Infitah

''Infitah'' ( ', "openness"), or Law 43 of 1974, was Egyptian president Anwar Sadat's policy of "opening the door" to private investment in Egypt in the years after the 1973 October War (Yom Kippur War) with Israel. ''Infitah'' was accompanied by a break with longtime ally and aid-giver the USSR—which was replaced by the United States—and by a peace process with Israel, symbolized by Sadat's dramatic flight to Jerusalem in 1977. Infitah ended the domination of Egypt's economy by the public sector and encouraged both domestic and foreign investment in the private sector. ''Infitah'' was later adopted by other countries in the 1970s and 1980s.

The Egyptian Army crossed the Suez canal in the October 1973 Yom Kippur War. Despite the inconclusive outcome, many saw the crossing as a political victory for its initial successes. It gave Sadat the prestige to initiate a major reversal of Gamal Abdel Nasser's policies.

Overview

During the 1950s and 1960s, in the midst of the Cold War, some countries along the Middle East were seeing waves of Arab nationalism in Egypt, Yemen, Syria, and Iraq when aligning with the Eastern Bloc. These governments emphasized ideals like Arab socialism and centered their economic planning on reducing dependencies of foreign exports in favor of nationalizing foreign interests. Moreover, the development of the private sector was to start with the development with the public sector, pushing forwards an economy centered and controlled by the state.

Yet the oil crisis of the 1970s provided a huge influx of capital to oil-producing states along the Gulf, like Kuwait, Saudi Arabia, and Iraq. Roger Owen highlights how total revenues from these states went from $9.3 billion in 1972, the year before the embargo, to $170.7 billion in 1980. Samih Farsoun highlights how these reserves created a dynamic where oil-rich states, in need of leveraging this newly-found capital to invest in a wide variety of projects, would provide capital into oil-poor states for their migrant labor. By the 1970s, critics believed that Egypt's economy, with its large public sector, had evolved into a "Soviet-style system" of "inefficiency, suffocating bureaucracy, and waste." These factors, in turn, encouraged Sadat and later others like Sudan, North Yemen, Syria, and Iraq, to prioritize drawing in capital and thus, abandon the Eastern bloc to gravitate towards the Western bloc.

Sadat also wanted to turn Egypt away from its focus on war with Israel and devotion of resources to a large military establishment. He believed that capitalist economic policies would build a substantial private sector and that alliance with the United States and the West would lead to prosperity (''rakhaa'' ) and eventually democratic pluralism.Tarek Osman, ''Egypt on the Brink'', p.65 Sudan, North Yemen, Syria, and Iraq later introduced similar ''infitah'' reforms like in Egypt.

Shortcomings

The implementation of Infitah is generally considered to have been flawed in its over-ambitiousness and its appearance of having abandoned "solidarity with the poor." The government rewarded its cronies and allies (many of whom became quite rich) and built a power base loyal to the regime with concessions on land, goods and commodities; mandates and contracts to agencies and dealerships but did little to create free markets and an open economy. Millions of previously poor Egyptians who had joined the middle class under the Nasser regime through education and jobs as doctors, engineers, teachers, lawyers, journalists for the government or parastatals, were left stuck in an "increasingly marginalized, stagnant and low-paying public sector," under Infitah. Infitah was a shock to the Nasser-era middle class, reversing the socialist principles of Nasserism, seeming to revoke policies of free education, social equality, abolition of feudalism, nationalization of land and industry, and progressive taxation. At the same time the public sector continued to dominate the economy. The proportion of the population working for the state grew from 3.8% at the height of the Nasserite era to 10% (about 35% of the country's entire labor force) after the full thrust of Infitah in the early 1980s. Despite promotion of foreign private investment, the "state's contribution to the formation of investment capital" (72%), barely changed from the mid-1960s to the end of the 1970s.

According to author Tarek Osman,

"Infitah's main fault was that it was over ambitious. It failed to recognize the complexities of Egypt's socio-economic conditions ... It ignored the limitations of the country's administrative system and the power of the military establishment ... the mismatch between the skills of the Egyptian middle class and the various economic opportunities springing up as a result. . . . As such, it was an unrealistically rapid developmental program that was doomed to fail."Tarek Osman, ''Egypt on the Brink'', p.125

In 1977, negative public reaction to Infitah policies led to massive spontaneous riots involving hundreds of thousands of Egyptians when the state announced that it was retiring subsidies on basic foodstuffs. On 6 October 1981, Sadat was assassinated during a military parade in Cairo.

See also

*Anwar Sadat
*Arab socialism
*Gamal Abdel Nasser
* History of modern Egypt
*Liberalization
*Nasserism
*''Perestroika''
*Privatization
*Yom Kippur War

Notes

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External links

The Politics of Economic Strategy: Egypt

Anwar Sadat
Economic history of Egypt
1970s in Egypt
Middle East peace efforts
Egypt in the Arab–Israeli conflict