Bridget McArdle McKinney*
A review of the privatization programmes, policies and legislation of the govern- ments of the Arab Republic of Egypt and the Sultanate of Oman makes an inter- esting case study comparison. Such a review reveals the unique historical, political and economic development of the two countries which created different environ- ments for privatization. While both countries have expressed active and positive sup- port for privatization, due to these historical, political and economic developments, each has adopted a different approach to the issue of implementation. The root of Egypt's privatization programme, policies and implementation is in many ways, in fact, a "reprivatization" of commercial companies and enterprises nationalized under Gamal Abdel Nasser's presidency following the Free Officers' coup d'etat in 1952 and the declaration of the republic in 1953, and a political re- versal of the socialist principles enshrined in the Egyptian Constitution in 1971. Policies of nationalization and socialism followed nearly 2,000 years of foreign oc- cupation or domination in Egypt, and sparked a strong sense of nationalism and na- tional unity in the people of Egypt in support of worthy goals of political and eco- nomic independence and equality. These deep and entrenched polices are today not far from the surface of the debate on whether privatization should go forward and, if so, at what pace and by which means. Oman's road to privatization began at the dawn of its modern age in 1970 with the accession of His Majesty Sultan Qaboos bin Said to power. With burgeonng financial resources from petroleum discovered in 1962 and put into commercial pro- duction in 1967, it was left to Sultan Qaboos to fix a course towards economic and social development, based on principles of steady and sustained economic
* Senior Attorney and Resident Manager in charge of Fox � Gibbons, Cairo. This paper was presented at the IBA 26th Biennial Conference, Arab Regional Forum, Berlin, 20-25 October 1996 and was published in the IBA International Business Lawyer, March 1997, vol. 25, no. 3, pp. 126-133. The editors are grateful to the author and IBA for permission to republish it in this Yearbook. growth through petroleum production and diversification of the economy based on a free market economy, while preserving the heritage and societal norms of the people of Oman. These two differing historical platforms, in the first case a return to private sec- tor-centred productivity and in the second the encouragement and development of the private sector at the outset, created different environments for privatization today. The differing approaches towards privatization are expressed in public declara- tions of policies and programmes and in evolving, enabling and implementing leg- islation. The purpose of this article is to compare the differing approaches of Egypt and Oman to the implementation of privatization policies through legislation.
1 EGYPT'S ROAD TO PRIVATIZATION
1.1 Historical context
In Egypt following the Free Officers' coup real property and commercial companies and enterprises were systematically nationalized, beginning with land redistribution in 1952, followed by nationalization of the Suez Canal Company (La Compagnie Universelle du Maritime du Suez) in July 1956, sequestration of all British and French properties following the British, French and Israeli invasion of the Canal Zone, sequestration of all Belgian property and the nationalization of the Khedival Shipping Line, the four largest cotton gins, all banks and insurance companies, fifty of the largest companies in industry and commerce, and public utility conces- sions in 1961. Following these measures, the Cairo and Alexandria stock exchanges, which had been established in the 1890s and thrived until 1959, virtually ceased opera- tions. Trading volumes plunged to only LE 3-7 million per day from a peak of LE 66.7 million in 1958 and only 32 companies of 925 previously registered re- mained listed. The effect of nationalization left the stock exchanges stagnant until their revival under legislation passed in 1992 (see below). With nationalization in the 1950s and 1960s the public sector controlled all key productive sectors in the economy, and to a large extent the situation remained the same until the early 1990s. The public sector enterprises were organized initially under Law 20 of 1957 and were further differentiated under Law 60 and Law 61 of 1963 (as amended by Law 32 of 1966, Law 60 of 1971, Law 111 of 1975 and Law 97 of 1983) governing public organizations, public companies and public authorities. The Egyptian Constitution of 1971 (as amended by a constitutional amendment of May 1980) declares in Article 1 that the Arab Republic of Egypt is a socialist democratic state instituted on the alliance of the working forces of the people and in Article 4 that the economic basis of the Arab Republic of Egypt is the socialist democratic system. Despite the entrenched predominance of the public sector in the economy and the dictates of the Egyptian Constitution, in 1974 following, and perhaps as a result of, the 1973 war, President Anwar El Sadat inaugurated a shift in economic policy towards the encouragement of private sector investment and participation in the economy, through what was called the "Open Door" policy, expressed and imple-