Egyptian Infitah Policy (1973, Sadat)

Introduction

Anwar Sadats Infitah policy was a reversal of Nassers policies. Nasser had presided over a command economy in which market economics were centralized and controlled by the government, with little to no private sector. Egypt had been influenced by the Soviet Union under Nasser, and its economic policies reflected the characteristics of the Communist state with its immense public sector and entrenched bureaucracy (Osman, 2010). Sadat wanted to shift away from the Soviet Union and develop a better relationship with the US. Sadat thus moved away from war with Israel to adopt a spirit of openness with its Middle East neighbor. In this manner, Sadat sought to open the private sector in Egypt, establish ties with the West, and cultivate a more diplomatic demeanor in the Middle East. However, Infitah did not go very far in the way of establishing a free market with an open economy. By the 1980s, it was vastly dependent on foreign assistance just to sustain itselfa stark reversal from the 1960s when Egypt imported only 7% of its food from abroad (Weinbaum, 1985). In 1981, the year of Sadats assassination, Egypt imports exceeded exports by more than $3 billion. Thus, Infitah was not an economic success.

The Policy

Infitah of 1973 under Sadat was an Open Door policy that meant to breathe fresh life into Egypt. Sadats political objectives were unattainable through military means, so a socio-economic policy of openness was conceived in order to bring in foreign investment and assistance, particularly from the US (Weinbaum, 1985). Infitah was a realigning of Egypts position in the Middle Eastbut it came with notable risks, such as the fact that by adopting a friendly stance to Israel and the US it estranged itself from the other Arab states. However, it was the intention of the Infitah policy to bring about positive change; as Ates (2005) notes, Sadat aimed not only to transform the economy according to the free-market model, but also to correct the deficiencies of state control and achieve integration with the world economy (p. 134). The privatization of industry would lead to wealth creationbut the risk was that it would also lead to social unrest...

Its population was increasing; its middle class had grown under Nasser; oil was there to be pumped, and the Suez Canal had reopened. With Sadat at the helm, Egypt appeared poised to attract foreign investment and enhance these possibilities for an economic boom (McLaughlin, 1978). Infitah signified a major economic restructuring that would open the door to outside investment and it was genuinely believed that it would turn Cairo into the major hub of economic activity in the Middle East (Salacuse, 1975).

Impact on Egyptian Economy

Under Infitah, 90% of all public projects were financed by foreign money (Weinbaum, 1985). Abdel-Khalek (1981) states that the impact of Intifah on the Egyptian economy was that it ushered in an era resembling a 19th century type of specializationone emphasizing oil, the Suez Canal, and tourism as the leading sectors (p. 394). The open door policy was an invitation to major foreign players to make use of what Egypt had to offer in terms of resources; in effect, it opened the door for the possibility of corporate neo-colonialism and exploitation.

Investors were not quick to leap at the opportunity, however, because of mistrust of the internal politics of Egypt, its entrenched bureaucracy and red-tape, culture clash, and the states lack of an overall sustainable vision. For instance, conservative Islamic groups in Egypt wanted alcohol banned in tourist centers; but for Western investors and businesses seeking to attract Western tourists this type of intrusion from a religious group was a severe frustration on the economic ambitions of Infitah (Weinbaum, 1985). Egypt could not make up its mind about how it would appeal to the West while simultaneously appeasing its own constituents. By seeking investment and foreign funding, Egypt made itself economically vulnerable. Thus, by 1977, food riots were occurring, as the once largely self-sufficient nation now found itself increasingly at the mercy of other nations for basic food items, having attempted to pivot away from domestic labor to international industrialization (Weinbaum, 1985). The impact on Egypts economy was thus crushing, and the social unrest that resulted was evidence of this.

Advantages/Disadvantages

Although well-intentioned, Sadats Infitah project was criticized for being overly ambitious (Osman, 2010). It also tended to award friends of Sadat and to make the rich even richer. Under Nasser, the…