The ouster of President Hosni Mubarak’s regime also meant the end of the National Democratic Party’s dominance over the country’s political life. In March 2011, the Supreme Council of the Armed Forces (SCAF) passed a political party law streamlining the registration process, and concurrently placed a minimum 5,000-member requirement. Since then, the number of political parties has ballooned to 28, with another 21 still under establishment according to a7zab.com, offering voters a wide political spectrum including the liberals, socialists as well as Nasserists. As the nation went to the polls to choose a new parliament, few parties offered well-thought out economic agendas.

With the second stage of the parliamentary elections nears completion, the Muslim Brotherhood’s Freedom and Justice Party is firmly in the lead, followed by the more conservative Salafi Al-Nour Party.

Business Today takes a closer look at the leading parties’ take on the economy and which policies they are most likely to pursue once the new parliament is officially in session sometime during the second half of January 2012.

Al Hurriyah wal Adala (Freedom and Justice Party)
On June 6, 2011, the Muslim Brotherhood’s Supreme Guide Mohammed Badie announced that the Brotherhood would establish a political party. The newly established party stands as one of the major victors of Egypt’s first parliamentary elections post-Mubarak and its future economic policy is among the most scrutinized. Preliminary figures show that 38 Freedom and Justice Party (FJP) members have secured individual seats as a result of the second phase of the elections.

The FJP formally embraces the principles of Shari’ah as the basis for legislation, and are widely perceived to pursue a social-minded economic agenda focusing on the “improvement of the Egyptian citizen’s standard of living as the basis of all its activities. The party’s economic vision is based on the Islamic economic system,” their agenda states.

One of the main objectives of the FJP is to promote Egypt to a level of self-sufficiency, especially in strategic commodities such as wheat and cotton as one of the central pillars of change. According to their economic platform, the economy suffers from a budget deficit at home which has reached 10% of the GDP. Public debt has reached LE 1.1 trillion along with rising inflation which has not been countered by a reasonable rise in incomes.

According to the party’s agenda documents on their website, some of the focal problems facing Egypt are an unemployment rate of 10% of the workforce — equal to 2.5 million people, the rising public debt to LE 1.1 trillion, rampant inflation coupled with stable incomes, the decline in foreign direct investments a shrinking tourism sector, the trade deficit and an increase in international commodity prices, especially those of strategic and food commodities.

Additionally, a population of which 40% is below the poverty line, a deficit in strategic commodities such as wheat and cotton, and the decline in foreign currency reserves to $22 billion (LE 132.34 billion) in October 2011 from $36 billion (LE 216.56 billion) in June 2010 are major issues the FJP addresses in its agenda.

Hezb Al-Nour (Al-Nour Party)
Al-Nour is a newly established political Salafi party, which aspires to tackle nepotism and corruption in the executive and legislative levels of government.
Al-Nour’s broad agenda is to achieve social justice by addressing social, educational, health, culture and identity, foreign policy, security and political issues.

The Party aims to revive elements of Nasserism in its belief that a nation should be able to feed and protect itself, therefore hinting that Egypt should become self-sufficient in arming as well as feeding itself. In fighting political and economic corruption which culminated in the events of the January 25 Revolution, Al-Nour aims to achieve social equality by ensuring the people’s right to education, health, security, livelihood, food, clothing and housing.
A close comparison of the two parties’ stated agendas highlights similarities of their political and social views with minimal differences between the two.

Privatization
Many investors are wary because the new parties with key majority representations in parliament might head back to the nationalization policies. However, a close reading of the two Islamist parties’ economic agendas shows that privatization has not been ruled out, only reformed.
The FJP advocates a new form of privatization tailored specifically for the Egyptian economy such as privatizing management or partnering with private sector players to reform and improve management efficiency.

As a rule, however, the party discourages privatizing strategic industries such as pharmaceuticals, food and energy. Additionally, local investors are preferred to be the buyers, with a national policy to be put in place that requires sold assets to be replaced with new productive assets. If enacted, this policy may result in a more protectionist economic outlook.

Budget and finance
The FJP seeks to find more revenue sources for the budget. Primarily, they aim to reevaluate the land contracts awarded to the real estate developers during Mubarak’s time at very low prices.

One such example is the land given to Talaat Moustafa Group on the Cairo–Suez road for the Madinaty compound. A revision of the land value is estimated to bring in LE 800 billion for the budget, but it is undetermined how such a move will be received by investors.

Another aspect of the budget that many will agree is ready for reform is subsidies. The FJP aims to address the subsidies issue by connecting all homes to the natural gas grid in order to save more than LE 16 billion in annual subsidies paid on imported butane gas.

Furthermore, the subsidy policies will be revised to shift them from “subsidizing commodities to subsidizing citizens” instead. Subsidies given to high-energy consuming industries will be revoked and those on petroleum products will be revised on the ground that it currently allows the well-off to benefit from 80% of the total value of the subsidy according to the party’s estimates.

While reducing the export subsidies may be a controversial move, the FJP says the subsidies policy was designed to benefit certain businessmen and costs the nation LE 2.5 billion in the current budget.

Another politically sensitive issue is the agreement to sell oil to Israel at $6.80 (LE 41) per barrel — a price that had been agreed upon at the Camp David agreement which is far below international market prices. Also, a revision of the agreement to sell natural gas to Israel could generate an extra LE 18 billion in revenues for the budget.

An additional LE 2 billion per annum can be saved by converting power stations run on mazut to operate using the much cleaner natural gas.
“Egypt’s natural gas agreement with Israel was passed under Mubarak despite a lot of objections,” Abdel Ghafour, chairman of Al-Nour party told Al-Ahram newspaper. “During the reign of Mubarak, Egypt was feeble and Israel used to do whatever it wanted. That must change. Egyptian public opinion cannot be ignored anymore.”

In line with their inclination towards progressive taxation and the social takaful (Islamic insurance) system, the party calls for a revision of electricity prices for those consuming more than 500 KW per month.

To cap speculative trading on the stock exchange, the agenda highlights a 3% capital gains tax on funds that exit the market in less than six months, 2% on funds exiting the market between six months and one year and 1% on funds that remain invested in the market for more than a year. While promoting large scale national projects, the party suggest funding them using sukuk (Islamic bonds), which will utilize the banking system’s large deposit base valued at LE 500 billion. This is aside from the long-term plan to gradually replace interest-charging banking institutions with Islamic banks.

Tourism
There is no debate about the importance of the tourism sector in the economy and contrary to the word on the street that has some people fearing the future of the sector at the hands of an Islamist government, the FJP sets out 13 points for how to improve and grow the sector.
From protecting tourist areas from encroachments to targeting new tourist markets and attracting more investments into the sector, the agenda leaves no stone unturned in its efforts to grow the sector. New forms of tourism are encouraged including medical tourism, conferences, cultural, religious and scientific.

Of the 13-point plan, three focus on increasing Arab tourism as well as internal tourism by building a bridge between Egypt and Saudi Arabia to ease tourist flow between east and west via Egypt, removing all custom taxes between Arab states.

Each party faces internal divisions on numerous economic issues and sometimes lack a consistent approach, as evidenced recently on the topic of tourism. The Al-Nour party tread carefully in its question and answer session with Al-Ahram. “I would like to reiterate: we would never oblige anyone to do anything. We simply want to safeguard existing Islamic traditions, nothing more,” Emad El-Din Abdel Ghafour, the chairman of the Al-Nour party, was quoted as saying on December 11.

A few days later, Al-Nour party spokesman told Al-Ahram the Al-Nour party would only allow tourists to drink liquor they brought with them from abroad and “only in their hotel rooms.” Bakar also said the Al-Nour Party would establish a chain of hotels that would function in compliance with Islamic Law, while banning beach tourism, which he said, “induces vice.”

Agriculture
Agriculture is a central pillar to any economy and its development is always essential. The FJP plans to achieve agricultural self-sufficiency and boost agricultural export by increasing agricultural land area and increasing the production capacity of the land. The FJP has outlined a plan to remove the remaining mines in the country’s northern coastal area of Alamein to allow for the cultivation of an additional three million feddans.

One of the largest problems Egypt’s agricultural sector has suffered from is small-scale farmers being unable to afford the inputs, which the party’s agenda aims to change. One of the inputs that has been debated for a long time is fertilizers, so the FJP aims to provide them at affordable prices and at the same time encourage investment in more fertilizer factories.

Al-Nour is on the same track, targeting improved standards of living for farmers to bring about social equality. To improve the agriculture production process, Al-Nour suggests developing the agricultural credit system and reducing the interest charged on agricultural credit
Both parties agree on the need to expand the arable land area with Al-Nour suggesting criminalizing construction in agricultural land.
The development of the agricultural sector is being promoted in order to achieve the ultimate goal of self sustainability in food by the increased cultivation of wheat, more livestock production and better utilization of water resources by the increased use of drip irrigation as well as expanding the mechanization of the agriculture process which will help increase productivity.

Employment and wages
Al-Nour would raise the minimum wage to LE 600 as a preliminary step with the aim of bringing wages to LE 1,200 in three years. Meanwhile, the party has called for a social network built on a 2.5% contribution from the revenues of public and private establishments. The funds will be managed by an authority for social support which will distribute assistance according to need.
The party calls for the application of a progressive tax rate system and will require Egyptians abroad to open bank accounts in Egypt and to deposit no less than $300 (LE 1,805) per year.

Employment tops the agendas of both parties. Al-Nour calls for a greater focus on attracting more investments and encouraging the funding of small- and medium-sized projects that would be labor-intensive and create many jobs to help combat rampant unemployment in Egypt.
To encourage this type of investment, Al-Nour suggests giving small- and medium-sized projects incentives and exemptions based on their degree of labor intensity, an upward increasing incentive plan that rewards projects that employ larger numbers of people.

The funding for the projects is suggested to come from various sources, including the private sector, banks, a suggested authority for social solidarity and civil societies. Loans are suggested to be grants or to be granted musharaka (a risk and profit-sharing enterprise) with the financing entity following up and developing these projects while also establishing a marketing authority to market the products of these projects.
The FJP puts in place a short-term solution for unemployment of setting up a national fund to support the unemployed. Meanwhile the employment issue needs longer term planning and expansion in vocational training and education.

Education
The Al-Nour party calls for free education and making education mandatory for nine years to limit the number of school dropouts.
The curriculum will also be developed to make it more in touch with current events and the future educational needs and include national issues such as developing tourism awareness, political awareness and awareness of human rights, laws and the constitution.
Besides academic training, the party also calls for a focus on vocational training.

Commonalities
Both parties agree on promoting the role of the private sector and encouraging investment in small- and medium-sized enterprises as a means of creating more employment opportunities and encouraging youth to invest.
They also both support Shari’ah law as the basis for legislation, improving standards of living of Egyptians and raising the minimum wage to LE 1,200. The two leading parties also espouse self-sufficiency in strategic commodities and increasing arable land and agricultural output. bt