Egypt has been trying to rebuild its economy, shattered after two popular uprisings in 2011 and 2013, and is struggling to achieve stability amid tough security conditions. One of the country’s major goals has been to foster foreign investment. EU countries have been major contributors to foreign direct investment (FDI) in Egypt, most notably at the Sharm El-Sheikh Economic Summit of March 2015.
In an interview with Daily News Egypt, EU ambassador to Egypt James Moran speaks on Egypt’s investment climate, and the impact of policy reform on the country’s economy. The discussion also tackled local political issues and the prospects of establishing a parliament amid high national security concerns.
What is the role of an EU delegation/ambassador in Egypt? How does the EU delegation interact with national embassies?
Under the Lisbon Treaty, the coordination of all EU embassies in each country, including here in Egypt, is carried out through the delegation. That doesn’t necessarily mean to say that everybody says the same thing all the time, but when it comes to issues within the European dimension, stretching from economics to security, the coordination is done through this delegation and that is the system all over the world.
We have a very clear system of intense relationships with all of the 27 EU embassies. We meet with ambassadors regularly and coordinate on a variety of issues.
Where does Egypt stand in terms of achieving its democratic transition, given your observation of three years in this post now?
I arrived in February 2012. We supported the democratic movement right from the beginning, since it was announced back in July 2013. It was positive to see the constitution come through. We also had a full mission observing presidential elections, though it was not an easy process. As for parliamentary elections, it is getting a bit late in the day, because without the parliament in place, we have got a very important part of the puzzle missing. Now we know there were very good reasons why they delayed it, because of the constitutional challenges. The sooner this is done the better, as it helps in so many political and economic fields to have a parliament in the place.
Do you see political will within Egypt to achieve political stability through a parliament?
I would be surprised that any parliament in any country would agree with the executives at all times. I would expect that the parliament would have its own agenda and would, as stated in the constitution, provide a proper check and proper balance on the executive and the other pillars of government in the country.
I think the issue of postponement was a genuine mistake, but it has taken a rather long time to put laws in place and other parliamentary legalities. It is at the point now where Egypt has already passed two budgets without a parliament. That is pretty unusual in any country, so the sooner this legislation is in place, the better.
How do you see investment prospects, given the amount of legal texts issued in the recent period, starting from laws on investments to those allowing the government to monitor, control and seize financial flow and assets?
There have been a number of laws passed that could have an impact on this. I am not sure that the legislations in process are quite at the last stage just yet, but things might change. All those laws have to be reviewed by the parliament. There is some doubt as to whether the parliament will be able to do it because of the very short time, but one would hope that all of those laws will be subject to review.
Foreign investment is more of a long-term process. The picture is not entirely clear, but investors will definitely be looking at tax incentives with regards to their suspension on capital gains for instance. These are the sort of things that bring investors home. When it comes to controls, we’re still studying the anti-terror law, for example, and the financial restrictions in there, with regards to whether or not they will have any direct effect on the investment picture. Maybe at first sight it is not clear it would, but I think it needs to be studied carefully.
Meanwhile, Egypt had a long history of confusion in the investment law framework, and sometimes this got in the way of efficient treatment to foreign investment. There were efforts by the Ministry of Foreign Trade and Industry and real efforts to try and consolidate and make the law more coherent, but we won’t know for a little while what the effect is. The investment community is still waiting a little bit to see how it works. Every law has regulations that go with it so as to be finalised. The “colour of the money” on this legislation is not yet clear, until we see how regulations are implemented. Moreover, the Economic Summit and the New Suez Canal were examples of Egypt’s efforts in trying to enhance foreign investment. It’s a top priority for the government and for the president.
For foreigners dealing with Egyptian laws, how do they view the law reinforcement process in terms of clarity of legal procedures? For instance, how do they see decisions to shut down companies?
Business people need to know where they stand with the government. They accept the rule of law for better or for worse, but they must understand where the decision is coming from. In several cases this remains unclear, for reasons of national security perhaps, which creates an uncertainty that is not terribly helpful. Transparency is the key.
There is widespread illegal migration to and across Europe, among whom are many Egyptians, who often end up in the illegal circuit in Europe, besides Egypt serving as a ‘hub’ for other refugees. How can the EU and Egypt cooperate on this issue?
Egypt is a transit country; however the figures coming through Egypt remain comparatively low next to Libya, or Turkey and Macedonia, which is a huge problem now. They might be rising slightly. As you try to control migration in one part in the region, other parts of the region come under pressure. A dialogue on migration started in Egypt, with the visits of European Commissioner for Migration Dimitris Avramopoulous in May and Italian Admiral Enrico Credendino, Operation Commander of EUNAVFOR MED, in July. He wanted to clarify the question of ‘blowing up boats on beaches’, as there is so much more to it than that, and it is a priority to save lives. On the other hand, we are also trying to take a full front on the human smuggling business, through civilian measures but also security aspects, where you need to fully cooperate with neighbours in the region, and we are trying to do that with Egypt.
How are the talks with Egypt on migration going? What does Egypt focus on? What are the common interests?
Egypt has a good understanding of the situation, and I think we have common interest in banning these people from doing what they do. Migrant interdiction also plays a major role, although it would not solve it. Egypt is very much involved with European countries in regular discussions about the civilian side; security is part of it, and so on. We need to have a holistic approach to the problem, by addressing the developmental situation in countries of origins – although it would be naïve to assume it would prevent such migration – also on the criminal activity, improving the security situation in the Mediterranean. It is very difficult, and when it comes to smugglers that we want to disrupt, we need to improve intelligence exchanges between us; we need to know more about what each side is doing, in each other’s common interests.
Unlike Egypt, the EU did not designate the Muslim Brotherhood a terrorist organisation. How do you deal with this disagreement?
If we were to see eye-to-eye with Egypt on all of these matters, it would make conversations in some areas a little bit easier, but we don’t, and the reason is that we do not necessarily apply the same process to an organisation like that, as Egypt does. But then again, Egypt has done what it has done, has its law and its Egypt’s right to have that law, but it does not necessarily say we need to have it too or we should do it the same way, just as Egypt would say about some of our own regulations back in Europe. So we have to agree to differ on the treatment of the organisation in that regard. Now it looks like some reconciliation efforts went unsuccessful, perhaps it is still a future possibility but for the time being it is not the mainstream in this country, there are a lot of other things we need to get on with, and should this topic come up, we just move on.
How would you assess the quality of dialogue with Egyptian officials since you assumed the position? Can Egypt accept constructive criticism after some aggressive reactions to foreign reports?
It is important to remember what the real interest is for the EU in making critical declarations. Genuinely, the real interest is to see this country achieve stability and sustainable security. If we are protesting the treatment of journalists, we are doing that not because we want to teach a lesson to Egypt, but because we want to see the country’s best interests served. We are aware of, and respect, differences in priorities, development levels and even culture. We also understand the country’s under pressure, in regards with explosions and violence that have also affected European nationals. We believe the smart way to face this is by maintaining a balanced approach.
Can Egypt achieve economic growth, security and political stability without looking into human rights, particularly as many minors are in prison, which also adds to their political frustration?
On human rights, well there is a constitution, which includes a number of rights which people thought were the strongest this country has ever had. Again we go back to the issue of the parliament, which should enact the constitution, since a lot of it is currently just on papers. We do not agree very often on some of the actions, especially when it comes to the youth, which is extremely important to developing the country, and I believe the president understands this. It is not only political, but you have the question of education and job opportunities and that is always a challenge for any country.
How about civil society’s role, which the EU put forward in its policies, namely the European Neighbourhood Policy (ENP)?
Well, certain areas are problematic, like civil society indeed. We would hope that the parliament reviews the NGOs law, to see some improvement in civil society by next year. It is not a smooth process in the current phase for NGOs, including those who are not working in human rights. The restrictions applied by Egypt affect the efficiency of civil organisations to deliver essential public services. My experience has told me that in numerous parts of the country and when it comes to people’s basic needs, these depend very much on the work of voluntary associations, supported through foreign funds or not.
Those restrictions come in the name of national security, Egypt’s top priority. Things are going to get worse for civil society, it is just a question of how bad it gets.
The EU is putting financial aid in development projects in Egypt, for instance in hospitals, education, government and water management, which sometimes is criticised for lacking proper monitoring. How to ensure that what you have started will continue and achieve the desired outcome?
This is the classic problem all over the world of how to ensure sustainability, which depends on the nature of public administration, especially in areas like health and education. I think there has been improvement in the last six months with the establishment of the Technical Education and Training Ministry led by Mohamed Youssef, which for the first time replaced all 29 ministries formerly dealing with this. For the first time, there is one place in the public administration which has its fingers in all of the different aspects, whether it is the technical training schools, nature of courses, relationships with universities, donors, etc. Focus is good for sustainability.
It gives you hope for the future, because this is a long term challenge covering 40 to 50 years. Likewise, you need to ensure that there is proper focus on the programme. Another thing is that, if it depends entirely on foreign funding, that is bad. Take the example of the TVET programme, in which the EU is putting €50m, while the Egyptian government takes the largest contribution share of nearly €70m. It fosters commitment, and that has been especially important in education and health, because for a long time the country has not been contributing into these sectors through the government budget.
The reforms that were carried out last year on fuel subsidies might give them the possibility to put more in education and health in the future, and that is essential in terms of sustainability. It should also enhance foreign direct investment (FDI) because the more Egypt does for itself the more we will do for Egypt.
Finally, what, in your view, is the most critical challenge determining Egypt’s future?
Well, naming just one would be terribly difficult, but in one word that would be ‘meeting aspirations married with accountability’ of government.
