You are on page 1of 13

Group 3

13P027 Kushagra Grover
13P046 Tejas Shah
13P233 Sahil Vij
Flow of the Presentation
• Why is Egypt important
• Timeline - Egyptian Crisis
• Causes of Collapse - Political & Economic
• Dangers in current trajectory of economy
• Implications for foreign companies
• Actions for Government to attract foreign capital
• Risks involved with these actions

Why is Egypt imp? ( For US, Europe &
World)
• Egypt is the home of Suez canal and Sumed Pipeline
which are known as “World Oil Transit Chokepoints”
as on EIA website
• 7.5% of sea trade passes through the Suez canal
• 20% of which is oil tankers and 6% is natural gas
• Sumed pipeline carries 2.5millions of barrels/ day
• 2/3
rd
of Europe oil passes through Egypt
• Only two direct routes for crude oil from Red sea to
Mediterranean Sea
• Example: Oil prices rose above $100 in July 2013 due
to unrest in Egypt


Timeline
•Mohamed Bouazizi, a twenty-six-year-old college graduate in Tunisia, sets
himself on fire
December 2010
•The Arab Spring Begins
January 14, 2011
•In Tahrir Square in Cairo, Egypt, protests call for President Hosni Mubarak to
step down
January 25, 2011
•Hosni Mubarak Resigns
February 11, 2011
•Mohamed Morsi is Elected
June 24, 2012
•Morsi Places Limits on the Military
August 12, 2012
•Morsi's Decree
November 22, 2012
•The SCAF Steps In (Military Coup)
July 3, 2013
•Interim Government Labels Muslim Brotherhood a Terrorist Organization
December 25, 2013
•Conclusion: The Revolution Continues January 25, 2014
Causes of collapse - Political
• Thirty years of dictatorship and autocratic rule
• High level of corruption
• The Emergency law
• Faulty constitution
• Emergence of the working class as the most powerful
social force in society
• Growing calls for constitutional, economic, political
and social reform
• Forging the latest parliamentary elections
• Successful revolution in Tunisia
• Unity between Muslims and Coptic Christians

60%
19.40%
13%
0%
10%
20%
30%
40%
50%
60%
70%
1984 1991 2007
Minimum wage rate as related
to per capita GNP
• At 13% in 2007, the minimum wage rate in
Egypt was the lowest in the world
Egypt Unemployment Rate
• Unemployment fell from 11% in 2004 to 8% in
2008
• It again increased to 12% in 2011
• 2.6 million people could not cover their
basic needs
Causes of collapse - Economic
Egypt GDP Growth Rate
Egypt Inflation Rate
• GDP Growth rate was around 2 – 4 % in
the early 2000s but accelerated to 7% in
2008
• Post 2010 it declined to 4% and to -4% in
2011
• Inflation rate remained at 12.8% in the
period 2004 to 2008
• It peaked at around 23% in 2009


Causes of collapse - Economic
 More aggressive turn to neo-liberal free market policies
pursued by the Mubarak regime after 2004, an agenda
dictated by the International Monetary Fund and its
overseer, the United States
 Under the direction of the president’s son, Gamal
Mubarak, this program involved two interconnected
processes:
1. Acceleration of privatisation and the destruction of
jobs in formerly state-owned industries
2. Further impoverishment of the working class
combined with a redistribution of wealth to the
upper echelons of society
Causes of collapse - Economic
Dangers in current trajectory of
economy
 Political uncertainty and anxiety over the future

 Political protest & labour strikes

 Deep mistrust between Islamist and secular parties, and Muslim-Christian tension
in some parts

 Lack of clarity of powers & co-operation between Military & ministers might lead
to repetition of happenings

 People have realized their rights, any autocratic rule might not
go a long distance


Implications for foreign companies
 Unstable environment for business


 Clumsy Bureaucracy – Execution is slow


 Uncertainty on authority, power and Constitution




Actions for Government to attract foreign
capital
 Rapid democratisation

 Restrain its borrowing from World Bank & IMF

 Empower industries - issuing laws and regulations – easier norms initially

 Emphasis on Corporate Governance

 Spending on safety of tourists so that travel helps them gain
momentum (12 % Egypt’s workforce)

Risks involved with these actions
 Domestic companies might feel the heat


 If it is not worked out in a controlled manner, will
further increase the gap between the rich and the
poor


 Agriculture & Rural areas might be neglected





"Bread, freedom, Social justice"