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follow up tourism sector unfazed
by sinai blasts the international press made dire predictions of economic ruin following last month’s terrorist attacks in taba and nuweiba. pictures of abandoned sinai beach camps filled foreign media, with commentators quick to draw comparisons with the fallout of 9/11 and the 1997 luxor tourist massacre. yet for many, the october 7 bombings have only served to demonstrate the tourism industry’s resilience. ibrahim kemal, communications director of state-owned misr travel, believes their impact on foreign tourism has been minimal. “although tourism from israel has been hit hard, we haven’t seen many overseas cancellations at all,” he said. while responsibility for the blasts is still disputed, israeli and egyptian security forces agree that they were directed specifically against israelis. the three car bombs, which destroyed large parts of the taba hilton hotel and two beach camps at ras shitan 50 kilometers south, left over 30 dead and 120 wounded, mostly israeli citizens. at the time of the bombings, 15,000 israeli tourists were staying in sinai resorts. most returned to israel immediately. thierry bertin, regional marketing director of the hyatt hotel group, says that the perceived risk to other international tourists is low. “this was a highly localized incident,” he remarked. “the israelis left but europeans are not too concerned – it’s had little impact on business.” this is good news for egypt’s second-largest foreign currency earner. following the 1997 slaying of 58 tourists and four egyptians in a temple near luxor, the tourism industry collapsed, only to be struck down again by the 9/11 attacks. since 2002, however, revenues have averaged $4.5 billion, with 2003 revenues accounting for 12 percent of egypt’s gdp. last year, a record 6.1 million tourists visited egypt. this year was shaping up to set another record, with 4 million tourists entering the country between january and september 2004. hala el-khatib, spokesperson for the ministry of tourism, thinks future figures are unlikely to suffer from the sinai bombings. “we’ve seen less than 5 percent in cancellations,” she told business monthly. “the new bookings figures aren’t out yet, but i don’t expect them to be hit too hard.” israeli visitors to sinai account for less than one percent of international tourism in egypt. some 320,000 israelis crossed the border to sinai in 2003, double the previous year’s number. able to travel in sinai without a visa, they flock to both resort hotels and the dozens of small local businesses – beach camps, cheap restaurants and taxi services – that line the sinai coast. the october 7 blasts struck both luxury and budget tourism establishments, but sinai hotel managers remain optimistic. medhat el-zeyat, manager of the nuweiba village hotel and beach camp, says that the dip in israeli tourism is only short-term. “israelis make up 70 percent of the guests here,” he said. “at the moment, my business is down by at least one-third, but it’s a temporary problem.” the bombings occurred during sukkot, the jewish holiday that marks the end of the high season for israeli travelers. by the next public holiday in april, el-zeyat and others predict, the israelis will have regained the courage to return. “i’ve had phone calls from my regular israeli guests saying they will definitely be back in the spring,” he remarked. the confidence among industry workers is reflected in the healthy state of the egyptian bourse. hassan choucri, foreign sales manager at hc brokerage, said the exchange suffered a temporary dip following the attacks. “on sunday, october 9, the first trading day after the explosions, local retail clients panicked and the market dipped.” institutional investors remained calm, however, and the market picked up on monday, recovering its losses of the previous day and remaining buoyant ever since. “over the weekend [after the attacks] i had foreign clients calling me to buy,” said choucri. “it hasn’t affected egypt’s profile among foreign investors at all.” rachel aspden arab-american voters to
play role in u.s. elections the outcome of the 2004 us presidential election is expected, like its predecessor, to be determined by a handful of swing states. the possibility that these states’ electoral votes could be won or lost by relatively small margins has given added value to the opinions of minority communities within these key states. in florida, for instance, a study by the council for national
interest showed that george w. bush garnered an estimated 64,000
more votes among muslim-americans than al gore in the 2000 election.
highly contested figures indicated that bush won the state by a
mere 1,784 votes, with the subsequent recounts and legal battles
indicating that his margin of victory was considerably less. the arab-american community has continued to increase its political activity. while campaign donations saw a more modest increase than anticipated, grassroots efforts among arab-american communities have risen dramatically, claims hady amr, a seasoned democrat campaign adviser. much of this grassroots activity can be attributed to political issues of particular importance to arab-american communities, ranging from us foreign policy in the middle east to civil rights abuses at home. according to nasser beydoun, executive director of the american arab chamber of commerce, these political issues are superseding business considerations, even among those with an eye on the future of business relationships between the us and the arab world. while many arab-americans disapprove of the current administration, beydoun says there are a surprising number who are hoping bush will be re-elected. he points out that many people share bush’s vision of democracy and freedom in the middle east and believe he is likely to apply the constant pressure necessary to effect such change. beydoun suggests that the muted importance of business considerations is due to the relatively small bearing the election will have on the future of international business between the us and the arab world. he cites a prevailing sentiment within business circles that us efforts towards economic development in the middle east will increase no matter who is elected. both candidates see greater prosperity as a necessary rung on the ladder toward political development, he notes. richard susalka observers anticipate more
cuts to energy subsidies with global oil prices surpassing the $50-a-barrel mark, egypt’s system of energy subsidies has come increasingly under the spotlight. official discussions on the topic have been largely held behind closed doors, but ideas for trimming unsustainable fuel subsidies – along the lines of september’s cut in diesel subsidies, which overnight doubled the retail price of diesel fuel – are being seriously considered, say policy watchers. according to a recent report issued by the american embassy in cairo, energy subsidies “have an indirect but enormous impact on government revenue,” which can only be expected to rise in tandem with oil prices and domestic consumption. to trust petroleum ministry figures, energy subsidies cost the government some £e 24 billion in the 2003-04 fiscal year. analysts at independent research firm pico energy research & analysis, however, claim energy subsidies already exceeded £e 28 billion in the first half of 2004-05. a number of reports in the local press suggest that government media outlets are getting citizens used to the idea of future subsidy overhauls. according to nevine mehrez, head of research and development at pico, raising the issue in the media can be a means by which the government can test the waters with the public before implementing policy changes. she added that in the medium term more fuel subsidy cuts could be expected. “i think it’s heading in that direction,” she told business monthly. “i believe this is a good way to start moving forward... someone has to bite the bullet.” while there appears to be little support for direct fund cutting, given the possibility of hostile popular reactions, the pressure of rising oil prices has brought earlier budget-cutting proposals back to the table. according to energy-sector analysts, initiatives include greater efforts aimed at encouraging the nation’s drivers to convert their vehicles to natural gas consumption, and making only low-income segments of the economy eligible for subsidized goods via a ration card system. last spring, the government tried to decrease reliance on subsidized gasoline by introducing a premium fuel. consumer response to the new 92 octane gasoline is generally cold, as it costs 40 percent more than regular 90 octane fuel. “nobody uses 92 because it’s too expensive,” said one motorist. hussein abdel-halim, head of research at sigma capital, praised ongoing efforts to convert energy usage from oil to natural gas, saying such a move would save money and make use of a burgeoning local sector. “we’ve got lots of [natural] gas, and they are discovering more every day,” he said. abdel-halim added that artificially cheap gasoline prices were a result of a lack of taxation rather than of direct subsidies, and that, eventually, fuel taxes would be levied. september’s diesel subsidy cuts pleased liberalizers, but most observers agree that further changes will take time, and that the political sensitivity of the issue means any approach will be cautious and gradual. meanwhile, exactly what budget-trimming ideas are gaining traction within the government – along with schedules and time frames – has remained a decidedly non-public debate. jill carroll dollar inflow keeps iraqi
dinar stable the iraqi dinar has been remarkably stable in the year since the central bank of iraq (cbi) issued new currency notes without the image of former president saddam hussein. despite the ups and downs of occupation, insurgency and counter-insurgency, the dinar continues to trade freely at around 1,460 dinars to the us dollar – slightly above its level immediately after saddam hussein was overthrown in april of last year. the exchange rate, which had dipped in the last days of the old regime to around 3,000 dinars per dollar, rose to 2,000 dinars before the new notes were issued. in recent months, however, occasional cbi interventions have been sufficient to keep the dinar stable at close to 1,460 per dollar, seemingly oblivious to the rising insurgency in falluja, sadr city and other urban centers. the cbi’s job is made relatively easy by the continual inflow of us cash, partly from revived oil exports but mostly due to us-funded reconstruction contracts. before 1990, when iraq invaded kuwait and came under international sanctions, the dinar traded at a mere 20 to the dollar on the black market. the official rate remained at a fantastical three dinars per dollar right up to the fall of baghdad to us forces. the “new” iraq’s interim leaders, unlike saddam hussein, are not dependent on printing money or smuggling out oil shipments to cover the government payroll. philip khoury, head of research at efg-hermes investment bank, explained that iraqi state spending is now drawn almost entirely from oil revenues or us financial assistance. “so as long as the central bank is willing to convert dinars into dollars,” security problems produce virtually “no impact on the currency,” he said. with relatively low deposits in the banking system, the cbi has opted to keep dinars in short supply, so that whenever events conspire to put the local currency under pressure, a small amount of dollars is enough to intervene decisively. in addition, dinar counterfeiting – easy work with the old notes and rampant during the 13 years of sanctions – has now practically ceased. all this has been bad news for egyptian speculators who rushed to buy up dinars on the black market earlier this year in the hope that the us-backed currency would take off. “as far as i know, hardly anyone is selling,” said one black market dealer. “they prefer to hold on to the currency in the hope that its value will go up when the situation in iraq stabilizes.” ashraf abdel moneim, an electrician from cairo’s al-waily district, said he has still not recuperated the losses he suffered when the dinar went south in march. “i bought iraqi dinars on the black market in the hope that i would be able to make some money to go towards buying a flat for my son only to see the value plummet,” he complained. “i have sold some to neighbors going to work in iraq, but i am still holding on to most of them.” neil macdonald |
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