socio-economic development and raising the quality of life in Egypt. "It is true that a handful of businessmen were found guilty of corruption but this should not be a cause to mar the image of the entire Egyptian business community," it said. The paper stressed the importance of supporting watchdog institutions in a serious bid for fighting corruption and monopolistic practices. "We recommend that the competition protection and anti-trust bill be submitted to parliament in the very near future." Additionally, fighting administrative bureaucracy and introducing a package of sweeping reforms in tax and custom departments must be two of the government's top priorities in the coming years. "This is necessary to reinforce confidence between investors and state agencies," the paper said. It also stressed the rationalising of public spending, augmenting the state's financial resources and fighting tax evasion. In terms of modernising fiscal policies, the paper urged the government to rush a new bill through parliament aimed at reinforcing the powers of the Central Bank of Egypt (CBE). "The CBE must be completely independent in setting interest rates and monitoring the performance of Egyptian banks." The paper added that new marketing techniques need to be sought to boost Egyptian products, both domestically and abroad. "A particular emphasis must be placed on small- scale enterprises, because they now generate around 85 per cent of job opportunities." The NDP believes that stronger support must be directed to these enterprises in the form of soft loans, marketing channels and new production techniques. "These kinds of projects must be promoted because they form the backbone of a market economy, free enterprise and individual initiatives, which the Party now espouses as a basic part of its economic platform," the paper concluded.
