Egypt Brotherhood Courts Investors With Pro-Business Stance
Only a few months ago, Khairat El- shater was languishing in an Egyptian prison, put there by the Hosni Mubarak regime. Many of his businesses were shuttered.
Now the deputy general guide, or No. 2 leader, of the Muslim Brotherhood, Egypt’s dominant political-Islamic group, El-shater shuttles between meetings at one of his once-closed offices in a grimy building in Cairo’s Nasr City district. His visitors include bankers and investors from the U.S. to Australia, Bloomberg Businessweek reports in its July 11 edition.
“They all have many questions about one issue: What impact will the Muslim Brotherhood have on the investment climate?” said El-shater, 61.
Founded in Egypt in 1928, the Brotherhood has helped spawn Islamic groups across the globe, including the militant Palestinian movement Hamas. The Brotherhood’s founder, Hassan al-Banna, preached the adoption of Islamic law as the way to lift the yoke of Western domination. Because of its popular appeal and occasionally violent tactics, the group came into conflict with secular Arab states such as Syria and Egypt, where the Brothers were persecuted intermittently from the 1950s until this year’s regional uprisings known as the Arab Spring. The Egyptian Brotherhood has long since disavowed violence.
Analysts say the Brotherhood’s Freedom and Justice Party may well emerge as a power in the Egyptian Parliament once elections are held. The party said it won’t field a presidential candidate or seek more than half of Parliament’s seats.
“The Brotherhood is the largest political force,” said Samer Soliman, an assistant professor of political economy at the American University in Cairo.
The Brotherhood said it was joining political groups and activists from different stripes in protests today to press for the country’s interim military council to meet their demands, including justice for those killed in the uprising that toppled Mubarak.
The prospect of a more powerful Brotherhood has riveted global investors. The fear, said Naguib Sawiris, a Christian who founded Cairo-based mobile-phone operator Orascom Telecom Holding SAE, is that the Brotherhood will encourage “better relations with Hezbollah and Hamas, more hatred of Israel, and a love-hate relationship with the U.S.”
Many outsiders don’t know whether the Brothers will be a force for moderation or a divisive element in a traumatized Egypt. Cairo-based EFG-Hermes Holding SAE, Egypt’s biggest publicly traded investment bank, recently brought 14 managers of foreign institutional funds based in the U.S., the U.K., Africa, and the Middle East to see El-shater as part of a tour of the new political landscape.
“I believe the meeting dismissed some investors’ concerns about an extreme economic policy,” said Wael Ziada, EFG’s head of research. He said some of the investors “were positively surprised to find some of the ideas shared by the Brotherhood to be mostly capitalist in nature.”
The Brotherhood supports private enterprise, a stock market and engagement with the global economy.
“We believe in a very, very big role for the private sector,” said El-shater. The Brotherhood also wants “to attract as much investment as possible,” he said.
The group said it would create jobs by directing more investment than the previous regime did toward industries, agriculture and information technology. It wants to trim the budget deficit, projected at 8.6 percent of gross domestic product, and increase the use of Islamic bonds. The bonds technically don’t pay interest, which is forbidden by the Koran.
Objects to Injustice
Although the Brotherhood doesn’t question pro-business measures taken under Mubarak, it does object to the social injustice that resulted.
The Brotherhood’s agenda “is a generally free-market- oriented program,” said Shadi Hamid, director of research at the Brookings Doha Center in Qatar. “I found it surprising because that is not the way the winds are blowing in Egypt.”
El-shater’s own status helps. His businesses range from furniture to clothing to bus assembly to pharmaceuticals. He estimates that they employ 2,000 people.
“The Brotherhood is trying to reassure investors by saying, ‘Look, we are business owners and professionals,’” said Elijah Zarwan, an analyst in Cairo for the Brussels-based International Crisis Group.
Not all investors are comfortable with what could be an increasingly Islamic society. “Who is going to invest in a country like Iran?” Sawiris said.
Conflict for Tourism?
Others say they worry about what a stricter observance of Islamic codes would do to business.
“Tourism could be in conflict with some of the Brotherhood’s ideas,” said Aladdin Saba, chairman and chief executive officer of Cairo-based investment bank Beltone Financial.
Saba is among many business people who say they assume the Brothers will show restraint when it comes to tourists enjoying cocktails at their hotel. “I don’t think they would jeopardize” tourism, he said.
Brotherhood members may need to compromise in running the economy as well.
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