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LETTER FROM THE EDITOR

Thwarting reform, quickly and easily

It's been easy for journalists in Egypt to be cynical about the government.

Politically, the opposition has been kept divided and toothless, with Islamists historically played off against the overly liberal. Long sought reforms, meanwhile, have been delayed with a multitude of excuses, all of which betray a state fixation with the status quo.

The same has been said for the national economy and the old-school officials that long governed it. Progressive economic legislation is often introduced, only to be rescinded when a particular demographic get ornery.

On both fronts, though, the last couple of years have seen real change, with the state - albeit in baby steps - slowly giving ground before the inevitable.

There's no denying that the political system has remained in a state of ossification. Still, there has been a growing awareness - among both the citizenry and the government - that the current state of affairs cannot stand. Pressure to lift the emergency law, for example, can no longer be resisted. Reportedly, in the wake of the March Alexandria Conference, the freshly created National Council for Human Rights began studying proposals aimed at replacing martial law with more citizen-friendly legislation.

Economically, too, the country hovers at a mid-way point.

With a WTO deadline for total compliance to world trade rules a year away, policymakers are starting to do what they promised. A presidential decree in January radically slashed or eliminated import tariffs in the textiles sector, including duties on raw materials and finished products. Again, in late March, the Customs Authority similarly cut tariffs on rice, flour and steel imports. Most impressive.

What's more, the currency "float," while causing medium-term pain in the form of sky-high inflation, heralded the dawn of a globally integrated national economy.

In some cases, Egypt has already been able to reap the fruits of its painful decision to devalue. The Cairo & Alexandria Stock Exchanges have continued to thrive driven largely by investors' increasing confidence vis-à-vis the exchange rate as legitimate and black-market dollar prices come ever closer to convergence. Exports, too, have risen in many sectors, pulling up several listed companies whose '03 financials have revealed significant sales jumps.

Unfortunately, US policy in the region - which should be designed to encourage the gradual drift towards reform - is threatening all this.

Before the benefits of liberalization have even had a chance to trickle down to the masses, already in a state of agitation over inflation, the US president has gone ahead and erased Palestinian national aspirations - along with any semblance of Arab pride - in one fell swoop.

The result? America is vilified in the Arab world, and Washington's longstanding wish list for Egyptian reform - including privatization, tariff reductions, human rights improvements, etc. - loses the popular support it once enjoyed. Perhaps, under pressure from alienated xenophobes, reform trends are even reversed.

It's easy being cynical.

Adam Morrow

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