EGYPT: TRADE MINISTER HINTS AT BROADER POLITICAL

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 001531

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E.O. 12958: DECL: 05/21/2017
TAGS: ECON ETRD PINR PREL EG
SUBJECT: EGYPT: TRADE MINISTER HINTS AT BROADER POLITICAL
AMBITIONS

REF: A. CAIRO 1417

B. CAIRO 1462

Classified By: DCM Stuart Jones for reasons 1.4 (b) and (d).


1. (C) Summary: In a pointed and wide-ranging speech to the
American Chamber of Commerce in Egypt, Trade and Industry
Minister Rachid Rachid called for reform of Egyptian
education, infrastructure, energy policy, and other areas far
removed from his trade portfolio. The ambitious speech
encouraged speculation that Rachid, a leading economic
reformer, hopes to replace Prime Minister Nazif during the
next cabinet shakeup. End Summary.


2. (SBU) Minister Rachid Mohamed Rachid had been scheduled
to speak to the AmCham May 15 in a periodic address on a
conventional subject, "The Ministry of Trade and Industry in
a High-Growth Economy." But he began the talk to the
capacity lunchtime audience by framing his remarks, jokingly,
as part of a campaign to run for AmCham president. Joke or
not, the range and tenor of the speech was at least Prime
Ministerial, if not Presidential (ref A).


3. (U) Rachid began by recounting his successes. Exports
increased 46 percent last year alone, while investment in
industry has increased nearly sixfold since his first AmCham
speech in 2004. He cited new training programs for Egyptian
workers and free-trade agreements with Europe, Arab countries
and Africa, as well as the Qualified Industrial Zone (QIZ)
agreement with the United States. New registrations of
small-to-medium enterprises have risen from 800 a week in
2004 to 2,200 a week this year, he said.


4. (U) He then turned to his concerns, "points in my mind
that sometimes wake me up at night." The concerns dealt with
areas outside of his purview as trade minister, although he
said they do concern the AmCham in its role as a partner for
government in creating a positive business environment.


5. (U) At the top of Rachid's list of concerns was
education. He noted that Egypt simultaneously has high
unemployment but a shortage of workers with the right skills.
Energy policies are also failing to meet the demands of an
expanding economy, he said. And while bank restructuring is
making progress, the Egyptian banking system still needs to
move more money into communities, he said.


6. (U) Rachid was particularly critical of infrastructure in
Egypt. "The China story is about infrastructure. The
Malaysia story is about infrastructure. Everywhere in the
world today, any developing country understands that
infrastructure will make it or break it." Market discipline
is another shortcoming, he said, arguing that the large size
of the informal economy is hindering economic development.
And inflation is hurting average Egyptians, he said:
"Millions of people in Egypt have not yet seen the reward of
our economic reform. It is unfortunate that they are seeing
the bad side of it and we cannot ignore that."


7. (U) Rachid warned that the government of Egypt is failing
to recruit the best young people to careers in public
service. In contrast, he mentioned meeting a 27-year-old
deputy minister of trade during his recent visit to
Kazakhstan (ref B) and added that Egypt should ensure people
in their twenties and thirties could be ministers. (Audience
members at one VIP table squirmed uneasily at that notion.)
The private sector, which now has a place of primacy in the
economy, needs to assume commensurate leadership in the area
of social responsibility, Rachid said. Likewise the private
sector should not tolerate companies that cheat on taxes,
violate labor laws, and respect consumers.


8. (U) Rachid's ninth concern was "messaging" -- or
explaining to average Egyptians the goals of reform -- and
the last point on his list, encapsulating the rest, was to
secure Egypt's place in the world economy. That place, he
said, should be firmly in the "second tier of developing
countries" alongside China, India, Brazil, and South Africa.
"But we have to work hard to get there," he said.


9. (U) Questions focused on a similarly broad range of
subjects from natural gas prices to labor unrest to the
future possibility of free-trade talks with the United
States. In response, Rachid referred to Ambassador
Ricciardone's introductory comments that US-Egyptian trade is
growing robustly. "If that is going to continue to happen, I
am very happy," he said. "We should judge the relationship
between us and the United States or any government by the
results, not by the number of agreements that we sign."

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10. (C) AmCham members continue to gossip about the speech.
Ahmed Sahmy, head of HP in Cairo and a candidate for the
AmCham board, told Econcouns sotto voce the following day
that the speech "was a prime ministerial speech, not a speech
by the minister of trade."


11. (C) Comment: While Rachid critiqued the full range of
Egyptian economic issues, he said not a word about freedom,
democracy, or politics in general. That could be read as a
reflection of his focus on business or the GOE's overall
reform priorities. However, it is most likely just an
indication that as a politically ambitious minister, he knows
which subjects are safe for poaching and which are best left
alone.
RICCIARDONE