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Popular Uprising: Eve of the End of Era of Domination and Transition to New World Order (VIII)

As spelt out earlier, the open-door economic policy (Infitah) was initially introduced during the presidency of Anwar Sadat. However, it was widely practiced under the rule of Housni Mubarak.

Part VIII

Consequence of open-door policy on the economy

As spelt out earlier, the open-door economic policy (Infitah) was initially introduced during the presidency of Anwar Sadat. However, it was widely practiced under the rule of Housni Mubarak.

In accordance with the directives of international financial institutions, the main objective of open economy is to create conducive ground for the private sector, control the economic and financial capacity of nations, and ultimately undermine their national sovereignty. These institutions advocate that private sector-based national economic system is the most viable policy that reinforces economic growth through encouraging competition. Nevertheless, it is logical to raise the question as to what the alleged advantage such a policy entailed in the economy of those countries that adopted it over the past ten years. In this regard, making a comparison of the Egyptian economy before and after the adoption of the open-economy policy would enable one to have a comprehensive understating about the real purpose of this system.

Industrial sector

According to the directives of international financial institutions, the first step that needs to be taken in applying the open-economic policy is to avoid government interference from all economic activities. Hence, all government-owned enterprises should be privatized. Prior to the adoption of this policy, there existed hundreds of government-owned companies in Egypt. Theses companies were then sold to private firms in the wake of the introduction of the open-door economic policy.  For instance, in the year 1991 alone a total of 290 government-owned companies were sold to private investors under the excuse of paying back government loan amounting to 170 million pounds.

What’s surprising is the fact that government-owned institutions were sold to private investors at low price. Although the value of the companies sold to the private sector was worth up to 100 billion Egyptian pounds, they were nonetheless sold at only 16 billion pounds. The privatization process in the country paved the way for rampant corruption. It was so because those rapacious individuals inside Egypt and abroad who had close connection with government officials were the ones who managed to buy the enterprises at low price. Some of these companies were even bought indirectly by the officials themselves. Moreover, extending bank loan to alleged investors is another phenomenon that was advocated by international financial institutions. This practice not only gave rise to money laundering and theft in the country’s banks but also played major role in prompting wide-spread corruption. Reports indicate that bribe ranging from hundreds to billions of dollars takes place in the country in every 90 seconds.

In the wake of the privatization of the government-owned enterprises, no additional investment was made to them. Besides, many assets of the companies were sold and the alleged bank loans permitted for more investment were deposited in individual accounts in European and American banks. In other respects too, various dire consequences ensued, including the closure of some enterprises that used to meet local demand under the pretext that they could not generate profit. This led to laying off hundreds of thousands of workers, which in turn contributed to massive unemployment. In addition, imports of consumer goods increased manifold leading to gross import-export imbalance to the tune of tens of billions of Egyptian pounds. 

Explaining the changes witnessed following the privatization of the companies, Dr. Aziz Sediq, who served as engineer in factories during the Gamal Abdel Nasir rule, said: “those investors who bought government-owned enterprises have only looted the agricultural and construction potentials of the country rather than making any contribution to national development.”

Agricultural sector

Prior to the adoption of the so-called open-door policy, agricultural activities in Egypt were fully undertaken through the collaboration of the government and farmers. After avoiding government involvement in economic ventures, the damage entailed in the agricultural sector was immense. According to the directives of international financial institutions, making subsidy to farmers is not allowed. It is astonishing, however, that the governments of the developed nations provide huge subsidy to farmers. As a result of such unjust action, Egyptian farmers have for long been deprived from obtaining subsidy for buying fertilizers and the like. Apart from that, they often fall victim to various unjust practices on the part of greedy businessmen, which in turn negatively affected agricultural activities. In the final analysis, national products could not be in a position to compete with foreign products in the local market.  A number of farmers were also displaced from fertile agricultural areas which were sold to private investors.

It is to be noted that the so-called open-door economic policy paralyzed Egypt’s agricultural sector and related industries. Though the failure of such policy was obvious, the Egyptian government subscribed to the World Trade Organization’s agreement in 1995, and thus kept on pursuing the policy on a bigger scale. Consequently, the Egyptian farming community was exposed to destitution, while the youth flocked to the urban centers abandoning agricultural activities and became jobless. Hundreds of thousands of hectares remained uncultivated and crop harvest dramatically declined. This led to a situation in which the country is compelled to import 6 million tones of wheat annually and became the first country in the world to import the crop.  It was even bound to import cement at substantial hard currency which was domestically available in huge quantity before the privatization of cement factories.

In a nutshell, the open-door economic policy that Anwar Sadat propagated could only mislead gullible individuals. However, time has amply proved that such a policy was one of the ploys employed to paralyze the Egyptian economy.

 

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