Egypt’s New Crisis: The Economy

By Michael Downey

Since the beginning of the protests that ultimately brought down Hosni Mubarak, Egypt's  tourism industry, which makes up one-tenth of the country's GDP of about 217 billion, has collapsed. The other pillars of Egypt's economy, foreign investment and fees from the Suez Canal, have also taken serious hits.

“We are happy for freedom, but freedom is expensive.  I’ve made almost nothing since the protests started,” says Ibrahim Khairy, an owner of five hotels in Cairo.

In fact, Khairy has only had one guest in his 30-room Arabian Nights hotel in Islamic Cairo, and just two in his 20-room Egyptian Nights hotel near Tahrir Square.  Khairy’s other three hotels have remained completely empty.

Ibrahim said the cost of rent, salaries, maintenance, electricity, and water combined, is over 75,000 EGP (about 12,800 USD) per month for all his hotels, a sum that will be difficult to amass before the 1st of March.

He explained, “I will try to extend the due date for the rent and I will have to cut salaries in half. But it’s not just me, everyone will have to do this.”

Another local businessman, Hany Hassan, owns Misr International—an agency that finds apartments and tourist services for foreigners—and the Egypt Arabic Center—offering lessons to those who wish to learn Arabic.  Here, many of the students were either U.N. workers, embassy staff members, or studying at AUC.

After the protests Hany said, “Everyone left. Last month I had 20 students and I made about 8,000 pounds. I only founded [the Center] two months ago and it was going very well; it looked like I was going to be able to make back my initial investment of 75,000 pounds.” Now, rent and salaries are the primary concerns for both business owners and employees.

“Since the owner of the building wants all the rent, I have to get it to him or I’ll lose everything. That means I am going to have to cut my employees salaries in half until things get better. Those who said no to the deducted pay, I gave them their full salary but I had to let them go. I just can’t afford that when I don’t know when things are going to get better,” Hany explained.

Since his interview on the 24th, Hany has seen some improvement; there may still be prospects on the horizon.

“I’ve gotten some requests about the school and one person looking for an apartment. I hope they will come back, but they only will if the people believe there is peace and security.”

In fact, peace and security are returning to Egypt, but there is still much uncertainty about the future. Demonstrations have continued while protesters call for the complete removal of the government, preferring to install technocrats in their place until elections are held in September. In Tahrir square on the 25th of February, one young protester exclaimed “The head is gone but the body is still here!” meaning that although Mubarak is no longer in power, the old regime remains in place.

A prominent youth activist, Gigi Ibrahim, who has caught the eye of the international media, said the three most important things to achieve free and fair elections are “[to] dissolve parliament, end the current government (while installing a temporary, technocratic one), and end the emergency law.” She has also expressed her suspicion of the army, stating, “I do not trust the high figures of the military. They’ve been in power since 1952 and they are not innocent.” Yet the 24-year-old also stressed that “Six months isn’t enough [to prepare for elections]. There needs to be more time to reform the constitution, at least a year.”

With uprisings in neighboring countries threatening stability in the region, Egypt must also cope with the domestic burden posed by a massive influx of Libyans fleeing the brutal violence perpetrated by longtime dictator, Muammar Gaddafi.

“I had three Libyans sleeping in my office last night; you couldn’t imagine what they’ve been through,” Hany Hassan stated.

As Egypt and other Arab countries strive for change, the problems they face may only be resolved by the passage of time.  However, these changes will come at a price; the question is, how long will people wait for reform as their economies suffer?

Michael Downey's most recent contribution to the WorldPolicy blog was an interview with Khaled Hamza, the editor of the Muslim Brotherhood's official website. 

Photo by Michael Downey

Related posts

We’d like to get to know our readers a bit better as we work on some exciting new projects this year.

Please take a few minutes to complete World Policy’s 2018 survey!