Oral History Interview of Ibrahim El-Issawy

Abstract

In this interview, Issawi attempted to retrace the history of the NPI. Founded in 1960, its role was to assist the Ministry of Planning by conducting research work in different areas of the economy. Issawi mentions, indeed, that the Institute elaborated the first input-output tables for the Egyptian economy. It acquired early in the 1960s the first computer to be introduced in the civil sector in Egypt (IBM 1620). The Institute also aimed at training government officials and young graduates in economic planning, since Egypt was lacking specialists in that specific area. The Institute gathered Egyptian economists from different tendencies, (from right to left wing) like Nazih Deif, Mohamed Mahmoud el-Imam, Salah Hamed and Ismail Sabri Abdallah who was appointed as the head of the Institute in 1969. It also benefited from the knowledge and experience of foreign experts who were sent to Egypt during the implementation of the first Five-Year plan (like Bent Hansen and Jan Tinbergen). Assessing the economic policies followed in the 1960s, Issawi argues that there was no comprehensive planning, in the true sense of the word: in fact there was neither price planning, nor consumption planning, social planning, or regional planning. The organism established for price planning – Jihaz Takhtit Al-Ass’ar – stopped its activities shortly after its creation, with the launching of the Infitah policies. As for regional planning, it was never really put into practice. In the early 1970s, Egypt was divided into 7 regions (different from the governorates), as a basis for regional planning. But in fact, this was not followed by practical steps for the elaboration of development policies adapted to each region. According to Issawi, the absence of such planning accounts for the deep economic distress found in Upper Egypt. According to Issawi, the 1967 war brought a shift in the economic policies followed by the regime, as all resources were mobilized for the war effort. Besides, the regime adopted a more conciliatory stance towards the private sector. Issawi argues that this policy benefited a fringe of the bourgeoisie which had started to make its fortune in the 1960s in sectors like wholesale trade and the construction sector. This group managed to accumulate wealth as early as the 1960s through the partnership between the public sector and private enterprises, through legal and illegal means. However, the radical shift occurred with Sadat’s era. Following the October 1973 war and the oil-boom, Egypt’s labor force massively migrated to Gulf countries. On the international level, Egypt broke its alliance with the Soviet Union and was getting closer to the United States. The economic reforms undertaken during that era put and end to the domination of the public sector on Egypt’s economy and encouraged domestic and foreign investment in the private sector. Sadat’s closer associates (among whom, for instance, Abdel Aziz Hegazi) were indeed arguing that Egypt had to encourage foreign investments in the economy to compensate for the lack of savings. According to them, Egypt had to take advantage of the economic boom occurring in the Gulf countries and change its economic policies accordingly. According to Issawi, with the growth of the private sector and, more generally, the shift in economic policies during Sadat’s era, the Ministry of Planning stopped playing any central role in orienting the Egyptian economy. Its role became limited to investment planning in the public sector and government administrations. Five-year plans were elaborated, but they were not implemented. Besides, the relation between the NPI and the Ministry became much looser. In 1982, an economic Congress was organized at the initiative of the newly elected president Hosni Mubarak. Kamal El-Ganzouri was at that time Minister of Planning. Economists from various political tendencies attended that meeting, among whom Ibrahim Helmy Abdelrahmane, and Issawi. According to him, the Congress was marked by a wish to break with Sadat’s economic policies, and to return to planning as a way of managing the Egyptian economy. Indeed the NPI was asked to collaborate in the elaboration of the following Five-year plan. But the ministry made little use of the research work done by the Institute; the discourse about the return to planning proved illusory and remained a slogan. Starting from the 1980s, the State started progressively to decrease its investments in the public sector. The main justification for such a policy, which was encouraged by the IMF and the World Bank, was that the financial resources were limited and that the priority had thus to be given to the private sector. Starting from the 1990s the government started officially to express its intention to proceed with privatizations. In that context, the role of the Ministry of Planning became confined to allocating state funds to the different sectors (health, education, police, etc.)