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fpbThe enclosed is a column by Jack Kemp, a well-known American right-wing columnist. To put it in its proper context, it is well to remember that: in Egypt, to change one's religion is a crime; that the State persecutes Christians; that Egypt's government is as authoritarian as any other one across the region; that Egypt's ancient Christian church, the Copts, is being victimized and driven out of the country; and that Egyptian media routinely ascribe all crimes to Jews.
A breeze of reform out of Egypt
By Jack Kemp
I was recently privileged to participate in a dinner co-hosted by the president of the Aspen Institute, Walter Isaacson, and one of the Middle East's most progressive ambassadors, Egypt's Nabil Fahmy. The dinner was in honor of Egyptian Minister of Foreign Trade and Industry Rashid Mohammed Rashid, who was introduced by the distinguished Alexandria businessman Mohamed Mansour, president of the Mansour Group. Also in attendance were such distinguished guests as Mark Brzezinski, Deputy Assistant Secretary of State Elizabeth Dibble and Export-Import Bank President Phil Merrill, among others.
It was so encouraging to hear Rashid talk about the wave of reform now building in Egypt following the framework of the Alexandria Declaration, which President Hosni Mubarak has instructed his government to use as the road map to reform. Banking law reform and bank privatization, along with tariff and trade-law reform, are leading the way.
A couple of months ago, the average tariff on imported goods was reduced 40 percent - down from 14.6 percent to 9 percent. Moreover, Mubarak has sent the parliament a package of tax reforms reducing the tax on personal income from 40 percent to a flat 20 percent and lowering the tax on corporate profits from 32 percent to 22 percent. These efforts have made believers of Egyptian investors with the stock market up 60 percent in three months.
With a new prime minister in place, former Minister of Information Technology H.E. Dr. Ahmed Nazif, and backed up by a new finance minister, H.E. Dr. Youssef Boutros-Ghali, who served previously as the minister for foreign trade, the Mubarak regime has an economic team in place that understands the power of private ownership and liberalizing markets to raise Egypt's standard of living and produce prosperity. Currently growing at 3.5 percent a year, Egypt's economy needs to grow at 7.5 in order to absorb all of the new entrants into the labor force, reduce unemployment from its current level of 12 percent and raise the standard of living from its current level of $1,100 per capita income.
The Declaration of Alexandria provides a vision for political, economic and social reform throughout the Arab world. In terms of economic reform, it seeks to reverse a number of economic challenges in the Arab world, including declining economic growth rates, declining share of international trade, declining share of foreign capital flows, increasing unemployment rates and, consequently, increasing poverty rates. Mubarak believes that economic growth and prosperity are the lubricants that will make broader social and political reform possible.
With poverty and lack of opportunity comes social friction and political tension that can cause the gears of society to seize up and the wheels of progress to grind to a halt. So the major endeavor Egypt is making on economic reform is seen as part of the larger, broad front of reform that launches the world's largest Arab nation into the forefront of progress and human advancement.
In addition to unilateral trade reforms, the Egyptian government is negotiating with the United States to certify specific Qualified Industrial Zones in Egypt where goods jointly produced by Egyptian and Israeli firms would enjoy duty-free entry into the United States market. Egypt also has put on a renewed effort to negotiate a bilateral trade agreement with the United States that opens U.S. markets to Egyptian products not unlike the one recently concluded between the United States and Jordan, led by King Abdullah, who is coming to Washington next month.
Both Egypt and Jordan have free trade agreements with Israel, which is a very hopeful sign. With serious reforms moving forward in Egypt and continuing in Jordan, we have a predicate for some form of a 21st century Marshall-like aid plan that can begin to win hearts and minds in the Islamic world if it is accomplished with the input of Arab world.
The only cloud I see in Egypt's reform plan is the decision to float the currency, which has led to an 11 percent fall in the foreign exchange value of he Egyptian pound. Floating currency, especially that of smaller economies, can easily be swamped by the high seas of the global economy. Much better for a currency such as Egypt's to be anchored securely to a strong and stable currency prominent within its own trading region - in this case the euro.
What a breath of fresh air since I was in Egypt last January with Peruvian economist Hernando DeSoto. The winds of change and seeds of hope are sweeping across not only the Nile Valley but also Afghanistan with the election of President Hamid Karzai. Egypt appears to be heading along the course DeSoto urged of expanding private property rights and formalizing the informal economy by bringing the extralegal entrepreneurs out of the shadows and into the real economy.
The current estimate is that roughly 8 million Egyptians hold as much as $30 billion in assets in extralegal enterprises. By instituting tax reform, deregulating the financial services industry, lowering barriers to international trade, rationalizing internal property law and legal administration, and pursuing a stable currency, Egypt has the opportunity to create an "Arab miracle," just as Germany and Japan did following World War II and as the Asian tigers achieved more recently.
But we all know these were not miracles at all - just the sound implementation of first principles: low taxes, sound currency, limited regulation and free trade. That is why it can, and will, work in the Arab world, as well.
This revolting trash ignores the fact that both West Germany and Japan had democracy imposed on them by the victorious Americans at the point of a bayonet - and that it was democracy (along with the Marshall Plan) that worked, not the so-called sound implementation of first principles in an authoritarian and intolerant state whose political principles Mr.Kemp is so happy to praise. Want to bet that these Mubarak reforms will fail?
A breeze of reform out of Egypt
By Jack Kemp
I was recently privileged to participate in a dinner co-hosted by the president of the Aspen Institute, Walter Isaacson, and one of the Middle East's most progressive ambassadors, Egypt's Nabil Fahmy. The dinner was in honor of Egyptian Minister of Foreign Trade and Industry Rashid Mohammed Rashid, who was introduced by the distinguished Alexandria businessman Mohamed Mansour, president of the Mansour Group. Also in attendance were such distinguished guests as Mark Brzezinski, Deputy Assistant Secretary of State Elizabeth Dibble and Export-Import Bank President Phil Merrill, among others.
It was so encouraging to hear Rashid talk about the wave of reform now building in Egypt following the framework of the Alexandria Declaration, which President Hosni Mubarak has instructed his government to use as the road map to reform. Banking law reform and bank privatization, along with tariff and trade-law reform, are leading the way.
A couple of months ago, the average tariff on imported goods was reduced 40 percent - down from 14.6 percent to 9 percent. Moreover, Mubarak has sent the parliament a package of tax reforms reducing the tax on personal income from 40 percent to a flat 20 percent and lowering the tax on corporate profits from 32 percent to 22 percent. These efforts have made believers of Egyptian investors with the stock market up 60 percent in three months.
With a new prime minister in place, former Minister of Information Technology H.E. Dr. Ahmed Nazif, and backed up by a new finance minister, H.E. Dr. Youssef Boutros-Ghali, who served previously as the minister for foreign trade, the Mubarak regime has an economic team in place that understands the power of private ownership and liberalizing markets to raise Egypt's standard of living and produce prosperity. Currently growing at 3.5 percent a year, Egypt's economy needs to grow at 7.5 in order to absorb all of the new entrants into the labor force, reduce unemployment from its current level of 12 percent and raise the standard of living from its current level of $1,100 per capita income.
The Declaration of Alexandria provides a vision for political, economic and social reform throughout the Arab world. In terms of economic reform, it seeks to reverse a number of economic challenges in the Arab world, including declining economic growth rates, declining share of international trade, declining share of foreign capital flows, increasing unemployment rates and, consequently, increasing poverty rates. Mubarak believes that economic growth and prosperity are the lubricants that will make broader social and political reform possible.
With poverty and lack of opportunity comes social friction and political tension that can cause the gears of society to seize up and the wheels of progress to grind to a halt. So the major endeavor Egypt is making on economic reform is seen as part of the larger, broad front of reform that launches the world's largest Arab nation into the forefront of progress and human advancement.
In addition to unilateral trade reforms, the Egyptian government is negotiating with the United States to certify specific Qualified Industrial Zones in Egypt where goods jointly produced by Egyptian and Israeli firms would enjoy duty-free entry into the United States market. Egypt also has put on a renewed effort to negotiate a bilateral trade agreement with the United States that opens U.S. markets to Egyptian products not unlike the one recently concluded between the United States and Jordan, led by King Abdullah, who is coming to Washington next month.
Both Egypt and Jordan have free trade agreements with Israel, which is a very hopeful sign. With serious reforms moving forward in Egypt and continuing in Jordan, we have a predicate for some form of a 21st century Marshall-like aid plan that can begin to win hearts and minds in the Islamic world if it is accomplished with the input of Arab world.
The only cloud I see in Egypt's reform plan is the decision to float the currency, which has led to an 11 percent fall in the foreign exchange value of he Egyptian pound. Floating currency, especially that of smaller economies, can easily be swamped by the high seas of the global economy. Much better for a currency such as Egypt's to be anchored securely to a strong and stable currency prominent within its own trading region - in this case the euro.
What a breath of fresh air since I was in Egypt last January with Peruvian economist Hernando DeSoto. The winds of change and seeds of hope are sweeping across not only the Nile Valley but also Afghanistan with the election of President Hamid Karzai. Egypt appears to be heading along the course DeSoto urged of expanding private property rights and formalizing the informal economy by bringing the extralegal entrepreneurs out of the shadows and into the real economy.
The current estimate is that roughly 8 million Egyptians hold as much as $30 billion in assets in extralegal enterprises. By instituting tax reform, deregulating the financial services industry, lowering barriers to international trade, rationalizing internal property law and legal administration, and pursuing a stable currency, Egypt has the opportunity to create an "Arab miracle," just as Germany and Japan did following World War II and as the Asian tigers achieved more recently.
But we all know these were not miracles at all - just the sound implementation of first principles: low taxes, sound currency, limited regulation and free trade. That is why it can, and will, work in the Arab world, as well.
This revolting trash ignores the fact that both West Germany and Japan had democracy imposed on them by the victorious Americans at the point of a bayonet - and that it was democracy (along with the Marshall Plan) that worked, not the so-called sound implementation of first principles in an authoritarian and intolerant state whose political principles Mr.Kemp is so happy to praise. Want to bet that these Mubarak reforms will fail?
