Remarks Before the American Chamber of Commerce in EgyptRemarks
Robert D. Hormats
Under Secretary for Economic Growth, Energy, and the Environment
Cairo, Egypt
August 29, 2012
Thank you very much for this opportunity to address such a distinguished group of leaders of the business community here in Cairo.
Thank you to the U.S. Egypt Chamber of Commerce, which I have had the pleasure of addressing here before.
I'm also pleased to welcome members of the Egyptian Business Development Association, who are joining us here this morning.
I’m also delighted to be here with Ambassador Patterson. She is one of the truly great Ambassadors of our era, and a very good friend as well.
I’m also pleased to be joined by an extraordinary delegation of senior officials from the United States Government:
Middle East Transitions Coordinator Ambassador Bill Taylor;
USAID Assistant Administrator Mara Rudman;
Assistant U.S. Trade Representative Dan Mullaney;
OPIC Vice President Robert Drumheller, and
Deputy Assistant Secretary of the Treasury Andy Baukol.
It is an honor to speak to you in the midst of such historic changes and opportunities in Egypt. This country’s political and economic transformation has required, and will continue to require, difficult decisions on an array of complicated but profoundly important issues.
Only Egyptians can address these issues and make these decisions. But we have come to Egypt, as Secretary Clinton said in July, to reaffirm the strong support of the United States for the Egyptian people and for Egypt’s democratic and economic transition -- recognizing that success in one supports success in the other.
We have come here to begin a practical and concrete dialogue on how we can come together to help create a strong economic foundation for a democratic Egypt, for an Egypt that provides new and broadly shared opportunities for its population, and for our partnership.
We have deep shared interests in
Egypt’s ability to expand job opportunities and additional skills training for its people; and
Egypt’s increased integration into the regional and global economy through the growth of trade and investment.
The United States has a wide range of capabilities to bring to bear:
our desire to provide significant amounts of direct financial and development support; and
our efforts to strengthen Egypt’s trade and investment ties with the United States and the rest of the world in order to create new job opportunities for the people of Egypt and support Egyptian companies.
EGYPT IN HISTORICAL CONTEXT
In times of transition, it is all too easy to get absorbed in the many challenges of the moment – losing perspective about the underlying strengths of this great country.
It is worth taking a step back to put the past year and a half in the context of Egypt’s deeper history.
I have been a frequent visitor to Egypt since the early 1970s. I have traveled to many parts of this nation – up and down the Nile and to Sinai and the Western Desert. Each time I learn more about this country’s rich history and its people.
For millennia, Egypt has made significant contributions to the progress of mankind. As a junction between East and West, North and South, Egypt has been a crossroads for diverse peoples, goods, and ideas.
The source of this continual innovation has always been the ingenuity and resolve of the Egyptian people. Egypt was a leader in scientific discoveries and innovations that defined the foundations of many fields, including astronomy, mathematics, chemistry, medicine, and, of course, engineering. The Library of Alexandria, constructed in the third century BC, was a center of knowledge that for centuries gathered scholars from all over the world.
This thirst for knowledge and achievement of the Egyptian people can still be seen today.
Egypt also has, of course, experienced its share of tumultuous times. But faced with each setback or crisis, Egypt has redoubled its efforts, drawn from the dynamism of its people, and emerged stronger and more resilient than before.
EGYPT TODAY – CHALLENGES AND OPPORTUNITIES
Today Egypt faces many new challenges, but also many new opportunities.
One of the key and most immediate challenges is stabilizing the economic and financial situation. Achieving this is vital to providing a solid base for sustainable and inclusive growth.
Egypt also faces the need to increase domestic investment, and attract more overseas investment. That is vital to boost growth, ensure diversification of the economy, and create new jobs. To do this during a period of downturn in large parts of the global economy is difficult. Doing so during a period of dramatic internal change makes it doubly difficult. But it can be done.
Improving the country’s business climate is one of the principal ways to encourage domestic and foreign investment. Doing so through such steps as regulatory reform, and maintaining and open and stable investment climate, can over the course of the next several years bring far more resources, and far more new technologies to Egypt than foreign loans or foreign assistance could bring. We plan to help on all these fronts.
President Morsi, through his Renaissance Plan, has indicated his desire to adopt a serious and impressive economic reform agenda. This agenda has highlighted reform of the banking sector, support for small and medium-sized enterprises and enabling women to play a greater role in national development.
With a president, a prime minister, and a cabinet ready to engage, now is the moment for Egypt and the United States – and indeed the wider the international community as well -- to work together with renewed commitment and energy on several levels and in several ways:
We welcome Egypt’s engagement with the IMF as a first step toward securing financial support for a robust, Egyptian-led stabilization and economic reform program that will reinforce confidence among international lenders, potential donors, and private investors. Just as importantly, it will provide a foundation for sustained growth and inclusive economic opportunity.
And the World Bank has identified several ways it can provide support for Egypt. It also has supported ways to improve Egypt’s business climate. In particular, the Bank has suggested streamlining regulatory processes for businesses, developing infrastructure, and advancing tax reform.
Egypt could also benefit from facilitating additional franchising agreements. For example, the U.S. company Dairy Queen has opened four outlets in Egypt. It plans to expand further, capitalizing on U.S. financing, bringing more jobs, entrepreneurship opportunities, and training. Other franchises could do the same.
Bankruptcy reform could also benefit Egyptian business. People should reap the rewards of their success; but, if they fail they should be given the opportunity to try again. Easing the ability to obtain construction permits and clear procedures for the enforcement of contracts would also produce new investment and jobs. So could additional progress on dispute settlement reform.
The Egyptian marketplace would also benefit from meaningful trademark and other types of intellectual property protection. This will sustain an innovative society and support Egypt’s entrepreneurs.
THE US --EGYPT’S PARTNER FOR FUTURE PROGRESS
President Obama and Secretary Clinton have both expressed their commitment to support Egypt’s democratic transition. They want to ensure that the United States is a partner of the Egyptian people and their leaders in building the New Egypt.I am here because I share that goal – as do the other U.S. officials on our team. We want to use this visit to make concrete progress in advancing our common efforts.
The American people have a deep reservoir of goodwill for Egypt. We want to demonstrate our friendship and our partnership through concrete actions, and build a relationship based on mutual interests and mutual respect.
We believe that Egypt’s transition to democratic governance has given both of us new opportunities to talk sincerely about our shared values and interests.
Our trip to Egypt this week is focused on making concrete progress on the timing and details for the support that already has been described by President Obama and Secretary Clinton.
My colleagues and I have listened carefully to what the leaders and people of Egypt have said about this country’s needs.
In our meetings over the past two days, we have heard from leaders of your government, and other Egyptians in the business sector and civil society, about your most important and urgent economic priorities. Egypt’s priorities are where we want to focus our attention.
To address a top priority, the United States is working to help relieve Egypt of part of its immediate fiscal and balance of payments pressure in support of the Egyptian government’s own, home-grown reform plan. As with all our assistance, our discussions will be conducted in very close consultation with our Congress and anticipating a supportive overall environment.
Other bilateral initiatives will focus on helping to unlock the potential for sustained growth in Egypt’s small and medium-sized enterprises, or what we call SMEs. We want to do this for Governorates throughout this country.
The Overseas Private Investment Corporation, or OPIC, is the U.S. government’s development finance institution. It has committed $250 million to an SME Loan Guarantee for Egypt. Through leveraging, the loan guarantee will support up to $700 million in SME lending by local banks and other institutions.
OPIC also has approved $125 million in financing to Cairo-based Citadel Capital to provide loans to medium sized Egyptian companies into which Citadel had invested equity -- in the transportation, finance, ICT, and consumer food sectors.
To date, OPIC has provided $300 million of insurance for the Apache Corporation’s investments in Egypt since 2004. Apache is the largest producer of liquid hydrocarbons and natural gas in the Western Desert and the third largest in all of Egypt.
The United States is also supporting SMEs in Egypt through USAID’s Egypt Competitiveness Project. Through this new partnership, announced in November 2011, USAID will work with HSBC Bank to offer $34 million to SMEs. USAID has programs in many parts of this country, including Upper Egypt, Sinai and other regions.
A new United States-Egypt Enterprise Fund also will foster stronger investment ties, leverage other investors, and help Egyptians launch and grow SMEs. The initial capitalization of the fund will be $60 million. We expect that amount to grow significantly.
Enterprise Funds were initially established to promote private sector development during the democratic transitions in Eastern and Central Europe. We see similar possibilities in Egypt.
USAID continues to fund projects across Egypt to help improve health and education, including in Sinai and Upper Egypt. In Sohag, USAID has installed or upgraded potable water services in homes, improving health, sanitation and convenience, and creating 116,000 labor-days of employment. In Sinai, USAID has funded the construction of 54 schools and partnered with the Ministry of Education to improve vocational training for 1500 students and 135 teachers, more than 30% of whom are women.
In addition, we see opportunities to promote direct business to business connections. The US believes that Egypt is a good place to invest and sees promise in a number of areas such as information and communication technology, energy, transportation, port facilities and agribusiness. Egypt also can be an increasingly important trading partner in many sectors.
We are organizing a visit to Egypt of a large business delegation, in two weeks. The delegation will consist of over 100 men and women from more than 40 American companies. This group of CEOS and top executives will meet with senior government officials and business leaders to explore new partnerships, investments and trade opportunities.
In the coming months and years, you, the leaders of the business community here, will have an historic opportunity to support a rejuvenated Egypt. You are ideally suited to send the signal to the rest of the world that Egypt is open for business. We will help you carry that message to potential partners in our country.
CONCLUSION
In sum, we see new opportunities for cooperation and partnership with Egypt. This moment presents an historic opportunity to work together to help Egypt address pressing financial issues in the near term and generate more inclusive growth and new employment opportunities now and over the medium and longer term.
The groundwork has been set with a new political leadership, a new level of energy and new opportunities to reform.
And, as in other nations, including my own, progress will only be possible if the talents of all citizens are drawn upon and all have a voice – men and women, all religious groups, all age groups, and all parts of the country. And, as in other nations, economic reform can only work, if it is based on a partnership among business, government and workers, and is grounded in sustained communication, mutual respect, and mutual confidence.
Egypt is continuing its transition. It will no doubt encounter additional challenges. Periods of dramatic change always provide unexpected challenges. But this is also a moment of historic opportunity. And we are taking the long view.
The United States has confidence in the ability of the Egyptian people to overcome new obstacles, modernize their economy, and succeed in building their new democracy. And we want to work closely with the Egyptian government and people to help them to achieve these goals.
It is through these changes that a prosperous and democratic Egypt will revitalize this nation’s historic role of prominence and leadership in the Middle East and around the world.
It all of this the American government want to be your steadfast partner and through our support demonstrate our deep and heartfelt friendship.
