King Tut, Egypt’s boy king, never fails to draw visitors, boosting tourism in the country. Egypt is overhauling its tourism industry in a bid to bring more foreign and domestic investment to the sector. Tourism is an essential part of the economy, employing 13% of the workforce and bringing in 19.3% of the foreign exchange.

Grit from the desert swirls around in blazing winds, as the shadows of the pyramids lengthen on the desert sands. On the other side, a salty breeze mingles with sweat as people walk along the shores of the Mediterranean, and across the shimmering streets the sun sets on this charming potpourri of history and modernity. Egypt snuggles along the beaches of the Mediterranean Sea on the North and the Red Sea on the East, with Sudan and Libya bordering on the South and West. Egypt is almost magical with stories of Pharaohs and treasure still lingering in the air, a past laden with fact and lore. But this mystic trance is snapped in the chaos of reality buzzing in the bazaars, alive with the intermingling of smoke from hookahs, kebabs cooking in spices and women perfumed with attar.

History

A royal past

The sweep of Egyptian history is enormous, filling more than 5,000 years with astounding architecture, art, literature and invaluable inventions. An Egypt populated by primitive tribes flourished along the banks of the Nile before the dynasties of the Pharaohs. The life giving river was so revered that Egypt was divided into Upper and Lower Egypt on the basis of its direction. But King Menes soon unified the two sides and with him began the rule of the Pharaohs around 3000 BC

The Pharaonic Era is divided into the Old Kingdom, the Middle Kingdom and lastly, the Modern Kingdom, a glorious age peppered with icons of history such as Nefertiti, Tutankhamen, Ramses, Akhenaton and others. But in 332 BC Alexander took the desert kingdom by storm, ending the rule of the Pharaohs. Alexander’s reign was short-lived, with his general Ptolemy taking over in 323 BC. The Ptolemaic dynasty lasted until 30 BC after which the all pervading Romans stepped in with Cleopatra leading the way. It was during the Roman rule that Coptic Christianity was born in the first century AD, through the preaching of Saint Mark. Today, Copts are the oldest Christian communities in the Middle East.

Islam was not far behind and between 639 and 642 AD Egypt became a possession of the Arabs under 'Amr ibn-al-Asi. Art and architecture flourished with mosques, minarets, domes and palaces decorating the horizon of Egypt. It was continued by the Mamelukes and the Ottomans, Turkish tribes who made Egypt the center of the Muslim world by the 14th century. Islamic rule petered off by the end of the 18th century with Napoleon’s cannons booming over the desert sands, shattering the crowns of the Turkish kings. But Napoleon didn’t last long and in 1805 Mohammed Ali of the Ottoman Turks came back with force to establish a rule that lasted until the arrival of the British.

Stepping into modern times

Modern Egypt was born in the able administrative hands of Mohammed Ali and Khedive¹ Ismail who was responsible for the building of the Suez Canal in 1869.

But if the nineteenth century rattled with such reforms, the twentieth century ushered in a colonized Egypt totally dependent on the import of British manufactured goods. Egypt gained independence in 1922, but could not completely break free of British influence. The years that followed were characterized by power struggles among three entities – the King, the British and the nationalist Wafd party.

A mosque at Port Suez stands witness to the troubled past of the Suez Canal, which today links Egypt to the world markets. One of the world’s busiest waterways, it is also one of Egypt’s main sources of revenue. In the fiscal year of 2006-2007, the Canal's revenues tallied up to $4.17 billion, a 17% year-on-year increase, with Suez Canal cities attracting 70% of investment in the industrial sector.

Resentment against the British reached its peak after World War II. They were forced to evacuate by 1947 and a Revolutionary Command Council (RCC), with Colonel Gamal Abd Al-Nasser at its lead, took over the reins of the state by abolishing the monarchy and all political parties including the Wafd. But it was in the 1950s that Egypt truly became a republic. In 1953, the Egyptian Arab Republic was declared and Abd Al-Nasser assumed the presidency in 1956.

Nasser was a charismatic leader who gained astounding popularity with the masses by propagating Arab Nationalism. His rule was a see-saw of glorious heights and the depths of failure. His triumph was the nationalization of the Suez Canal but his greatest defeat was the Israeli occupation of the Gaza Strip, Sinai and the West Bank in Palestine, which were painful losses for the Egyptians, on both the political and religion fronts. Anwar Sadat, who followed after Nasser’s death in 1970, brought about some progress by signing the Egypt-Israel peace treaty during the historic Camp David visit with President Jimmy Carter in 1978. But his liberal rule soon ended in 1981 when Islamic extremists assassinated him. Next in line was Hosni Mubarak who has had the distinction of being the longest serving Egyptian President, well loved by the people for his progressive reforms. He was elected consecutively for the next four terms and he remains in his role until today.

Culture

Of Coca-Cola and falafel

Carpet making is one of the oldest crafts in Egypt, a leading carpet producer. Egypt’s textile industry, growing at an average rate of 6.5% annually, is a key component of the Egyptian economy. It employs more than half a million Egyptians and is a crucial foreign exchange earner. Egypt's exports of textiles are estimated at $1.3 billion per year, accounting for 25% of total Egyptian exports.

All that is Egyptian cannot be wrapped up in a few words. Spanning centuries, ancient Egypt is known for its glittering dynasties, charismatic queens and kings, for scientific inventions and supernatural incidents. Egyptians are admired for the invention of paper, ink and eye make-up but also feared for curses engraved on the tombs of their eternally sleeping Pharaohs, with trespassers suffering agonizing deaths. It is a country of contrasts – tourists attired in shorts and sunglasses scour the markets, as housewives bargain animatedly from behind their veils. Skyscrapers teem with nattily dressed executives negotiating super deals with men in traditional white galabiyahs², and farmers navigate busy city junctions with donkeys and camels in tow.

Egyptian cuisine is a merging of the Middle Eastern and Mediterranean palate . Local Egyptians crowd into small snack bars to relish a plate of mashed fava beans, popularly known as the national dish, along with accompanying bread named eish masri. Corner stalls on the streets serve up kebabs, shawarma³ and falafel⁴.

Islamic mosques jostle for space with Coptic churches, while soaring billboards fill the sky. Images of colas and cigarettes are juxtaposed with those of pharaohs and President Hosni Mubarak. These are signs of an open curiosity about westernization and American culture, where 90% of the population practices Islam. But perhaps from a Western point of view, there still are kinks in the society that need to be straightened, namely freedom of the press or rights and opportunities for women. Indicators of a wealthy modern economy are many, with American food, sports, music on one hand, and overpopulation, pollution and a widening gap between the rich and the poor on the other.

Egypt is the world's largest exporter of cotton and the U.S. and the UK are its biggest customers. Its cotton exports are worth $298 million. Although China, the U.S., India, Pakistan and Brazil are the world leaders in production, Egyptian cotton is considered a premium product

Economy

Making money

Since ancient times, agriculture was always one of the main occupations of the Egyptians. Cotton dominated Egypt’s economy from the 1850’s to the 1930’s, when the country was completely dependent on long-staple cotton exports.

Cotton cultivation was introduced in the 1820s under the reign of Mohammed Ali who wanted to develop and diversify the economy through industrialization. Although industrialization was embracing other economies, Egypt did not fall under its early wave, due to tariff restrictions imposed by the British.

Until the 1950s, growth was heavily dependent on the cotton industries. Egypt then slowly became a dual economy sporting budding modern industries within the circle of a traditional society. A growing population was fast depleting the limited agricultural resources and one of the major objectives then was to divert private investment from land into industry. It was only between 1952 and 1966 that the first program of industrialization was established, led by the public sector in heavy industries such as iron, steel and chemicals. In 1961, a major policy shift brought all economic activity under the purview of the government.

The period between 1965 and 1974 was racked by internal strife and the economy suffered a setback. But then President Anwar Sadat introduced an “open door” policy that allowed decentralized decision making powers in the public sector. He also attracted foreign private capital by liberalizing financial and trade regulations. The economy began to breathe and gain some color with most public sector industries developing rapidly during the 1973-79 period.

Black gold and more…

Energy will continue to play an important role in Egypt's economy in coming years. Though Egypt’s net exports of crude oil and petroleum products have declined in recent years, higher prices on world markets have pushed Egypt's oil revenues upward. Egypt's oil and gas exports were worth $10.1 billion in 2007.

Egypt is an important producer of oil and energy but is not a member of the OPEC. Huge quantities of oil were first discovered in 1908, but used only for commercial purposes. More was found in the late 1930s along the Gulf of Suez, and the Western and Eastern deserts. This began Egypt’s role as an energy producer on the global stage.

Like most other Middle Eastern countries, Egypt was affected by the oil price rise and thus suffered the subsequent fall. The Suez Canal and the Sumed pipeline from the Gulf of Suez to the Mediterranean Sea are the two main oil routes from the Persian Gulf, making Egypt a crucial figure in the world energy markets. In the latter half of the 70s and early 80s there was a phenomenal increase in the GDP which grew at an annual rate of more than 11%, pushed up by oil exports apart from remittances, foreign aid and grants. But the collapse in oil prices by the end of the 80s restrained the GDP, which slowed down to a crawl of 2.9% per annum in the following years.

Egypt revived in the 90s when reform policies were introduced along with incentives for the private sectors. The International Monetary Fund supported stabilization and structural adjustment programs were also implemented. Apart from this, massive external debt relief resulting from Egypt’s participation in the Gulf War coalition helped the country boost its economy. Well thought out fiscal policies, reduced budget deficits and building foreign reserves helped cut down inflation.

The Egyptian economy is the fourth largest in the Arab world, drawing its strength from varied resources like tourism, oil exports and textiles. Industry forms 22% of the total national investment.

By the early 21^st century, the state controlled almost all heavy industry, with the exception of the cotton, agriculture and sugar sectors, which boosted the growth of the economy. In 2003, after a series of currency devaluations, Egypt adopted a floating exchange rate mechanism, with the Egyptian pound no longer pegged to the dollar.

Egypt has a varied economy, where sectors like tourism, agriculture and service contribute almost equally to the national production. The country relies heavily on foreign currency inflows from tourism, oil and gas exports, remittances from Egyptians living abroad, and revenues from the Suez Canal. The oil and gas sector accounts for approximately 12% of the GDP. In 2005-06 the GDP grew by 5% and by 7% in 2007.

The growth in Egypt has picked up speed since 2004 making it one of the fastest growing economies in the Middle East. The Egyptian market has opened up considerably, especially since the EU-Egypt Association Agreement came into force in June 2004. Today, the European Union, especially Germany, Italy, and France, are Egypt’s main partners for import, apart from China which accounts for 8.3% and the U.S. which accounts for 11.4% of total imports. Egypt mainly exports mineral fuels and oils, cotton, and iron and steel, while it mainly imports consumer electronic and capital goods, nuclear reactors and boilers, cereals, food products, and chemicals.

Sadly, these advances have not quite managed to touch the lives of the average Egyptian. The government has not been able to raise the living standards of the masses, and still provides subsidies for basic necessities, which have now increased due to rising international food and oil prices.

Promises to keep

Egypt faces superior challenges today, with unemployment and population growth topping the list. About 2.4 million jobs were created between 2004 and 2007 and the jobless rate fell from 10.5% to 9%, but lack of work is still rampant. Unemployment has been the result of a labor force growing at a faster rate than the demand for labor. Strangely, reports show that unemployment is higher among the literate than the uneducated. Labor strikes have become very common since a couple of years now and everyone from cement workers to university professors are part of them.

Egypt stepped into the twenty-first century with economic and social uncertainties and still faces enormous social and economic challenges. Apart from the glaring unemployment and population problems, there are underlying issues like female illiteracy which stands at about 46.9%.

The problem of unemployment is worsened by the steady rise in inflation, which has made it difficult for an equally steadily growing population to feed itself. It is doubly hard in a populous Arab country, where about 45% of the population survives on just $2 a day. With the recent rise in global food prices, the situation has worsened and with a population of 78 million the country is bursting at its seams. Early morning finds people scrambling in front of bakeries for subsidized bread. The population boom has not just affected people’s spending power but also the environment. Once swathed in bands of green, Egypt’s key cities, like Cairo, now lies clouded most of the time in dust and smoke. Highrises sprawl for endless stretches while construction goes on busily sprouting several new housing complexes.

The threads of Egypt are woven in the Bible, the Holy Quran, and the Talmud. Egyptian Jews perhaps are the oldest Jewish community in the world outside of Israel. Yet a land where three religions have converged, also suffers from periodic violence in the name of religion, politics and globalization. Globalization and the world food crisis have put enormous pressure on the government, which recently ordered the army to bake bread for civilian bakeries to prevent shortages. This led to violence and the deaths of people across the country. Bread in Egyptian Arabic is called “aish” which literally means life. The fight for bread symbolizes a desperate urge for survival, the people’s fight for life and the right to live with basic comforts.

But away from the chaos and turmoil of the city, on its fringes, lies the desert. Brimming with tales to tell but hushed with the layers of time, the sands struggle to come to terms with an ever shifting present. So like Egypt.