ALEXANDRIA: CONSENSUS OF VIEWS ON

C O N F I D E N T I A L ALEXANDRIA 000721

C O R R E C T E D C O P Y ( HEADING ADDING ADDEES)

E.O. 12356: DECL:OADR
TAGS: PGOV ECON KISL EG
SUBJECT: ALEXANDRIA: CONSENSUS OF VIEWS ON
THE PROBLEMS FACING EGYPT: THE ECONOMY


1. CONFIDENTIAL - ENTIRE TEXT.


2. SUMMARY AND COMMENT: DURING A DAY-LONG SERIES OF
MEETINGS OCTOBER 17, CG SCHELL AND VISITING NEA/EGY
DIRECTOR SURBER HEARD FROM A CROSS-SECTION OF OUR
REGULAR LOCAL CONTACTS THAT THE MOST SERIOUS PROBLEM
FACING EGYPT TODAY IS THE ECONOMY, MORE SPECIFICALLY,
THE LACK OF EMPLOYMENT OPPORTUNITIES. OUR CONTACTS WERE
ALMOST UNANIMOUS IN THEIR VIEWS THAT ISLAMIC
FUNDAMENTALIST MILITANCY DERIVES MUCH OF ITS MOMENTUM
FROM THE FRUSTRATIONS AND HOPELESSNESS WHICH ATTEND THE
CURRENT SITUATION. THEY ALL RECOGNIZED THE NEED TO
CONTINUE THE PROCESS OF ECONOMIC REFORM AND TO CREATE
JOBS AND A FUTURE FOR EGYPTIANS. COMMENT: THOUGH NOT
NEW, THEIR MESSAGE WAS NONETHELESS REMARKABLE FOR ITS
UNIFORMITY. END SUMMARY AND COMMENT.


3. THE ALEXANDRIANS WHO MET WITH NEA/EGY DIRECTOR
SURBER AND CG SCHELL OCTOBER 17 REPRESENTED A
CROSS-SECTION OF OUR LOCAL CONTACTS. THEY INCLUDED THE
MAYOR OF ONE OF ALEXANDRIAS SIX DISTRICTS, THE DIRECTOR
OF AN A.I.D.-FUNDED SMALL BUSINESS PROJECT, SEVERAL
YOUNG AND SUCCESSFUL BUSINESSMEN, A MEMBER OF THE SHOURA
COUNCIL, AND A MEMBER OF THE PEOPLES ASSEMBLY, WHO IS
ALSO AN ACADEMIC.


4. A CONSENSUS EMERGED FROM THE SERIES OF INDIVIDUAL
MEETINGS WE HELD; NAMELY THAT THE ECONOMY IS THE MOST
SERIOUS PROBLEM FACING EGYPT TODAY AND, SPECIFICALLY,
THAT THERE IS A CRITICAL NEED TO ADDRESS THE
UNEMPLOYMENT PROBLEM AND INCREASE THE ROLE OF THE
PRIVATE SECTOR. THE DISTRICT MAYOR, A HARD-WORKING
PUBLIC SERVANT HEAVILY-INVOLVED IN LOCAL PUBLIC WORKS
PROJECTS, STATED FLATLY THAT THE UNEMPLOYMENT PROBLEM
WAS BEYOND HIS LOCAL RESOURCES. THE A.I.D. PROJECT
ADMINISTRATOR, WHOSE PROJECT PROVIDES LOANS FOR SMALL
BUSINESSES, SAID THAT EVERY 1,690 L.E. (APPROX. USD 510)
HE LOANS CREATES ONE NEW JOB. HE WAS AN AGGRESSIVE
ADVOCATE OF JOB-CREATION AND THE ROLE OF THE PRIVATE
SECTOR IN RESTORING THE AILING ECONOMY. HIS VIEWS WERE
ECHOED BY THE YOUNG BUSINESSMEN AND BY THE SHOURA
COUNCIL MEMBER, WHO ARGUED FOR EXPANSION OF THE
A.I.D.-FUNDED PROGRAM AND TOLD US THAT THE MAIN
CHALLENGE OF HIS COUNCIL WAS TO "CONTINUE THE PROCESS
(ECONOMIC REFORM) WHICH WE HAVE STARTED." FINALLY, THE
PEOPLES ASSEMBLY MEMBER STRESSED THAT ECONOMIC REFORM
WAS NOT JUST A MATTER OF GOVERNMENT DEREGULATION AND
REDUCTION OF THE PUBLIC SECTOR. HE NOTED THAT THE
BUSINESS COMMUNITY HAD TO BE READY INVOLVE ITSELF IN
OFFERING AN ALTERNATIVE TO THE PUBLIC SECTOR.


5. OUR CONTACTS ALSO AGREED THAT EGYPTS ECONOMIC
PROBLEMS, WITH THEIR ATTENDENT FRUSTRATION AND
HOPELESSNESS, WERE BEHIND THE RISE IN FUNDAMENTALIST
MILITANCY AND VIOLENCE. THEY NOTED THAT THE
FUNDAMENTALIST MOVEMENT INCLUDED A SOCIAL WELFARE
COMPONENT WHICH AIDES YOUNG EGYPTIANS IN THE PURCHASE OF
TEXTBOOKS AND IN THE QUEST FOR HOUSING, THUS APPEARING
MORE RESPONSIVE TO PEOPLES NEEDS THAN THE GOVERNMENT.
THE ONLY POSSIBLY DIFFERING VIEW WAS THAT OF THE
UNIVERSITY ADMINISTRATOR WHO, WHILE IN AGREEMENT ABOUT
THE IMPACT OF ECONOMIC PROBLEMS, ARGUED THAT EXCESSIVE
FORCE AND OVERREACTION BY SECURITY FORCES HAD ALSO
CONTRIBUTED TO INCREASED FUNDAMENTALIST POPULARITY AND
MILITANCY. (HER VIEWS ARE REPORTED SEPTEL).


6. COMMENT: ALTHOUGH OUR CONTACTS CAME FROM A VARIETY
OF BACKGROUNDS AND OUTLOOKS, THE SIMILARITIES IN THEIR
ANALYSES AND CONCLUSIONS WERE STRIKING. NO ONE ARGUED
WITH THE BASIC PREMIS OF THE NECESSITY OF ECONOMIC
REFORM, NOR WITH THE PACE OF REFORM, YET ALL RECOGNIZED
THE POLITICAL DANGERS THE PROCESS OF REFORM COULD
BRING. THEIR COMMENTS ON FUNDAMENTALISM WERE ALSO
REMARKABLY SIMILAR. END COMMENT.


7. NEA/EGY SURBER DID NOT REVIEW OR CLEAR ON THE TEXT
OF THIS MESSAGE.


SCHELL