Egypt country profile

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In Egypt, discussing the president's health in public is a criminal offence. The editors of four Egyptian newspapers discovered how true this can be in September when a Cairo court sentenced each of them to a one-year prison sentence and a fine of E£ 20,000 ($3,637).

Adil Hamouda of al-Fagr, Wael al-Ibrashi of Sawt al-Umma, Abd al-Halim Qandil, the former editor of al-Karama and Ibrahim Issa, the editor of al-Dustur, had all published stories about the state of president Hosni Mubarak's health.

The choice of successor to Hosni Mubarak is the biggest political issue in Egypt. Mubarak, who has been the head of state since 14 October 1981, will celebrate his 80th birthday on 4 May 2008. Whether his health is robust or not, the need to find a successor is an issue that will not go away.

Assuming that Mubarak continues to stay healthy, he is entitled to stand for a sixth term of office in the 2011 presidential elections. In 2011, Mubarak will be 83. The presidency is pre-eminent in Egyptian politics. The president appoints the prime minister and the prime minister appoints the cabinet. The two chambers of Egypt's parliament, the People's Assembly and the Shura Council, approve laws, but they lack the power to draft new ones themselves.

One possible successor to Mubarak is his 44-year-old son Gamal Mubarak. Although Gamal Mubarak has repeatedly said that he has no intention of succeeding his father as president of the republic, Gamal has become increasingly active in Egyptian politics in recent years. In 2002, he became the general secretary of the National Democratic Party's (NDP) policy committee. Hosni Mubarak nominated him for the position. Through the post, Gamal oversees most areas of Egyptian government policy.

Table: Egypt at a glance 

Government

For a 26-year-old administration, the Egyptian government has been remarkably dynamic over the last few years. Prime minister Ahmed Nazif was appointed by Hosni Mubarak in 2004. His three years in charge of the Egyptian government have been dramatic even by international standards.

Egypt is modernising quickly. When the World Bank's annual Doing Business survey was released in September this year, government ministers were delighted to see that Egypt was the fastest improving nation in the world. Investment minister Mahmoud Mohieldin's beaming smile can be seen on the Doing Business homepage.

Nazif's cabinet is dominated by NDP members loyal to Gamal Mubarak. Finance minister Youssef Boutros Ghali is another of the key appointments. He is behind many of the efforts to open Egypt's economy to greater competition.

Presidential election: 2011 (president serves a six-year term).

Parliamentary election:
2010 (People's Assembly members sit for five-year terms)
2010 (Shura Council members sit for six-year terms, but half the members stand for election every three years).

Government officials

• Prime minister: Ahmed Nazif

• Minister of defence and military production/Field Marshal: Mohamed Hussein Tantawi

• Minister of finance: Youssef Boutros Ghali

• Minister of state for legal and parliamentary councils: Mufid Mahmoud Shihab

• Minister of interior: Habib Ibrahim El Adly

• Minister of petroleum: Amin Sameh Fahmy

• Minister of international cooperation: Fayza Mohamed Aboulnaga

• Minister of state for economic development: Osman Mohamed Osman

• Minister of civil aviation: Ahmed Mohamed Shafik

• Minister of foreign affairs: Ahmed Ali Aboul Gheit

• Minister of state for environmental affairs: Maged George Elias Ghattas

• Minister of information: Anas Ahmed El-Fekky

• Minister of state for administrative development: Ahmed Mahmoud Darwish

• Minister of communications and information technology: Tarek Mohamed Kamel

• Minister of investment: Mahmoud Mohieldin

• Minister of housing, utilities & urban development: Eng. Ahmed Amin El-Maghraby

• Minister of trade and industry: Eng. Rachid Mohamed Rachid, Dr. Ali El-Sayed Al-Moselhi 

• Minister of education: Dr. Yousry Saber Hussein El-Gamal

• Minister of higher education and the state for scientific research: Dr. Hany Mahfouz Helal

• Minister of health and population: Dr. Hatem Mostafa El-Gabaly

• Minister of transportation: Eng. Mohamed Loutfy Mansour

• Minister of agriculture and land reclamation: Mr. Amin Ahmed Abaza

• Minister of tourism: Zoheir Garranah

• Minister of manpower and immigration: Aisha Abdel Hadi Abdel Ghani

• Minister of justice: Mamdouh Mohyiddin Marie

• Minister of state for local development: Mohamed Abd ElSalam Mahgoub

• Minister of culture: Farouk Abdel Aziz Hosny

• Minister of Awqaf (endowments): Mahmoud Hamdy Zakzouk

• Minister of water resources and irrigation: Mahmoud Abou ZeidHassan Ahmed Younes

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Economy

Egypt's economy has grown quickly since the reformers took power in 2004, but it still lags behind its neighbours because it had fallen so far behind during the 1980s and 1990s. Even though Egypt is the fastest improving economy in the world according to the 2007 Doing Business report from the World Bank, the country is still among the bottom third of countries in the bank's ranking. Egypt is 126 out of 178 countries. Its neighbours Saudi Arabia and Jordan are ranked at number 23 and number 80 respectively.

When Ahmed Nazif was appointed prime minister in 2004, he created a new ministry of investment with a Cairo University academic, Mahmoud Mohieldin, as the first minister of investment. Mohieldin created the General Authority for Investment and Free Zones (GAFI), a governmental agency designed to promote Egypt as a destination for foreign direct investment (FDI). By its own standards, GAFI has been a resounding success. Net FDI in Egypt grew from $2,107 million in 2004 to $6,111 million in 2006. The 2007 figure will be greater than $10,000 million.

Egypt's tourist industry has been one of the main beneficiaries of increased FDI. Foreign companies have invested in new hotels and leisure complexes to attract the millions of tourists who visit the pyramids and the ruins at Luxor every year. The rest of the economy has also benefited. The transformation has been so great that Egyptian consumer confidence has grown more quickly than any other Arab country over the last 12 months. Research from MasterCard Worldwide measured Egyptian consumer confidence at 94.3 out of 100 in June, compared with 92 in Saudi Arabia and 88.8 in the UAE.

Table: Economic indicators

($ million, unless stated)

Sectors

Oil and Gas

While large parts of Egypt's economy have been liberalised, the oil and gas sector is still governed by the onerous demands of the country's constitution. Oil majors are only allowed to export one-third of the gas they discover. They have to leave one-third of the gas in the ground as a strategic reserve for future generations and the other third must be sold to the domestic market at below-market prices.

Despite the difficulty in extracting oil in Egypt, petroleum minister Sameh Fahmy believes that oil majors will increase their investments in the republic. Oil majors will invest $20,000 million in the sector between 2007 and 2012, Fahmy said in September.

He appears to be offering sweeteners to oil majors that already operate in Egypt. The UK's BP and Germany's RWE were allowed to renegotiate the price of gas they supply to the domestic market through the Egyptian General Petroleum Corporation. The government will not disclose how much prices will rise until parliament approves the terms of the deal, but analysts expect prices to almost double. Other oil majors are also expected to renegotiate their contracts to supply the domestic market. Refining costs have increased across the Middle East as both labour and equipment costs have soared. These extra costs have made supplying the domestic market with cut-price gas unworkable in the long term.

Most of the easy discoveries in Egypt have already been made. Oil majors seeking new gas deposits are increasingly drilling offshore at depths that make increased costs inevitable. BP is drilling in water depths of 700 metres in its North Alexandria concession. Its UK rival Shell is drilling in water depths of 2,400 to 2,750 metres in its North-East Mediterranean concession. The total depth of these wells is 4,000 to 4,500 metres.

Egypt has supplied Jordan with gas since the Arab Gas Pipeline to Aqaba opened in 2003. Jordan, which subsidises oil and gas for its 5.9-million-strong population, gets the gas at a substantial discount from Egypt. While the oil majors all want profitable access to the Egyptian market, many privately worry that Egypt has insufficient reserves to continue subsidising its neighbours' consumption. A plan to build a new pipeline that could export 2,000 to 7,000 million cubic metres of gas to Israel would only speed up the consumption of Egypt's dwindling gas supplies.

Financial market

The success of Egypt's financial market is probably the clearest sign that the reformers' period in government has brought success to the economy. The Cairo & Alexandria Stock Exchange's main index, the CASE 30, is up 26 per cent since the beginning of 2007. Investors from the Gulf are behind some of the rise. Stock exchanges from Kuwait to the UAE crashed during the first quarter of 2007. CASE, which largely avoided the downturn in the Gulf, was seen by many burned investors as a good alternative home for their cash.

The privatisation of Egypt's state-owned companies has helped create new investment opportunities. The government has many more enterprises to sell. The national airline Egypt Air is one of the assets that would find a willing foreign buyer. The Dubai International Financial Centre's chief economist Nasser Saidi has even suggested that the government should sell a strategic stake of around 20 per cent to a foreign operator that could then transform the airline. Once the transformation is complete, the government could sell its majority stake for a handsome profit.

Egypt Air is not the only part of Egypt's transport system in need of reform. Cairo's 17-million-strong population have to endure some of the worst traffic jams in the Middle East. The 6th of October bridge grinds to a halt every day and some parts of Cairo experience 24-hour traffic jams. Cairo does have a metro system, but it lacks the scale to reduce the city's chronic congestion problem. Some roads are being expanded or widened. The 26th of July road will soon have double the number of lanes in the stretch between Smart Village and the outskirts of the main city.

Telecoms

Liberalisation has brought quick benefits to Egypt's telecoms sector. Since the regulator announced the terms for the country's third mobile phone licence in February 2006, the number of mobile phone customers has increased from seven million to 27 million. Etisalat Misr, the Egyptian subsidiary of the UAE's Etisalat, signed up more than one million customers within three months of its launch in May 2007.

Mobinil, the Egyptian subsidiary of Orascom Telecom, and Vodafone Egypt, which is jointly owned by the UK's Vodafone and fixed-line operator Telecom Egypt, have slashed prices in preparation for Etisalat Misr's launch. The number of active subscribers at Mobinil jumped to 13.7 million in the third quarter of 2007. UK-based consultancy Analysys is forecasting that mobile phone revenues in Egypt will grow faster than any other country in the Middle East between 2007 and 2011. It expects revenue growth of 20 per cent a year until then.