DRAFT

Egypt

Administrative Reform, Innovation and Maintenance

The views expressed do not imply the expression of any opinion whatsoever on the part of the United Nations and of Italian Department for Public Administration, and Formez

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Table of Contents

CHAPTER I – HISTORICAL AND POLITICAL BACKGROUND CHAPTER II – THE INSTITUTIONAL SYSTEM

II.1 General Institutional Framework II.2 The constitutional organs II. 3. The central administration II. 4. Local administrations

CHAPTER III – THE ECONOMY

III. 1.The five-year development plan III. 2. Macro-economic indicators

SOURCES

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CHAPTER I – HISTORICAL AND POLITICAL BACKGROUND

Egypt’s independence, achieved in 1922, ended centuries of foreign domination. In the 16th century the Ottoman Turks invaded Egypt and turned it into a province of their empire. Egypt’s history took a new turn with the arrival of Napoleon Bonaparte on July 2, 1798, which marked the beginning of Western influence in the country. Napoleon’s rule was short-lived: in 1801 Mohamad Ali, an Ottoman Army official and leader of its Albanian contingent, rose to power with the support of Egypt’s population and took the title of Khedive (Lord in Persian). His reign lasted from 1805 to 1849 and included many important events in Egypt’s modern history. He is considered the father of modern Egypt due to his decisive contributions to the country’s modernisation. In 1863 Khedive Ismail, a member of Mohamad Ali’s dynasty, rose to power. Ismail brought to a head the modernisation process launched by Mohamad Ali. Ismail’s main ambition was to bring Egypt up to par with European countries in terms of development and culture. The Suez Canal was inaugurated during his reign, on November 17, 1869. However, in the second half of the 19th century Egypt found itself in dire economic straits, which brought about the creation of an international organisation – the Public Debt Commission - in charge of overseeing Egypt’s public debt. European control over the country grew significantly thanks in part to the Commission’s work. On August 12, 1882, British troops landed in Alexandria and begun an occupation that lasted 74 years. The early 20th century saw the rebirth of Egyptian nationalism, whose aim was to end foreign occupation. Mustafa Kamel founded the National Party, while Sa’ad Zaghloul, Mustafa el Nahas and others became prominent figures in the Wafd movement, which was committed to the two main goals of Egyptian nationalism: independence and constitutional reform. On February 28, 1922 the United Kingdom unilaterally proclaimed the end of the British protectorate, and Egypt was declared an independent country; nevertheless, British influence would last much longer. Indeed, in order to safeguard British interests the U.K. and Egypt signed a treaty that put the U.K. in charge of several important aspects of Egyptian policy1. The following thirty years of monarchy were a highly turbulent period, but were also very fecund in terms of democratisation: on April 19, 1923, independent Egypt’s first constitution was proclaimed by royal decree. It

1 These included the security of imperial communications, Egypt’s defence against foreign aggression and interference, the protection of minorities and foreign interests, and Egypt’s relations with the Sudan.

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came into force on April 30. Sa’ad Zaghloul formed Egypt’s first representative government. The 1923 Constitution proclaimed an independent, free, and sovereign Egypt, governed by a hereditary monarchy and a representative government. It also enshrined a number of civil and political rights for Egypt’s citizens, and divided legislative powers between the King and a bicameral parliament. From a political point of view, this entire period was characterised by constant conflict between the parliamentary majority, especially the Wafd party, and the King. On numerous occasions this led to the dissolution of Parliament2. World War II revealed how fragile Egypt’s independence actually was. The United Kingdom openly interfered with Egypt’s internal politics on at least two occasions: in order to obtain the resignation of Prime Minister Ali Mahir, who was suspected of favouring Germany, and in order to provoke elections in 1942. Because of alternating electoral outcomes and grave political crises, such as the murder of Prime Minister an Nugrashi (of the Sa’adis party, close to the King and hostile to the Wafd), British misgivings increased and culminated in January 1952 with violent clashes between British troops and the Egyptian police. A growing sense of political, economic, and social frustration led to the creation of the Free Officers Movement on the part of a group of young Army officers who felt betrayed by the government. On July 23, 1952, the Free Officers Group led by Gamal Abd el-Nasser took power through a bloodless coup that allowed King Farouk to leaved the country. On June 18, 1953, the monarchy ended, Egypt was declared a republic and Mohamad Naguib was appointed President; to be succeeded a year later by Gamal Adb el-Nasser. Nasser abolished the 1923 Constitution and appointed a constitutional committee to draft a new Constitution, which was approved on February 10, 1953. This document called for a strong concentration of powers in the hands of the leaders of the revolution who were legally recognised in the Revolutionary Command Council. All political parties were dissolved in February 1953. Nasser, who was Interior Minister at the time, was highly critical of the possibility of forming a parliamentary, liberal government, which was the idea that Naguib favoured. Nasser began a rapid ascent and quickly became Prime Minister and eventually Head of State in November 1954.

2 The seriousness of this problem was evidenced by the fact that Prime Minister Mustafa an-Nahhas, Zaglhoul’s successor, who held the title of Prime Minister five times between 1928 and 1950, had to resign every time there was conflict with the King. See: K. De Feyter, Egypt, in “Costitutiones Africae”, Brussels, Etablissements Emile Brulyant, S.A., 1989, p. 10.

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The Nasser administration undertook various ambitious agricultural and industrial development project, such as building the Aswan Dam. In 1954, with the evacuation of British troops from the Suez canal (on the basis of an agreement stipulated earlier that year), Western countries felt threatened by the loss of control over the Canal and suspended the financial aid that Egypt needed in order to complete the Aswan Dam. Nasser further hardened his position, thus strengthening Western fears, and nationalised the Suez Canal in 1956. This led to the invasion of the Sinai peninsula on the part of Israeli, British, and French troops. The intervention of the United Nations was necessary in order to cease the hostilities. Egyptian foreign policy stopped looking exclusively towards European countries and began to focus on the Soviet Union, especially in terms of financial aid. On June 23, 1956, a new Constitution was approved by a national referendum. In it, Egypt was defined a democratic Republic and an independent, sovereign Arab state. Citizens were granted a number of important civil rights along with economic rights, such as the right to social security and the right to adequate employment. The 1956 Constitution therefore set the stage for a planned economy, although it also enshrined private property if used for the collective good. A single-chamber National Assembly became Egypt’s legislative body, while the President assumed many of the powers previously held by the King. Nasser was elected to a six-year mandate in a plebiscite held in June 1956, with an almost unanimous consensus. The first elections for the 350-member National Assembly took place in 1957. Most of the elected Assembly members turned out to be landowners or of middle class extraction; very few were from the working class and this led to frequent disputes between the government and parliament, especially on the issue of social reform. One of Nasser’s most ambitious goals was to unify the Arab world under Egypt’s leadership: the Arab Socialist Union was created during the initial years of Nasser’s rule, but its complex structure was not completed until 1968. Only in that year did democratic elections take place that involved the poorer sections of the population. A new Constitution, approved on March 25, 1964, included socialist concepts and did not change the President’s dominant position. The “Six-Day War” of 1967 drew attention away from internal problems, which became more acute with the presidential crisis of June 9, 1967 and with Nasser’s death on September 28, 1970. Anwar al-Sadat assumed the presidency. He was one of the original members of the Free Officers Movement, had been President of the Assembly and held the title of Vice-President at the time of Nasser’s death. During the first few months of his presidency, Sadat moved deftly to gain as wide a consensus as possible, freeing many of Nasser’s opponents (radical Muslims and Marxists). The 1971 Constitution took further steps towards a less

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authoritarian regime. The Parliament was significantly strengthened and the country’s official name became the Arab Republic of Egypt, which is still current today. Sadat sought to maintain continuity with Nasser’s policies on Arab unity: on January 1, 1972, the Federation of Arab Republics was born, but Egypt’s policies with regards to Israel nullified all the projects tied to the federation (the proposed union with Libya was postponed indefinitely). In the meantime, the country oscillated between the Western and Soviet orbits while trying to gain the support it needed in order to deal with a disastrous economic situation. Throughout the 1970’s, problems related to the Israeli-Palestinian question led to frequent tensions: the disarrangement of the Bar Lev Israeli defence line that presided over parts of the Sinai peninsula occupied by the Jewish stare in 19673, and the Yom Kippur war of 1973 necessitated new diplomatic interventions: a first agreement between Egypt and Israel on August 18, 1974 (Sinai 1) led to Israel’s withdrawal from the Suez Canal and its re-opening the following year, while a second agreement stipulated on September 1, 1975 (Sinai 2) brought several important oil wells (such as Abu Rodais) vital to the country’s economic recovery back under Egyptian control. On the internal front, Sadat mustered the necessary consensus to launch his “open door policy”, which was presented to the Arab Socialist Union in the so-called “October paper”: this was a programme of gradual economic liberalisation aiming to attract new foreign investment through commercial unions or requests for financing. Sadat also tackled the single party problem, and proposed a reform of the Arab Socialist Union that aimed to achieve a better representation of the various factions that existed within the party. These timid attempts at pluralism were counterbalanced by strict laws on the country’s political security, exemplified by law n. 40 of July 2, 1977, which severely banned the creation of political parties on religious bases, but at the same time dictated that party programmes could not be in contrast with the overarching principles of Islamic law. In July 1978 Sadat dissolved the Arab Socialist Union and replaced it with his own National Democratic Party. The Socialist Labour Party, made up of left-wing opponents within the Arab Socialist Union, became the major opposition party. Sadat brought Egyptian foreign policy to a turning point when he launched the process that led to the beginning of the Camp David negotiations between Sadat and the Israeli Prime Minister Menachim Begin. The negotiations resulted in an agreement on two essential points: a draft peace treaty between Egypt and Israel and a Middle East peace plan. This process brought about Egypt’s isolation in the Arab world and to sour relations with a

3 See http://www.jajz-ed.org.il/100/italy/concepts/sd3.html , May 2003

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part of the Palestinian world. The peace treaty was finally signed in Washington on March 26, 1979. It marked a radical shift in Egypt’s foreign policy, in part because the acceptance of Israel on Egypt’s part shattered Arab unity, while Egypt gained favour with the Western world. In 1980, Sadat also assumed the title of Prime Minister, with an internal cabinet of six deputy prime ministers. On May 22, 1980 a popular referendum approved important amendments to the 1971 Constitution: the prohibition on allowing a president to serve more than two terms was abolished, as was the constitutional status of the Arab Socialist Union, and Islamic law was enshrined as the principal source for Egyptian law. These changes towards economic liberalisation were accompanied by an increasing influence on the part of Islamic fundamentalists. Tensions came to a head in the summer of 1981, with serious clashes between Christian Copts and Islamic fundamentalists. Sadat had to resort to Article 74 of the Constitution, which gave him the power to take urgent measures in support of the country’s unity and security, leading to arrests, strict limitations on political activities, and the outlawing of several newspapers and other media. This dramatic situation culminated in Sadat’s assassination at the hands of a fundamentalist group on October 6, 1981. His successor Hosni Mubarak harshly repressed Islamic fundamentalism, but also launched an anti-corruption campaign that targeted Sadat’s brother among others. Nevertheless, Sadat’s establishment continued to play an important role in both government and economics. From an economic point of view, great efforts were made to pursue the development of nuclear energy, and Egypt stipulated a mutual investment promotion agreement with the United States. Rifaat El Maghoub became Prime Minister in May 1983 after the death of his predecessor Moiheddin; general Kamal Hassin Ali formed a new government in July 1984 that lasted until September 1985, when Ali Lufti, an economist whose main goal was to tackle the country’s serious economic problems, became Prime Minister. Social malcontent grew over the following years, with some massive strikes and several instances of heavy-handed police intervention to break up disorders that began to increasingly look like revolts. President Mubarak managed to emerge relatively unscathed from this incandescent situation, but his Interior Minister Ahmed Rusdhi was forced to resign. Islamic movements began calling for the application of the Sharia (Islamic Law), which led to a parliamentary debate that created a parliamentary commission to tackle the issue. There was a general tendency for increasing influence on the part of fundamentalist groups, accompanied by a crackdown on the part of the authorities.

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The delicate role that Egypt has always had to play in the Middle East is undoubtedly one of the main reasons why the country has often lagged behind in tackling its economic problems and administrative needs. Recent Egyptian political history underlines the ambivalent role of the Head of State. Egypt has a long tradition of personalising leadership: the popularity and authority of the government lie in large part on the charisma of its leader. Both Nasser and Sadat acquired great personal prestige: Nasser as a hero of the revolution and subsequently as an outspoken leader of the Arab world, and Sadat as the military commander of an army that won a historic battle against Israel, although his second show of strength – his trip to Jerusalem – did not have its desired outcome. These aspects often ended up drawing public attention away from everyday problems. The Head of State is the pre-eminent figure in the country’s political and institutional life: his leadership is strongly felt and he holds considerable personal powers that are normally exercised with much leeway, although there are numerous forces that try to evade presidential control (such as the extra-parliamentary opposition, both religious and political). It is interesting to note that judiciary power often assumes the role that normally belongs to parliamentary opposition groups, who have often turned to the judiciary branch in order to religious and social conflicts: in these cases the courts have shown little fear in making their positions known with respects to policies they consider illegal. If this trend continues the government might be induced to intervene more incisively. Over the lat few years, having pacified in part the political arena, Mubarak has focused on economic development by promoting local, Arab, and foreign investment, launching a privatisation process, revitalising exchange rates, and undertaking important reform efforts with the help of the World Bank and the International Monetary Fund.

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CHAPTER II – THE INSTITUTIONAL SYSTEM4

II.1 General Institutional Framework Egypt’s system of government is delineated in part V of the Constitution5, which is made up of seven chapters dealing with the following institutions:

• The Head of State • The legislative branch – the People’s Assembly • The executive branch • The judiciary authority • The Supreme Constitutional Court • The Socialist Public Prosecutor • The Armed Forces and the National Defense Council

The Constitution of the Arab Republic of Egypt proclaims Egypt as an Arab state with a democratic system. The President of the Republic is the Head of State and holds the executive power. He is appointed by a qualified majority of the People’s Assembly and his nomination is subsequently submitted to a popular referendum for a six-year mandate. The President is eligible for re-election. The President sets general state policy, oversees its implementation, and is the Commander in Chief of the Armed Forces. The current Head of State is Hosny Mubarak, who was elected to a fourth term in October 1999. The government is the supreme executive and administrative body of the state. It is made up of the Council of Ministers and the Prime Minister, who heads the government and oversees its work. The People’s Assembly is the legislative arm of the state. It approves laws, budgets, and development plans. The Constitution calls for the composition of the People’s Assembly to be regulated by ordinary law. Law 38/72 sets its composition: 444 directly elected members, plus 10 members appointed by the President, who serve five-year terms. The Council of the Shura (the Senate) is the consultative body and it also proposes new laws and regulations to the People’s Assembly6. Judiciary authority is exercised through four different types of justice courts: the Supreme Constitutional Court, which is the highest judiciary body, the Court of Cassation, the seven courts of appeals in the different governorates (muhafazah) and summary courts in each district. Egypt has a multi-party system: law 40 of 1977 regulates the formation of political parties and prohibits their creation on a religious basis. There are 4 K. De Feyter, Egypt, in “Costitutiones Africae” 5 The Constitution was adopted in 1971 and amended in 1980 6 http://www.assembly.gov.eg/EPA/en/Levels.jsp?levelid=2&levelno=1&parentlevel=0

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currently 14 active political parties that represent the entire political spectrum. The majority of the seats in the People’s Assembly are held by the National Democratic Party7. Administratively, Egypt is divided into 26 muhafazah (governorates)8, with the addition of Luxor City. Each muhafazah is headed by a governor appointed by the President. Within each district, local government units provide services and designate industrial areas. Local People’s Councils are elected bodies that are responsible for local government along with local administrative units. In 1980, Egypt introduced some important constitutional amendments, which reflect the country’s progresses during the Nasser and Sadat eras: these amendments change the ideological basis of the Constitution, by de-emphasising its socialist nature and shifting the ideological centre of gravity towards both liberal and Islamic principles. II.2 The constitutional organs The Head of State9

The President of the Republic is the Head of State. He is appointed by a qualified majority of the People’s Assembly and his nomination is subsequently submitted to a popular referendum. This procedure is a mixture of elements of direct and indirect democracy: a representative institution nominates the candidate, but final approval rests in the hands of the people. If the Presidential office is vacant, the president of the People’s Assembly temporarily assumes the presidency of the republic (unless the People’s Assembly is dissolved as well). The President is elected to a six-year term and is allowed to stand for re-election. Until the 1980 amendments, the President could not be re-elected beyond a second term. The activities of the President focus on affirming the sovereignty of the people, guaranteeing respect for the constitution and for the rule of law, ensuring national unity and overseeing the separation of powers.

7 The most active ones are: the National Democratic Party (NDP), headed by President Hosny Mubarak and currently the governing party; the Green Party, headed by Hasan Rajab; the Labour Party, headed by Ibrahim Shukry; the Liberal Party, headed by Mostafa Kamel Morad; the Misr al-Fatah Party (Young Egypt Party), headed by Ali al-Din Salih; the Nasserist Arab Democratic Party, headed by Di’a-al din Dawoud; the New Wafd Party, headed by Fu’ad Siraj Eldin; the National Progressive Unionist Rally, headed by Khalid Muhi Eldin; the Umma Party, headed by Ahmad al-Sabahi. 8 Alexandria, Aswan, Asiut, Beheira, Beni Suef, Cario, Dakahliya, Dumietta, Fayoum, Gharbiya, Giza, Ismailiya; Kafr el-Sheikh, Kalyobiya, Kena, Matroh, Monofiya, Minia, New Valley, North Sinai, Port Said, Red Sea, Sharkyia, Sohag, South Sinai, Suez. 9 Art. 73-85

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The President can adopt urgent measures in case of threats to national unity or security, or of threats to the constitutional role of the state’s institutions (art. 74). The use of these discretionary powers has often been controversial. The only barrier against potential abuses is the need to make a public declaration and submit emergency measures to a public referendum within six days of their adoption. President Sadat turned to article 74 twice (in 1977 and 1981) to severely limit the exercise of political rights. In both cases, his justifications for emergency measures were questioned once peace was re-established in the country. The legislative branch10

The single-chamber People’s Assembly is Egypt’s main legislative body. The Constitution calls for half of its members to be either workers or farmers. Electoral laws also call for the presence of women. Almost all its members are elected through direct, secret suffrage, while up to 10 members can be appointed by the President. Originally, this provision was meant to assure adequate representation for Egypt’s largest religious minority, Coptic Christians, but Mubarak changed their use after the May 1984 elections, when he appointed opposition members in order to counter-balance the results of the election.

Elected representatives of the People’s Assembly serve five year terms. Members can be revoked “on the grounds of loss of confidence or status or one of the conditions for membership, or the loss of a member’s status as a worker of farmer upon which he was elected or the violation of the member’s mandate” (art. 96). The President summons the Assembly for its annual session. If it is not summoned, the Assembly meets in force of the Constitution. Extraordinary meetings (art. 102) have never been called by members of the Assembly, but only by the President. According to article 86, the Assembly of the People has three main tasks: exercising legislative power; approving state policy, social planning, economic planning, and budgets; and overseeing the work of the executive branch. According to article 109, both President and each Assembly member can undertake legislative initiatives. In the latter case, the legislative procedure is complex: in an initial phase, proposals presented by members of parliament are referred to a special commission on legislative affairs that formulates opinions on whether proposals are suitable for submission to the Assembly. The Assembly then decides whether to send the proposal to one of its specialised commissions (each with a particular field of expertise). If the decision is unfavourable, the proposal cannot be re-submitted in the same

10 Art. 86-136 C

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session; if the Assembly’s decision is favourable, the relevant commission will prepare a report and submit it to the Assembly, which then votes on it. Proposals from the President are sent directly to the relevant commission, and for this reason the vast majority of proposals are prepared by the presidential administration and by the government. Currently, the People’s Assembly exercises legislative power through 18 commissions.11

Proposals are adopted by an absolute majority of those present and are voted upon on an article by article basis. The President can veto proposals approved by the Assembly. In this case, the proposal is sent back to the Assembly, which can over-ride the veto with a two-thirds majority.12

Laws to revise the Constitution require complex procedures that must be initiated by the President or by one-third of the assembly’s members.13

The Assembly approves the general plan for social and economic development (art. 114), elaborated by the government, and the budget, which comes into force only after its approval and cannot be modified without government approval (art. 115). The imposition, modification, and abolishment of general taxes falls within the competences of the Assembly (art. 119). Members of parliament have three ways of obtaining information from the government: questions (art. 124), interpellations (art. 125), and public questions (art. 129). Only interpellations can question the responsibility of the person under interrogation, and they can lead to a vote of no-confidence and to the resignation of a single minister or the entire cabinet. However, the cumbersome nature of this procedure makes the resignation of an entire government quite unrealistic. Questions and public questions are simple invitations for the government to discuss certain policies, and they are used frequently. The government answers to the People’s Assembly, but the assembly can be dissolved by the President: since the latter heads the executive branch, his power is not counter-balanced by any type of control on the part of

11 The commissions are as follows: Constitutional and legislative affairs; Planning and budgeting, Economic affairs; Defence and national security; Claims and suggestions; Workforce; Industry and energy; Education and scientific research; Waqf; Social and religious affairs; Culture; Media and tourism; Health and environmental issues; Transportation and communications; Public housing; Construction and public utilities; Public organisation and local government; Youth commission (Egypt Year Book 2002 http://www.sis.gov.eg/public/yearbook/2002/html/03.htm, June 2003). 12 The power of single assembly members is therefore rather limited, especially due to the fact that the President can count on a large parliamentary majority; furthermore, in cases of “necessity or exceptional circumstances”, the President can issue legally binding resolutions (art. 108) if he obtains the support of two-thirds of the Assembly. 13 Art. 189 C

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the assembly. An attempt to remedy this was made in 1971, when a provision was approved that explicitly limited the President’s power to dissolve the assembly to cases where this was necessary, and only with the approval of a referendum; nevertheless, the President remains the sole arbiter of necessity. In April 1979, following the signature of the peace treaty between Israel and Egypt, the assembly was dissolved in order to avoid criticism or dissent. According to some scholars14, the People’s Assembly is more akin to an instrument for dialogue with the government rather than an institution that can effectively oversee government policy. The People’s Assembly has a constructive opposition role (encouraged by Sadat), but it is not capable of questioning the President’s legislative and executive power. The executive branch15

The President holds executive power (art. 137). The President shares with the government the power to “lay down the general policy of the State and supervise its implementation” (art. 138). The wide range of the President’s executive powers and his ability to manoeuvre the cabinet to his liking give him an enormous personal authority. The figure of the Vice-President is rather diminished. While in traditional presidential systems the Vice-President replaces the President whenever necessary, in Egypt the President can appoint as many Vice-Presidents as he likes, an dismiss them. As long as the President is in charge, the Vice-President is no more important than a minister. There is no binary exercise of power, but both Sadat and Mubarak were Vice-Presidents when they were appointed President; the most important role of a vice president remains tied to the continuity of power. The President has decisive powers vis-a-vis the government, which is a mere co-ordination body: he presides over meetings of the Council of Ministers and has regulatory powers that can be delegated; he can appoint or dismiss the Prime Minister and other ministers, and can re-arrange the Council if he feels it necessary. The President is in charge of all civil and military appointees; controls foreign policy, accredits foreign diplomatic missions, signs treaties (in some cases subject to approval on the part of the People’s Assembly), and is the commander-in-chief of the armed forces. The Prime Minister oversees the government's work, but he has a limited role given the President’s extensive powers. In 1980 President Sadat

14 P. Mirel, Le Parlement égyptien, 1971-1979, Revue Juridique et Politique, 1980, 4 pp. 841-856, especially p. 856 15 Art. 137-164 C

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himself became Prime Minister and appointed six deputy prime ministers in order to form an internal cabinet. The Prime Minister’s main competences are in national policy. Each minister is the administrative head of their department, and has significant leeway within his or her field of competence.

The judiciary branch16

The Constitution protects the independence and the immunity of judges (art. 64); they answer only to the rule of law and their status is irrevocable.

A Supreme Council (art. 179) created by law in 1969 deals with questions regarding judiciary organisation; it is responsible for taking disciplinary measures against judges. Summary Courts and Courts of First Instance are the lowest level courts. Appeals Courts handle second degree appeals: there are six of them, with three judges each. The highest level of appeals is the Court of Cassation, located in Cairo. It examines the sentences of the Appeals Courts, for both civil and penal cases.

The State Security Court (art. 171) was created in 1980. Many of its cases involve members of banned political parties or of Islamic movements, some of whom have turned to terrorism, such as the Al-Jihad movement.

The State Council has jurisdiction over administrative disputes and disciplinary cases (art. 172). It was created in 1879 and re-designed, based in part on the French model, in 1946. It acquired its current form in 1971, after the adoption of the Constitution. The State Council has jurisdiction over appeals against the decisions of lower administrative courts; it also settles electoral disputes and those related to negative opinions of the Commission on parties17. Along with being an administrative tribunal, the State Council is also responsible for disciplinary measures against state officials; it also plays a consultative role in the legislative process.

The Supreme Constitutional Court is responsible for the judicial revision of legislative and executive acts (art. 175) and exercises control over the constitutionality of laws and regulations. Its jurisdiction can be invoked by plaintiffs in instances of first degree judgement. The lower court then sends the case to the Supreme Constitutional Court, which gives its opinion, then sends it back. Upon request from the Minister of Justice, the Supreme Constitutional Court can express its opinion on the constitutionality of legislative texts and settle conflicts of competence between tribunals. Its members are appointed by the President and cannot be revoked. The Supreme Constitutional Court was

16 Art. 165-179 C 17 An example of this is the decision on the case of the Wafd party, when the court approved the reconstitution of the party against the decision of the Commission on parties and the Prime Minister’s wishes.

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founded by Law 48/1979, and replaces the previous constitutional court, set up by Law 81/1969.18

The Socialist Public Prosecutor promotes all the procedures “which secure the people’s rights, the safety of the society and its political system, the preservation of the socialist achievements, and commitment to the socialist behaviour” (art. 179). He is appointed and revoked by the President, and his actions are subject to the control of the People’s Assembly. In the recent past, it has focused on prosecuting those who have been involved in financial fraud19.

The Assembly (Shura) The Assembly (Shura) is a consultative body created in 1980, which

replaces the preceding Central Commission of the Arab Socialist Union. Starting in 1968, the general policy of the Arab Socialist Union was discussed at the national level in the National Congress, which convened every two years. At the same time, the party was headed by a central commission that met twice a year to discuss the implementation of the congress’ resolutions and general national and international policy questions. When the Arab Socialist Union was dissolved in 1980, the Central Commission was replaced by the Shura, a multi-party assembly.

Article 194 established that the Shura is responsible for safeguarding the principles of the revolution, consolidating national unity and social peace, defending the socialist democratic system, and amplifying its scope.

The Shura has 210 members, 140 of whom are elected through a system by which the party that obtains an electoral majority is awarded all the seats, while the remaining 70 members are appointed by the President. Half of the 140 seats are renewed every three years. The first election took place in October 1983.

18 Information on the Supreme Constitutional Court is available at : http://www.accpuf.org/egy, May2003 19 A famous case regarded a money changer whose trial led to a spectaluar raise in the dollar’s exchange rate. The Socialist Public Prosecutor has also conducted political investigations: thanks to a 1980 law sponsored by Sadat, he gained the authority to interrogate prisioners arrested after September 1981 (Law n. 95 of 1980, to “protect moral values from indecent behaviour”).

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II. 3. The central administration

Government and ministries The Government is made up of the Prime Minister and the following

ministries: 1. Ministry of Construction and Urban Communities 2. Ministry of Agriculture 3. Ministry of Civil Aviation 4. Ministry of Communication 5. Ministry of Communication and Information Technology 6. Ministry of Culture 7. Ministry of Defense 8. Ministry of Education 9. Ministry of Electricity and Energy 10. Ministry of Finance 11. Ministry of Foreign Affairs 12. Ministry of Health and Population 13. Ministry of Higher Education and Scientific Research 14. Ministry of Industry and External Trade 15. Ministry of Insurance and Social Affairs 16. Ministry of Interior 17. Ministry of International Cooperation 18. Ministry of Investment 19. Ministry of Justice 20. Ministry of Labour 21. Ministry of Local Development 22. Ministry of Military Production 23. Ministry of Petroleum 24. Ministry of Planning 25. Ministry of Religious Endowments 26. Ministry of Supplies and Internal Trade 27. Ministry of Tourism 28. Ministry of Transportation 29. Ministry of Water Resources and Public Works 30. Ministry of Youth 31. State Ministry for Parliamentary Affairs 32. State Ministry for Shura (Consultative) Council Affairs 33. State Ministry of Administrative Development 34. State Ministry of Environmental Affairs

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Intervention sectors From an organisational and institutional point of view, the State

Ministry for Administrative Development is in charge of administrative reform, but the activities of this ministry have a limited impact on the country’s administrative affairs. The Ministry of Public Sector Entrepreneurship is in charge of privatisations, liberalisation, and de-regulation, and pursues the following goals:

• Defining a new role for administrative institutions in a market economy;

• Adapting administrative reform to the new global order inspired on the principles of competitiveness, free exchange, and regional economic unions;

• Adapting the administrative structure to new national and international conditions;

• Implementation of a privatisation programme; • Decentralisation and devolution of functions (local

communities are recognised as the main pillars of the country’s development)

• Implementation of a human resource training and specialisation programme.

Particular attention has recently been paid to technological innovation:

the Ministry of Communication and Information Technology, in collaboration with the other state ministries, adopted a public sector reform initiative aiming to improve the quality of services offered to the citizenry and promoting increased citizen participation in the country’s political and institutional affairs. . E-government efforts in Egypt go beyond the mere computerisation of public offices, but also aim to facilitate access to services, in line with the principles of efficiency, efficacy, and administrative simplification. These efforts include plans to make documents and information accessible to citizens at the nearest post office, or even from their own homes, 24 hours a day. On September 21, 2002 the Ministry for Local Development and the United Nations signed an agreement to launch a joint project to develop ICT skills within a framework of local community empowerment.20.

20 http://www.sis.gov.eg/public/yearbook96/YEARBOOK/INDEX.HTM, May 2003

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II. 4. Local administrations

Decentralisation and the management of municipalities21

Historically, Egypt’s governmental institutions have strongly favoured centralisation. The bureaucracy was modelled on Nasser’s development and centralisation plans. Although in recent years Mubarak has undertaken efforts to streamline and localise the public administration, Egypt remains highly centralised, despite the fact that the country is divided into 26 governorates. These are the executive branches of the government. They are responsible for local development, and they exercise their authority over vast urban areas, but also over arid lands, and industrial and free areas. The governorates control the central government funds channelled by the Ministry of Planning for five-year development plans, and they also control a share of the local development funds, generated with the proceeds from the sale of land.

Governorates are headed by a governor and an executive council appointed by the President. At a lower level, there are 126 administrative districts. There are elected people’s councils at both the governorate and district levels, but these bodies have very limited powers compared to the executive councils. There are 4496 villages/municipalities and 199 cities/municipalities. Municipalities are controlled by an executive council appointed by the central government. They are responsible for health, education, infrastructure development, and provision of public services. Municipal elections for people’s councils take place every four years. The elected councils have limited powers and most of their members (95%) come from the National Democratic Party (NDP)22.

Sub-national government bodies have limited fiscal autonomy: all the budgets of the governorates, districts, and municipalities are part of the central budget approved by the legislative branch; transfers of central government funds account for 90% of local revenue. Other local revenue includes profits from the sale of urban real estate, arable land, registration taxes for vehicles, and license fees. Most local and regional funds are earmarked for spending that has already been decided, such as salaries and debt management. The lack of capital at the local level hinders local government ability to implement development projects. Two of the main sources of local capital are the national Special Funds Account and the budgets of the municipal people’s councils.

21 UNDP (United Nation Development Programme), POGAR, (Programme on Governance in the Arab Region), Egypt (http://www.undp-pogar.org/countries/egypt , May 2003). 22 As an example, the NDP presented 47000 candidates during the April 1997 municipal elections, versus 11550 opposition and independent candidates. The NDP won uncontested elections in 49% of districts. Opposition parties criticised the government for electoral fraud and political repression. Voter turnout was estimated at 20%.

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Egypt’s government has implemented a certain number of coordination programmes with international assistance, in order to increment local institutional capacities and improve administrative efficiency. In collaboration with the United States Agency for International Development23 and the United Nations, government officials developed programmes to increase the devolution of authority to local governments, and increase its participation in rural development. Decentralisation and local government problems in Egypt have been the object of research on the part of the University of Cairo’s Economic and Political Science Department’s Public Administration Research & Consultation Center24. A recent publication25 examines the theoretical framework for local administration in Egypt and highlights some of its difficulties. The Egyptian local administrative system is one of the oldest modern local administrative systems, dating back to the local councils created in 1883 during the British occupation. The system was based on a French model, and is based on the possibility of organising local powers in general terms through legislation, giving the central government ample powers to oversee these activities and to provide a certain amount of uniformity in administrative styles. The tasks of local authorities are disciplined by ordinary laws, since there are no specific provisions for them in the Constitution. In particular, the Councils are allowed to use Parliamentary-type powers, such as the right to ask questions and have debates and discussions. The councils can ask these questions to the executive branch, much like in presidential systems, where there is a clear separation of powers between legislative and executive authorities. In this case, however, the local councils have no independent

23http://www.usaid.gov/index.html, May 2003 24 PARC: http://www.parc.edu.eg, May 2003 25 ALI EL SAWY, The Problems Of Local Organization In Egypt, 1999 (cfr.: http://www.parc.edu.eg/english/publications/administrative/the_problems.html, May 2003). The book is divided into four chapters. The first deals with the theoretical framework and the main concepts. It is entitled "The Imperatives of the Local System and Decentralization". It tackles the goals and main concepts of the local system in modern society. The section on concepts includes decentralization, administrative decentralization, the styles of decentralization, and methods of supervision. The second chapter is entitled "The Political Framework of Local Administration in Egypt". It deals with the relationship between the central-local entities in modern Egyptian history. It highlights the roles played by the organs and ministries in relation to local administration. The third chapter deals with "The Organization Structure of the Localities" from the legal, organizational, and administrative dimensions. This chapter analyzes the relations among local organs and the control mechanisms. The fourth chapter is entitled "The Seven Problems of the Egyptian Local System". The chapter examines the main problems of the local system that need to be solved. The solutions vary from the legislative ones (suitable for organizing the relations between the new communities and the old localities) or the continuous training for local human resources.

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constitutional powers. Local councils have very limited powers, which they exercise under the supervision of the central government, the governor or the Supreme Council of the Local Administration. The latter two institutions have absorbed some of the powers that the central government used to exercise with regards to local elected councils.

City management The management of the new urban areas that are developing

themselves in Egypt has led to some theoretical and practical discussion on the best urban management and governance methods to be used26. There are two main approaches to the management of new cities: managing projects and managing urban societies. Project management is far simpler than managing urban societies, which requires weaving a network of social relations among citizens. The government has encouraged the creation of an organisation of investors to improve the level of services provided. Case studies in the industrial district of Assuit, in Ramadan City, Borg El Arab and El Nahada highlighted certain common features: new cities provide opportunities to experiment with new management paths; although each new city is different, they all have the same social needs; centralisation levels are too high and must be reduced; agricultural land must be valorised as much as possible since it is an important source of wealth for new cities. Many of the cities that were studied lacked systematic and efficient urban planning efforts.

The case of Ismailia: local government and environmental policies The urban governorate of Ismailia is a particularly interesting case

study. This city has seen a rapid growth in its population and urbanisation in the last 25 years. Nevertheless, the lack of a strategic plan or an comprehensive approach to development has led to significant environmental problems. Although the governorate’s five districts (marakiz) each have their individual problems, the overall themes remain the same. For example, agricultural drainage and municipal and industrial waste water polluted Lake Timash, the main source of fish and the main tourism and recreation centre for the population of Ismailia. These problems became pressing in the early 1990’s. The need to solve them led to the drafting of an Environmental Planning and Management Model (EPM) that was conceived and developed with the help of the United Nations Centre for Human Settlements (UNCHS/Habitat)27, which then became the base for a broader project 26 See Ahmed Saker Ashour’s conference on “Managing the New City” available: http://www.parc.edu.eg/english/publications/conferences/managing_cities.html (May 2003). 27 http://www.unhabitat.org

21

regarding a global network of cities called the Sustainable City Programme (SCP). The city of Ismailia, capital of the governorate of the same name, was selected for the first pilot SCP project in the Arab region in 1992, through the launching of the Sustainable Ismailia Project (SIP). The governorate became the national implementing agency, while the United Nations Development Programme (UNDP) was the main source of funds, and the United Nations Centre for Human Settlements (UNCHS) was the agency in charge of technical cooperation. The project aimed to promote sustainable development of the city from the environmental, financial, and institutional points of view, through a three-pronged effort: a strategic development plan for Ismailia that included the key elements for environmental management; the creation of an investment portfolio and of technical assistance projects to sustain development, upgrade social and productive infrastructure, and protect the city’s natural and environmental resources; and strengthening private and public institutional capacities to plan and coordinate urban growth and development, with a particular focus on community participation. This project was successful, and became a template for other cities – not just Egyptian ones – who participated in the programme. The changes in political leadership that Ismailia has had in the last decade impacted the continuity of the project, but the technical quality of the project was high enough to keep it going throughout. The governorate then further institutionalised the project (which included numerous stakeholders such as UN agencies and agencies from foreign countries such as Sweden, which gave crucial support in terms of capital and know-how), and proposed adapted versions of it for the remaining four districts of the governorate. One of the project’s main successes was the promotion of greater awareness of environmental problems at the governorate and city level, and putting sustainable development at the heart of local debate. Furthermore, the project created long-lasting changes in approaches to administrative models that require co-ordination, teamwork, and information sharing. The project revolved around a complete strategic plan, a working methodology that has not yet been fully implemented by local authorities. Certain factors played a key role in this process: the complexity of the environmental problems (especially those related to the need for the ecological restoration of Lake Timash), their urgency, the desire on the part of shareholders to participate and co-operate, the presence of institutional rivalries, political commitment, and the capacity of the problem to attract resources and interest. An initial drastic change was the emergence of a sense of stewardship for the lake, when prior to the project the various actors blamed one another for the lake’s pollution. There have also been negative influences on the project: the most important one was a reluctance to share information, but also the centralised nature of prior development plans, and the control on the part of the army and the Suez Canal

22

authority of certain important plots of land that hindered the rapid implementation of development plans. These problems led to more projects being addressed towards areas where the city had previous successes, and to update projects that had already been launched. The strategic question of how and where to address future projects has not yet been fully solved; the same can be said of the links between urban planning and environmental problems – there are ample margins for improvement in this sector. The project, which had originally been launched in 1992, was re-launched and partly institutionalised in 199728 with a stronger participation on the part of the Governorate of Ismailia, with continuing input from national and foreign agencies (Social Development Fund of Egypt, Danish International Development Agency - DANIDA, United Nations Development Programme - UNDP, United Nations Human Settlements Programme - UN-Habitat).

28 http://www.unhabitat.org/offices/roaas/egypt/index.htm, (May 2003)

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CHAPTER III – THE ECONOMY III. 1.The five-year development plan29

Egypt is trying to develop a far-reaching plan, starting from the development plans launched in the last 20 years, and with the next 20 years in mind, with long-term goals to be met by 2022. The main goals of the five-year plan are as follows:

1) Better living standards through the improvement of basic services.

2) Improvement of measures to support families. 3) Increased employment 4) Increased economic growth rates that should reach an

annual average of 6.2% through the five-year plan. During the first year of the five-year plan, the desired real GDP growth rate is 4.6%, which would bring GDP up to 415 billion Egyptian pounds.

5) Balancing the budget by improving monetary and financial stability through monetary and financial policy tools that will help accelerate development rates. The budget can also be balanced by generating a surplus in the current budget of up to 2 billion, against a deficit that was estimated at 11.7 billion in 2001/2002. In order to meet this goal, services and exports would need to grow at an annual rate of 10%.

6) Increasing women’s participation in the labour force, up to 18% in the first year of the plan (up from 17.7%) and increasing to 19.2% by the end of the plan, for an average annual growth rate of 4.4%.

7) Improving basic systems in rural areas, in order to improve living conditions in villages and activate local resources tied to tourism.

8) Strengthening security throughout the country, with adequate support from the armed forces and the police.

III. 2. Macro-economic indicators 30

Egypt’s recent economic history has had alternate fortunes. Significant progress was made in the 1990’s, due in part to Egypt’s pro-western stance during the Gulf War, which allowed it to receive significant financial help and the cancellation of half its foreign debt, with positive effects on macro-economic indicators. This economic recovery allowed Egypt to become the

29 http://www.sis.gov.eg/public/yearbook/2002/html/eyb00.htm, May 2003. 30 Data analysis performed by C.A.I.MED.

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second largest Arab economy after Saudi Arabia31, and to achieve improved standards of living and better infrastructure.

As a part of its MEDA programme – tied to the Euro-Mediterranean

partnership – the European Union earmarked € 250 million to promote the industrial development programme, with an eye towards the implementation of a free exchange regime. In 2000/2001, the agricultural sector accounted for 16% of GDP, the oil sector for 8%, the mining and manufacturing sector for 20%, the construction sector for 6%, and 50% for the service sector.

GDP composition (2000/2001)

services 50%

mining andmanufacturing

20%

construction 6%

oil sector 8%agriculture

16%

Internal demand is greater than internal offer by 6 percentage points:

this difference arises from the difference between the exports of goods and services (18% of GDP), and the imports of goods and services (24% of GDP). Internal demand is particularly strong for durable consumer goods, medical expenses, and household goods. Inflation is slowing down, in part due to the new monetary policies adopted by the government. Nevertheless, a new phase of political inertia has aggravated deficit and export problems (tied in part to monetary policy choices).

31 It should however be pointed out that Egypt and Saudi Arabia dominate the basic resource base in the Arab world, Egypt having the largest population, and Saudi Arabia the largest share of GDP. In other words, Egypt was not the second richest country in the region after Saudi Arabia but the one with the highest gross expenditures on human capital formation (Fergany, Nader: “Science and research for development in the Arab region”, Almishkat Centre for Research, Egypt (www.almishkat.org), February 1999.

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In its September 2001 World Economic Outlook, the IMF corrected the Egyptian government’s growth rate projections, which dropped to 3.3% from 4.9%. Slower growth is related to a crisis in liquidity that began in the late 1990’s and aggravated itself in the last two years. The crisis had consequences on the exchange rate, the stock market saw some significant losses, which created problems for the privatisation process and for the implementation of development models based on market liberalisation. The main reason for this crisis is Egypt’s monetary policy, which is undergoing changes that are not yet sufficient to make up for previous mistakes. In February 2001, Egypt announced a new fluctuation policy. Thanks to subsequent updates, this policy led to an equilibrium in the balance of payments. The restructuring of monetary policy can be a significant impulse in directing economic growth. Despite the government’s commitment, the international scenario and the delicate situation in the Middle East can have a significant impact on the country’s economy.

Egypt is currently undergoing the final phase of an important transition programme that was launched by Sadat, when the country undertook a series of economic reform through an adjustment programme implemented with the help of the IMF.

On June 26, 2001, Egypt signed an association agreement with the European Union in order to create a Euro-Mediterranean free exchange area32. Indicators of the opening of the Egyptian market include:

• Increasing numbers of international trade fairs since 1995 (no less than 50

trade fairs currently take place in Cairo every year); • The development of distribution networks (such as shopping malls), which

currently satisfy the needs of the middle and upper classes; • An increasing, and increasingly diversified supply of consumer goods

reflects the recent evolution of the composition of demand on the part of families.

Over the last six years, Egypt has been characterised by moderate but constant growth. Nevertheless, the needs to modernise the primary sector, support the industrialisation process, and improve the quality of life of the citizenry (especially the middle class) has led to several problems, including a strongly negative balance of payments and the triple devaluation of the currency in 2001.

32 This agreement, which had been in negotiation since 1995, has often been considered damaging to Egyptian exports, which would be threatened by European products that are more technologically advanced.

26

According to data supplied by the CBE (Central Bank of Egypt), real GDP rose by 4.9 % in the 2000/2001 fiscal year (which ends in June), an amount equivalent to 316 million Egyptian pounds. According to the same data, the inflation rate in 2000/2001 was 2.4%, versus 2.8% in 1999/2000 and 3.8% in 1998/1999

.

Inflation rate, 1996-2000

2,42,8

3,83,8

8,2

1996 1997 1998 1999 2000

Unemployment is falling steadily and reached 7.6 % in 2000.

Unemployment rate, 1996-2000

7,67,9

7,9

8,58,8

1996 1997 1998 1999 2000

Although the Egyptian government promised, and in some cases launched, deep structural reforms (such as privatisations in several sectors, including banking, attraction of foreign capital for industrial collaboration, joint ventures), and although these reforms stimulated investment and led to a gradual economic recovery, they remain insufficient. In order to fully achieve recovery, Egypt will have to guarantee clear rules, efficiency, and transparency for investors.

Summary of macro-economic indicators

27

1996/97 1997/98 1998/99 1999/00 2000/01 GDP (in billions of US$) 75.6 82.3 88.4 98.0 97.5 Real GDP (growth in %) 5.3 5.7 6.1 5.1 4.9 Per capita GDP (US $) 1258 1342 1411 1532 1493 Average inflation (in %) 8.2 3.8 3.8 2.8 2.4 Public debt/GDP (%) -0.9 -1.0 -4.2 -4.7 -- Public foreign debt / GDP ratio (%) 49.0 48.8 48.7 48.9 -- Foreign deficit/GDP ratio (%) 38.0 34.0 31.7 28.5 27.5

Exports (in millions of US $) 5345 5128 4445 6388 7078 Imports(in millions of US $) 15565 16899 17008 17861 16432 Urban unemployment (in %) 8.8 8.5 7.9 7.9 7.6 Egyptian pound/US $ (annual average) 3,389 3,388 3,396 3,446 3,850

Source: Economist Intelligence Unit, 2002

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