AMENDING THE NGO LAW AND REVAMPING THE BREAD

C O N F I D E N T I A L SECTION 01 OF 02 CAIRO 002200

SIPDIS

SIPDIS

NSC STAFF FOR WATERS

E.O. 12958: DECL: 07/17/2017
TAGS: PGOV PHUM KDEM EG
SUBJECT: AMENDING THE NGO LAW AND REVAMPING THE BREAD
SUBSIDY: THE LABORS OF MINISTER MOSELHY

REF: A. CAIRO 2067

B. 2006 STATE 200959

Classified by Ambassador Francis Ricciardone for reasons 1.4
(b) and (d).


1. (C) Summary: Minister of Social Solidarity Ali
El-Moselhy informed the Ambassador that he had initiated GOE
studies to revise the NGO Law (84/2002). The Ambassador
pressed Moselhy to seek an amended NGO law that protects and
expands freedom of association and operations by all
legitimate non-governmental organizations, and provided a
copy of the USG's ten "Guiding Principles for NGOs." Moselhy
also briefed the Ambassador on his ongoing efforts to revamp
the GOE's costly bread subsidy. End summary.


2. (C) In a July 15 call on Minister Moselhy, the
Ambassador, accompanied by USAID/Egypt Acting Director,
Justice Attache, and poloff (notetaker),pressed the GOE to
ensure that any revision to the NGO law (Ref A) be in accord
with the USG's "Guiding Principles on Non-governmental
Organizations (Ref B)," and urged that groups currently
operating as civil companies be assured of continued legal
operations. The Ambassador gave Moselhy a copy of the
"Guiding Principles," which the Secretary announced in
December 2006. Moselhy welcomed and carefully perused the
document. While he offered no direct comment about the
"Principles," he told the Ambassador that he supports "the
right of NGOs to advocate and educate." He said that he
hopes that any new legislation will give NGOs "double the
space and triple the freedom" but that it should also demand
accountability by the NGOs, both in terms of their financial
controls and in terms of the results of their work.


3. (C) Moselhy said that only 2000 of Egypt's 26,000
registered NGOs are currently active. He praised several
charitable and development organizations (including
charitable foundations run by the Sawiris family and
businessman Farid Khamis, as well as the Hoda Sha'rawi and
Awladi organizations),but he also decried other unnamed NGO
leaders whom he accused of "a filthy pursuit of easy money"
by their attention to "issues a la mode."


4. (C) Regarding the process and timeframe for any revision
to the NGO law, Moselhy said that the issue was a priority
for the GOE, but "not urgent" like the revisions to the
election law or the new anti-terror law. Moselhy said that
revising the NGO law was his own initiative, and that he aims
to have his ministry's input for the draft law ready by
September, so that the Ministry of Legal and Parliamentary
Affairs can prepare the actual draft legislation in time for
the re-opening of the People's Assembly in November. Moselhy
emphasized that he is not seeking to dominate the process by
which his ministry solicits input for the new law. He
asserted that Egyptian NGO experts (such as lawyer Mona
Zulficar, who also serves on the National Council for Human
Rights),as well "review teams that the U.S. government is
supporting" (an apparent reference to the United Group, a law
firm that has received USAID support to review the NGO law)
will be providing the key inputs for the NGO law revision.
Moselhy noted that he looked forward to continued
consultation with the Ambassador, Embassy officers, and USAID
staff on the issue of amending the NGO law.


5. (C) Turning to the issue of Egypt's bread subsidy,
Moselhy lamented that May strikes at Giza mills had forced
the temporary halt of his effort to expand a successful pilot
program (in Alexandria, Ismailiya, and Minya) to replace
Egypt's costly and ineffective subsidized flour mills and
bakeries with targeted welfare payments to the most needy
that would allow privatization of Egypt's flour mills, 80
percent of which are still public enterprises, as well as the
remaining state-owned bakeries. Moselhy asserted that needy
working class Egyptians who would receive cash payments in
lieu of the bread subsidy would be happy to pay for higher
quality bread at market rates. Moselhy said that the current
bread subsidy costs the GOE LE 9 billion per year (about 1.7
billion USD),and that he, Minister Rachid (whose Ministry of
Trade handles wheat procurement from abroad) and Minister
Mohieldin (whose Ministry of Investment handles privatization
issues) are firmly committed to revamping the bread subsidy
because of the significant savings, and improved service
delivery that they believe can be achieved.


6. (C) Comment: Moselhy characterized the amendment of the
NGO law as "easy" compared to reform of Egypt's bread
subsidy. (Egyptians from all walks of life invoke the 1977
bread riots--when Anwar Sadat's effort to revamp the bread
subsidy led to violent street protests which the army quelled

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with heavy loss of life--as the leading example of how
economic dislocation can spur the traditionally tolerant
Egyptian citizenry to revolt.) In addition, Moselhy may not
have wide support within the GOE for his effort: Minister of
Finance Yousef Boutros-Ghali has told us that, given the
risks of tampering with the bread subsidy, he believes that
the GOE should focus its subsidy reform energies on reducing
Egypt's fuel subsidy, which costs the GOE approximately LE 40
billion per year.
RICCIARDONE