Magda Shahin* writes on the arrival of three major US financing agencies onto the Egyptian scene Just when high level experts, among them representatives of international financial institutions and private banks, met at the World Trade Organisation on 12 November to address the global financial crisis, three of the most renowned US financial agencies were making their way to Egypt. These were the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the US Trade and Development Agency (USTDA). Against the backdrop of the continued deterioration of the global financial climate, Egypt appears to have been selected as a prime location for trade financing and investment. As a result, now may well be the time for Egypt -- for both its private and public sectors -- to capitalise on its special role. The arrival of Ex-Im, OPIC and the USTDA to Egypt could not be timelier or more fortuitous. Perhaps more than ever before, emerging markets like Egypt hold key opportunities to facilitate large-scale infrastructure projects led by US firms, furnished by US goods and driven by US services. Naturally these three sister agencies and their stated approach to generating growth and development serve first and foremost US interests and needs. Their priorities lie in helping US exporters, by providing them with support for the purchase of US goods and services, and in helping the US private sector by ensuring it against political risk and thus to encourage investment in budding markets where nervous private capital may not otherwise venture at all. These institutions also ensure the generation of substantial revenues and employment for the US. At the same time these agencies also help recipient and host developing countries and their private sector to access high quality US goods and services, to build up key infrastructure, and to enhance competitiveness. In fact, these agencies are no strangers to Egypt. They have done business here before, though they have kept their presence modest up until now. Choosing to come to Egypt during these difficult times is undoubtedly a sign of trust in our economy and its creditworthiness. It is also an indication that the overall objective of the US government at this stage of the game is to keep trade flowing as an important contribution to addressing the economic crisis. As such, it appears that nowhere else could such an initiative be more effectively fostered than in the emerging economies. It is anticipated that the industrialised world will grow at around 0.5 per cent if at all over the next year. It has even been estimated that the weighted average growth for industrialised countries today is negative by 0.7 per cent for the first time since World War II. This negative growth comes at a time when most emerging markets are expected to keep growing at a reasonable rate, despite the crisis. Central to the maintenance and steady climb of Egypt's annual growth rate are infrastructure, technical assistance and cooperation. For instance, as Minister of Transportation Mohamed Mansour stated several months ago, the Egyptian transportation sector is in dire need of significant investment. Ex-Im Bank with a total annual authorisation of $12-15 billion of which the biggest share at 30 per cent is directed to the transportation sector is then an ideal financier, especially since it offers low cost financing, longer repayment terms, and most importantly, places no dollar caps on countries or projects. While Egypt's banks are currently reaping the benefits of their conservatism, there is still a lack of liquidity in foreign currency, making export credit agencies such as Ex-Im incredibly relevant. According to the Middle East regional director for Ex-Im Bank, "Export credit agencies are definitely your friends at the moment. They will be needed more than ever as key players in multi-source financing." Partnering with US firms will not only provide liquidity to a cash- scarce economy, but also provide much needed know-how and technical expertise. Ex-Im, OPIC and USTDA offer vast opportunities for investment in Egypt: support for developmental infrastructure, development of skills through training, transfer of technology and managerial skills, job creation, and support for private ownership. As such engaging with the three sisters creates a win-win situation. As financing institutions the three agencies find Egypt to be a fertile ground, and an emerging market with plenty of potential. Moreover, Egypt with its high population offers a large domestic market, highly skilled labour force and vast investment opportunities. In fact, tapping into emerging markets where growth remains strong is integral to pulling the US out of its recession. It might even be argued that what the US needs, and what it is embarking on through bolstering the activities of the three agencies, is no less than a modern version of the Marshall Plan. This plan, officially known as the European Recovery Programme, was the US primary methodology for rebuilding and creating a stronger foundation for Western Europe, in a bid to repel communism after World War II. The plan was in operation for four years beginning July 1947, during which time some $13 billion in economic and technical assistance were distributed to help European countries recover. On this point, many argue, and rightly so, that there is no such thing as an altruistic deed. So why did the US bail out Europe in the aftermath of the war? The Marshall Plan was first proposed when World War II ended, when the administration under president Harry S Truman began to feel the economic crunch. It was not just a means to rebuild Europe, but fulfilled the need to create so- called effective demand for American goods and services abroad to reinvigorate the stunted US economy. While today's circumstances seem completely different, they are in fact similar. We have no world war, yet we have a financial crunch sweeping the US economy that emulates the same post-war dynamic. There is again a dire need to generate effective demand and capacity abroad to resuscitate the US economy. The emerging economies will have to play the role today that Europe played at the end of the war; simultaneously becoming the recipients and the donors. Manifesting this dynamic indeed necessitates, by all imaginative thinking, a new version of the Marshall Plan for the 21st century. If the US wants to effectively tap into emerging markets' expected continued and stable growth, it needs not just to access these markets but also to provide financial assistance to these economies, to enable the purchase of American goods and services. Marketing Ex-Im Bank, USTDA, and the OPIC serves both these needs. The three sisters have the capacity and hold the promise to finance US exports, and at the same time safeguard the stable growth of the emerging markets. With this in mind, our relationship with these institutions must be a two-way street. We ardently believe we can benefit from the three financing agencies tremendously, but we must acknowledge the opportunities Egypt has to offer and find a mutual interest for good and fruitful cooperation. We know that the sisters are instrumental tools to cement our relations with the US, but we also believe that with the incoming US administration we will have new vistas for Egypt and the region, and especially for our two countries to become more forward-looking and proactive in promoting economic and trade relations. We need to overcome misperceptions and recognise that in this time of global financial turmoil, things are not always what they seem. Egypt should not miss this opportunity to reinvigorate our shared values with the US and to capitalise on the huge opportunities before us. * The writer is director of the Trade Related Assistance Centre of the American Chamber of Commerce (AMCHAM).
