THE IMPACT OF THE ASWAN HIGH DAM

ON THE ECONOMIC DEVELOPMENT OF THE U.A.R.

A Dissertation

Presented to

The Faculty of the Department of Economics

The University of Houston

In Partial Fulfillment

of the Requirements for the Degree

Doctor of Philosophy in Economics

by

Mohammed A. Rabie

January, 1970 ACKNOWLEDGEMENTS

The author gratefully acknowledges the editorial assistance of

Mrs. Ann Banker, Instructor in English South Texas Junior College

Mrs. Georgellen C. Whitfield, Typist

iv THE IMPACT OF THE ASWAN HIGH DAM

ON THE ECONOMIC DEVELOPMENT OF THE U.A.R.

An Abstract of a Dissertation

Presented to

The Faculty of the Department of Economics

The University of Houston

In Partial Fulfillment

of the Requirements for the Degree

Doctor of Philosophy in Economics

by

Mohammed A. Rabie

January, 1970

v ABSTRACT

The waters of the Nile River have been an attractive target for investment, owing to their tremendous potential for agricultural expansion and for generating cheap hydro­ electric power.

The government of Egypt, aiming at utilizing as efficiently as possible all of the nation's available natural resources, had decided in 1952 to build the Aswan

High Dam. It reasoned that the completion of the Dam would help the country and its citizens in two ways: first, as a basic step toward a solution for Egypt's economic problems; and second, with the gradual disappearance of those obstacles, as a necessary move toward the creation of a balanced, stable economy—one characterized by sus­ tained growth.

The Dam provides for a permanent storage of water which would help achieve the following:

1. Regulate the flow of the river, thus stabiliz­ ing and increasing the power-generating capacity of the power plants of the original Aswan Dam and the Aswan High

Dam.

2. Guarantee an annual average run-off of 84 bil­ lion cubic metres of water, which will provide the water needed for successful summer cultivation.

vi 3. Control the Nile, thus preventing the flood­ damaged crops and property, which will provide the Egyptian farmers with the kind of security they have always hoped for.

This study tries to investigate the Dam's impact on the economic development of the United Arab Republic.

The Dam's contribution to agriculture was examined in terms of the expansion in the cultivated area, in the crop area, and in terms of the expected increase in the income of the agricultural sector. The Dam's contribution to industry was examined in terms of the readily available hydroelectric power produced by the Dam's power plant and in terms of the potential expansion in Egypt's industrial sector.

In an effort to evaluate the overall impact of the

Dam on Egypt's economy and society, some other related factors have been given consideration. These are: the

Dam's effect on Egypt's national income, employment, navi­ gation in the Nile and its canals, manpower training, and potential social change. TABLE OF CONTENTS

Page

I INTRODUCTION ...... 1

Egypt's Land and People...... 1

The Central Government's Program for Economic Development ...... 3

Statement of the Problem ...... 7

Hypothesis ...... 9

Method of Investigation ...... 11

Limitations...... 12

Footnotes...... 13

II CHAPTER ONE...... 15

UNITED ARAB REPUBLIC - BACKGROUND

Historical - Cultural ...... 15

Social - Economical ...... 24

Footnotes...... 38

III CHAPTER TWO...... 40

THE ASWAN HIGH DAM - HISTORY AND DESCRIPTION

History...... 40

Description...... 47

Footnotes...... 51

IV CHAPTER THREE...... 52

THE DAM'S CONTRIBUTION TO AGRICULTURE

Footnotes...... 77

viii ix

Page

V CHAPTER FOUR...... 78

THE DAM'S CONTRIBUTION TO INDUSTRY

Footnotes...... 105

VI CHAPTER FIVE...... 107

THE DTkM'S IMPACT ON OTHER ASPECTS OF THE EGYPTIAN ECONOMY

Flood Control...... 107

Transportation and Navigation ...... 108

Fishing Culture and Tourism ...... 109

Income and Employment...... 112

Footnotes...... 122

VII CHAPTER SIX...... 123

THE ASWAN HIGH DAM - A NEW PHASE IN THE HISTORY OF AN UNDERDEVELOPED COUNTRY

Agriculture...... 139

Industry ...... 142

Social Change ...... 145

Footnotes...... 151

VIII CHAPTER SEVEN...... 153

CONCLUSIONS

Is Egypt Likely to Meet the Challenge? . . . 156

How Far is Egypt from the Industrial Revolution?...... 161

Footnotes...... 170 INTRODUCTION

Egypt1s Land and People

Egypt has an area of about four hundred thousand

square miles, most of it arid desert. Of the total area only 5 percent is inhabited. This area consists of a narrow

strip of land along the Nile River and its delta. Man has

lived on that strip of land for centuries, making it one of the most heavily populated regions of the world. The oceans of sand surrounding the narrow land strip make the Nile the most outstanding topographical feature of Egypt. The annual

floods of the Nile provide the water necessary for agricul­

ture, the main contributor to the Egyptian national income

and the principal economic support for over 65 percent of the population. The same floods also destroy a good part of the Egyptian crops during some years.

In years of sufficient water supply, national income rose and the farmer bettered his economic situation; in years of insufficient water supply, the national economy and the farmer suffered. During those years characterized by flood-damaged crops and other property, the farmer and

the country as a whole again suffered a great loss in in­

come. Thus, the economic well-being of Egypt and her people

is directly related to the annual water supply of the Nile. 2

Rain in Egypt is very scarce, and temperatures run as high as 100-120° F. during the summer months. Hot, sandy winds—yet another source of damage to crops—are frequent, particularly during the spring months. A dense and rapidly growing population is pressing hard on the limited agricultural resources. All these factors have contributed to Egypt's poverty, its high rate of unemploy­ ment, and its unequal distribution of wealth. As a result of these combined precarious economic conditions, the fellah^ has been kept backward and isolated.

Agricultural production has not kept pace with the rapid increase in population, and the industrial sector has been the least developed in the Egyptian economy. Indus­ trial production in 1952 was less than 9 percent of the national income, and investment in industry was less than

$5 million. Foreigners owned or controlled most of the industrial firms, leaving almost nothing to the great ma­ jority of the population. The people's state of poverty and ignorance was further heightened, since a significant number of these Egyptians were often prey to the ravages of sickness and disease and subject to the crippling ef­ fects of exploitation. Thus, while most Egyptians passed a life of pain, certain foreigners and the members of the

Egyptian royal family accrued fortunes by owning large estates and monopolizing the country's import-export activities. 3

The Central Government's Program for Economic Development

To confront these numerous problems obstructing economic development, the leaders of the Revolutionary 2 Government of Egypt almost immediately after their as­ cension to power became preoccupied with finding the means to utilize as efficiently as possible all of the nation's available natural resources in an effort to raise the people's standard of living. With its political structure revamped, the government guaranteed equal opportunities for all of its citizens. And, for the first time in the country's history, the doors of the Egyptian Parliament were opened to the fellaheen and workers. In 1962 the

Egyptian National Charter gave representatives from these groups 50 percent of the seats in Parliament.

In addition to these far-reaching changes in the political system of the country, equally significant ad­ justments occurred in the nation's economic structure.

The growing influence of the combined political and eco­ nomic factors allowed for more equality in the distribution of the country's wealth. It also provided for the emer­ gence of a large public sector capable of leading Egypt's march to industrialization. Other programs were implemented to improve health conditions and nutrition, some to build more schools and factories, and yet others to improve working conditions and to create more sources of employment.

To meet the growing needs of the population and to sustain the economy in a manner that was continuous, the 4 leaders of Egypt's government gave priority to the develop­ ment and control of its water resources. Very early, then, the waters of the Nile were an attractive target for in­ vestment, owing to their tremendous potential for gen­ erating hydroelectric power. By means of this additional power source, representatives of Egypt's government hope to expand their country's capital base. By supporting these techniques for capital expansion, these leaders wish to endow their country with a capability for attain­ ing two very general, but major, goals of similar economic development schemes operating in the majority of the under­ developed nations of the world. These goals are an increase in the rate of industrialization and an increase in the total gains for agricultural yields.

Not too long after Egypt's new government came to power, its leaders made one of their stronger commitments the construction of the Aswan High Dam. They reasoned that the completion of the Dam would help their country and its citizens in two ways: first, as a basic step to­ wards a solution for the economic problems discussed earlier; and secondly, with the gradual disappearance of those obstacles, as a necessary move towards the creation of a balanced, stable economy—one characterized by sus­ tained growth.

The Dam, when fully operational, will provide the farmers with a means to control the flood waters, enabling the country to use it for expanding agriculture both 5 horizontally and vertically. The resulting higher yields in the agricultural sector will provide yet an additional stimulus for even more growth and diversification in the economy's industrial sector. The growth of this indus­ trial sector will be a direct result of the great amount of readily available hydroelectric power—an amount suf­ ficient to run the largest power station in the world and one to provide ten times as much power as the country pro­ duced in 1952. By 1972 the country will be enjoying

10,000 million kwh of electric power as the annual pro­ duction of the Dam's power station.

Without doubt, the Aswan High Dam is a great eco­ nomic and technological achievement. For example, the Dam created one of the largest artificial lakes in the world— a lake which has a storage capacity of 165 billion cubic metres. This lake will enable Egypt to bring under per­ manent cultivation two million additional feddans,^ an increase amounting to as much as one third of the total area cultivated in 1960. By ending the threat of flood damage and providing the means to obtain the appropriate amount of water needed for the fields at the time it is needed, the Dam enabled the farmer to control the total yield of his crops with a fairly high degree of accuracy.

The greater capability to control the amount of agricul­ tural production according to each year's differing needs, it is argued, will be aided significantly by instituting a government-financed and controlled schedule of estimated 6 requirements for a particular crop. These estimations are to be determined to a great extent by keeping track of the related factors which bear on changing needs for consump­ tion and by attempting to assess the net effect of their joint impact. An example of one such related factor would be the actual rate of net increase or decrease in popula­ tion. In short, during the present-day electronic age, when most residents of the underdeveloped areas of the world are witnesses to explosive growth in the sheer num­ bers of their populations, Egypt as a nation and her citizens as individuals strongly desire to cast off those life-styles they view as remnants of the eighteenth and nineteenth centuries and to take on in their place life­ styles deemed as valuable and suitable for the present century with its spectacular advances in technology.

As with most examples of economic development pro­ grams, this study has to take into account the accompanying changes in the relations of other factors to the economy— such as historical, ecological, and cultural factors—in addition to purely technological ones. Old urban centers will grow in size, and new ones are being established. A redistribution of the labor force will possibly occur as a result of the ever greater numbers of people needed by the expanding service and manufacturing industries. With the growth of urban centers of population, pressure on land is expected to diminish. The resulting land-to-man ratio surely will eventually lead to the disappearance of 7 disguised unemployment and even to more and greater pro­ ductivity for agriculture.

Statement of the Problem

The idea of building the Aswan High Dam originally came from an agricultural engineer who thought of the Dam as a purely agricultural project to help the Egyptian agriculture keep pace with the rapid increase in popula­ tion. It was argued, therefore, that the Dam would elim­ inate, or at least limit, the population pressure on land.

But when the Aswan High Dam project was under consideration, some Egyptian officials correctly argued that the Dam would not solve Egypt's agricultural problem, since Egypt's popu­ lation has been growing at a high rate, and by the time the Dam would be completed, which might take ten to fifteen years, the increase in population would probably match the increase in the cultivated area. Thus it was contended that the Dam would merely keep the land-to-man ratio con­ stant for a period of time, postponing Egypt's agricultural problem for about fifteen or twenty years rather than eliminating it completely.

To solve the problem, some Egyptian sociologists argued, efforts should be concentrated to check the popu­ lation growth by using birth control methods, allowing and encouraging people to emigrate to other countries, and raising the level of education. In spite of the positive advantages of checking the population growth through the 8 above-mentioned methods, their application at that time was unlikely to bring about the desired ends. Using birth control methods would be met with resentment and would run against the fellah's belief that man's control of natural birth rates is wrong. Migration from one country to another has never been a practical solution to any country's popu­ lation problems. Raising the level of education so that the fellah could increase his awareness to the degree that he would cast off his cultural handicaps and start thinking in terms of the economic advantages of population control would take a long period of time and would require large expenditures which the country could not afford. It would also raise the level of expectations of the people beyond what the country could provide, creating a situation which could lead to political instability and social disorder.

Some economists, on the other hand, argued that the

Aswan High Dam project was too large for the Egyptian econ­ omy to carry out:

In 1956 Premier Nasser's attempt to finance the construction of the High Dam at Aswan by his seizure of the Suez Canal was the desperate act of a frustrated man whose overly ambitious plan was doomed to failure even if the United States and the Soviet Union had together undertaken to carry it through.^

The United States' official rejection of the idea of sharing the financing of the Dam project was based on such arguments, of which Kindleberger says:

This project was first supported then rejected on political grounds, although the excuse given 9

for rejection—that the project was too large and involved too long a commitment of too much Egyptian savings before any increment in output would be realized—should have been the basis for an initial refusal to give support.5

The Revolutionary Government of Egypt decided to build the Aswan High Dam because of its advantages in in­ creasing the area cultivated and in producing a tremendous amount of hydroelectric power to be used by industry. It was part of the plan that the time taken to build the Dam would be used to build and expand the industrial sector and that the increase in the agricultural income would stimulate industry to further expansion.

The Aswan High Dam has been completed, and partial utilization of its waters and its generated electric power started in 1964 and 1968, respectively. This study will try to investigate the potential impact of the Dam on the

Egyptian economy. Since I believe that the Dam will bring about basic changes in the Egyptian economy, I will try to answer the following question: In what way would the economy of Egypt be affected by the construction and utili­ zation of the Aswan High Dam?

Hypothesis

Egypt by the 1950's was already in its agricultural revolution, but in spite of this fact, the per capita in­ come was low, and therefore the agricultural surplus was inadequate to expand and strengthen the country's social overhead. It was evident, then, that Egypt could not rely 10 on its agriculture to provide the savings deemed adequate to stimulate industry. Other problems also existed at that time to prohibit or hinder the country's social and economic development: The rate of population growth was too high for the expansion in agriculture to keep pace with it; the country had virtually no industry or even a middle class as a potential prospect for carrying out industrial­ ization; and the Egyptian Royal Family shared with the foreigners the exploitation of the economy. The tradi­ tional Egyptian elite played politics with each other and with the Royal Palace, while corruption in civic service was evident; the technological gap between Egypt and the advanced countries was widening, while Egypt's known re­ sources to close that gap were very much limited; and the country appeared doomed to social and political instability.

It is my belief that the Aswan High Dam will mate­ rially accelerate the economic growth and development of the United Arab Republic. The basic changes in the Egyptian economy which the Dam is expected to effect are likely to help create a new environment which is more desirable and suitable for industrialization. In short, the Aswan High

Dam is most likely to bring Egypt very close to its in­ dustrial revolution. 11

Method of Investigation

The examination of the Dam’s impact on the Egyptian economy will center around the Dam's contribution to the development of agriculture and industry. Agricultural de­ velopment will be examined in terms of the cultivated area, the crop area, and the increase in the income of agricul­ ture. The development of industry will be examined in terms of the increase in the annual production of electric power and the potential expansion in Egypt's industrial sector which will be made possible by the completion of the Dam's power station in 1970.

The Dam has already had its impact on some other aspects of the Egyptian economy. One example is the con­

struction industry, which had to expand in order to meet the increasing demand originated mainly from the building of the Dam. In an effort to evaluate the Dam's overall contribution to more general and broader trends of socio­ cultural change, other factors, such as employment and the

c change in its structure, the creation of the New Nubia, and the social aspects of the flood control, will be

considered.

I should like to mention at this time that a tho­ rough study of the socio-cultural impact of the Aswan High

Dam on the Egyptian society is beyond the scope of this study. However, since the cultural values and the social

attitudes produced by the Dam proved to be important to 12 the process of industrialization, I have given some con­ sideration to these socio-cultural factors.

Limitations

The work on the Dam started in 1960 and was to be completed in two stages by 1970. The first stage was com­ pleted in 1964 on schedule, and work on the second stage ended in 1969, one year ahead of schedule. The Dam's potential for irrigation is expected to be fully utilized between 1975 and 1980, though it became available in 1969.

The Dam's full generating power, which was scheduled for

1972, is now due in 1970, but the full utilization of this power is not expected before 1975 at best.

Land reclamation projects are behind schedule, and the political situation in the Middle East, i.e., active war with Israel, is very lilely to cause further delay.

The majority of the Nubians are still waiting for their reclaimed land to compensate them for the loss of their own land, which was buried under the waters of Lake Nasser starting in 1964.

When visiting Egypt in 1969 for the purpose of col­ lecting whatever data was available pertaining to this study, I found that the printed material on the Aswan Dam was limited. I found what might be called a recorded his­ tory of the engineering aspects of constructing the Dam, but little information was available dealing with the Dam's contribution to the Egyptian economy, and most of the 13 material was written in the late 1950's or early 1960's.

Therefore, intensive interviews were conducted with key persons in both the Ministry of National Planning and in the Ministry of High Dam.

There is delay in implementing both agricultural and industrial projects to benefit from the Dam's poten­ tial. When asked about the reasons for the delay and what appeared to be a lack in planning, a high-ranking official in the Egyptian Ministry of National Planning said, "It seems that we did not trust the Russians and therefore wanted to have them first complete the Dam be­ fore other things happen which might make them change their minds." Due to all these circumstances, lack of precision in drawing some conclusions might be understandable and expected.

FOOTNOTES

1Fellah is the Arab word for peasant. In Egypt the fellah1s holdings of land are very small; his family provides the necessary labor for cultivation and is the chief con­ sumer of the annual harvest. The fellah lives in small villages with few contacts with the other parts of the country. To the great majority of Egypt's fellaheen (plural of fellah), agriculture is subsistance. 2 On the twenty-third of July, 1952, a group of the Egyptian army officers overthrew the government of Egypt, expelled King Faruk, and later on declared Egypt a republic, thus ending the era of monarchy in the country, •i Feddan = 1.04 acres. 14

^Charles Poor Kindleberger, Economic Development (New York: McGraw-Hill, 1958), p. 234 5 Kindleberger, op. cit. (2d ed., 1965), p. 376 6About fifty thousand Nubians were transferred to newly built homes, villages, and towns as a result of the complete submersion of their ancient Nubia under the waters of Lake Nasser, which is the permanent reservoir of the Aswan High Dam. Chapter 1

UNITED ARAB REPUBLIC - BACKGROUND

Historical-Cultural

The national character and cultural background of

a people are formed by their history as well as their

environment. Egyptian history shows a remarkable series

of constant features from the time of the Pharaohs up to

the present. One of these is the unity of the country, which has been directly influenced by its geography.

Of Egypt's total area, 96 percent is desert. In

order to have life-supporting water for themselves and

their crops, the early societies were established along

the narrow valley of the Nile river. Both as a source of water and as a means of transportation, the Nile has repre­

sented a unifying force in Egyptian life. The development

of trade along the Nile led to the emergence and growth

of towns. With the expansion of the people's economic

activities and their concentration in population centers,

it became possible and profitable for trade to evolve

around well-established routes and for rulers to collect

taxes. Thus, in trading among themselves and with neigh­ boring societies, the Egyptians did not live in isolation.

They interacted beneficially with their neighbors on both

cultural and economic levels.

15 16

Political interaction, however, was one-sided.

The flat, desert terrain made successful resistance to

invasion extremely difficult. Crusaders in 1113 and 1249

were beaten off near Cairo and later at Mansura. The

Turks, who reached the Suez Canal in 1915, and the Ger­

mans, who were stopped at El-Alamein in 1942, were quite

successful in breaking through the Egyptians' desert

defenses. These invasions, as well as other foreign oc­

cupations, played a large role in Egypt's history and

greatly influenced her cultural background.

Between the years 30 B.C. and 640 A.D., Egypt was

a part of the Roman Empire. It served during that time as

a field for growing grain, supplying the empire with its

needs.

The Islamic conquest of Egypt placed the country

in a new context of spiritual thought and feelings. Arabs

came to Egypt with their religion and civilization and

planted the seeds of science and justice. Guided by the message of Mohammed, they assumed the main role in defense

of civilization by stemming the first wave of colonialism.

Islam, the religion of over 85 percent of the Arabs, sees

no difference at all between different races. Therefore,

it was easy for Moslems and non-Arabs to reach high posi­

tions and to seize power in various parts of the Islamic

Empire.

As the Islamic Empire declined, the Turks conquered

the Empire, and under their domain, the Arabs experienced 17 the worst era in their history. The Turks tried to destroy the cultural heritage of the Arabs. Egypt, being a part of the Arab world, fell under the Turks' domain and became a part of their weak and decentralized empire until the

British took over.

Mamelukes were brought by the Caliphate from Cen­ tral Asia and Georgia to be his own guards. They were a military class enjoying property rights, inheritance rights, and free wives and children. As the Caliphate's position was weakening, the Mamelukes forced themselves into power and ruled with brutality, putting an end to every creative action. After the Turkish conquest in 1516, they maintained their rule, paying a perfunctory allegiance to the nominal authority of the Sultan and his representative, the Pasha.

Between the fifteenth and nineteenth centuries,

Egypt stagnated. It was transformed into a militarized, feudal state and settled into a long period of isolation and economic and cultural stagnation. Knowledge was con­ sidered as given, and the process of learning an accumula­ tion of the known rather than the process of discovering the unknown. In spite of this, the Islamic society suc­ ceeded in preserving itself by paying an exorbitant price.

Al-Azhar, one of the oldest universities in the world, was a stronghold of resistance against the colonialist and reactionary factors of weakness and disintegration imposed by the Ottoman Caliphate in the name of religion. 18

Arab Nationalism was born during this period and continued to grow to win its first battles against the

Turks during the first World War. Victory did not last, however, since the promised independence by the Allies never materialized.

Thus, for three centuries after the Ottoman con­ quest, Egypt went into its own medieval slumber, "...un­ aware of the vast revolutions that were taking place across the Mediterranean and in the New World and completely by­ passed by the Renaissance and the Industrial Revolution,"1 from which only the aftermath of the campaign of Napoleon awoke it.

The French expedition of 1798 is regarded by some historians as the beginning of the renaissance in Egypt’s history.

When the French campaign came to Egypt, it found Al-Azhar, simmering with new trends which had their impact on the life throughout Egypt. The French campaign also found the Egyptian people resenting Ottoman colonialism disguised in the form of the Caliphate, which imposed on the Egyptian people a false conflict between genuine religious faith and the will to live which rejects tyranny.

Bonaparte found Egypt a poor, isolated, and self-contained country with a localized economy and a low standard of living. His very short stay in Egypt contributed much to the cultural progress. It brought with it modern science developed by Europe and outstanding professors who studied the affairs of Egypt and revealed the secrets of her an­ cient history. 19

The Egyptian people who were resisting the rule of the Mamelukes and their attempts to oppress them were brought a new revolutionary energy which inspired self­ confidence and opened up new horizons for them:

This popular awakening was the driving force behind the reign of Mohammed Ali. It is almost unanimously assumed that Mohammed Ali laid the foundation of modern Egypt. Yet the tragedy of that age was that Mohammed Ali believed in the popular movement that paved the way for him to govern Egypt only as a springboard for him to reach his ambitions. Thus Mohammed Ali drove Egypt to futile adventures which sought individ­ ual interest and ignored the interest of the people.

The Caliphate sent Mohammed Ali, a Turkish soldier from Albania, to Egypt to end the Mamelukes* disobedience.

Pretending that he was attempting to forget the past and to start working together for a unified country, Mohammed called a conference for all the Mamelukes. After the con­ ference began, armed men appeared from boxes which had been put there as chairs and killed the Mamelukes, leaving no­ body to protest or even to ask Mohammed Ali what he was doing. The Kalaa, or palace where the slayings took place, still stands on the highest hill in Cairo as a reminder of the cruelty of the soldiers and their use of power to put an end to disorder and to unify the country.

Mohammed Ali, who worked for himself, tried to create an industrialized, closed, state-controlled economy.

His successors went on working for themselves, strength­ ening their positions by establishing order and security.

They created a feudal-capitalist class to support them 20 and shared the output of the poor, starving peasant. Ef­

forts were concentrated to emulate particular aspects of

Western civilization by imposing and introducing changes which the peasant did not accept and the country could not afford.

The rulers gave their attention to the superficial aspects of the European civilization, borrowing money to build fancy palaces and to enjoy luxury in a poor country.

As a result, Egypt was led to a financial indebtedness which cost her her independence when the country failed to pay back what the rulers got for their own self­

indulgence. Individual adventures, therefore, impeded the movement of the Egyptian awakening and opened the gates to domination by world powers.

Resistance against the Egyptian royal family and

foreign occupation continued and exploded in 1882, when

Orabi, an officer in the Egyptian army, revolted against the corrupted Ismail, foreign occupation, and Turkish dominance. He was backed by the army and the masses,

especially small landowners with social, as well as polit­

ical aims. Orabi failed, however, because of British and

French intervention on the part of Ismail.

The British then occupied Egypt, claiming they would help Egyptian economy and would leave as soon as possible. On the contrary, they further disrupted the

economy by lending the Egyptian rulers the money they wanted for their own benefit, and they did not leave until 21 they were forced to do so in 1956.

The Arabs* experience with the West has not been one of cooperation and friendship. In the Middle Ages

Arabs knew the West as Crusaders who came to kill, to destroy, and to occupy the Arab homeland. In 1882 Arabs saw the West in the guns of British warships in Alexandria which shelled into suppressed submission the first major

Egyptian attempt to redress internal misrule. In 1918

Arabs felt betrayed by their allies, the West, who promised them their independence during the first World War when they revolted against the Turks. In 1942 British tanks crushed the gates of the King's Palace in Cairo, forcing a new government agreeable to the allies. In 1947 the

British army left Palestine in the hands of the Zionists.

In 1956 British occupation forces were forced to leave

Egypt, but they returned later in the year, bombing, de­ stroying, and reoccupying parts of the Suez Canal Zone.

International financial monopolies started to play their grave role in Egypt. They channeled their activities to two distinct directions, namely the digging of the Suez Canal, and the transformation of Egypt's land into a vast field for cotton growing. The aim was to provide Brit­ ish industry with the cotton which America then rarely exported to Britain, following the end of the British domination of America. Later on, American cotton was withheld from Britain as a result of the American Civil War.

The British military occupation of Egypt in 1882 was an expression of the determination of colonialism to insure the continuity of the set­ back and to maintain the suppression and exploita­ tion of the people of Egypt to guarantee the interests of foreign financial monopolies.^ 22

Even though the potential of the national wealth was exhausted to serve the interests of foreign powers and a number of foreign adventurers, the spirits of the Egyptian people were never broken. The educated people who came from Europe, the revolutionary cries after Orabi, and the change in the international situation due to the emergence of new power and the first World War brought some progress.

Communication and security of life and property were de­ veloped. Population was growing with no social reform to be undertaken—only exploitation. Education lagged,

...for it must be said that public education expanded extremely slowly under the British and continued to be purposely geared, for most of the period under review, toward producing government officials. Its development was deliberately lim­ ited to the administration's capacity to absorb its graduates.

By the beginning of the twentieth century, Mohammed

Abdu's call for religious reform contributed to the de­ velopment of the press in Egypt. At the same time Lutfi

El Sayed stressed that Egypt should belong to the Egyptians.

Qasin Amin called for the emancipation of women. A new revolutionary wave which manifested itself in the popular revolution of 1919 was spreading. That revolution failed because of the failure of its leadership to see the need for social change, to learn from history by not isolating

Egypt from other Arab countries, and to adopt the methods needed to fight the enemy.

The successive governments in Egypt tried to recon­ cile the old tradition with the new reality, but an 23

ever-widening gap developed between reality and the ideol­

ogy which undermined the existing political community. A

state of instability and tension developed. The gap could

be closed only by a readjustment of the traditional system

or the formulation of a new system capable of guiding the

people and representing their aspirations. The govern­ ment's failure to earn for itself any claim to the people's

allegiance and the aftermath of the humiliation of the

Egyptian army in 1947 in Palestine brought about a collapse

from which a new political system emerged.

"The twenty-third of July, 1952, marked the begin­

ning of a new and glorious phase in the history of the

constant struggle of the Arab people of Egypt.'* The revo­

lution of the Arab people in Egypt was against political

corruption, capitalism, and feudalism. The situation in

the country at the time of revolution was summarized in

the National Charter as follows:

The foreign invaders occupied the land; close by were the military bases fully armed to terrify the Egyptian motherland and destroy its resistance...

The alien royal family ruled according to its own interests and whims and imposed humility and submission.

The feudalists owned the estates which they monopolized, leaving nothing to the toiling farmers except the remaining straw following the harvest.

Capitalists exploited Egyptian wealth in sev­ eral ways after they succeeded in dominating the government and made it serve their own interests. 24

Facing such circumstances, the Egyptian Revolu­ tionary Command declared its famous six principles to meet the demands and needs of the people:

1) Destruction of imperialism and traitors among Egyptian people.

2) Ending of feudalism.

3) Ending monopoly and the domination of capital over the government.

4) Establishment of social justice.

5) Building a strong national army.

6) Establishment of a sound democratic system.

By 1952, and for the first time since the Pharaohs, Egypt began to be ruled by Egyptians.

...for over twenty-five centuries, then, Egypt was never ruled by Egyptians.... But the rulers, the army and higher ranks of the bureau­ cracy were almost without exception foreigners whose one thought was to squeeze the utmost out of the fellaheen from whom they generally kept aloof.8

Social-Economical

In addition to political oppression, Egypt has al­ ways suffered from intensive economic exploitation. Some idea of the extent of this exploitation may be obtained by recognizing the amount of human labor which went to the erection of the Pyramids of Giza and the building of the Suez Canal. But these two great achievements in the history of Egypt are now something to be proud of. They encourage the people and give them the motive to build 25 more miracles, one of which has just been completed—the

Aswan High Dam.

The basic fact about Egypt is that the country is at once extremely fertile and desperately poor. The paradox is deepened when one learns that Egypt now has the most productive agriculture in the world (in terms of output per unit area) and the most wretched peasantry of any Middle Eastern country. Put together, these two factors are sufficient to account for the atmosphere of un­ reality which envelops so many phenomena in modern Egypt.”

Egypt is a ribbon of highly fertile land on the bank of the Nile river. Cultivation of this area keeps a mass of peasants alive at a standard of living not much higher than subsistance. It also supplies foodstuffs for the towns and enables the country to export the cotton and the few other products on which its income of foreign ex­ change mainly depends.

Until the eighteenth century, Egypt was divided into two parts—the city, which enjoyed a relatively high standard of living due to its commercial, industrial, and political activities; and the country, which tried to harvest as much as possible from the land, using very primitive tools and methods of exploitation. The city did not take care of the country, and the country, too poor and too weak to ask, lived in poverty. The few times when the country dweller tried to raise his voice to ask for a bigger share of his own production, his cry was si­ lenced with power. 26 The economic activities of Egypt in the early ages were agricultural, with the possible exception of some commerce. Agriculture was primitive, but highly produc­ tive. Its high productivity, compared with other parts of the world, depended on the highly skilled Egyptian peasant and on the advanced system of irrigation, which was totally dependent on the Nile. "When there was a civil war or a failure of the Nile, the most terrible famines were experienced as in A.D. 42, 928, 967, 1064-72, 1201, 1202, 1294."10

Under the Mamelukes, the system of land tenure was feudal in structure. The country was divided into groups of villages under the control of the leading Mamelukes, who collected taxes and sent the revenue to the central government. The holdings of the Mamelukes were tax-free.

The Egyptian peasants were not bound to a master like their

European counterparts, but were free, and their children could inherit property.

Unlike most countries, feudal systems did not not exist in Egypt as a feudal aristocracy and with traditions of local authority. For, in the first place, the central government never broke down as completely as it did in Europe during the dark and early Middle Ages. Secondly, the upper classes devoted their attention either to trade or to war, and never to agriculture, and dwelt exclusively in the cities.^l

In the Middle Ages little industry existed in

Egypt. The Egyptians had the skills to make their own tools for agriculture and irrigation. These skills had been handed down through history since the time of the 27

Pharaohs. The most famous and advanced of the Egyptian

industries during the Middle Ages was the glass industry.

By the middle of the seventh century, Egypt be­

came a part of the Islamic Empire and an important part

of the Arab world. The Arab conquest was inspired by the

humanitarian teachings and beliefs of Islam, which were

to strive to put an end to disorder and injustice, to res­

cue mankind, and to establish equality and justice on

earth.

No close series of historical events in the Middle East has ever produced results so imme­ diate, yet so profound and lasting, as those which followed the unbelievable, rapid, unexpected, and complete conquest by the earliest Moslims under the first successors (or Caliphs) of the prophet, of practically all the territories of Western Asia and of North Africa. These con­ quests, dating from the fourth decade of the seventh century of the Christian era represented in one, but a quite incomplete sense, another great outpouring from the human reservoir of Arabia; they proved final and irreversible, yet were orderly, unmarked by ruin or massacre, and were preliminary, not too violent, but rather a peaceful revolution, visible and invisible, in society and in politics and men’s minds throughout the region and far beyond it. 2

Egypt, therefore, preserved her culture for centuries and

enjoyed great economic development between the eleventh

and the sixteenth centuries.

By the eleventh century, as the growing prosperity

of Europe revived the demand for oriental products, Egypt

began to regain her former importance. The Fatimite period marks one of the peaks of Islamic civilization. Cairo was

built in that period; science and art flourished greatly 28 under royal patronage, and Al-Azhar, the oldest university in the world, was founded to preserve the Arabic culture and spread its Islamic teachings.

Economic activity increased with the increase of knowledge, particularly in industry.

New industries were established such as paper­ making, porcelain, sugar refining, and the dis­ tillation of gasoline; and old ones like linen and woolen textiles, leather-work and metal-work were perfected. Many of the processes worked out by the Arabs were transmitted to Europe, but as late as the thirteenth century the Arabs were still sufficiently creative to learn as well as to teach. Thus, the distillation of alcohol and the use of the compass were taken over from Italy in the thirteenth century, and the early European church-tower clocks were adopted and perfected. 3

Commerce revived, and means of trade advanced because the

Islamic economy depended mainly on exchange of goods. The origin of the so-called Indo-Mediterranean or Indo-European trade can be traced back to the opening of the Mediterranean by the Phoenicians and to the growing affluence of the

Greeks. As trade began to flow from the Indian Ocean to the Mediterranean along established routes, the Red Sea-

Nile Valley route to Alexandria became important and active.

Rulers of Egypt tried to secure control over the

Indo-Mediterranean trade routes and constantly attempted to attract as large a share as possible of the Indo-

European trade for their country. Although the prosperity of the country was primarily dependent upon agriculture, income from trade, as profits and tolls levied on transit, formed an important source of revenue. 29 The Arabs1 conquest eliminated the frontier be­ tween Persia and the Roman Empire. It united the Indian

Ocean and the Mediterranean Sea politically and economic­ ally. Arab merchants, moreover, pushed vigorously to 14 India and Malaya.

After Tartar ravages in Iraq in the thirteenth century, Egypt became increasingly important as a channel for transit goods, and her Mameluke rulers reaped enormous wealth from that trade.

The rounding of the Cape of Good Hope was a deadly blow to Egyptian trade. The Mamelukes quickly realized

its significance and with the help of the Venetians and the Arabs in other Arab countries, attempted to destroy the Portuguese fleets in the Indian Ocean. But after

fierce battles, the Portuguese succeeded in controlling the Indian Ocean and henceforth Indian goods started to come to Europe by way of Lisbon. "The discovery of the

Cape route diverted transit trade from its territory

(Egypt) and reduced it to a backwater province of the

Ottoman empire, deprived even of those few contacts with the West that took place at its periphery.This im­ pact was not immediate, however, as a large portion of

the Far East trade continued to use the old route even during the seventeenth century.

As mentioned earlier, the early medieval ages were promising for Egypt’s development, but the social

and economic development which accompanied the introduction 30 of Islam in Egypt was stifled in the thirteenth and fourteenth centuries by the following:

1. The warlike Crusaders, who went to the Holy

Land, destroying cities and turning them into ruins;

2. The Tartars, who came later to the Middle

East, destroying Baghdad and wrecking and burning Damascus, the greatest centers of civilization at that time;

3. The Mamelukes, a military class with an in­ feriority complex, who ruled with brutality and made no effort to develop or even to protect what the Arabs had founded;

4. The Ottomans, who tried unsuccessfully to rule the Arab World from Constantinople and pushed Egypt deep into the Dark Ages by the deportation of thousands of artisans from Egypt to Constantinople;

5. The repeated famines, 1201, 1202, 1294, 1398, and 1404, which added a disturbing factor to the economy and were one source of economic insecurity;

6. The discovery of the Cape of Good Hope route, which diverted some of the transit trade from the Medi­ terranean and weakened Egypt's contacts with the West, thus eliminating a main source of income.

Thus, the aftermath of all the above-mentioned factors sent Egypt into a decline from which she did not recover until the advent of foreign troops coming to occupy and colonize in the late eighteenth century. 31

By 1798 the population of Egypt, which had numbered about six to seven million in Roman and early Arab times, had shrunk to some 2.5 million, of whom perhaps 250,000 lived in Cairo and 8,000 in the ruins of Alexandria.16

The reaction to the French campaign and its after­ math had positive effects on almost all aspects of life in Egypt. The masses reacted unfavorably to foreign oc­ cupation, which led to the strengthening and growth of nationalism within and beyond the Egyptian frontiers.

Science and knowledge brought by Napoleon nurtured the seeds of hope for change and planted new seeds of revo­ lutionary energy and aspirations.

Mohammed Ali came at a time when the popular awaken­ ing was growing and becoming deeply rooted. He led that awakening and turned it into the driving force behind his reign. Between the French campaign in 1798 and the British occupation in 1882, Egypt was transformed from feudalism to capitalism:

Under Mohammed Ali, the land system was con­ siderably modified. On the one hand, large tracts of uncultivated land were granted to the Viceroy’s relatives and followers. On the other, plots of three to five feddans were allotted to peasants who, though not enjoying legal ownership of the land, could freely dispose of the produce. A cadaster was made and the collective village responsibility for taxation abolished in favor of individual responsibility. In 1846 transfers and mortgages of property were authorized. Under Said, the rights of male and subsequently female heirs were recognized. In 1871 Ismail’s financial embarrassments led him to offer absolute property rights to all those paying six years' taxes in advance (Mukabah law). In 1858, foreigners were authorized to purchase land. * 32

Thus Mohammed Ali and his followers moved Egyptian agri­ culture from communal to small-scale individual ownership.

They also extended the area cultivated from about three million feddans in 1813 to about 4.7 million feddans in

1877. Cotton was expanding, but at the expense of wheat

cultivation. Mohammed Ali introduced new varieties of

cotton and monopolized its export. The profitable cotton

cultivation was one of the main incentives behind the ex­

pansion of irrigation, railroads, and trade:

Cotton, moreover, requires adequate transport. Mohammed Ali connected Alexandria with the Nile by means of Mahmoudia Canal, and re-created the city. Egypt was also becoming an important link in the overland route to India and in 1851 a rail­ way was laid down between Cairo and Alexandria. By 1880, Egypt had over 1300 kilometers of rail and 5,200 kilometers of telegraphs. Three Egyptian and sixteen foreign steamship lines touched Egyptian ports and the Suez Canal had been opened to inter­ national trade. The necessary financial machinery was also set up. The reform of 1835 gave Egyptians a bimetallic currency and stabilized the rate of exchange with sterling and the franc until 1914. After 1864 there was a spectacular growth of com­ mercial and mortgage banks.18

Under Mohammed Ali industry revived. His main ob­

jective was to supply his army and navy with their needs,

thereby reducing his dependence on foreign sources. Arms, machine tools, and even steam engines were produced. Sugar,

glass, paper, oil, and cloth industries revived. But these

accomplishments broke down rapidly as the English influence

spread in the Ottoman Empire. The Anglo-Turkish Commercial

Convention of 1838 permitted British traders to buy and

sell anywhere within the Ottoman dominions. Thus, protecting 33

Egyptian industry could not be continued, and in 1841

Mohammed Ali was forced to reduce his army.

By the mid nineteenth century Egypt was progress­ ing. Industry was expanding again due to the establishment of new industries and the revival of old ones. Following the construction of roads, railways, and canals, especially the Suez Canal, commercial activities, national and inter­ national, increased rapidly. Agriculture expanded, and productivity rose because of the new system of land tenure, the many new canals and bridges on the Nile, and the ex­ pansion of cotton cultivation. National income and employ­ ment was rising; even labor was becoming scarce, in spite of the increase in population.

By the year 1882 the movement of the popular awaken­ ing was impeded and was followed by a setback in Egypt's progress and development of her economy. Egypt had to wait for the changing of national and international situa­ tions at the end of the second World War to start rebuild­ ing. The setback can be explained by the following:

1. The royal family in Egypt, being foreign, worked for itself. It created a two-class system—a small minority to back them and share the exploitation of the peasant, and the large majority of peasants who had nothing more than a subsistance standard of living.

2. The Suez Canal, which rendered an immense service to the world, made foreign intervention in Egypt's affairs inevitable. The tens of thousands of suffering 34

Egyptians who built the canal were badly exploited by foreigners who owned the shares, pocketed the profits, and reinvested them in London and Paris. Economic ex­ ploitation, followed by political intervention, led to the military occupation of Egypt by England.

3. The setback was taking place at a time when colonialism was changing from mere competitive occupation of colonies by colonial powers to a stage of economic exploitation by international financial monopolies.

4. Industry, unable to develop freedom of com­ petition, died or declined tremendously after rights were given to the British traders to move more freely within the Ottoman Empire, of which Egypt was a part.

5. Agriculture was moving back to the feudal sys­ tem. Large estates were granted to members of the royal family and to their followers. The area in the hands of the peasants either remained constant or declined, thus lowering productivity through the continuous process of fragmentation from inheritance.

6. Income was unevenly distributed because of the following factors: a) The limited industry was owned pri­ marily by foreigners; b) The Suez Canal was controlled by

Anglo-French interests; c) The import-export industry was monopolized by either the royal family or foreigners; d) The establishment of foreign colonies following the ex­ pansion of cotton cultivation created a scarcity of labor.

Capital leaving the nation was badly needed for investment; 35 the masses were subject to economic as well as political exploitation, and the system of income distribution did not generate enough demand for further investment.

7. Changes in economic, social, and governmental

structures

...did not proceed gradually, originally and indigenously but [were] the result of the initia­ tive of individual autocrats in imposing certain reforms on a reluctant population in an effort to emulate particular aspects of Western civili­ zation. The material changes were therefore not preceded or accompanied by an intellectual re­ awakening, as they had been in the West, but proceeded independently while the ideology pre­ vailing at the beginning of the process remained unchanged.iy

8. The lagging education was aimed at producing administrative employees, rather than being creatively aimed at providing the public with a service necessary for

social, economic, and political change.

9. Being the product of such a system, the govern­ ments of Egypt were unenlightened. They paid no attention

to the peasant situation, but put their own interests ahead of their country's, and could not see beyond Egypt's boundaries.

It might be said that Egypt lost her oppor­ tunity in the second half of the nineteenth century. If during that time she had had a government which was both national and enlight­ ened and which could have laid the foundations of a modern educational system, carried out some measure of industrialization and established the groundwork of a Westernized administration with­ out incurring such a large foreign debt as to jeopardize the country's independence, her eco­ nomic and social structure might have been very different from what it is today. It is even possible that a rise in the standard of living 36

and more widely diffused education might have checked the population growth. Egypt migh have emerged into the twentieth century as a small-scale Japan.20

The setback, partly imposed by foreign powers and partly by the product of forces at work within the Egyptian society, created an intellectual discomfort. With the materialization of the long-feared threat of foreign dom­ ination in the form of British occupation, the government lost for itself any claim to the people’s allegiance.

The educated people who came from Europe led a reform movement which undermined the existing political community and some of the traditional Islamic conceptions.

The government tried to restore and maintain order by reconciling the old traditions and the new reality. The gap between the new ideas and the reality of the situation created a political conflict which climaxed in 1919.

The revolution of 1919 failed because the leader­ ship overlooked the need for social change and were unable to extend their vision beyond Egypt’s boundaries.

Under the British occupation the Egyptian economy moved very slowly, and its transformation to an agricul­ tural economy, depending mainly on one cash crop, was completed. No social reform was undertaken, and public education did not experience any noticeable change.

Foreigners were encouraged to settle in the country, deep­ ening the degree of exploitation and widening the gap between the small, chosen minority and the large, destitute majority. 37

The population was growing, and the death rate dropped due to the introduction of minimal measures of sanitation. The population, which was 3 million in 1800, rose to about 6.8 million in 1882 and 11.3 million in

1907. Labor, which had been scarce in the 1880's, became abundant, and the period of labor shortage was replaced by one of population pressure on land.

Poverty, ignorance, and the absence of leisure activities were responsible for the increased birth rates.

Migration from the country to towns was significant, es­ pecially during the war years, due to the employment provided by the allied armies. Population increased from

11.3 million in 1907 to 12.8 million in 1917, 14.2 million in 1927, 16 million in 1937, and to 19 million in 1947.

Some economic progress was achieved due to the building of dams and improved irrigation. Industry ex­ panded slightly during the war years when imports stopped and more products were needed for the fighting armies.

Industry declined, however, by the end of World War II.

Textiles and sugar became the main industries in Egypt, and industry continued to play a minor role in the

Egyptian economy.

Agriculture expanded in the area under cultivation.

Dams and canals were built to increase the amount of water available for irrigation and to limit the damage caused by high floods. Productivity increased due to the drain­ age projects which were undertaken by the government and 38 to the increase of foreign investment in land. The price of cotton played a dominant part in determining the standard of living, and more than 75 percent of the popu­ lation continued to live on the land as poor peasants, exploited and dehumanized.

By the end of World War II, the gap between ideol­ ogy and reality was not closed. Aspirations were far beyond achievements. The political structure did not pay attention to social change and was undermined by intellectual criticism. In July, 1952, a new kind of government emerged, promising to formulate a new system capable of serving as a foundation for a new political community.

FOOTNOTES

■^Charles Issawi, Egypt at Mid-Century (London: Oxford University Press, 1954), p. 14

7 e The National Charter of the United Arab Republic (Cairo: Information Department, 1962), p. 20 3Ibid.

^Ibid., p. 21-22

5Nadav Safran, Egypt in Search of Political Com­ munity (Cambridge: Harvard University Press, 1961), p. 55 ®The National Charter, p. 5 7 Ibid., pp. 5-6

8Issawi, op. cit., pp. 5-6

^Walter Z. Laqueur, Nasser1s Egypt (London: Weiden- feld and Nicolson, 1957) , p. 13 39 l°Issawi, op. cit., p. 8

11Ibid., pp. 5-6

12 Stephen Longrigg, The Middle East: A Social Geography (Chicago: Aldine Publishing Company, 1964), p. 47 13 Issawi, op. cit., pp. 12-13 l^ibid., pp. 10-13 1 R "."Safran, op. cit., p. 26 l^Issawi, op. cit., p. 20

17Ibid., p. 21

8ibid. , p.- 22

19 Safran, op. cit., p. 26 20 Issawi, op. cit., pp. 19-20 Chapter 2

THE ASWAN HIGH DAM - HISTORY AND DESCRIPTION

History

The revolutionary government in Egypt chose the way of socialism as being the "inevitable solution" to bring about social justice and economic development in the country:

The socialist solution to the problem of economic and social underdevelopment in Egypt— with a view to achieving progress in a revolu­ tionary way—was never a question of free choice. The socialist solution was a historical in­ evitability imposed by reality, the broad aspirations of the masses and the changing nature of the world in the second part of the twentieth century.1

Assuming the responsibility for building a strong and broad base for economic development, the revolutionary government of Egypt had to give its primary attention to agriculture, upon which 75 percent of the population depended. Poverty, ignorance, and disease had hindered social and economic development. The poverty stemmed from both social con­ ditions and the fact that agricultural production had not kept pace with the rapid increase in population, which had increased from 9.7 million in 1897 to 19 million in 1947 and to 26 million in 1960. Now, some say, it is up to

32 million.

40 41

To meet the demands of the expanding population and to promote a continuing high standard of living, the full utilization of the country's water resources was essential. The Aswan High Dam is considered to be a broad and quick approach to the problem of providing sufficient food and electricity to the growing needs of Egypt's people and industry. It will ensure the full utilization of the flood waters of the Nile for the expansion in cul­ tivation and for the production of a large amount of hydroelectric power.

The Nile River derives its supplies of water from equatorial Africa; due to the seasonal character of the tropical rainfall, there is a great variation in the level of the river. The average annual run-off of the Nile is eighty-four billion cubic metres. Tn low-water years, it can be as low as forty-five billion cubic metres for the whole year—too little to provide the water needed for irrigation, thereby causing great agricultural losses. In high-water years, the run-off can be as high as 150 billion cubic metres, leading to catastrophic floods and causing heavy damage to crops, property, and industries. These variations in the Nile's run-off had bothered the people of

Egypt since the ancient times of the Pharaohs. The Nile had to be controlled by regulating its flow so as to avoid the extreme fluctuation of drought and flood and to obtain the maximum benefits inherent in its potential resources. 42

During the nineteenth and the twentieth centuries, much has been done to conserve water for irrigation pur­

poses. A number of dams and barrages were built to control

the flow of the river and to distribute water where and when it was needed. In 1902 the original Aswan Dam was built, but further progress in the development of new areas

called for new supplies during the low season (February-

July) , when water is most needed to irrigate summer crops.

This was achieved by heightening the Aswan Dam twice—in

1912 and 1933—thus doubling the capacity of its reservoir,

and by building a new dam at Gabal El-Awlia near Khartoum

in 1937.

In spite of all improvements, water was Still flow­

ing in an annual average of thirty-two billion cubic metres

to the Mediterranean, while it was badly needed to expand

agriculture to meet the demands of an ever-increasing

population. Also, the annual storage reservoir system

filled at the end of the high season and emptied in the

low season to supplement natural supply of water, would not

solve the profound problem of the great variations in the

level of the Nile. This system was not capable of prevent­

ing catastrophic floods and was unable to supplement the

natural flow in low years.

Therefore the idea of building a high dam across

the Nile River to store its waters in high flood years for

consumption in low flood years was born. Such a dam would 43 regulate the flow of the river, guarantee the annual average of eighty-four billion cubic metres to provide water for expansion in areas cultivated, and prevent floods from destroying and damaging crops and property. In 1921 the idea began to be formalized. Dams, barrages, and canals could have been erected in different countries along the

Nile, controlling its flow by means of continuous storage of water, but international problems hindered the progress of the idea and stopped its development.

The 1952 revolution in Egypt aimed at bettering the conditions of life for the people and forced the government to consider the erection of a dam in Egypt to do the follow­ ing things:

1. Provide enough water for both horizontal and vertical expansion in agriculture, and

2. Provide cheap hydroelectric power for industry, on which hope rests for building a strong economy and im­ proving the conditions of life for the masses.

On October 8, 1952, the National Revolution Council decided that studies on the design for a high dam should be started.

An international committee was formed from a number of world famous leading professors and experts with wide experience in dam design and construction. This committee was assigned to make a thorough study of the design and check its technical feasibility. On December 4, 1954, the International Committee reported, supporting the design and emphasizing its soundness from every aspect.

Hence, the government of the United Arab Republic decided to proceed immediately with the Aswan High Dam construction.2 44

The question of distributing the waters of the Nile after the development of the Aswan Dam Project was solved by the agreement signed on November 8, 1958, between Egypt and Sudan. According to the agreement, Sudan acquires rights to four billion cubic metres annually, and Egypt to forty-eighth billion cubic metres annually, leaving an unutilized surplus of thirty-two billion cubic metres at

Aswan. After the construction of the Dam, only a net of twenty-two billion cubic metres would be left, since losses from evaporation and seepage were estimated at ten billion cubic metres. The agreement gave Sudan 14.5 billion cubic metres and gave Egypt 7.5 billion cubic metres. Egypt had also to pay $34 million in sterling as compensation for the region affected by the"lake in the Sudan. As a result of the agreement, Egypt will be consuming 55.5 billion cubic metres, Sudan will be consuming 18.5 billion cubic metres,

and ten billion cubic metres will be lost. Added together, this would give us eighty-four billion cubic metres, the annual average of the Nile’s run-off.

Preliminary work on the Dam began in 1955 and con­

tinued through 1956 while the government of the UAR was busy

studying and negotiating the finances of the Aswan Dam

Project. The cost of building the Dam was estimated at 3 LE 415 million ($1,190 million), of which 35 percent, or

about $400 million, had to be in foreign currency to pay

for the construction and power equipment. This figure

included expenses for irrigation, drainage, land reform. 45 housing, roads, and other facilities; it excluded the in­ terest paid on loans and the compensation paid to the

Nubians and the Sudanese government.

The International Bank for Development was the first to be approached for financing the foreign currency.

The bank approved the request after its expert studied the technical and economic aspects of the project and reported it as sound, technically possible, and important to the country’s development.

England and the United States showed an interest in helping to finance the Dam project, so negotiation started among the different parties. Optimism, which dominated the atmosphere at the beginning of the negotiations, was replaced by pessimism when the United States government and the International Bank for Development made their offers only under conditions of supervising Egypt’s financial situation to make sure that Egypt could fulfill its part in carrying out the Dam project. In February of 1956 the government of the UAR stopped all work on the Dam because negotiations did not seem to be heading toward an agree­ ment, since Egypt refused to accept any control or super­ vision by outsiders.

On June 22, 1956, the United States withdrew its offer of financing $140 million of the estimated $400 mil­ lion which was to be financed in foreign currency. The rest was supposedly to be financed by the International

Bank for Development ($200 million) and by England 46

($60 million). On July 19, 1956, the International Bank followed the lead of the United States and withdrew its offer.

In January, 1956, the Russian Ambassador to Egypt expressed his government's interest in financing the Dam project. In June, 1956, the Russian Minister for Foreign

Affairs visited Egypt for the same purpose, but details were postponed for discussion during Nasser's visit to the

Soviet Union in August, 1956.

On July 26, 1956, Nasser told his people the story of financing the Aswan Dam Project and declared that Egypt's answer to the withdrawal of the West was the nationaliza­ tion of the Suez Canal Company. With that, the door was closed for any further negotiations, and the chances for any possible compromise with the West were ended.

On December 27, 1958, an agreement between Egypt and the Soviet Union for financing the Aswan Dam was dis­ closed. According to the agreement, the Soviet Union was to render a long-term loan of 90 million rubles ($100 mil­ lion) to pay for the equipment and technical assistance required for the execution of the first stage of the pro­ ject. The loan would be paid in twelve annual installments starting in 1964 at an interest rate of 2.5 percent. On

July 27, 1960, another agreement was signed between the two countries. The Soviet Union was to loan Egypt another

202.5 rubles ($225 million) for the completion of the whole 47 project. The new loan was to be paid in twelve annual installments to begin in 1970.

The Soviets introduced some basic changes in the design of the Dam project as a result of their own research and studies. On the ninth of January, 1960, work started, and the struggle between man and nature began.

4 Description

The headfront of the project is formed by a rockfill dam 3,820 metres along the crest, 520 metres of which are within the riverbed. The Dam is 980 metres wide at its bottom and 40 metres wide at its crest. Its maximum height at the channel part is 111 metres, and maximum head is

78 metres.

The channel part of the Dam is built on the thick alluvial strata. The body of the Dam consists of rockfill, fine and coarse sands, and segregated stone sluiced with sand.

Watertight prisms alongside with an impervious clay core, a horizontal impervious blanket, and a vertical grout curtain best suit the requirements for safety of the dam.

The spillway structures of the project and the power plant are located on the eastern (right) bank of the

Nile. The upstream canal, 1,150 metres long, leads water to the tunnel's inlets and the water intakes.

The water intake, the main intake structure for turbine and discharge passages, is equipped with control 48 and service gates, as well as trash rakes. It has two lifts: the lower one is intended for passage of water in the construction period; the upper one is used for control and is aimed mainly at control of discharges after comple­ tion of the project.

Vertical main gates are of welded structure and are 5 metres wide and 20 metres high. They are installed at twelve apertures, thus blocking all six tunnels.

Twelve combined-flow turbines, nine of which have already been installed at the power plant, have a capacity of 175,000 kilowatts each. When completed, the total in­ stalled capacity of the units will be 2,100,000 kilowatts, and in average flood, years they will generate more than

10 billion kwh of electric energy.

From the power plant water flows down the 450-metre discharge canal into the Nile channel.

Six spillway tunnels have been constructed in the diversion passage between the upstream and the discharge cansls. Before discharging into the power plant, each tunnel is divided into two branches.

An open emergency spillway 288 metres long, with headrace and tailrace channels, was constructed at the left bank of the river. Its job is to receive the overflow at

5,000 cubic metres/second in case the water level in the reservoir reaches 183 metres. The emergency spillway has thirty waterways, 8 metres each, equipped with segmental gates. A 10-metre wide autoroad tops the spillway structure. 49

The project includes the construction of a large reservoir. Lake Nasser, with a capacity of 164.3 billion cubic metres. This amount of water equals two run-offs of the Nile in an average flood year. Lake Nasser is now one of the largest lakes in the world. It is 500 kilo-- metres long, and its tail waters occupy some territories of the Sudan. Its average width is 11 kilometres, and its maximum depth is 98 metres.

To connect the Sudan and areas located at Lake

Nasser with Upper and Lower Egypt, a port is being built at the upstream where the railroad line starts.

Energy generated by the power plant of the High Dam will be transmitted to Cairo through two high-voltage trans­ mission lines of 500 kv each and to other regions of the

UAR through other transmission lines of 220 kv and 132 kv and fifteen substations scattered throughout all of the

UAR.

Work on the Aswan Dam started on May 9, 1960. The first stage of building the canal to divert the direction of the Nile was completed on May 15, 1964. Building the body of the Dam was completed in 1969. Full utilization of the electric power will not be attained before industries to utilize such power are in operation.

Due to the fact that the building of the Dam lasted almost ten years, elements of cost were changing, and cost was rising. Cost of land reclamation is also inaccurate, since it is being distributed over twenty years. By the 50 year 1979-80, the area of new reclaimed land will reach

1.3 million feddans, the area necessary to make full utili­ zation of the Dam's waters. New reclaimed land needs three to six years before it becomes economical and reaches its full productivity. Below is a cost analysis containing estimates of the Dam's cost in both Egyptian and American currencies.

Cost Analysis

LE Millioh .$ Million

1) Cost of constructing the Dam to its final stage 165.00 379.5

2) Cost of installing power station, transmission lines, and compen­ sation of step-down transformers 154.00 354.2

3) Compensation to Nubians (property covered by Lake Nasser) 6.50 14.95

4) Indemnities paid to the Sudan 16.50 37.03

5) Interest on Soviet loans 25.00 57.5

TOTAL 366.60 843.18

These figures show the Dam project, plus the power station, will cost about one billion dollars. Other cost elements would be:

LE Million $ Million

1) Cost of physical facilities needed for the Dam's construction 10.4 23.92 2) Other services needed 8.0 18.40 3) Cost of building new homes for the Nubians 30.0 69.00

TOTAL 48.4 111.32 51

FOOTNOTES

1 The National Charter of the UAR (Cairo: Infor- mation Department, 1962) , pp. 5-6 2 Aswan High Dam Authority, Aswan High Dam, January 1968, p. 5 3 LE = Egyptian pound

1 LE = U. S. $2,872 (September, 1949-June , 1962)

1 LE = U. S. $2,286 (June, 1962- )

Aswan High Dam Authority, Aswan High Dam, pp. 7-9 Chapter 3

THE DAM'S CONTRIBUTION TO AGRICULTURE

Egypt is classified as an underdeveloped country.

Per capita income is low, and its economy is mainly agri­ cultural. But if the world's inhabitants are arranged according to per capita income, Egyptian population would stand somewhat above the median.

The production of agriculture increased substan­ tially in the period between the two World Wars, and by

1950 it could be said that Egypt was already in its agri­ cultural revolution; but the fruits of such development in agriculture were largely absorbed by the rapid expansion in population. Therefore, agriculture in Egypt could not provide the surplus needed in building up other sectors of the economy, notably industry.

The fellah, being poor and isolated and having a distrust of townsmen and government agents, was kept back­ wards. The cheapness of the labor and the belief of the fellah in the techniques he inherited, as well as his skill in using the traditional instruments, kept him and the government from introducing machinery to agriculture.

One of the main problems in agriculture was the markedly unequal distribution of property, accompanied by a very small scale of farming. Rented land comprised about 52 53

65 percent of the total land area of the country. Only those who had holdings of five feddans or less lived on and cultivated their own land. The following table repre­ sents land distribution in Egypt by 1952. The almost six million feddans of cultivable land, mostly on the banks of the Nile, were owned by 2.8 million owners, 5,000 of them or 0.2 percent owning as much as 27 percent of the land.

Table 3.1

Distribution of Landholdings According to Size in 1952

Ownership Number of Area Owned Percentage Percentage in Owners in of of Feddans in Thousand Owners Ownership Thousands Feddans

Less than 5 2,642 2,122 94.3 35.4

5 - 9 79 526 2.8 8.8

10 - 19 47 638 1.7 10.7

20 - 49 22 654 0.8 10.9

50 - 99 6 430 0.2 7.2

100 - 199 3 438 0.1 7.3

200 and more 2 1,177 0.1 19.7

Source: Rashid Barrawi, Economics of the Arab World (Cairo: The Egyptian Library, 1964) , p. 2 80

The unequal distribution of land ownership, coupled with the monopolization of industry by foreigners and a 54 small number of people in the high hierarchy, led to the inequality in the distribution of income. Two main trends were evident in consumption: on the one hand, a decline in the average level of living, and on the other, a widen­ ing in the gap between the consumption levels of rich and poor. With the revolution taking place in Egypt, this picture had to give way for another one—one of social justice, paving the way for the creation of a middle class capable of introducing social and economic change. Agri­ culture, which was the means of livelihood for more than

75 percent of Egypt's population, had to develop in order to face the increasing requirements for consumption and carry out an effective role in economic development. It also had to become a consolidated part of the new socialist society.

Land reform laws declared in 1952 and 1961 put an end to social injustice in the field of land ownership.

They corrected some of the errors by putting an upper limit of one hundred feddans on an individual's ownership of land and two hundred feddans as the upper limit of a family's ownership. Those laws changed the picture described in

Table 3.1 as follows.on the next page in Table 3.2.

The Arab application of socialism in the domains of agriculture does not believe in nationalizing the land and transforming it into the domain of public ownership. But from experience and study, it believes in individual ownership of land, with­ in limits that would not allow for feudalism. 55 Table 3.2

Distribution of Landholdings According to Size in 1961

Ownership Number of Area Owned Percentage Percentage in Owners in of of Feddans in Thousand Owners Ownership Thousands Feddans

Less than 5 2,919 3,172 94.1 52.1

5-9 80 526 2.6 8.6

10 - 19 65 638 2.1 10.7

20 - 49 26 818 0.8 13.4

50 - 99 6 430 0.2 7.0

100 5 500 0.2 8.2

Source: Rashid Barrawi, Economics of the Arab World (Cairo: The Egyptian Library, 1964) , p. 267

(It might be of some importance to note that new laws of land reform were announced in July, 1969, lowering the upper limit of a family's ownership from two hundred to one hun­ dred feddans and the individual's ownership from one hundred feddans to fifty feddans.)

The government began with land reform and went on

to improve the fellah's situation, providing him with free

social and medical services. Improved seeds, fertilizers,

loans, and agricultural education were also provided. New

irrigation projects improving the capability of dams and

land reclamation, were among the government activities to

strengthen agriculture and increase its contribution to the national income. 56

Calculated together, the aforementioned factors led to improved agriculture, higher productivity, and bettered the fellah*s economic situation. Progress achieved in the field of agriculture in the years 1952-64 can be summarized as follows:

1. Cultivated area increased from 5.8 million feddans in 1952 to 6.7 million feddans in 1964.

2. The average production of the feddan of cotton increased by 34 percent between the years 1952-64; rice in­ creased by 51 percent; wheat, by 49 percent; and barley, by

35 percent.

3. Animal wealth was promoted. New, superior breeds were imported to be distributed among the fellaheen, and animal insurance was introduced in order to protect the fellah.

4. The system of loaning to small farmers was de­ veloped, and interest on loans was abolished. Total loans presented to farmers amounted to $138 million in 1964.

5. The number of cooperative societies increased from 1,727 in 1952 to 4,665 in 1964 to assure the fellah better service, especially in marketing his crop.

6. Investments allocated for the sector of agri­ culture in the first Five-Year General Economic and Social

Plan, 1960-65, were $799 million, which represented 20.5 percent of the total investment of the plan.

7. Increase in overall productivity amounted to 2 about 22 percent. 57

As a result of this progress, the income derived from agriculture rose from $757 million in 1952 to $1,042 million in 1964—an increase of about 40 percent over 1952.

This led to the improvement of the economic situation of the fellah, enabling him to support his family more ade­ quately and eliminating some of the diseases caused by inadequate diet. Free medical services were also provided by the government, including the establishment of a medical unit in almost every village and medical education, espe­ cially for mothers, for the villagers. The results of these provisions were better sanitation and a subsequent decline in the death rate. The birth rate, however, con­ tinued to climb, compounding the problem of overpopulation.

The fellah has economic, cultural, and social reasons for keeping his birth rate so high. On the economic side, he looks to his family as a source of income. He needs his wife and children to help him plough the land and har­ vest his crops. In his old age, it is his sons who will support him and carry the whole burden of life for him.

Being the descendant of a tribe and mainly Moslem in re­ ligion, the fellah takes pride in his family. By producing more boys, he not only reproduces himself, but also con­ tributes more to the number and strength of his kinship.

Believing that each new child's means of living will be born with him, the fellah has no reasons not to produce any number of children he can. Because the villages had no recreational or social activities in the evening, the fellah 58 was forced to stay home. There, with no electricity or television, he is left with the only recreational activity open to him—sharing his wife’s bed and enjoying his abil­ ity to produce more children.

Due to the fact that death rates were declining at the same time that birth rates were kept high, the rate of population growth was rising and surpassed the rate of in­ crease in the cultivated area. The table on the following page will demonstrate this fact. The high rate of increase in population and the low rate of expansion in the area cultivated led to an increase in the number of people occu­ pied in agriculture, since the expansion in other sectors of the economy did not absorb all the increase in population.

As a result of that, agriculture became crowded, and its productivity declined.

The government of Egypt, realizing the increasing pressure of population on land, gave its most attention to

1. Increasing the area cultivated and crop area

(horizontal and vertical expansion in agriculture).

2. Intensifying efforts to check population growth or at least limit the rate of increase to a manageable one.

To tackle the second problem, the government opened hundreds of social service units in urban and rural areas. Beginning in 1955, the government established what is called family planning clinics.

The clinics were designed not only to provide birth control services, but to supply data and a> in Table 3.3

The Ratio of Area Cultivated and Crop Area to Population for the Years 1897-1960

Area Crop Popu­ Per Capita Per Capita Year Cultivated Area % lation % Share in Area Share in (million (million Increase (millions) Increase Cultivated Crop Area feddans) feddans) (feddans) (feddans)

1897 5.0 6.7 — 9.7 — 0.52 0.70

1917 5.3 7.7 15 12.8 32 0.41 0.60

1937 5.3 8.4 9 15.9 24.2 0.33 0.53

1947 5.7 9.2 9.5 19.0 19.5 0.30 0.48

1960 5.9 10.4 13 26.1 26.8 0.23 0.40

Source: This table is computed from Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Company, 1965), p. 52, Table 3.3, and from Charles Issawi, Egypt in Revolution (London: Oxford University Press, 1963), p. 37, Table 3. 60

carry out experimentation in the field.... Contraceptive services are free, but devices are sold at full or partial cost or given free according to economic situations or needs.3

The number of such clinics started with eight in 1955 and increased to thirty-eight in 1964. In 1962 the Egyptian

National Charter recognized the use of contraceptives as wise and healthy. A campaign through the press media was conducted to advocate birth control and strongly recommend it as rational for the improvement of the family's, as well as the country's, welfare. In 1966 a massive campaign aimed at controlling birth rates was carried out by Presi­ dent Nasser himself. A network of combined service units providing social, medical, and agricultural education and services was added. There are now over two thousand such units scattered all over the country, covering rural as well as urban areas.

Realizing the effect of education on handling such a problem, the government of Egypt opened thousands of schools and more than tripled the number of institutions of higher education.

Results from the various programs of population control are still limited, since there are reasons behind the high rate of population growth which have not been very much weakened. In spite of the fact that Islamic teachings do not conflict with practicing birth control, the tradi­ tional beliefs in the wrongfulness of man's controlling birth are deep and profound. "In certain ways, such as its 61 attitude towards birth-control and its respect for commer­ cial activity, it [Islam] is more conducive to economic 4 development than some forms of Christianity." Electricity has not yet reached the Egyptian countryside; and the downward-upward obligations within families and kinships are breaking down slowly. Positive signs are noticeable in the spreading of education, the changing religious attitudes and the increase in the degree of urbanization and indus­ trialization.

Unless some kind of cultural revolution takes place in the Egyptian village and town to shake the old system of beliefs and reconstruct religious understanding, the problem of high rates of birth will continue to live with the people of Egypt for a long time. However, the new political ideol­ ogy, the aftermath of the land reform, the building of the

Aswan High Dam, and the introduction of electricity to the

Egyptian villages in the 1970's are expected to cause a decline in the rates of birth.

For the purpose of horizontal and vertical expansion in agriculture, the government sought more land to be cul­ tivated and more water for intensive cultivation. Egypt, with 96 percent of its area being desert, limited the arable land to reclamation projects, a process that is ex­ pensive, slow, and still depends on the development of a water supply. The fact that rain in Egypt is very scarce and inadequate for successful cultivation pointed to the

Nile River as the only dependable source of water. Hence, 62 the idea of building the Aswan High Dam was given priority and urgency.

The Aswan High Dam will ultimately enable Egypt to bring about the following changes:

A. Add 1.3 million feddans to its cultivated area.

Since Egypt had only 5.8 million feddans in 1952, the in­ crease in the cultivated area will amount to about 22.4 per­ cent. But, as was mentioned earlier, Egypt was able to expand its cultivated area from 5.8 million feddans in 1952 to 6.7 million feddans in 1964. This expansion was achieved without using the Aswan High Dam waters; it depended on the building of canals, barrages, and the improvement of the irrigation system. Therefore, the Aswan Dam will bring the cultivated area in Egypt to 8 million feddans by 1980—an increase of 19.4 percent between the years 1964 and 1980.

B. The conversion of 700,000 feddans from the basin irrigation system to perennial irrigation. This conversion will increase the crop area by about 700,000 feddans, since it will allow for cultivating the land more than once a year, thus producing two or more crops annually. Under the basin irrigation system, the land was divided into basins of 1,000-4,000 feddans by the construction of dykes.

Flood waters were let into the compartments covering the land to an altitude of 1-2 metres. After the fall of the river (45-60 days), the land was drained and made ready for cultivation. Only one crop annually was produced, since its cultivation would have to depend on the residual moisture 63 after drainage.

C. The overall increase in the crop area resulting from the utilization of the waters of the Aswan High Dam for irrigation would be about 25 percent over 1960. Therefore, the income of agriculture is expected to increase by the 5 same percentage. It was $1,278 million in 1960, and the increase that would result from the utilization of the

Dam’s waters for irrigation is expected to be about $320 million.

D. The full control of the Nile's waters and the new agricultural projects of horizontal and vertical ex­ pansion will result in:

1. The guarantee of the irrigation require­

ments for the existing and the new areas under

cultivation, even in years of low water supply.

2. Expanding rice cultivation by allocating

as much as 1.2 million feddans for this purpose.

Rice is one of the most profitable crops in Egypt

for which the area allotted has reflected the

fluctuations in the availability of water from

year to year, since rice cultivation requires

large supplies of water in the summer, which is

the low water supply season.

3. Expanding the cultivation of other highly

productive and profitable crops such as sugar canes

and cotton. 64

4. The lower and stable supply of water in the river and in the canals throughout the year will facilitate better drainage, lowering its cost as well as the cost of maintaining canals, barrages, and bridges in good condition.

5. The elimination of damage to agriculture and property caused by high floods will save the

Egyptian economy money that otherwise would have to be spent fighting floods. It will also lower the cost of maintaining canals, barrages, bridges, and roads. Cultivable lands on the shores of the

Nile and on the islands along the river will also be saved from being flooded every year. The Dam's contribution here was estimated at $18 million annually, of which $12 million is estimated as directly related to agriculture.

6. Providing the government the chance to in­ troduce new methods of cultivation and demonstrate to the fellaheen the profitability of such methods.

7. The distribution of the newly reclaimed land among the farmers with no landholdings or very tiny ones. This will surely strengthen the fellah *s incentive to work harder, and therefore it is expected to increase the overall productivity of agriculture. Self-confidence gained by the fellaheen will help change their attitudes of distrust-disrespect toward the government and its 65 agents. The anti-government feelings were the only

bad outcome of the fellah1s experience with the

government’s agents who visited his villages only

as tax collectors or army recruiters. His unwill­

ingness to participate or play an active role in

running his country was one of the hindrances of

economic and social change.

By making the above-mentioned goals possible to achieve, the Aswan High Dam will cause the productivity of 6 agriculture to rise by an estimated 15 percent. In terms of money, this increase in the income of agriculture is ex­ pected to reach $192 million. The total increase in the income of agriculture caused by the expansion in the crop area, the rise in productivity, and the control of floods is expected to reach $524 million—an increase of 41 percent over 1960.

The government of the UAH is carrying on the reclam­ ation of land by its own agents. The benefits of such projects could be handled separately from the High Dam project, but it was the Aswan Dam which made the reclamation of 1.3 million feddans possible. To estimate the benefits of those projects, man can assume that the government will continue to own the newly reclaimed land and cultivate it, or the government will continue to own the land and rent it to small farmers.

The philosophy of the Egyptian government does not believe in the nationalization of land in the field of 66 agriculture. On the contrary, it believes in increasing the number of farmers who have land, strengthening their incentive to work, and helping them gain self-confidence.

Therefore, we expect the government to sell the new cultivable land to small farmers, intensifying its efforts to create good citizens in a progressive country. 7 Mr. Fouad Kafrawy estimated the cost of reclaiming

1.3 million feddans at $1,230 million. He also estimated the cost of converting 700,000 feddans from basin irrigation to perennial irrigation at $230 million. Due to the con­ version process, the productivity of the 700,000 feddans will almost double. Therefore, taxes levied on such land will be increased by a percentage of almost 100 percent.

Taxes on the feddan before the conversion averaged $11-. 5; new taxes which will be collected by the government will amount to $8.1 million annually, thus allowing the govern­ ment to cover the costs of converting the 700,000 feddans to perennial irrigation in about twenty-eight years. The conversion will double the crop area of the converted land and should certainly lead to doubling the income of the same land, which is expected to increase by about $80 mil­ lion. Therefore, the economy is expected to recover the cost of conversion in about three years.

The value of the feddan for such land on the banks of the Nile, though it depends on its location, rates high among other kinds of Egyptian soil, since it is used for growing highly profitable crops. The average value of the 67

feddan is estimated at $1,050. This figure is based on prices for land of similar fertility and location on the one hand, and on the average annual income of the feddan on the other hand. Assuming that the productivity of the converted land was doubled, the value of such land would have doubled also. Therefore, it is safe to assume that

the value of the feddan, due to the increase in its pro­ ductivity, would have gone up by at least 80 percent.

Assuming that the value of the feddan after the conversion was $1,050, the value before the conversion would have been about $580. The increase in the value of the feddan due to the conversion, therefore, would be about $470. Total in­ crease in the value of the converted 700,000 feddans would be about $329 million.

Mr. Kafrawy classifies the land under reclamation under three classes according to the time required by each o class before its soil gets to be of normal productivity:

Class 1: requires two years of reclamation work,

reaches economical cultivation in the third year, and

reaches full productivity after six years.

Class 2: requires two years of work, reaches

economical cultivation after five years, and reaches full

productivity after nine years.

Class 3: requires two years of work, reaches

economical cultivation after six years, and reaches full

productivity after thirteen years. 68

Mr. Kafrawy goes on to estimate the income of the feddan of each class until it reaches full productivity. Assuming that the government would rent the reclaimed land to small farmers, he estimates the annual rent. Finally he estimates the price at which each feddan will sell after reaching normality of its soil. The table on the following page is a summary of his estimates.

Since I failed to find estimates of how many feddans of each class would be reclaimed, I feel it is rational to assume that each class would contribute one third of the

1.3 million feddans under reclamation.

To estimate the government's income from the re­ claimed land, two approaches could be used:

1. To assume that the government will continue to own and cultivate the land until it reaches full productiv­ ity, then sell it to small farmers; or

2. To assume that the government will continue to own the land, but will rent it to small farmers until it reaches full productivity, then will sell it.

If the government chooses the first alternative: 1) Income it will receive from Class 1 will be $119.6 million (income received in the years 3 through 6 x area, previously es­ timated at 1.3 million feddans); 2) Income it will receive 3 from Class 2 will be $114.5 million; 3) Income it will re­ ceive from Class 3 will be $164.5 million; and 4) A total of $398.6 million of value added will be received by the government. 69

Table 3.4

Classification of Land under Reclamation and the Estimated Annual Rent During the Years of Reclamation ($)

Year Class 1 Class 2 Class 3 Cult. Value Value Value Starts Added Rent Added Rent Added Rent

3 34.5 11.5 — - - -

4 57.5 16.1 — - — —

5 80.5 20.7 — — — —

6 103.5 27.6 34.5 11.5 — —

7 115.0 34.5 57.5 16.1 34.5 11.5

8 80.5 20.7 46.0 13.8

9 92.0 27.6 57.5 16.1

10 110.4 32.2 69.0 18.4

11 80.5 20.7

12 92.0 27.6

13 103.5 32.2

Value < af the Class _1 Class 2 Class 3 feddan of normal soil 805 690 575

Source: Fouad Kafrawy,"Costs of Building the High Dam and Terms of Repayment/' Mage11at El-Muhandiseen, Third issue, April, 1969, p. 21 70 The value of the newly reclaimed land when sold to small farmers will be about $690 per feddan on the average.

This means that the government will receive about $879 mil­ lion (690 x 1.3 million feddans) when it sells all the 1.3 million feddans of the reclaimed land to the farmers. The government will therefore receive a total of $1,277 million:

$398.6 million from cultivating the land before selling it when it reaches full productivity, and $879 million as the value of the land when sold to the small farmers.

If we compare the government's expected receipts of

$1,277 million with the $1,230 million which is the esti­ mated cost of land reclamation, we will notice that the government will cover all costs of reclamation by the time the land is handed to the farmers. But by choosing this alternative, the government would have to enter the field of agriculture as a producer, setting up agencies and ap­ pointing managers for whom work will not last long. It will also delay the distribution of land among needy farmers, employing them as farm workers rather than renting them the land and giving them the incentive to work hard on land whose full product belongs to them.

Therefore, the second alternative—the government continuing to own the land but renting it to small fanners until it reaches full productivity and then selling it— will be more appropriate within the philosophy of the gov­ ernment. If the government chooses this alternative:

1) Rent received by the government from Class 1 until the 71 year of full productivity, when the land would be sold to the farmers, would be about $32.9 million (rent received during the years 3 through 6 x area); 2) Rent received from Class 2 would be about $32.9 million; 3) Rent re­ ceived from Class 3 would be about $46.9 million; and

4) Total income to be received from renting the land would amount to $112.7 million.

Taxes on agriculture are 14 percent of the value added. Therefore, the income the government will receive from taxes on the newly reclaimed land before it is sold to the farmers are expected to be about $56 million

($398.6 million x 14%). This will bring the government's receipts to a total of $168.7 million. Taxes on this land will be stabilized after selling it to the farmers, and the annual taxes would be about $15.4 on each feddan (av­ erage value added x 14%). Total taxes to be received each year by the government would be about $20 million.

The second alternative—the government owning the land, but renting it to small farmers before selling it when it reaches full productivity—would increase the gov­ ernment's income $1,065.7 million: $897 million from sell­ ing the land, $56 million from taxes collected during the period, and $112.7 million from rent. Comparing this figure of $1,065.7 million with the $1,230 million of the estimated cost, we notice that the government will need some time before it will recover all costs of reclamation.

A total of $164.3 million has to be recovered from taxes. 72 Knowing that annual taxes to be collected from the 1.3 mil­ lion feddans will be about $20 million, we find that the government will have to wait about eight years after selling the land to small farmers before it will fully recover the cost of reclamation. This alternative has two main advan­ tages over the other plan:

1. By renting the land, the farmer will have the incentive to work harder than he would if he were employed by the government as a farm worker; and

2. The farmers will enjoy a big difference in their incomes which would otherwise have been a part of the gov­ ernment's income, had the government decided to operate the land itself.

In the preceding discussion of the government's selling reclaimed land to small farmers over a period of forty years, no interest was assumed to be charged by the government. The reason for this is that the government has completely abolished all kinds of interest on loans to small

farmers. Therefore, no attempt was undertaken to estimate the government's annual income from charging interest, had the government decided to do so.

The Dam's contribution to Egyptian agriculture began in 1964, the year in which the first stage of con­ struction was completed. Since then the Dam's waters have been utilized in increasing amounts, owing to the advances

in land reclamation projects. By 1970 about 850,000 feddans of new land will have been reclaimed, and the rest is due 73

by 1980. The following table compares tihe estimated cul­

tivated area, crop area, and income derived from agriculture

for 1970 and 1980 with the actual figures for 1960:

Table 3.5

The Area Cultivated, the Crop Area and the Income of Agriculture in 1960 Compared to Those Estimated for 1970 and 1980

% % 1960 1970 Increase 1980 Increase

Cultivated area 5.9 7.5 27.5 8 6.7 (million feddans)

Crop area 10.4 13.7 31.7 14.6 6.6 (million feddans)

Income 1,278.0 1,470.0 15.2 1,700.0 16.0 (million $)

Source: 1960 figures for the area cultivated and the crop area are from Bent Hansen, De­ velopment and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Pub­ lishing Company, 1965), p. 52, Table 3.3

Note 1: The income of agriculture for 1970 is much lower than the actual because of the devaluation of the Egyptian pound in 1962. The increase measured in Egyptian pounds will be about 60 percent, or about $550 million.

Note 2: The estimated incomes of 1970 and 1980 have been adjusted to allow for some increase in the pro­ ductivity of agriculture.

Hansen estimates the net value added per feddan at

$185 for 1950 and $204.5 for 1960, which represents a rise

of 11 percent in the productivity between those years. If we assume that the same trend will continue and productivity 74 will rise at least by the same percentage, then the average net value added per feddan is expected to be about $224.9 in 1970 and $246.3 in 1980. Using these estimates, the in­ come from agriculture would be expected to reach $1,688 mil­ lion in 1970 and $1,968 million in 1980. After the deval­ uation these figures would be about $1,350 million for 1970 and $1,575 million for 1980.

Most of the rise in productivity will come from the reallocation of land to more valuable crops for export, such as cotton and rice. Average net return on various crops (per feddan) for 1955-59 was estimated as follows:

Table 3.6

Estimated Net Value Added and Net Profit Per Feddan (in $)

Crop Net Value Added Net Profit

Cotton 144.9 105.8

Rice 121.9 89.7

Barley 46.0 32.2

Wheat 43.2 25.3

Source: Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Company, 1965), p. 56, Table 3.4

The Aswan High Dam will enable Egypt to increase the area allotted to cotton and rice, thus increasing the income from agriculture. In 1959 cotton cultivation was 75 limited to a maximum of 33 percent of the total area under cultivation, and wheat cultivation to a minimum of 33 per­ cent also. Rice cultivation fluctuated greatly, due to the fluctuations in the Nile's water supply. The follow­ ing table compares the estimated cotton and rice cultivation made possible by the building of the Aswan High Dam with areas allotted to cotton, rice, and wheat cultivation in the years 1952-60.

Table 3.7

Area Cultivated with Cotton, Rice, and Wheat for 1952-60 and the Estimated Area for 1970 and 1980

% % % Year Cotton Increase Rice Increase Wheat Increase

1952 2,042 388 1,455 1953 1,374 439 1,858 1954 1,639 633 1,863 1955 1,885 623 1,581 1956 1,716 716 1,630 1957 1,888 759 1,572 1958 1,977 538 1,479 1959 1,827 757 1,531 1960 1,944 733 1,511

1970 2,492 28.2 1,050 43.3 2,492 64.9 1980 2,640 6.1 1,200 14.5 2,640 6.1

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Publishers, 1968), p. 248, Table 54 76

To conclude this chapter, I should like to point out the following:

1. Partial utilization of the Dam's waters started

in 1964, and the full utilization will have to wait until the completion of the reclamation projects in 1980.

2. Most reclamation projects will be completed by

1970-71, and therefore most of the reclaimed land will be handed to farmers between 1970 and 1980.

3. Assuming that land to be sold to farmers will be payable on 40-year terms, the government will recover most of the reclamation cost forty years from now.

4. When the Dam's waters fully become utilized in

irrigation, an increase of about $524 million in the income of agriculture will be conceivable.

5. With taxes on agriculture at 14 percent, the government will be receiving about $73 million in new taxes annually, leaving about $450 million to the fellaheen. A large portion of the fellah's share will be spent on con­ sumer goods, and this will cause the fellah *s economic situation to improve substantially, especially if the birth rate slows down.

6. The nation's wealth will increase tremendously due to the building of the Aswan High Dam and the subsequent rise in the value of the converted land from basin irriga­ tion to perennial irrigation and the addition of 1.3 million

feddans of new land for cultivation. 77

FOOTNOTES

^The National Charter of the UAR (Cairo: Informa­ tion Department, 1962), p. 60 2The United Arab Republic from 1952 to 1965 (Cairo: Information Department, 1965), pp. 8-64 "^Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Pub- lishers, 1968), pp. 140-41 4 Charles Issawi, Egypt at Mid-Century (London: Oxford University Press, 1954), p. 98 E El-Kammash, op. cit., p. 271 ^Taher Abu Wafa, an interview in Cairo, July, 1969

7Fouad Kafrawy, "Costs of Building the High Dam and Terms of Repayment," Magellat Al-Muhandiseen, Third issue, April, 1969, pp. 19-25 8Ibid., p. 21

®Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Company, 1965), p. 78 Chapter 4

THE DAM'S CONTRIBUTION TO INDUSTRY

The first attempt to build an industrial sector within the Egyptian economy was undertaken by Mohammed Ali in the first half of the nineteenth century. Trying to build a strong army and to break away from the central government in Constantinople, Mohammed Ali struggled to reduce his dependence on foreign sources. His program of industrialization had definite objectives, one being to supply his army and navy with Egyptian-made arms and tools.

The program went beyond the goals aimed at by

Mohammed Ali, setting up a chain of reaction which induced other sectors of the economy to expand. Sugar, glass, paper, oil, and cloth industries revived. Arms, machine tools, and even steam engines were produced. The textile industry was established following the introduction of cotton cultivation in Egypt and since then has continued to grow and prosper.

Within fifty years or so Egypt achieved a good deal in the field of industrialization. To protect the newly established or revived industries, Mohammed Ali tried to create an industrialized, closed, and state- controlled economy. But the country's short-lived in­ dustrial achievements broke down fast, and Mohammed Ali's 78 79 ambitions were brought to a halt due to the increasing

British influence in the Ottoman Empire. The Anglo-

Turkish Commercial Convention of 1838 permitted British traders to buy and sell anywhere within the Ottoman do­ minions. As a result, in 1841 Mohammed Ali was forced to reduce the size of his army.

The army's demand for goods diminished, and the new and inexperienced Egyptian industries, unable to com­ pete with the old British industries, declined or died.

The textile industry was the only one which seemed to have survived the challenge. It proved unable to stimulate other sectors of the economy to develop, so its effect on indus­ trialization remained very much limited.

Egypt had to wait over one hundred years for its first comprehensive industrialization program. The revolu­ tionary government which came to run Egypt as a result of the 1952 revolution realized the need and importance of in­ dustrialization as an essential step for the modernization of the whole country. That is not to say that Egypt had no industry between the mid-nineteenth and mid-twentieth cen­ turies. The industrial sector went up and down as demand for manufactured products increased or declined, and in­ dustries revived or died, depending mainly on the inter­ national rather than on the national situation. During

World War I the industrial sector was activated by the shortage of European products and the increasing needs of 80 the Allied forces. But the ups were followed by downs at the end of the war. The same experience was repeated during World War II.

Table 4.1

Percentage Share of Agriculture And Manufacturing Industries In National Income for Years 1939-60

Year Agriculture Manuf a)cturing

1939 48.8 7.8

1940 43.6 9.0

1941 40.5 11.5

1942 41.4 11.8

1943 41.0 12.0

1944 41.3 12.6

1945 44.5 11.1

1950 44.7 8.4

1951 40.3 8.3

1952 36.0 8.7

1953 35.0 9.8

1954 35.8 10.8

1960 29.9 19.8

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York-: Frederick A. Praeger, Publishers, 1968), p. 162, Table 35 81

Starting in 1952, more emphasis was put on industry.

The government’s investment strategy aimed at developing

Egypt's industrial sector. The percentage share of the in­ dustrial sector in Egypt's national income was 8.7 percent in 1952. This share increased to 19.8 percent in 1960.

The share of the agricultural sector in Egypt's national income had decreased from 36 percent in 1952 to 29.9 percent in 1960. Taking into consideration the increase in Egypt's national income in the period from 1952 to 1960, we would realize that the production of the industrial sector more than tripled for that period, whereas agricultural produc­ tion increased only by about 40 percent.

Although it was early realized that Egyptian agri­ culture could not keep pace with the increase in population, very little was done to support industry. The development and growth of the industrial sector was slow, and efforts were concentrated mainly around cotton, sugar, and other food industries. Capital invested in industry was estimated at $23 million in 1921 and $42 million in 1940. Of this capital, 30 percent was invested in the cotton and sugar industries alone, and a substantial part in the food industry.

Following the revolution of 1952, the new govern­ ment, realizing that new investment in industry was about

$5 million in 1952, decided not to rely on private enter­ prise to carry out the industrial projects which the gov­ ernment deemed necessary for the development of the country. 82

The new philosophy of the Egyptian government in the field

of industrialization is summarized in the Egyptian National

Charter, as the following excerpts show:

Social freedom cannot be realized except through an equal opportunity for every citizen to obtain a fair share of the national wealth.

The capitalist experiments to achieve progress correlated with imperialism. The countries of the capitalist world reached their period of economic drive on the basis of investments they made in their colonies....

Moreover, other experiments of progress realized their objectives at the expense of increasing the misery of the working people, either to serve the interests of the capitalists or under pressure of ideological applications which went to the extent of sacrificing whole living generations for the sake of others still unborn.

Facing the challenge calls for three condi­ tions : 1. Assembling the national savings, 2. Putting all the experiences of modern science at the disposal of the exploita­ tion of the national savings, and 3. Drafting a complete plan for production.

Work aimed at expanding the base of national wealth can never be left to haphazard ways of the exploiting private capital with its unruly tenden­ cies .

The redistribution of the surplus national work on the basis of justice can never be accom­ plished through voluntary efforts based on good intentions, however sincere they may be.

This socialist solution is the only way out to economic and social progress.... The people’s control over all the tools of production does not necessitate the nationalization of all means of production or the abolition of private owner­ ship or the mere touching of the legitimate right of inheritance following therefrom. Such control can be achieved in two ways: 83

First—The creation of a capable public sector that would lead progress in all domains, and bear the main responsibility of the development plan.

Second—The existence of a private sector that would, without exploitation, participate in the development within the framework of the overall plan, provided that the people's control is exercised over both sectors.

Thus, the present philosophy of the Egyptian government rejects the extremes of capitalism as well as those of

Communism. It chooses a middle-of-the-road method to de­ velop the economy. In 1955 the government founded the

National Planning Commission, which became the Ministry of

National Planning later on. The Ministry of Industry was established in 1956, and the Ministry of Public Works and the Ministry of High Dam soon followed. The government brought in economists and planners from both the West and the East to help in drawing up the first Five-Year Social

and Economic Development Plan, 1960-65, and later on, the second Five-Year Plan, 1965-70.

The government encouraged private savings and in­ vestment, subsidized the Industrial Bank which was estab­

lished in 1948, and enlarged and modernized the textile

industry. New industries were founded—coal and iron,

chemicals, foods, and appliances. The following figures

illustrate some of the progress achieved: Between Septem­ ber, 1952, and September, 1960, new investment in industry amounted to $200 million. The government's share was

$71 million, and the share of the Industrial Bank was 84 only $9 million. The rest of the investment was carried 3 out by the private sector.

In 1952, 1953, and 1956 the government passed many laws encouraging foreign capital and the importation of raw materials and semi-finished products. In 1957 the govern­ ment decided to speed up industrialization and adopted a

Five-Year Plan ending in 1962. It was soon realized, how­ ever, that such a plan should have been a part of a general plan for the social and economic development of the country.

Therefore, the Five-Year Plan for industrialization was shortened to three years, ending by 1960. Beginning in

1960, the industrial sector was incorporated in the new

Five-Year general social and economic Plan. The tables on the following pages illustrate the progress achieved in the field of industrialization in the period from 1952 to 1961.

This period shows a considerable expansion in the number of industrial establishments. An increase of 12 per­ cent is shown in the tables mentioned above. However, employment increased 35 percent, which means, compared to the 12 percent increase in the number of establishments, that the average size of those establishments expanded.

The textile industry was the leader in growth with over

30 percent increase in employment as compared to less than an 18 percent increase in the number of establishments.

Value added increased from $159 million in 1952 to $450 mil­ lion in 1960, an increase of almost 183 percent. This tremendous increase is due mainly to the increase in the 85

productivity of the worker, which went up from an average of $724 in 1952 to $1,516 in 1961.

The planned development of the economy took the

form of a ten-year program to be executed in two five-

year phases. The goal of this plan was to double the national

income in ten years. The first phase of the plan, 1960-65,

achieved most of its goals. Table 4.5 is a representation of the investment expenditures by sectors of the economy during the Five-Year Plan, 1960-65, and the base year,

1959-60, in millions of dollars.

Table 4.6 indicates the distribution of investment by sector and source of financing during 1960-65 and

1965-70. Investment needed for the executin of the two- phase plan was estimated at $7.58 billion—$3.6 billion for

the 1960-65 phase and about $4 billion for the 1965-70 phase. Industry and electricity will account for more than one third of the total investment, a fact which reflects

the emphasis placed on these two sectors. Table 4.4 of

the following tables is an index of production targets

assigned to the various economic sectors.

Before 1952 Egypt's industrial sector was handi­

capped by a lack of social overhead capital. Power, which

is a vital element for economic development, was inadequate

and constituted an obstacle to industrialization. The pro­

duction of electric power was too small to stimulate in­

vestment in industry, as Table 4.7 shows. 86

Table 4.2

Number of Industrial Establishments with Fifty or More Workers and the Number of Persons Employed by Each

No. of Industrial No. of Persons Industry Establishments Employed 1952 1961 1952 1961

Mining and quarrying 7 24 4,207 12,573 Food and kindred products 130 146 42,039 44,672 Textiles 235 277 108,697 140,292 Apparel and footwear 19 11 2,784 5,727 Lumber, furniture, and fixtures 40 33 3,550 4,880 Paper and paper products 20 23 4,750 7,931 Printing and pub­ lishing 31 32 4,925 6,801 Leather and leather products 11 11 1,075 1,202 Rubber products 4 6 809 2,278 Chemicals and allied products 41 46 9,690 16,869 Petroleum and coal products 1 3 4,376 3,693 Nonmetallic products 52 41 10,895 13,651 Metal and metal products 42 56 7,456 16,679 Machinery except electrical 3 25 280 4,400 Electrical machinery 4 13 946 2,987 Transportation equipment 46 37 7,543 6,073 87

Table 4.2(continued)

No. of Industrial No. of Persons Industry Establishments Employed 1952 1961 1952 1961

Utilities and public services 10 4 3,928 3,854 Miscellaneous 15 9 1,608 2,013

Total 711 •797 219,722 296,575

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Fred­ erick A. Praeger, Publishers, 1968), pp. 208-11 88

Table 4.3

Value Added by Industry and Value Added Per Worker in Each Industry

Total Value Value Added Industry Added ($1,000) Per Worker ($) 1952 1961 1952 1961

Mining and quarrying 2,613 41,451 621 3,297 Food and kindred products 41,156 87,837 979 5,605 Textiles 54,931 156,825 505 1,118 Apparel and footwear 1,989 5,203 714 909 Lumber, furniture, and fixtures 1,495 3,991 446 818 Paper and paper products 1,794 6,502 378 820 Printing and pub­ lishing 3,537 8,758 718 1,288 Leather and leather products 655 1,028 609 855 Rubber products 630 7,197 779 3,159 Chemicals and allied products 11,613 49,209 1,198 2,917 Petroleum and coal products 14,623 8,556 3,195 2,317 Nonmetallic products 5,886 16,866 542 1,235 Metal and metal products 4,402 30,187 590 1,810 Machinery except electrical 301 3,988 1,075 906 Electrical machinery 690 6,808 563 2,279 Transportation equipment 4,759 5,536 631 911 Utilities and public services 7,158 7,831 1,822 2,032 Miscellaneous 952 1,847 592 917

Total 159,184 449,620 724 1,516

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Publishers, 1968), pp. 208-11 89

Table 4.4

An Index of Production Targets by Industry

At the End of the Two Stages of

The Ten-Year Plan, 1959-60 to 1969-70

Industry 1959-60 1964-65 1969-70

Heavy Industry 100 310 445

Light Industry 100 137 185

Services 100 128 213

Commerce 100 128 196

Supporting Economic Structure 100 122 160

Agriculture 100 128 159

Source: Magdi M. El-Kanunash, Economic Development

and Planning in Egypt (New York: Fred­

erick A. Praeger, Publishers, 1968), p. 303 o a> Table 4.5

Investment Expenditures by Sector During the Five-Year Plan, 1960- 65, and the Base Year, 1959- 60, in Millions of Dollars

Total Sector 1959-60 1960-61 1961-62 1962-63 1963-64 1964-65 1960-65

Agriculture, irri­ gation, High Dam 67.9 87.4 119.6 170.2 234.6 204.7 816.5

Industry 113.4 155.9 115.7 185.2 242.4 229.8 929.0

Electricity 14.3 12.9 14.5 27.4 81.9 122.4 259.1

Construction — — — 8.0 10.4 12.0 30.4

Total Commodity Sector 195.6 256.2 249.8 390.8 568.3 568.9 2,035.0

Transportation and Communication 82.3 172.0 163.8 123.7 103.7 113.4 676.6

Trade, Commerce, and Finance — — 11.5 8.5 14.9 9.9 44,8

Housing 71.5 43.9 86.9 86.5 86.0 68.1 371.4

Public Utilities 17.2 17.7 23.4 31.0 18.9 25.1 116.1

Other Services 27.6 28.5 42.3 49.0 63.5 52.7 236.0

Total Services 198.6 262.1 327.9 298.7 287.0 269.2 1,444.9

Total (all Sectors) 394.2 518.3 577.7 689.5 856.3 838.1 3,479.9

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Publishers, 1968), pp. 374-5 Table 4.6

Distribution of Investment by Sector and Source of Financing during the Ten-Year Plan, 8 1960-65 and 1965-70 (millions of dollars)

1960-65 1965-70 Sector Foreign Local Total Foreign Local Total

Agriculture 181. 5 720.1 901.6 193.2 754.4 947.6

Industry and Electricity 862.5 468.5 1,331.0 690.0 586.5 1,276.5

Supporting economic structure 366.4 772.6 1,139.0 287.5 1,069.5 1,357.0

Services 75.4 179.9 255.3 92.0 276.0 368.0

Total 1,485.8 2,141.1 3,626.9 1,262.7 2,686.4 3,949.1

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Publishers, 1968), pp. 302-4 92

Table 4.7

Electric Energy Produced During the Period 1951-62

Year Energy Million Kwh

1951 609 1952 629 1953 1,200 1954 1,240 1955 1,422

1956 1,545 1957 1,712 1958 1,905 1959 2,125 1960 2,638 1961 3,760 1962 4,400

Source: Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Fred­ erick A. Praeger, Publishers, 1968), p. 224

The 609 million kwh produced in 1951 increased to

1,200 million kwh in 1953, thus doubling in two years. In

1960 this figure rose to reach 2,638 million kwh, of which

99 percent was generated by thermal plants. Until 1960 the main source of power in Egypt was petroleum. In 1962 elec­ tric power produced had increased to 4,400 million kwh in order to meet the demand of expanding industry and to pro­ vide more electricity for the general consumer. This 93 tremendous increase in electricity production between the years 1960-62 was achieved mainly through the installation and utilization of the hydroelectric power plant of the original Aswan Dam in 1961. This power plant and a ferti­ lizer plant producing nitrates were built by a Franco-German concern in 1959-60.

The power installation at the Aswan High Dam is one phase of utilizing the potential generating power of the

Nile. This potential is estimated at 17 billion kwh annual­ ly, 60 percent of which will be produced by the Aswan High

Dam. The dam will have a tremendous impact on industry by causing the expansion of existing industries and stimulat­ ing the establishment of new ones.

The immediate effects of the Dam are seen readily in four major areas:

1. Industries producing materials needed in the construction phase of the Aswan High Dam expanded in order to meet the increasing demand for these materials. With the construction of the Dam underway, housing units had to be built for workers, supervisors, engineers, and foreign experts. Roads were opened, railway tracks were laid down, and an airport at Aswan was built. Industries producing materials such as cement, asphalt, air conditioning, iron, and steel expanded greatly to meet the requirements of the project and to insure the completion of the construction phase on time. 94

2. Some agricultural and food industries expanded, and new ones were established. With the completion of the

Aswan High Dam, water became available for successful cul­ tivation all year long. Rice cultivation, which had 4 fluctuated between 27,000 and 700,000 feddans, depending on the water supply of the Nile, increased and will be stabilized at 1.2 million feddans. Cotton and cane sugar cultivation will also expand and be stabilized. Agricul­ tural and food industries based on cotton oil, wheat, rice, textiles, cane sugar, and drying agricultural products in general were either established or expanded. Two outstand­ ing examples of such expansion are the textile and sugar industries.

3. The technical know-how needed for productive and efficient industry which Egypt lacked was one of the by-products of building the Aswan High Dam. The number of workers employed by the Aswan High Dam Authority reached

34,000 at its peak, and work was carried on around the clock. Of these, two thousand were Russians who worked as experts, engineers, and supervisors. An Institute for Man­ power Training was established in Aswan and contributed to the technical know-how by producing four thousand highly skilled workers. The number of workers employed by the

Dam Authority in 1969 dropped to 20,000, of whom 250 are

Russians. They are engaged primarily in installing the power station, transformers, and transmission lines. 95

These skilled and semiskilled laborers will provide a wide base for building industry. The experience gained by the hundreds of Egyptian engineers who worked many years building a highly technical project will be of great value to industry. The Arab contractors proved to have gained a lot of experience when they built a short but rather com­ plicated freeway in Cairo which was the first of its kind in Egypt. The contractors have formed subsidiaries operat­ ing currently in Kuwait and Yemen.

4. The power station of the Aswan High Dam at its peak will ultimately produce 10 billion kwh of hydroelectric power annually. The cost of this power was estimated at

0.5 milliemes per kilowatt hour at Aswan and 2 milliemes at

£ Cairo. The cost of this hydroelectric power is about

50 percent of present cost of producing electric power by thermal plants, and this cheap source of power will provide industry with one of its basic needs, thus stimulating it to grow and expand.

Industrial projects to benefit from the Dam's electricity are as follows:

a. Chemical fertilizers

Kima Company was established in Aswan following the building of the power station of the original Aswan

Dam in 1960. "Its annual production is estimated at

670,000 tons of nitrate fertilizer. The value of this product is about $30 million, and it consumes 1.6-1.8 bil- 7 lion kwh annually." The operations of Kima Company used 96 to be interrupted in the winter of each year due to the fluctuations of floods and the subsequent fluctuations of electricity generated. By controlling floods, the Aswan

High Dam will prevent fluctuations in the level of the

Nile's water, thus stabilizing and maintaining the power generating capacity of the power station at the original

Aswan Dam and thereby lowering the cost of producing elec­ tricity. Kima Company is expected to increase its produc­ tion by 25 percent as a result of the Dam. The fertilizer industry in general is expected to expand as a result of the increase in the available cultivated area and the growing acceptability of the use of chemical fertilizers by the fellah.

b. Iron and Steel

The iron and steel industry started very late in

Egypt. Work on the first plant started in the late 1950's, and production started in the early 1960's. This plant is located in Hulwan, about fifteen miles from Cairo. Ore mines are located near Aswan, however, so ore has to be transported from there to Cairo, usually via the Nile River.

The decision to make Hulwan the location for the plant raised many questions as to the suitability of such a location, since the plant is about five hundred miles from the ore mines. However, the location of the plant in

Hulwan, a market-oriented city, stimulated many other in­ dustries, such as refrigerators, cars, trucks, sewing machines, and other durable consumer goods. Hulwan is now 97

the most important industrial complex in Egypt, with elec­

tronics, aircraft, and other metal industries being estab­

lished. A steel plant was built and started with West

German aid in 1958-59. It employed over three thousand workers in 1962, and its staff, formerly West German ex­

perts for the most part, is now Egyptian.

The hydroelectric power of the Aswan High Dam made

the construction of Egypt's biggest iron and steel complex

possible. This complex is now under construction at Hulwan.

The cost of building the plant, including the cost of equip­ ment for the ore mines and transportation facilities, is

estimated at one billion dollars. The plant will produce

1.5 million tons of steel and consume about one billion kwh of electricity annually. The project is being built and g partially financed by the Soviet Union.

c. Other Industrial Projects 9 On the twenty-fifth of February, 1969, the

Egyptian Minister of Industry called a press conference

to announce new industrial projects to benefit from the

hydroelectric power generated by the Dam's power station.

They are as follows:

1) Aluminum plant

This plant will have an annual capacity to

produce 100,000 tons of aluminum, and it will

consume 1.75 billion kwh annually.

2) Phosphates plant

This plant will be built near Aswan, and its 98

capacity will be 300,000 tons of different

phosphate products to be produced annually.

Its annual consumption of electric power will

be 1.8 billion kwh.

3) Silicon plant

The annual capacity of this plant will be

22,000 tons of ferrosilicon to be used in

processing iron and steel. The consumption

of electric power will be 0.2 billion kwh

annually.

The projects were the results of studies conducted by Egyptian and Russian experts, who showed that the es­ tablishment of such industrial projects was both feasible and essential to the country's development. All the above projects will be built by the Soviet Union. Work on the projects is expected to begin soon, and officials in the

Ministry of National Planning expect the completion of the projects by 1975.

The total amount of electric power which is ex­ pected to be used by the above-mentioned industrial projects will be 4.75 billion kwh (1 + 1.75 + 1.8 + 0.2).

This amount is only 50 percent of the capacity of the

Aswan High Dam power station. This means that over five billion kwh of hydroelectric power will still be available and is expected to stimulate other industries and to electrify the Egyptian countryside. 99

Jean and Simonne Lacouture, writing about Egyptian industry in 1955,"*"® said that it has to face problems common to all underdeveloped countries. First, there is the absence of a middle class, which alone could supply the savings needed for local investment as well as the human element for a genuine home market. Second, the poor output and quality of the labor force impede progress. An industrial revolution cannot be managed without an improve­ ment in the workman's technical training and modernization of equipment. Third, basic materials are more costly.

The lack of coal and the inadequate supply of water are badly felt.

To create a middle class and with it a home market for industry, the Egyptian government issued land reform decrees in 1952, 1961, and again in 1969.

The pattern of landholding in Egypt in 1952 at the time of the military coup reflected the great gap between the small class of rich land­ owners and the mass of peasantry. Thus 0.1 per­ cent of the population owned an average of 550.9 feddans each, while 72 percent of the population held one-fourth feddan each. In be­ tween these holdings there was another 25 percent who held between one and ten feddans each—or a family-sized farm in Egypt.H

The land reform laws of 1952 provided that indi­ vidual owners must sell or take compensation for all holdings in excess of two hundred feddans. A family might retain up to three hundred feddans. In 1961 new land re­ form laws were issued, lowering the upper limit of an individual1s ownership from two hundred feddans to one 100 hundred, and a family's land ownership from three hundred to only two hundred. In 1969 new laws issued lowered the upper limit for individuals' and families* land ownership to 50 feddans and one hundred feddans, respectively.

By the end of 1961 distributions to a total of over 180,000 new families had been made, which affected about a million persons. The total ex­ propriated from the formal Royal Family and bought from other owners under the law amounted to 935,000 feddans. This is 15 percent of Egypt's cultivable land which has changed hands since 1952.

Important as land distribution has been, the drastic reduction in land rents, by about 50 per­ cent, has had an even more beneficial result for two million peasants. This reduction and a pro­ vision in the law that leases must run for three years have given the peasant a sense of security and provided incentives to production. One result has been an increase in yields per acre, which has reached 20 percent in some land reform areas.... Figures on income for new owners of land are dif­ ficult to determine. But it has been established that peasant incomes have risen by as much as 50 percent in some areas.12

The Aswan High Dam will double the income of at least two more million of Egypt's fellaheen, since it will double the income of landowners who owned 700,000 feddans that had been converted to perennial irrigation and will provide land for more than 260,000 families. New methods of irrigation and cultivation, better drainage, and shift to the cultivation of more valuable products will further increase the income of the fellah and improve his economic situation.

New factories which were built mainly after 1956 and the profit-sharing by workers—factory workers get

25 percent of profits realized at the end of each year— 101 were also helpful in creating a middle class in Egypt and a home market for Egyptian industry. In 1960 it became clear that the increase in industrial production could not keep pace with the increasing demand created by the

Egyptian market. The fear of inflation led the government to raise the prices of some manufactured goods, mainly consumer durables, and to raise taxes on some kinds of wealth.

Savings needed for investment did not come from the new middle class because, with the rising level of aspirations, this class tended to spend almost all the increase in its income to acquire the goods and services for which they had been waiting. The government, there­ fore, was the agency which accumulated most of the savings and made almost all the investment in industry, especially after 1961.

The second problem mentioned by Jean and Simonne

Lacouture which hindered the process of industrialization in Egypt was the poor output and quality of the labor force. Since 1956 the Egyptian government has been work­ ing to improve this situation. Diets and working conditions improved tremendously; higher compensation, social security, and profit-sharing increased the workers* incentive to work; and the new political ideology motivated them to work harder. Technical training has been given attention: technical schools were established; workers and college students were sent to European countries, especially West 102

Germany, for training; and exchange programs for technical assistance have been established with many countries, es­ pecially India, Yugoslavia, and East Germany.

Writing in 1963, Georgia G. Stevens said,

In the race against economic catastrophe, Egypt appears to have certain advantages over many other semideveloped countries: advantages which may help it to succeed. One asset is a large and relatively well-trained civil service in which there are many technical experts. Man­ agement of the Nile, for example, has required skilled hydrologists for many years. This in turn seems to have helped a general appreciation of the scientific approach to nature.... Egyptian technical assistance has been success­ ful abroad, notably in Africa and in the Caribbean countries. Egyptian teachers and engineers have had a strong influence in the less developed Arab countries. There is, in short, a corps of educated citizens to support progressive measures in welfare, in education and in industry.

The most successful demonstration of organized Egyptian skill has been the management of the Suez Canal since its takeover by the government in 1956. Despite the withdrawal of Western tech­ nicians at that time, the canal is operated with great efficiency and is under constant improvement.

Egyptian technicians are proving their skills in the important petroleum industry, the sugar industry and in the new center for steel pro­ duction. There is no longer any question about the ability of Egyptians to operate large enter­ prises.... Egypt's trained managers and engineers are today one of the country's finest assets.13

The Aswan High Dam added a great number of highly experienced engineers and managers to Egypt's corps of trained citizens supporting industry. Thousands of skilled and semiskilled workers were trained while work was going on around the clock to build the Dam. The Institute for

Manpower Training of Aswan trained four thousand highly 103 skilled technicians by 1969, and the technical university built at Aswan is expected to match the technical insti­ tutes of advanced countries.

The tens of thousands of workers who built the Aswan

High Dam would provide a corps of trained manpower—a wide base for a comprehensive plan to industrialize the country.

The third problem mentioned by Jean and Simonne

Lacouture was the lack of coal and inadequate water supply.

Since 1962 new mines of coal were discovered, and petroleum production increased to make Egypt self-sufficient in its supply of this commodity in the early 1960's. Controlling the waters of the Nile will provide the amounts of water needed by agriculture and industry, and the tremendous generating capacity of the Aswan High Dam will provide

Egypt with a cheap source of electric power.

Electric energy production per head in Egypt has quadrupled since the revolution. The High Dam, through increasing the output of existing hydroelectric power stations on the Nile as well as through what it will produce itself, will triple the output to 16.5 billion kwh or 525 kwh per head (compared with the world average of 600 kwh). The cheap electric power should help Egyptian industry to expand more rapidly and to become more competitive.

While the number of industrial establishments em­ ploying ten persons or more dropped from 3,445 in 1952 to

3,308 in 1960, the number of workers employed by such establishments increased from 273,000 in 1952 to 337,000 in I960.15 This means an increase in the size and effi­ ciency of the industrial establishments. "The number of 104 new industrial projects during the first Five-Year Plan

(1960-65) reached 749, costing $157.3 million.Invest­ ment in industry and electricity allotted by the second

Five-Year Plan (1965-70) is $2,935 million. The number of workers employed by industry overall increased from 623,000 in 1959-60 to 864,000 in 1964-65.17

To conclude this chapter, I would like to note the following:

1. The installation of the power station will be completed in 1970, and transmission lines are due to be completed by 1972.

2. The capacity of the power station will not be attained unless water in Lake Nasser reaches a certain level and water passing through the turbines is stabilized.

Therefore, with reclamation and irrigation projects uncom­ pleted and the Nile's water supply fluctuating, it is doubtful that capacity power production will be attained fully in the near future.

3. The transmission lines will help establish an interconnecting transmission network for the entire United

Arab Republic. This will help the country to coordinate the distribution of electric power, providing it to all areas of potential use.

4. The Aswan High Dam led to the decline of the fish canning and salting industry in Egypt, since the creation of Lake Nasser caused the annual loss of about thirty thousand tons of different kinds of fish. To 105 compensate for this loss, a fishing navy was developed to fish in the high seas. It is expected, though, that Lake

Nasser, used for freshwater fishing culture, will more than compensate for the loss and will lead to the expansion of the fishing industry.

5. It is possible, although inconceivable in the near future, that the availability of cheap electric power will stimulate the utilization of such power in trans­ portation, especially railways, and in agriculture, es­ pecially water pumping, drainage, and irrigation. The use of electrical methods in irrigation will save more than half the amount of water that is normally needed. This goal, if attained, will save more water for more agricul­ tural expansion and will help modernize the whole country.

FOOTNOTES

^Rashid Barrawi, Economics of the Arab World (Cairo: Egyptian Library, 1964), p. 280

The National Charter of the UAR (Cairo: Infor­ mation Department, 1962), pp. 49-52 o Barrawi, op. cit., pp. 284-90 4 Helmi Abdul Ghani, personal interview at Ministry of National Planning, Cairo, July, 1969 5Fouad Kafrawy, personal interview at Ministry of National Planning, Cairo, July, 1969 6Yahya Hijazi, Electricity of High Dam (Cairo: Ministry of National Planning, 1969TT p. 6 106 ^Ibid., p. 10 Q Arab Youth, Number 144, September, 1969 9 Hijazi, op. cit., p. 11 10Jean and Simonne Lacouture, Egypt in Transition (New York: Criterion Books, 1958), pp. 375-6 ^Georgia G. Stevens, Egypt Yesterday and Today (New York: Holt, Rinehart and Winston, Inc., 1963), pp. 136- 137 12Ibid., p. 141

l^ibid., pp. 155-6

l^Peter Mansfield, Nasser's Egypt (Baltimore: Pen­ guin Books, 1965), p. 189 l^Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Com­ pany, 1965), p. 126

16united Arab Republic Yearbook (Cairo: Information Department, 1964), p. 101 1 *7 Patrick O'Brien, The Revolution in Egypt's Economic System (London: Oxford University Press, 1966), p. 326 Chapter 5

THE DAM'S IMPACT ON OTHER ASPECTS OF THE EGYPTIAN ECONOMY

The Aswan High Dam project is an energetic approach to utilize the total water resources of the Nile River for bettering the standard of living of Egypt's fast growing population and for helping modernize the country. There­ fore, the Dam's impact will not be limited to agriculture and industry. Other sectors of the Egyptian economy will be directly or indirectly affected by the building of the

Dam. The Dam's impact on some aspects of the Egyptian economy other than agriculture and industry will be con­ sidered in this chapter.

Flood Control

The people of Egypt had been subject to the dangers of the Nile in high flood years. They lived under the protection of embankments erected on both sides of the river along its whole length. Heavy damage was caused to life and property in years of high floods that exceeded the capacity of the embankments. Any flood control system to be completely effective must insure that the flood waters in all years can be controlled.

The construction of the Aswan High Dam will insure the full protection of land and property against dangerous

107 108 floods. Lake Nasser has a storage capacity of 165 billion cubic metres. This storage capacity corresponds to the level 175 metres. Between the levels of 175 and 182 metres is the allowance for flood protection. Before the arrival of flood waters in any year at the end of July, the reser­ voir level must not exceed 175 metres in order to have a sufficient capacity to contain any dangerous flood.

It is estimated that flood control will increase agricultural income by $11.5 million, and it will save the

Egyptian economy $6.8 million more that used to be spent on fighting the flood waters. The Dam, by controlling the floods, will also release human resources that other­ wise have had to be engaged in flood control operations.

By protecting fields and villages from excessive floods, and by reducing the water underground, the Dam will lower the costs of drainage and costs of maintaining and repair­ ing canals, bridges, and roads.

Transportation and Navigation

The sharp fluctuations in the level and flow of the water in the Nile and in other canals did interfere with navigation in the river. During the flood season navigation had to be stopped for a period of two months because of insufficient clearance under the stationary bridges. During the low water supply period, navigation in certain canals was interrupted owing to the shallow water. The Aswan High Dam will stabilize the level and 109 flow of water in the Nile and its canals. It is expected that the construction of the Dam will increase traffic, and therefore tonnage, in the Nile by 30 percent.

A highway linking Cairo with Aswan has been com­ pleted, and an airport at Aswan was built, receiving two daily commercial flights from Cairo via Luxor. A seaport is now under construction at Lake Nasser to connect south

Egypt and the Sudan with north Egypt. A railway track was laid down to connect the Aswan High Dam site and the sea­ port at Lake Nasser with other Egyptian cities. New highways were also built to connect the New Nubia with other parts of Egypt, especially with Aswan, the center of south Egypt.

The construction industry in general expanded to meet the rising demand initiated by the building of the

Dam. New houses for engineers and workers had to be built, and the New Nubia had to be constructed to accommodate an estimated eighty thousand inhabitants. Cement and brick industries, particularly, advanced, and the asphalt in­ dustry became established.

Fishing Culture and Tourism

The Nile valley has a legacy of culture and history that goes back through thousands of years. Free-standing and rock-cut temples of Pharaonic, Ptolemaic, and Roman age enrich the cultural heritage of Egypt. The Aswan High

Dam, being one of man's outstanding achievements, is 110 expected to increase tourism in Egypt. The Dam created one of the largest artificial lakes in the world. The lake has a storage capacity of 165 billion cubic metres of water. Programs to develop the lake for purposes of fishing, tourism, and sports activities have already started.

It is expected that the lake will largely increase fresh water fish production in Egypt and will therefore stimulate fish canning and salting. Meat production in

Egypt is insufficient to meet the demand for it, and the government, unwilling to import enough meat to eliminate the shortage, is restricting meat availability in the market to only four days a week. By producing large amounts of fish, Lake Nasser is expected to provide the Egyptian masses with an alternative for meat, thus reducing the demand for it and improving the people's diet.

The area that was covered with water as the result of creating Lake Nasser is known historically as the Nubia.

This area extends two hundred miles along the upstream of the Nile, starting at Aswan.

When the old Aswan Dam was completed in 1902, and then elevated in 1912 and 1933, many of the temples were flooded seasonally. It was not until the project of the new Aswan Dam began to take shape that it became apparent that the area lying behind it would turn into a permanent artificial lake, extending for ap­ proximately 180 miles and raising the water level to above sea level. The Nubian temples were threatened with complete submersion.1 111

The government of the United Arab Republic, real­ izing the value of the Nubia's cultural heritage and the impact of its Pharaonic antiquities on Egyptian tourism, decided to do its utmost to preserve all that was possible of the Nubia's monuments. Since the Nubia's temples and monuments are an important part of the cultural heritage of man in general, not just that of Egypt, the United

Arab Republic asked UNESCO to help in preserving the

Nubia's legacy.

The appeal launched by the president of UNESCO in

1959 to aid in rescuing the Nubian monuments was met with favorable reaction. Money and technical assistance were provided by governments and educational institutions, pri­ marily of the United States, West Germany, and France. A gift of $15 million came from the United States alone. As a token of gratitude, the Egyptian Ministry of Culture donated the temple Dendur to the United States in 1965.

Contributions coming from many governments and the missions sent by the Chicago Oriental Institute helped in drafting a plan to rescue most of the Nubia's monuments.

Temples and tombs were transferred to new sites, where they continued to tell the story of the great Pharaohs.

Abu Simbel, the most important of the Nubia's monuments, has its new site on an island deep in Lake Nasser. Be­ cause the site is a special attraction to tourists, the

Abu Simbel Hotel was built nearby, and the island is - 112 connected with Aswan by means of sea and air.

Building the Aswan High Dam and the act of inter­ national cooperation to preserve the cultural heritage of man at Nubia gave Egypt great publicity and is expected to increase the number of tourists visiting the country.

Since 1965 tourists from the East have been arriving in

Egypt—a source of income never before known to Egypt be­ fore the building of the Dam. Three new hotels were built in Aswan, and a fourth one is under construction. Floating air conditioned hotels were bought from West Germany to make regular trips on the Nile between Cairo and Aswan, and agreements with American, German, and French hotel companies were concluded to administer many Egyptian hotels.

Income and Employment

The feasibility of building any plant in Egypt or constructing any project is governed by the government's policy and socialistic philosophy. Profit is looked upon from the social rather than the economic point of view.

Any project that is owned or controlled by the government and saves hard currencies, is feasible as long as technical know-how to run it is available.

The Aswan High Dam is the one big project that will aid in creating a desirable environment for social change and economic development. Agriculture expanded horizon­ tally and vertically and will further expand. Many in­ dustries expanded during the period of constructing the 113

Dam, and the cheap hydroelectric power it produces is ex­ pected to stimulate industry to expand further. The people who lived through the experience of building the Dam will be more willing to accept social change because of it.

The increase in the national income which is ex­ pected to be forthcoming when the Dam is fully utilized is estimated as follows:

Source $ (million)

Increasing the crop area by about 25 percent 235.5* Raising productivity of agriculture 153.0*

Controlling floods and lowering costs of drainage and of maintaining other facilities 14.0*

Improving navigation 11.5

Producing electric power of about 10 billion kwh 103.5 Lowering the cost of producing electric power by the power station of the original Aswan Dam 3.5

Total 521.0

* These figures are deflated, since the LE was devalued in 1962.

2 A figure of $538 million was estimated by Mansfield. His estimation of the increase in the income of agriculture was put at $274 million—a figure I feel underestimates the Dam’s contribution to agriculture. Selling the electric power produced by the power station of the Dam was estimated at $230 million—a figure making electric power rather 114 expensive, or at least not cheap enough to stimulate in­ dustry.

Since the total cost of the High Dam— including the hydroelectric power scheme and the building of canals, drains, roads, etc.— is estimated at $929 million, this means that the Dam should amortize itself in less than two years. This seems to be over-optimistic; the Dam is lilely to cost more than the estimates, and no calculation has been made for the loss of the fertilizing Nile silt which will be held behind in Lake Nasser and will have to be re­ placed by extra fertilizers because the canal and drain building will take several years to complete.’

To estimate the effect of the Aswan High Dam on employment, one would have to consider both the agricul­ tural and the industrial sectors. In agriculture it was estimated that 1.3 million feddans of reclaimed land will be added to the agricultural sector, in addition to the conversion of 700,000 feddans from basin irrigation sys­ tems to perennial irrigation.

Table 5.1 on the following page represents the working force by sector for the years 1959-60 and 1964-65.

According to this table, the number of workers employed by agriculture was 4.22 million in 1959-60, and according to the first Five-Year Plan, 1960-65, employment should have been 4.66 million in 1964-65. But we know that the full utilization of the Dam's waters will bring about a

25 percent increase in the crop area cultivated; we therefore expect the number of workers employed by agri­ culture to increase by the same percentage. 115

Table 5.1

Working Force by Sector for 1959-60 and 1964-65 (in thousands)

1959-60 1964-65 Sector Private Public Private Public

Agriculture 4,060 160 4,306 354

Industry 595 37 802 44

Electricity 170 — 159 —

Construction and Communication 92 127 85 141

Housing 14 2 20 —

Trade 590 20 700 —

Financial Services 21 - 18 12

Other Services 527 5 630 8

Government Admin­ istration — 483 — 581

Total 6,069 834 6,720 1,140

Source: Patrick O'Brien, The Revolution in Egypt1s Economic System (London: Oxford University Press, 1966), p. 326 116

For the purpose of estimating the increase in the number of workers employed by the industrial sector, the relationship between electric power produced and the number of industrial workers will be taken as basis for comparison. This method assumes that the distribution of electric power produced between the consumer and industry will continue to follow the same pattern. The period from

1960 to 1965 is taken as the base period, whereas the in­ crease in the number of industrial workers is related to the increase in electric power produced in the same period.

Electric power produced in 1960 was about 2.64 bil­ lion kwh, and employment in industry and electricity was

632,000 workers. In 1965 electric power produced was about 5 billion kwh, and the number of workers employed by industry and electricity should have been 846,000. The increase in the amount of electric power produced was

2.36 billion kwh between 1960 and 1965, as compared to an increase of 214,000 in the number of industrial workers in the same period.

To estimate the increase in employment for the rest of the economy, the average rate of increase in these sectors for the period of 1960-61 to 1964-65 is taken as the basis. Table 5.2 on the following page con­ tains the estimates for employment in the industrial and agricultural sectors, government administration, and all other sectors taken together. 117

Table 5.2

Estimates for Employment in Various Sectors of the Economy and Electric Power Produced

Employer 1959/ 1964/ % In­ % In­ (Sector) 1960 1965 crease 1975 crease

Agriculture (million) 4.22 4.66 10 5.7 22 Industry (million) 0.632 0.846 34 1.9 123 Government Ad­ ministration (million) 0.483 0.581 20 0.860 48 All other sectors (million) 1.57 1.773 13 2.263 28

Total (million) 6.905 7.860 14 10.723 36.4

Electric power produced (billion kwh) 2.64 5.0 89 16.5 230

Source: Data for 1959-60 and 1964-65 is from Table 5.1.

It is assumed that full utilization of electric power will be attained by 1975. This power consumption is 4 expected to total about 16.5 billion kwh, since the Dam will increase the output of existing hydroelectric power stations on the Nile.

Vertical expansion in agriculture was fully achieved in 1968, and horizontal expansion will be almost completed by 1975. Employment in agriculture, which increased by

10 percent over the five-year period from 1959-60 to 1964-65, 118 is expected to increase by 22 percent over the ten-year period from 1965-75. Employment in industry and electri­ city, which increased by 34 percent in the period from

1959-60 to 1964-65, is expected to more than double over the ten-year period from 1965-75.

The total increase in the number of workers em­ ployed by both the agricultural and the industrial sectors is expected to amount to 2.1 million—an increase of

38 percent over the ten-year period from 1965-75. Employ­ ment by all sectors of the economy is expected to increase by 38 percent over the same period.

According to the 1960 census, the total population 5 of Egypt was twenty-six million. Hansen shows that only

7.734 million of the total population were in the labor force. This is about 30 percent of the total population. g But the 1960 census also shows that 50.2 percent of the total population were between the age of fifteen and sixty.

The low percentage of those in the labor force is under­ standable in view of the fact that women participate in economic activities to a limited degree because of some cultural obstacles. The woman is still considered inferior to the man, and her mission in life is to produce children and to run her "small kingdom" at home. The majority of students do not look for jobs before they finish school, also.

The Egyptian national income in 1960 was $3,192 7 billion and in 1965, $4,142 billion. Assuming that the 119 target aimed at by the ten-year plan, 1960-70, will achieve its goals, and the second ten-year plan, 1970-80, will do so also, it is possible to draw a table containing esti­ mates of employment, national income, and per capita in­ come as follows on the next page.

To conclude this chapter, the following points should be mentioned:

1. The Aswan High Dam, when fully utilized, will change the structure of employment. Employment in agri­ culture is expected to decrease from 54.6 percent of the labor force in 1960 to 50 percent by 1975, while employment in industry is expected to increase from 8.2 percent of the labor force in 1960 to about 19 percent by 1975.

2. From Table 5.3 it is evident that the Dam will not solve the problem of unemployment in Egypt, but it will lower the percentage of the unemployed from 11 percent in

1960 to about 5 percent in 1975. This represents a decrease in numbers from 830,000 to 600,000.

3. National income will be rising and is expected to raise the per capita income from $123 in 1960 to $237 in 1975. This is an increase of about 92 percent, in spite of the increase in population by 45 percent for the same period.

The Dam, in short, is expected to expand the size of the Egyptian market, raise the standard of living by raising the per capita income, provide more capital for investment, and stimulate more economic growth. 120 As As As National Total Total In In Per In

the a Agricultural the cupation the a cupation a the Industrial ($ (million) (million) (million)

Capita

percentage percentage percentage

million) employed population Labor Labor Labor Labor

income

income

(million) (million)

Force Force Force Force

oc

of ­ of oc of

­ ($) Estimates 6.905 7.734 4.22 0.632 3,192 .

89.0 54.6 26.0 1960 8.2 123

and of 7.86 4.66 0.846 8.82 4,142

89.2 52.8 29.4 1965 Employment, 9.6 Per 141 Table

Capita crease %

-1.8 14 17 14.1 10 34 14.6 13 30 0.2 5.3 In

;

­

Income National 6,384 9.96 33.2 1970 — — — — - — 192

Income, crease %

— — — — — - 13 13 54 36 In ­

94.8 10.72 11.31 50.0 16.8 8,940 5.70 1.90 1975 37.7 237 crease 123 %

-2.8 36.4 22 13.5 40 24 13 5.6 7.2 In ­ CM Table 5.3 (continued) r4

1960 1965 % In­ 1970 % In­ 1975 % In­ crease crease crease

Unemployed (million) 0.829 0.960 15.6 - — 0.59 -38.1

As a percentage of the Labor Force 11.0 10.8 - .2 - — 5.2 - 5.6

Source: Computed from Table 5.2 for 1960 and 1965. Data for 1975 is estimated. 122

FOOTNOTES

■'■"The Treasures of Nubia," The Arab World, XV, July-August, 1969, p. 13 2 Peter Mansfield, Nasser's Egypt (Baltimore: Pen­ guin Books, 1965), p. 188 3Ibid.

^Mansfield, op. cit., p. 189 c Bent Hansen, Development and Economic Policy in the United Arab Republic (Egypt) (Amsterdam: North Holland Publishing Company, 1965), p. 122 ^Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Pub­ lishers, 1968), p. 135 ^Ibid., pp. 151-2 Chapter 6

THE ASWAN HIGH DAM - A NEW PHASE IN THE HISTORY OF AN UNDERDEVELOPED COUNTRY

The Egyptian Revolution was led by a group of army officers who, on the twenty-third of July, 1952, assumed the responsibility for changing the social, political, and economic conditions under which Egyptians had previously lived. Realizing.the corruption on the part of the govern­ ment and the backwardness imposed on the people, the of­ ficers revolted against the Egyptian Royal Family, expelling

King Faruk.

The new rulers of Egypt, inexperienced in public affairs, handed the government's business to the traditional

Egyptian elite. They formed a Revolutionary Command Council to introduce new social and economic policies and to super­ vise the work of the newly appointed government. The

Council soon realized, however, that it was the intention of the traditional elite to maintain stability in the country by imposing continuity and working through the old institutions. The new government rejected land reform and opposed the establishment of new institutions capable of introducing social and economic change. It was later acknowledged by the members of the Council that it was illogical to expect the traditionalists to introduce the kind of change that would limit their freedom or diminish 123 124 the privileges they had acquired. Therefore, the govern­ ment composed of members of Egypt's traditional elite was forced to resign later in the year.

After the resignation of the traditionalist govern­ ment, the officers assumed the sole responsibility for running the Egyptian government and economy. Between the years 1952 and 1956—a period best described as the con­ tinuation of the pre-1952 conditions—the revolutionary government was able to accomplish two significant achieve­ ments :

1. The Agricultural Reform Decree of September,

1952, which provided for:

a. an upper limit of 200 feddans on in­

dividual ownership and 300 feddans on

a family's ownership. Land owners had

to sell or take compensation for all

holdings in excess of what was provided

by the law. Compensation was to be

made in the form of thirty-year govern­

ment bonds bearing 3 percent interest;

b. drastic reductions in land rent;

c. selling the surrendered land in three-

to five-feddan lots to the fellaheen

on easy terms; and

d. compulsory agricultural co-operatives

to help the peasants in cultivating 125 their land, in getting the loans they

needed, and in marketing their crops.

2. In 1954 the revolutionary government succeeded in signing an agreement with the British government for the withdrawal of its forces from Egypt, and the year 1956 witnessed the departure of the last British soldiers from

Egypt after eighty years of occupation. Egyptian commandos raided British camps in order to speed up the withdrawal process and end the hated foreign occupation.

The officers had failed to put the Egyptian tra­ ditional elite to work to lead the country toward moderni­ zation. As an alternative, they concentrated their efforts to create a middle class capable of assuming the leadership

in the process of modernization—a process proved essential for industrialization in England and the United States— and freeing capital from agriculture with the hope that it would be invested in industry. Major Gamal Salim said in

1952:

The principal aim of the agricultural reform is to transfer capital from agriculture to in­ dustry. Egypt lives entirely on its agriculture; this throws the economy out of balance and we want to put it right.1

Land distribution started on the day of the first

anniversary of the revolution, and King Faruk's lands in

particular were among the first to be distributed. At

that time 840,000 feddans were available for distribution,

since "on the day when the law was enacted, 660,000 feddans

thus became available for distribution, apart from 180,000 126 feddans belonging to Faruk and the two hundred members of the royal family, which was simply confiscated." The land reform provided for more equality in the distribution of wealth by giving land to about eighty thousand families.

Since land reform reduced the annual rent for the feddan from $90-115 to only $28-41, about four million tenants benefitted greatly.

Recognizing the bad economic situation of the country and the dependence of the economy on agriculture, the new government wanted swift and dramatic solutions.

It believed that if within a decade it could make the extension of cultivation keep pace with the growth of population, the growth of industry would raise the standard of living. The overall increase in the country's purchasing power would then stimulate further industrial development.3

The Aswan High Dam project was therefore given serious consideration, and the government ordered immediate study of a scheme for the Dam to provide a reservoir for multi­ year storage.

Financing the Dam came under discussion as early as December, 1953, and the International Bank for Recon­ struction and Development was the first to be approached.

The government of Egypt wanted to bring the Dam under con­ struction as soon as possible, because it was necessary to expand the cultivated area while using the time taken to build the Dam to industrialize the country. In 1956 negotiations to finance the Dam came to an end as the

United States, England, and the International Bank for 127

Reconstruction and Development withdrew their offers.

Nasser’s reaction to this withdrawal came in July, 1956, as he nationalized the Maritime Suez Canal Company and declared that the Canal’s revenues would be used to finance the Dam’s construction. This act invited international intervention, and the French, British, and Israeli forces invaded Egypt in October of the same year.

The British government wanted to force itself on

Egypt again by occupying the Suez Canal Zone for the pur­ pose of overthrowing the new government and ending the revolutionary era in the country. The French government aimed at ending the unlimited support extended by the rulers of Egypt to the Algerian revolution for independence.

Israel, finding her opportunity to expand, joined with

England and France to invade Egypt in 1956.

Except for Israel, the Suez Canal War failed to achieve its objectives. Israel’s objectives were partially achieved, since she was able to hold onto some territory and for the first time got a foothold on the Gulf of Aqaba.

The failure of the war is credited to two main forces: first, the political and moral stand of the United States government, which condemned the invasion and denied the invaders the support they hoped for; and second, the great resistance of the Egyptian people and the determination of their leaders to fight the invaders to the death. This resistance was fully backed by the Arab peoples throughout the Arab World, in which both England and France had 128 significant economic and political interests. It must always be remembered that the role played by the United

States government was decisive in having the occupation forces withdraw from almost all the land which the invaders occupied before the war was stopped.

By 1957 Nasser emerged as a national hero and an international figure leading his country toward achieving its goals of national independence and economic progress.

Following the Suez Canal War, Nasser had to reconsider his position at home and abroad, and his decisions moved Egypt to enter a new phase in its history which extended from

1957 to 1961.

On the political side, Nasser tried to strengthen

Egypt's independence from the West and established his political party at home. On the economic side, this period was one of state-controlled capitalism. Borrowing some of the economic planning techniques from the East, a three- year plan for industrialization was carried out by both the private and the public sectors, of which the latter's part was very small. The execution of the plan resembled the

French economic planning system wherein industries within the private sector commit themselves to carry out certain projects within the framework of a general economic plan.

During this period Egypt received economic and technical aid from the West, mainly the United States and

West Germany, and signed an agreement with the Soviet Union 129 to provide the technical and financial assistance needed for building the Aswan High Dam.

The aftermath of the Suez Canal War resulted in the nationalization of the French and British concerns in

Egypt and in strengthening the position of the Egyptian industrialists. In spite of the fact that the industrial production more than tripled between 1952 and 1960, and the agricultural production increased by about 60 percent during the same period, the pre-1961 period achieved very little in terms of the goals aimed at by the revolutionary government:

1. The newly created middle class was weak, in­ active, and with no real middle class awareness. It possessed upper class aspirations, it engaged in demon­ strating new acquisitions, and it did not provide the savings necessary for industrialization.

2. The work on the Aswan High Dam project was delayed due to problems of international politics.

3. The fellah consumed the increase in his income, since he spent it on agricultural products. The increase in national income and the United States' aid in the form of foodstuffs were mainly absorbed by the increase in population.

4. The capital freed from agriculture following the land reform carried out in that period did not go to industry but was reinvested instead in residential building, and the country had to borrow capital from the international 130 market in order to finance some of the industrial projects which were planned.

5. The private industrial sector hesitated to carry out the industrial projects assigned to it in the three-year industrial plan of 1957-60. Therefore, the role it played in executing the plan was unsatisfactory.

Companies preferred the distribution of large dividends, and they reinvested very little profits in order to in­ crease their production.

6. The country failed to secure the savings deemed necessary to finance its industrial projects. Domestic savings were very much limited, foreign capital was hesi­ tant to enter Egypt because of the government’s socialistic tendencies, and Egypt's neutrality and its stand of being anti-Israel denied her the hoped-for grants and long-term

loans from the governments of the West and the international agencies.

The failure of the newly created middle class to

lead the industrialization process and the increasing in­

fluence of the Egyptian revolutionary intellectuals as the result of Egypt's increased contact and cooperation with the East influenced the thinking of Egypt's leaders. The

inability of the economy to generate the savings deemed necessary to carry out the country's development programs

led to an increasing deficit in the balance of payments, with very little hope that the economy’s potential would

soon close the gap. To speed up the social and economic 131 changes without being trapped in political and social dilemmas, Egypt's leaders felt it was necessary to adopt centralized nationalistic socialism with all its political, social, and economic implications.

In June, 1960, the press was nationalized, and the Cairo bus services were municipalized. But the really big step was taken in June and July, 1961. In a series of decrees the gov­ ernment took over the entire import trade of the country and a large part of the export trade, including cotton, which is much the biggest item in Egypt's exports. All banks and insurance companies were nationalized, and about 300 industrial and trading establishments were taken over either wholly or partly by the state. A highly progressive taxation system was introduced with the declared objective of making $15,000 a year the maximum income in Egypt. Individuals’ share holdings in companies affected by the July nationalization decrees were limited to $23,000. The working day in industry was limited to seven hours (as a means of increasing employment), and a quarter of all profits made by companies was to be distributed to the workers.4

A new series of decrees nationalized some other concerns, mainly the land transport and shipping companies, in 1963. All contracts for quarrying and mining signed with private concerns were also ended. In 1964 British oil interests in Egypt were nationalized because of Eng­ land's attitude toward the revolution for independence in

South Arabia. Compensation was paid to all shareholders in the nationalized companies. In 1963 American oil com­ panies entered into a partnership arrangement with the

Egyptian Petroleum Organization, and now American, French, and Japanese oil companies are engaged in producing or searching for petroleum in Egypt. 132

A comprehensive plan for the country's economic

and social development was launched in 1960. It was a

ten-year plan to be executed in two phases, 1960-65 and

1965-70, with the target of doubling the national income by 1970. About 80 percent of the total investment, of which about 25 percent was to be invested in industry and electricity, was to be undertaken by the public sector.

The first Five-Year Plan, 1960-65, was completed and achieved over 80 percent of its objectives. The total growth rate of the economy was 5.7 percent as compared to

the planned 7 percent rate of economic growth.The actual

agricultural growth was about 2 percent as compared to the

5 percent rate as the plan's target. The investment in

industry had been almost as planned, with a rate of growth

about 85 percent of the target rate.

The increased capacity for electrical production, which was already set high in the plan—a 14.7 annual growth—exceeded even this rate by 4 percent. As a result, the annual output rose from just 2 million kilowatts to nearly 6 million kilowatts. This higher growth in electrical power and in construction and services brought the plan close to its overall target growth; for the latter two sectors show growth averaging between 8 and 9 percent a year, although the planners had actually pro- vided for a slight fall in the rate of construction.

Upon the completion of the first stage of the

Aswan High Dam in 1964, the limiting factor of expanding

Egyptian agriculture—water—became available. Beginning

in 1968, cheap electric power became available in increas­

ing amounts, thus providing one of the basic needs for 133 industrial expansion. Therefore, agriculture and industry stand a good chance of achieving the planned rate of growth in the second Five-Year Plan, 1965-70. The building of the Aswan High Dam strengthened the government's political position and boosted the morale of the Egyptian people.

And the utilization of the Dam's potential is most likely to speed up the economic development of the country and decrease its dependence on foreign sources for capital.

Between July and December 31, 1969, twenty-five new industrial projects, costing $322 million, will start op­ erating. Of these, sixteen will producing textiles, sugar, paper, cement, tires, motorcycles, and railway wagons. The cost of these sixteen projects was $163 million, and the •7 annual value of their products is estimated at $92 million.

Other projects will be producing paint, ink, food flavors, food oil, fertilizers, and electronics. In May, 1969, a new steel plant, which cost $154 million, started its op­ eration, and it is expected to produce 300,000 tons of steel g annually, valued at $55 million. These projects are ex­ pected to employ about eighty thousand workers and to have an annual production of about $230 million.

In a speech on the twenty-third of July, 1969,

President Nasser said that investment in 1968-69 totaled

$920 million, and the country's exports exceeded its imports for the first time in the last thirty years. He added that the government is planning to expand heavy in­ dustry, and therefore new plants to produce phosphate. 134 Q silicon, and aluminum are underway.

Industrial production in 1968-69 reached a high of $3,002 million,"*"0 surpassing Egypt's total national income for 1959-60 of $2,956 million. ^■*" Exports in 1968-69 totaled $591.33 million, of which $385.18 million came from exporting agricultural products and $206.13 million from exporting manufactured products, as compared with

1967-68 exports, which reached $519 million, of which

$358.06 million represented agricultural product exports, and $160.91 million represented manufactured products which 12 were exported. Putting the data in the tables which fol­ low will show the increasing importance of manufactured goods to the country's exports and will indicate the ex­ pansion in the economy's industrial sector.

Raw cotton made up 85 percent of Egypt's exports in 1953, and cotton yarn and fabrics made up 1.9 percent only. Starting in 1953, as was mentioned earlier, emphasis on industry, especially industrializing agricultural prod­ ucts, continued. Thus, in 1958 raw cotton exports dropped from 85.6 percent in 1953 to 67.4 percent of Egypt's ex­ ports. This trend continued through 1962 and 1968-69, reflecting the increasing degree of industrialization in

Egypt.

Rice exports clearly reflect the impact of the Dam on agriculture. In 1958, 8.3 percent of Egypt's exports came from rice. This percentage dropped to 4.2 in 1962 because of the fluctuations in the water supply of the 135

Table 6.1

Egypt's exports in 1967-68 Compared to Those of 1968-69 ($ million)

1967-68 1968-69 % Increase

Total exports 519.09 591.33 14

Agriculture 358.06 385.18 7.6

As a percentage of total exports 69 65 -4

Manufacturing industries 160.91 206.13 28

As a percentage of total exports 31 35 .4

Source: Information reported by the Arab Youth (Al-Shabab Al-Arabi), No. 139, August, 1969

Table 6.2

Exports by Main Commodities in 1953, 1958, 1962, and 1968-69 (percentage share)

1953 1958 1962 1968-69

Raw cotton 85.6 67.4 53.0 42.0

Cotton yarn and fabrics 1.9 7.1 11.8 21

Rice 0.0 8.3 4.2 16

Source: Data for 1953 , 1958, and 1962 are re- ported by Hansen, Development and Economic Policy in the UAR (Egypt)(Amsterdam: North Holland Publishing Company), p. 182, Table 7.6. Data for 1968-69 was reported by the Arab Youth (Al-Shabab Al-Arabi), No. 139, August, 1969 136

Nile. In 1968-69 rice exports demonstrated a four-fold increase within a six-year period, thus reflecting the increase in the area allotted to rice cultivation made possible by the Dam.

Knowing that Egypt's exports in 1953, 1958, and

1962 were $327.8 million, $383.2 million, and $364.1 mil- 13 lion, respectively, we are able to find out the increase in each commodity exports, as the table on the following page shows.

Between 1958 and 1962, raw cotton exports dropped.

The overall decrease in the area cultivated for cotton re­ sulted from the 1959 laws which put 30 percent of the cultivated area as the upper limit for cotton cultivation and as the lower limit of wheat cultivation. Exports of cotton yarn and fabrics increased from $27.2 million to

$43.5 million for the same period, indicating the trend toward industrialization.

Comparing the 1962 figures with those of 1968-69 makes clear the extent of the immediate impact of the Aswan

High Dam on both the industrial and the agricultural sec­ tors. Cotton exports as raw cotton increased from $193.0 million in 1962 to $248.3 million in 1968-69, whereas cotton exports as yarn and fabrics increased from $43.5 million in 1962 to $142.2 million in 1968-69. This in­ dicates that the increase in raw cotton exports was not the result of a decrease in cotton yarn and fabric exports but reflects the overall increase in cotton production. 137

Table 6.3

Exports by Main Commodities in 1953, 1958, 1962, and 1968-69 ($ million)

% Increase 1953 1958 1962 1968-69 (1962 to 1968-69)

Raw cotton 280.2 258.3 193.0 248.3 29

Cotton yarn and fabrics 6.5 27.2 43.5 142.2 227

Rice 0.0 31.8 15.3 94.6 518

Total exports 327.8 383.2 364.1 591.3 62

Source: Deduction from Tables 6.1 and 6.2

This increase was due to the expansion in cotton cultiva­ tion as a result of the Aswan High Dam. Exports of cotton yarn and fabrics for 1962 and 1968-69 reflect the trend to manufacture agricultural products in Egypt.

Rice exports reflect even more than any other figures the great impact which the Aswan High Dam had on the Egyptian agriculture. Rice exports went up from $15.3 million in 1962 to $94.6 million in 1968-69, which means that rice cultivation expanded tremendously to meet the

increasing domestic demand and to increase also the country's exports of it. All this was made possible because the Dam provided enough water for year-round irrigation and for

further expanding the cultivated area.

Egypt's total exports in 1962 were $364.1 million,

as opposed to its imports, which reached $696.7 million— 138 a $332.6 million unfavorable balance of trade.For

1968-69 total exports were $591.3 million, exceeding the year's total imports for the first time since 1939. This means that while exports increased by over 60 percent be­ tween 1962 and 1969, imports decreased by at least 15 per­ cent. Taking into consideration the increase in Egypt's population between 1962 and 1969 and the increase in con­ sumption which actually exceeded the increase in population due to the redistribution of income, one might have expected imports to have reached the level of $800-850 million by

1969. But the fact that imports declined while exports increased reflects the growth and development of the

Egyptian economy.

The Aswan High Dam, therefore, changed the picture which existed in the early 1960's. It provided more water for intensive cultivation and for the expansion in the area cultivated. And since 1968 it has produced increas­ ing amounts of cheap hydroelectric power. The increase in

Egypt's agricultural products decreased the country's de­ pendence on foreign sources and stimulated food industries to grow. The cheap electric power will remove one big obstacle previously hindering the expansion of industry— the lack of cheap power sources. In short, the Aswan High

Dam provided for agricultural expansion, industrial devel­ opment, and potential social change, thus moving Egypt to a new phase of its history. 139

Agriculture

New projects are being explored aiming at raising the productivity of agriculture and providing more water for expanding the cultivated area:

1. The New Valley: One hopeful scheme for re­ claiming more lands at the sites of Western Desert oases is the New Valley project. This project

...is of outstanding interest because it will ultimately change the ancient face of Egypt entirely. When this scheme was started in 1960, geologists knew that there was a lot of water in the Western Desert under the five oases of Kharga, Dakhla, Farafra, Bahriyah, and Siwa; but they did not know whether it was a finite static lake or an underground river. After exhaustive hydrological and geological tests, they became reasonably certain that it was something like a river which emerged from the Tebasti Mountains of Chad and the highland of Western Sudan—where there is a heavy annual rainfall—and which seeped northwards through the Nubian sandstone at a speed of some twenty-seven metres a year. Work was started in the two southern oases, Kharga and Dakhla, and all the 200 wells that were drilled produced water—sometimes as much as 12,000 cubic metres a day, or enough to irrigate 600 feddans. '

The project was started by the army engineers, who drilled the first wells and built a good road linking Assuit with the New Valley. According to a speech by President Nasser, the New Valley is ultimately to oversee three million fed­ dans of cultivable land. "The Five-Year Plan (1960-65) includes the reclamation of 131,000 feddans in the New

Valley. With 110,000 feddans under cultivation irri­ gated by ground water now, the United Nations' experts are helping reclaim 27,000 feddans, and the UN contributed

$250,000 for this purpose. Digging a canal linking 140

Lake Nasser with the New Valley is also under considera­

tion.

2. Mechanization and Collective Cultivation: The

Egyptian government has been applying new agricultural

techniques at a fast rate during the last five years.

Since land holdings by farmers are small, collective methods of cultivation have been used to facilitate the

introduction of tractors, harvesting machines, and other

advanced tools. In 1969, three thousand feddans of cotton 18 are to be cultivated by machines for the first time. In

the speech President Nasser delivered on July 23, 1969, he

said that there are 700,000 feddans of reclaimed land still

undistributed, for which he suggested the establishment of

companies to deal with its cultivation on a large scale.

The mechanization of agriculture will surely raise

the productivity of the land and will save human labor that

otherwise has to be engaged in land farming. Therefore it

is expected that the mechanization of agriculture will lead

to the improvement of the economic situation of the fellah

through increasing his land's yields and thus increasing

his purchasing power, which will act as a stimulus to in­

dustrial expansion. Using capital-intensive techniques in

agriculture would release human resources which will ul­

timately be needed for employment in other sectors of the

economy.

3. Jounjly Canal: The Nile Waters Commission be­

tween Egypt and Sudan had studied a project that would 141 reduce water evaporation from the Nile. This project consists of digging a canal starting in north Sudan, where loss from evaporation is estimated at 36 billion cubic metres of water. This canal will be about three hundred miles long and would secure 4 billion cubic metres of water to be shared equally by Egypt and Sudan. Water to be provided by Jounjly Canal is expected to bring 1.5 mil- 19 lion feddans under permanent cultivation in Egypt alone. -

It was also decided that work on this project will start in

1973, to be completed in 1978. For this purpose and for reclaiming 300,000 feddans in the third Five-Year Plan,

1970-75, a $26 million loan was secured from the Interna- 20 tional Bank for Reconstruction and Development.

4. A project to use Sudanese land for wheat culti­ vation to satisfy the needs of all the Arab people is under consideration and study within the circles of the Arab

League. Sudan is not using her share of the Aswan High

Dam's waters, and millions of cultivable feddans are being deserted. Only some organization and capital is needed to make Sudanese agriculture meet the demands of all the Arab people for wheat and many other products within a few years.

When and if this project gets underway, the one third of

Egypt's cultivated area allotted for wheat cultivation would be freed to be used for cultivating profitable crops, and as a result, agricultural production would be expected to increase by about 30 percent. 142

Industry

The Three-Year Plan for Industrialization, 1957-60, emphasized the importance of self-sufficiency, and by 1960

Egypt was producing most of the consumer goods she had imported in the 1950's. In 1955 Egypt's imports were

$430.6 million, while her exports were $335.8 million, 21 $95 million less than the imports. In 1963 imports in­ creased to $916.3 million, and exports increased to $521.6 22 million, thus increasing the difference between exports and imports from $95 million to almost $395 million. This indicates that Egypt's imports were changing in nature from consumer goods to capital goods needed for building the country's industrial sector.

With power available in the 1970's Egypt is expected to move to heavy industry, where it would be producing most of the capital goods needed by other industries.

The cheap mass-production of electrical energy would completely change the face of Egypt. As at present Egypt consumes only 300,000 kilowatts an hour, supplied by thermal power stations, one can imagine the economic upheaval that will be produced by 10,000 million kilowatts an hour at a negligible price. Nearly $39 million worth of oil-fuel would be saved per year. The electrification of agriculture will make a further increase in output, which will already have been improved by the regu­ lating and abundance of water. There will be no further hindrance to industrialization, which has at present reached its^limits because of the lack or cost of power. J

Examples of the expansion in heavy industries are the steel, phosphate, aluminum, and silicon plants to be built in the third Five-Year Plan, 1970-75, discussed in Chapter 4. 143

Poland gave Egypt a $28 million loan for building six plants; five of them will be producing bricks, and the sixth plant will be producing spindles needed by the ex- 24 panding textiles industry. The loan will be paid for m phosphate rather than in cash or cotton, as is the case with the Soviet Union.

The war with Israel stimulated the industries pro­ ducing military equipments, and the Soviet Union is helping to build such industries in Egypt. Those industries, in times of peace, will be producing consumer durable goods, mainly electronics, ovens, and refrigerators. More alum­ inum ores, iron ores, and oil had been discovered, which is expected to stimulate petro-chemicals, steel, and aluminum industries to expand.

The government of Egypt knows that the amount of electric power produced by the Dam will only bring per capita consumption of electricity in Egypt up to about

500 kwh, which is about 100 kwh below the world average.

Therefore new projects are under study to increase Egypt’s power production and to explore new sources of power.

1. Natural Gas: Egypt's production of natural 25 gas is about 300,000 tons annually, and this is expected to be used in industry to run factories and power stations.

It is also possible that such power would be used by the fertilizer and petro-chemicals industries or be exported.

2. Oil production and oil discovery hold out hope that Egypt may become a substantial oil exporter. Egypt 144 produced some forty-five million tons between 1911 and 1961.

Oil production, which was 1.3 million tons in 1946, in­ creased to 2.4 million tons in 1950 and then to 3.8 million tons in 1961, with two oil fields not yet brought into pro- 2 6 duction. Oil production has been in the Sinai, the Gulf of Suez, and the Red Sea coast, but in late 1966, an oil­ field was discovered in the Western Desert which is believed to be an extension of the Libyan Desert oilfields.

Egypt has only recently become a net exporter of petroleum products, but With the annual output of the Morgan field rising to ten million tons a year, the annual export surplus should be about twelve million tons in 1970. The Western Desert field holds out much bigger promise, however, and - may transform the whole situation before that date. *

3. The Qattara depression scheme is under study, and German engineers are already working on it. The pro­ ject would bring the Mediterranean into the depression which lies about fifty metres below sea level. "Hydro­ electricity could be generated by drawing in sea-water across 70 kilometres. Various schemes envisage a capacity ranging from 64,000-200,000 kw."28

It was also mentioned in Chapter 4 that the power station of the Aswan High Dam is only one phase of utilizing the Nile's power-producing capacity of 17 billion kwh, and therefore other power stations are expected to be installed along the Nile to further increase the output of electric power. 145

Social Change

In Chapter 4 I discussed, among many other things, the three obstacles to Egyptian industrial development: lack of skilled labor, absence of a middle class, and the lack of power sources. These factors hindered economic development, mainly industrialization, in Egypt, but there are some other factors, mainly cultural, which have con­ tributed to Egypt's backwardness in the first half of the twentieth century. Some social and cultural obstacles are still at work in Egyptian society, slowing down the rate of industrialization and economic development.

After World War II, it was clear that industriali­ zation is the way to a healthy, prosperous economy and to an educated population and modernized society. Industriali­ zation is not only the path to modernization, but a way of life, having its own cultural and social values. Western

Europe and the United States no longer have the European cultural values of the seventeenth century, and they no longer live under the same circumstances under which the world of underdevelopment lives. As we talk of a peasant economy or an agrarian society, we also talk of an indus­ trialized nation or community.

When Egypt started her industrialization process, her leaders realized that a new culture had to emerge.

This culture should respect and value science and its ap­ plication to everyday life and should take pride in work and in the advancement of the country. In the early 1950's 146 cultural values and social attitudes formed a complicated problem which hindered the development of the Egyptian society and economy. Those problems are summarized as follows:

1. In 1952 over two thirds of the Egyptian popu­ lation lived on agriculture, isolated socially and polit­ ically. Illiteracy, ignorance, disease, and poverty were very common among Egypt's peasants.

2. The extended family system with all its social and economic drawbacks, was in widespread use.

3. A traditional social structure existed, and class distinctions were deep. Only two classes existed: the very rich and the very poor. Class mobility was al­ most impossible, and for the great majority of the people, physical mobility was also unusual.

4. The peasants distrusted the government and its agents, since their principal contacts with them were as tax collectors and army recruiters in the villages. Being illiterate and exploited, the peasants remained isolated and showed no interest in participating in the government.

5. British occupational forces, foreigners, the alien Royal Family, and the Egyptian traditional elite formed their own groups, shared the exploitation of the masses, and prevented the emergence and establishment of a strong centralized government.

6. Population was increasing at a fast rate, and the agricultural expansion could not keep pace with the 147 population. This situation led to the decline of the per capita income in Egypt.

The above-mentioned problems are common to under­ developed countries. But from the beginning, Egypt has had some advantages over most of the underdeveloped coun­ tries , namely

1. Egypt had no racial problems; and

2. There was no religious conflict with the newly emerging way of life.

The Egyptian Revolution found it easy to break down the traditional social structure, which collapsed with the political structure in 1952. A strong, centralized govern­ ment was firmly established following the end of the Suez

Canal War in 1956. Land reform and the nationalization of foreign interests between 1952 and 1963 led to the emergence of a middle class, which now, under the leadership of the nationalist government and in cooperation with Egyptian intellectuals, leads the industrialization process in the country.

The revolutionary government had decided to indus­ trialize the country as the only way out of the economic and social backwardness which existed. It had to make a choice among Western cultural values. Eastern cultural values, or a reconciliation of the old cultural values with the new values of an industrial society. The Egyptian charter rejected the Western and the Eastern experiences, choosing instead a nationalistic approach to industrializing 148 the country which provides for an ideological explanation to reconcile the old culture with the new realities. A centralized nationalistic socialism was seen as the "in­ evitable solution" for Egypt's economic and social problems.

The new ideology of Arab unity, social justice, political and social democracy, and an Arabic application of the scientific socialism proved successful in stimulating

Egyptians to work hard and to be on their way to indus­ trialization, in holding the country together after its defeat in the 1967 Arab-Israeli War, and in maintaining

Nasser's leadership for the Arab masses everywhere.

Land reform and the agricultural cooperatives helped to end the distrust-disrespect attitude of the

Egyptian peasants toward the government. Almost all the

Egyptian peasants benefitted from the land reform law, which either gave them land, reduced the rent they paid, or provided them with the easy credit they needed.

The Aswan High Dam touched the lives of all

Egyptians. Controlling the waters of the Nile removed the insecurity felt by every fellah due to the dangers of damaging floods and increased his land's yields as a result of better drainage and improved irrigation. About 280,000 new families will eventually become landowners, and about

180,000 families have increased their crop area as a result of the availability of water for year-round irrigation.

The Aswan High Dam also introduced physical mobil­

ity in the country, since over 50,000 engineers, managers. 149 and workers gathered from all parts of Egypt to help build the Dam. This labor mobility helped to break down or weaken the old traditional customs, particularly the extended family system. The worker became more independent and patriotic. The sixty thousand Nubians who had lived in complete isolation, with the Nile as their only means of transportation, now live in modern houses and in organized villages provided with pure water, schools, free social and medical services, and a modern transportation system con­ necting the New Nubia with other parts of the country by means of railway and good roads.

To end the state of isolation under which the bulk of the Egyptian masses lived, the government introduced the transistor to the villages, opened thousands of schools, and for the first time established universities and higher educational institutes outside Cairo and Alexandria.

In 1952 only 45 percent of children of ele­ mentary school age received any education, but by 1960, 65 percent were attending school. A plan to give universal elementray education by 1964 could not be fulfilled, but the figures continue to increase, and it is expected that the target will be achieved by 1970. If so, it will be in spite of the extremely high popu­ lation increase, as represented by the actual numbers of children at primary schools: 1,392,741 in 1953 as compared with 4,294,823 in 1966. From the very outset of the revolution the government built a standardized, cheap primary school at the rate of one a day, reach­ ing a record figure of 372 in 1954, and there are now 8,000.29

It is hoped that education will help hold down the rate of increase in population. As mentioned in Chapter 3, 150 the Egyptian National Charter recognized in 1962 that the use of contraceptives was wise and healthy, and in 1966 a massive campaign was carried out by President Nasser him­ self, aiming at convincing the fellaheen to limit the size of their families. With the breakdown of the extended family system and the disappearance of the upward-downward obligations within the family, the size of the families will tend to get smaller.

Besides helping break down the extended family sys­ tem, the Aswan High Dam will make electricity available for consumption by the villagers. This will indirectly affect birth rates for reasons discussed in Chapter 3.

The lack of electricity is one important factor contribut­ ing to the high rates of birth in Egypt and in other under­ developed countries. The Egyptian government is having a plan to electrify the entire countryside of Egypt. The costs of such a project are high, but they will be spread over a period of twenty years. The 1969-70 budget will allot $6.9 million to provide electricity for 151 villages, while the dwellers of 50 other villages will themselves be paying for the cost of electrifying their villages.

Power lines to provide the electricity for all 201 villages is estimated at 460 kilometres.^

Electricity in the village will help stimulate food industries, speed up the introduction of the machine to the countryside, and facilitate the application of technology to chicken breeding, cow milking, and protecting animals 151 against the cold days of winter. Electricity will also contribute to raising the standard of living in the village and to narrowing the gap between the village and city dwellers. In short, it will create a new way of life in the village, and it is hoped that it will stop or at least limit the migration of the villagers to the already crowded cities and hold down the rates of birth.

FOOTNOTES

Ijean and Simonne Lacouture, Egypt in Transition (New York: Criterion Books, 1958), p. 347 ^Ibid., p. 341 q Tom Little, Modern Egypt (New York: Frederick A. Praeger, Publishers, 1967), p. 317 ^Peter Mansfield, Nasser1s Egypt (Baltimore: Pen­ guin Books, 1965), p. 137 ^Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Company, 1965), pp. 297-8 ^Little, op. cit., p. 262 7 Arab Youth (Al-Shabab Al-Arabi), No. 139, August, 1969 q Ibid., No. 148, October, 1969 9Ibid., No. 138, July, 1969

lOlbid., No. 150, October, 1969

l^Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Pub- lishers, 1968), p. 376 152

^Arab Youth (Al-Shabab Al-Arabi) , No. 139, August, 1969 13 Hansen, op cit., p. 174, Table 7.1 14Ibid. 1 s Mansfield, op. cit., p. 185 •^UAR Year Book (Cairo: Information Department, 1964), p. 127 1 7 Arab Youth (Al-Shabab Al-Arabi), No. 145, Septem­ ber, 1969 l^ibid., No. 148, October, 1969 19 Ibid., No. 143, September, 1969 2^Ibid., No. 141, August, 1969 21 Mansfield, op. cit., p. 160 22Ibid.

23 Lacouture, op. cit., p. 392 24 Arab Youth (Al-Shabab Al-Arabi), No. 150, October, 1969 25 Ibid., No. 148, October, 1969 2 6 Charles Issawi, Egypt in Revolution (London: Ox­ ford University Press, 1963), p. 3?2 ^Little, op. cit., p. 265

2 8 Issawi, op. cit., p. 322 29 Little, op. cit., p. 245 in uArab Youth (Al-Shabab Al-Arabi), No. 150, October, 1969 Chapter 7

CONCLUSIONS

By the end of the 1960's, Egypt had overcome most of the problems of the early 1950*s that had handicapped

Egyptian society and hindered the development of its economy. It was marching on its way to become an indus­ trial society. The level of technology had advanced, and the Egyptian industrial worker had acquired new skills and training. "Egypt has the high-level manpower for sub­ stantial industrialization."^ The known natural resources had been exploited, particularly water resources, since by

1969 the Nile was completely mastered. Egypt's educational system had developed not only to satisfy the country's needs for college graduates, but also the needs of most of the Arab world.

Of the secondary students, no less than 110,000 proceeded to the universities; in 1966 the number of university students totaled 130,000. The proportion of graduates to the total popula­ tion is eleven times higher than in Britain and must be one of the highest in the world.

The country's borrowing capacity increased due to the fact that Egypt:

1. had succeeded in running the Suez Canal and had managed to deepen and widen it, thus increasing the tolls received by the Canal's Authority from $73 million in 1955

153 154 to $177 million in 1964 and to almost $230 million in 1966;3

2. had successfully completed the Aswan High Dam and met all its financial obligations to other countries and to shareholders of all nationalized companies;

3. had expanded its industrial sector and in­ creased the gross value of its production from $2,079 mil­ lion in 1959-60 to $3,002 million in 1968-69, an increase 4 of 44 percent; and

4. had expanded its exports to the extent that they exceeded imports, and exports no longer depended so heavily on raw cotton, since its share decreased from over

85 percent of Egypt's exports in 1953 to only 42 percent in 1968-69. The decline in imports is due mainly to the increase in the agricultural output following the building and utilization of the Aswan High Dam.

The 1970*s will bring with them still greater challenges to Egyptian leadership and the Egyptian economy.

The problem of the high rate of population growth still exists, and if left unchecked, could threaten to hold back the growth rate of the economy. Parts of Egypt are still occupied by an enemy whose occupation in 1967 resulted in closing the Suez Canal to navigation, and with its closure

Egypt lost about $230 million annually in foreign currency.

Although the Egyptian economy has been subsidized for this loss by the Arab governments of Kuwait, Saudi Arabia, and

Libya, Egypt cannot count on this source of income to 155 continue indefinitely. Egypt has also lost some of its oil fields in Sinai to exploitation by Israel since the end of the Arab-Israeli War in 1967.

The Ten-Year Plan of 1959-60 to 1969-70 channeled about 35 percent of the total investment to the industrial sector, about 30 percent to the building of the infra­ structure, and about 25 percent to the agricultural sector, leaving only about 10 percent to the services sector, which includes commerce, education, and housing. The latter, due to the ever-increasing population and to the growing middle class, became one of Egypt's chronic problems, especially in big cities like Cairo and Alexandria. It therefore had to be given priority in the third Five-Year Plan, 1970-75.

The 1967 War added a new and unexpected element to the already complicated housing problem—the flood from the

Canal Area of about one million refugees for whom the gov­ ernment had to seek adequate housing and income.

Egypt's population is expected to be about fifty million in 1990, and about 55 percent will be living in 5 urban centers. These figures indicate that the Egyptian population will be doubling in thirty years, since it was only twenty-six million in 1960. Table 7.1 on the follow­ ing page indicates urban population as a percentage of the total population in the past and projected for the future.

Aware of the housing problem, the Ministry of Housing in

Egypt has prepared and submitted its proposals for invest­ ment spending in the third Five-Year Plan, 1970-75, which 156

Table 7.1

Urban Population as a Percentage of the Total Population for 1937-90

Year Urban Population (%)

1937 28

1947 34

1965 38

1966 41

1975 46

1980 49

1990 55

Source: The Arab Youth (Al-Shabab Al-Arabi), No. 147,

September, 1969

is still subject to the approval of the Ministry of National

Planning and the Egyptian Cabinet. The Ministry of Housing has estimated its investment spending at $2,875 million, to be spent as follows: $460 million in 1970-71; $506 million

in 1971-72; $575 million in 1972-73; $644 million in 1973-74; and $690 million in 1974-75.6

Is Egypt Likely to Meet the Challenge?

In 1965-66 the government launched a program of

austerity and raised taxes, especially on imported consumer

durable goods. This move meant that Egypt was under 157 economic pressure and could not afford to spend much of its earnings of foreign currencies on imports. By 1969, most of the imposed restrictions on imports were relaxed, and taxes on the items, which had been raised in 1965, were cut down tremendously, especially those on cars, and the prices of the Egyptian-made Nasr car was reduced. If the government of the UAR does not feel that it is under great economic pressure, it is surely under enormous political pressure.

If we assume that a situation of neither peace nor war with Israel will continue to exist (which is not likely) then I think that the Egyptian economy has the potential to meet the challenge of the 1970’s:

1. With the full utilization of the waters of the

Aswan High Dam for irrigation, agricultural income is ex­ pected to increase by about $430 million annually, of which about $60 million will go to the government as taxes— assuming that newly reclaimed land could be sold to the

Egyptian farmer.

2. Over $100 million annually will be received from selling the hydroelectric power to be generated by the Dam's power station.

3. The industrial sector has expanded and is ex­ pected to continue to expand in the 1970's, thus generating higher income for the government and for the industrial worker. It will also be producing more for the consumer and more for exports in exchange for foreign currencies 158 to meet some of Egypt's needs for further investment.

The development of both the industrial and agri­ cultural sectors has caused the overall purchasing power to increase, and this is expected to stimulate the economy to further growth.

Egypt's investment during the first Five-Year Plan,

1960-65, in projects demanding foreign capital was about

20 percent short of its goals. This underlines Egypt's main problem in the 1960's in carrying out her development programs, especially industrial projects. Besides the in­ adequate entrepreneurial know-how, she required foreign capital. The 1970's hold the hope that the problem of the availability of foreign capital will be overcome or at least

limited due to the following:

1. The income received from the Suez Canal amounted to about $230 million in 1966, but the Canal has been closed since June, 1967. In spite of this, an estimated $250 mil­

lion in foreign currencies still flows into Egypt, paid by the Arab governments of Kuwait, Saudi Arabia, and Libya.

2. Egypt is exploring its natural resources and has found rich deposits of iron ore, zinc, manganese,

aluminum, phosphate, oil, and many others. These natural

resources are expected to provide industry with one of its basic needs—cheap raw materials—and to increase Egypt's

exports, thus bringing home the needed foreign currencies

for investment. Two outstanding examples of such natural

resources are: 159

a) Phosphate: The production of phosphate was 443,000 tons in 1953 and increased to 629,000 7 tons in 1959. Deposits are located at Isnu and

near Safaga. "In the early 1950's they were esti­ mated at 180 million tons. Further deposits of

150 million tons have been discovered between Dakhla g and Kharga oases." Half of the total output was

exported, and the rest was converted in to super­

phosphates. New deposits have been discovered in

the New Valley region, and the production of phos­

phate has increased by 110 percent between 1968 and g 1969. The $28 million loan from Poland which was mentioned in Chapter 6 will be paid for in phosphate.

b) Oil: Oil production started in Egypt

in 1911, and since then Egypt has remained a minor

producer until the discovery of Morgan Field in

1965. Egypt's principal oil fields were in the

Gulf of Suez, the Sinai Peninsula, and the Red Sea

coast until late 1966, when oil fields were discov­

ered in the Western Desert. These are assumed to

be an extension of the rich oil fields of the Libyan

Desert. Oil production increased from 1.94 million tons in 1965 to 4.15 million tons in 1961."*"® Around

the year 1962 Egypt became self-sufficient in oil,

and recently she became a net exporter.

The Morgan oil fields are thirty-seven wells 11 producing about 250,000 barrels daily. Their 160 product will start to be exported to Italy and

Brazil in January, 1970. Italy will be importing

600,000 tons a year at $13.6 million, and Brazil will import 500,000 tons, whose value is estimated 12 at $11.5 million. An oil pipeline connecting

Suez with Alexandria is being built by French con­ cerns. The contract was signed in July, 1969, with 13 work to start in October, 1969. In his speech on

July 23, 1969, President Nasser said that the pipe­ line will be ready in 1971.

In 1969 the Soviet Union gave Egypt a loan of $36.8 million for the purpose of oil extracting.14

Pan American had found new oil fields in the Western

Desert only 140 miles from Al-Alamein port, where

Al-Alamein oil fields reported an increase of

33 percent in oil production over 1968. Egypt's exports of oil in 1968-69 reached $17.6 million, with most of the oil fields in the Western Desert not yet in production.

The petroleum industry in 1961 employed

19,000 workers, and its contribution to the GNP 16 was estimated at $69 million. In 1962-63 the value of petroleum production was put at $213 mil- lion. By 1970 oil production is estimated to be

25 million tons, as compared with only 4.1 million 18 tons in 1961. Egypt's needs of various petroleum products was about 4.2 million tons in 1961; there­ 161

fore, assuming that home consumption would increase

50-100 percent between 1961 and 1970, Egypt would

have the potential of exporting between 15-18 mil­

lion tons in 1970.

On September 30, 1969, a contract was signed

between the Ministry of Industry and Standard Oil

of Indiana. According to this contract, Egypt will

receive 80 percent of the value of the oil produc- 19 tion by Standard Oil.

If Egypt's oil products of 4.1 million tons

in 1961 were valued at $69 million, then her ex­

pected oil products of 25 million tons in 1970

would be estimated at $440 million. By the same

token, petroleum industry employment of 19,000

workers in 1961 could be expected to increase to

about 110,000 workers in 1970.

How Far is Egypt from the Industrial Revolution?

The situation in the underdeveloped countries of the twentieth century is different from that of England in the seventeenth century. Although the underdeveloped countries might not be better off economically than seven­ teenth century England, they still live under different conditions, since the structure of their economies and societies is not similar. In almost every underdeveloped country in Africa, Asia, or Latin America, there exists a rich class living in affluence and in advanced communities which might be not more than a few miles from the backward 162 communities where the poor live in a state of ignorance and isolation.

Almost every underdeveloped country in the world has at least one industry or one sector within its economy that could be called advanced or developed, e.g., agricul­ ture in Egypt before I960, mining in the Congo, and trade in Lebanon. Radios, cars, and planes are being heard and seen by all the inhabitants of the underdeveloped countries, which means that they are in some way in touch with the sophisticated equipment and machines that the most advanced countries produce. Therefore, the terms and aspects of the eighteenth century's industrial revolution cannot be applied to the twentieth century revolution taking place in under­ developed countries.

The role played by the textile industry in eighteenth century England was so significant that it is said to have been a basic factor bringing about the first industrial revolution in the second half of the eighteenth century.

Egypt's textile industry is more than one hundred years old, and in 1922 it was modernized by Misr Bank industrial group, and since then it has become Egypt's leading indus­ try. In 1960 Egypt's cotton spinning industry consisted of

...1,300,000 spindles, against 500,000 in 1950 and 250,000 before the war. The weaving industry had 22,000 looms in 1960, representing 50 percent increase over 1950. Two-thirds of the production is accounted for by large and well-equipped firms. Dyeing and designing im­ proved greatly and have reached a very high standard. The Five-Year Plan, 1960-65, pro­ vided for $139 million to raise capacity by 163

330,000 spindles and to raise output of fabrics to 79,000 tons by 1965.20

The textile establishments employing ten persons or more

71 in 1961 employed 140,292 workers.

In spite of the long history of the Egyptian textile industry, it proved by 1952 unsuccessful in bringing about the kind of change which could lead to industrialization of the country. It expanded slowly and failed to stimulate other industries to achieve the rate of growth needed to put the economy on the verge of industrialization. The

Egyptian Revolution in 1952 modernized and expanded the textile industry, and by 1960 it had become the country’s leading industry.

Egypt’s transport system had been organized and modernized with railways, country and city bus lines, river navigation, shipping, and airlines reaching all parts of the country. By 1963 the replacement of all steam engines by diesel engines on all the railway lines was completed.

The improvement of services and the cut in fares increased the number of passengers carried by the railway industry

77 from 3,885 million in 1960-61 to 4,426 million in 1962-63.

The history of railways in Egypt goes back to the mid nineteenth century:

The first railway was opened as early as 1853 and by 1858 Cairo was linked to both Alexandria and Suez. In 1877 there were 1,519 kilometres of standard-guage railways and by 1913 this figure had risen to 2,953; at the latter date there were also 1,376 kilometres of light rail­ ways.... Thus Egypt, whose total inhabited area 164

is only 35,000 square kilometres, had built up an internal system of transport and communica­ tions comparable to that of many European coun­ tries at a much higher level of development.23

By 1949 the length of State Railways reached 7,102 kilometres, mainly because of the War. "Egypt thus has some 14 kilometres of railway for every 100 kilometres of inhabited area, a figure which approaches the Western Euro­ pean standard and is well above that of other underdeveloped 24 areas." Moreover, the General Economic Development Plan

(1960-61 to 1964-65) had allotted $230 million to be in­ vested in railways for the realization of the lines and 25 raising of the standard of service.

Navigable waterways total 3,100 kilometres, divided almost equally between the Nile and canals. In 1958 the river fleet consisted of twelve thousand units. The volume 2 6 of freight carried in 1948-56 was 5.1 million tons. Now iron ore is being carried by the Nile all the way from

Aswan to Hulwan. With the completion of the Aswan High

Dam, traffic in the Nile and other canals is expected to increase by about 33 percent.

Under the revolution, about 4,700 kilometres of roads have been macadamised...work is underway for the macadamisation of 712 kilometres of roads. Thus the total length of all roads in the UAR are now 12,500 kilometres, of which 8,500 kilometres are macadamised. 7

Therefore it is safe to say that Egypt is not handicapped by the lack of a transport system. With the exclusion of the extremely crowded city of Cairo, Egypt has a modern transport system which meets the country's needs in this 165 stage of development and facilitates the movement of com­ modities and the mobility of labor all through Egypt.

The progressive taxation system, the nationaliza­ tion of the Suez Canal Company, and the creation of a big public sector provided the Egyptian government with the means to make the investment that it deemed necessary to carry out the development programs. In the period from

1957 to 1960, investment was about 14 percent of the na­ tional income, and in the period from 1960-65, this per­ centage was increased to about 19 percent. The second

Five-Year Plan, 1965-70, provides for an average rate of investment of 16 percent. Table 7.2 on the following page shows investment as a percentage of national income pro­ jected for 1960-65.

Judged in terms of Professor Rostow’s "take-off" stage, we find that Egypt had the following:

1. The political leadership that values industrial­ ization and gives priority to the modernization of the country;

2. Built up the overhead capital needed for this stage;

3. Increased savings and investment to high rates of 15-20 percent—rates usually unattainable for under­ developed countries; and

4. Expanded the industrial and the agricultural sectors, applying new methods of technology to both sec­ tors, especially to industry. 166 Table 7.2

Investment as a Percentage of National Income (projected for 1960-65)

Year National Income Investment % Rate of ($ million) ($ million) Investment

1960 3,052 394.2 13

1961 3,192 518.3 16.2

1962 3,307 577.7 17

1963 3,667 689.5 18.8

1964 3,976 856.3 21.5

1965 4,142 838.1 24.2

Source: computed from Table 32, pp. 151-2, and Table B.I., pp. 374-5, Magdi El-Kammash, Economic Development and Planning in Egypt (Hew York: Frederick A. Praeger, Publisher, 1968)

Therefore I think that Egypt is in its industrial revolution or the "take-off" stage of its economic growth. The year

1960 could be considered as the beginning of the "take-off"

in Egypt, and I estimate that Egypt will complete this

stage in twenty-five to thirty years.

The Aswan High Dam represents the "big push" which has been given the Egyptian economy. It helped agriculture

to expand, stimulated many industries to grow—mainly the

food industry—and provided an adequate source of power, which is a basic need for industrialization. The Dam also

raised the income of the fellah and increased the income of 167 the government, thus increasing the overall purchasing power in the economy. The increase in the national income, which is partially due to the utilization of the Dam, pro­ vided the government with more capital needed for carrying out its development programs and strengthened the govern­ ment 1s borrowing power.

The expected increase in the income of agriculture with the full utilization of the Dam is estimated at

$430 million. About $60 million will go to the government in the form of taxes, and about $50-60 million is expected to be saved by the farmer. Therefore, about $300 million will be spent in the economy. Most of this money will be spent on agricultural products, due to the farmer’s poor diet and to the rapid increase in population. It can be said that demand for agricultural products in Egypt is elastic, and therefore more land is needed.

"Hurst had estimated that the waters of the Nile could never irrigate more than ten million feddans of farm­ land, and his estimate was confirmed by surveys made since 2 8 the revolution." If we add to this figure other areas of potential agricultural expansion in the New Valley and in the Sinai, the total might not exceed fifteen million feddans. Therefore, in solving Egypt’s agricultural prob­ lems, planners have to look to other Arab countries like

Sudan, Algeria, Iraq, and Syria, which have vast areas of uncultivated land. 168

Land distribution following the land reform decrees of 1952, 1961, and 1969 served to redistribute Egypt's in­ come, thus putting the country's agricultural resources

in the hands of the Egyptian peasants who worked hard to raise its productivity and who were eager to spend the money they made. The rise in the agricultural income will further

increase demand and stimulate industrial expansion. The rise of the income of the industrial worker and the in­ creasing degree of urbanization is expected to raise the prices of the agricultural products, thus leading to an increase in the fellah1s ability to buy and acquire more manufactured products.

Although per capita income in Egypt in 1970 is almost the same as that of Japan in 196--0, about two thirds of that of Italy, and higher than that of Germany at the time of World War I, the size of Egypt's domestic market

is still small. Egypt's population is growing fast, and most of the income of her people is spent on food. More than 60 percent of Egypt's population lives in the country­ side and spend an estimated 10-15 percent of their income on manufactured products.

The Arab World, which has a population of one hundred million, is one of the fastest expanding markets

for manufactured products in the world. Transportation

and communication between different Arab countries is

adequate to facilitate the shipment of all kinds of goods. 169

The rising anti-West sentiment among the Arab people is

paving the way for Egypt's manufactured products and is

expanding the size of its potential market. The only

remaining problems hindering Egypt's competition in the world market are improvement of the quality of Egyptian

products and an increase in the productivity of labor.

The Aswan High Dam has improved the fellah's

economic situation and provided the country with enormous

amounts of water and electricity for expanding agriculture

and industry. The Dam has also some drawbacks, which are

of relatively small economic importance: The brick in­

dustry suffered somewhat from the loss of the silt which

had been carried each year with the floodwaters of the

Nile, and some crops lost tenderness—like beans and water­ melons—following the transformation of cultivation from

basin to perennial irrigation systems.

The Dam's impact on Egypt's fellah was so tremen­

dous that he was transformed from a peasant who was ex­

ploited economically, spectator politically, and static

socially to a farmer exploiting the potential of his land

and utilizing resources at his disposal. With the ideo­

logical changes taking place in Egypt since 1952, the

Egyptian farmer became a good citizen with an active role

in running his country and an acceptance of social change

as good and desirable. 170

FOOTNOTES

Clark Kerr, Industrialism and Industrial Man (New York: Oxford University Press, 1964), p. 34 2 Tom Little, Modern Egypt (New York: Frederick A. Praeger, Publishers, 1967) , p. 2^45 o Peter Mansfield, Nasser*s Egypt (Baltimore: Pen­ guin Books, 1965), p. 161 4 Bent Hansen, Development and Economic Policy in the UAR (Egypt) (Amsterdam: North Holland Publishing Com­ pany, 1965) , p. 121 ^Arab Youth (Al-Shabab Al-Arabi), No. 147, September, 1969 £ Ibid., No. 149, October, 1969 7 Magdi M. El-Kammash, Economic Development and Planning in Egypt (New York: Frederick A. Praeger, Pub­ lishers, 1968), p. 226 o Charles Issawi, Egypt in Revolution (London: Ox­ ford University Press, 1963), p. 323 q Arab Youth (Al-Shabab Al-Arabi), No. 150, October, 1969 ^^Kammash, op. cit., p. 228 l^Arab Youth (Al-Shabab Al-Arabi), No. 145, September, 1969 l^Ibid., No. 141, August, 1969 1 3 Ibid., No. 150, October, 1969 14ibid., No. 137, July, 1969 1 s Ibid., No. 141, August, 1969 16 Issawi, op. cit., p. 321 17 UAR Year Book (Cairo: Information Department, 1964) , p. 98 l^Arab Youth (Al-Shabab Al-Arabi), No. 145, September, 1969 171

l^Arab Youth (Al-Shabab Al-Arabi), No. 148, October, 1969 9 n Issawi, op. cit., pp. 323-4 21 Kammash, op. cit., p. 210 22 UAR Year Book (Cairo: Information Department, 1964) , p. 234-6 23 Issawi, op. cit., p. 26 ^^Ibid., p. 200 25 3UAR Year Book, p. 234 2 6 Issawi, op. cit., p. 204 27 UAR Year Book, p. 237 2 8patrick O'Brien, The Revolution in Egypt1s Economic System (London: Oxford University Press, 1963), p. 3T BIBLIOGRAPHY

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Mr. Helmi Abdul Ghani, Agriculture Department, Ministry of National Planning, Cairo, July, 1969.

Mr. Yahya Hijazi, General Director, Department of Electri­ city, Ministry of National Planning, Cairo, July, 1969.

Mr. Fouad Kafrawy, General Director, High Dam Department, Ministry of National Planning, Cairo, July, 1969.

Dr. Imam Salim, Under Secretary of State, Ministry of Na­ tional Planning, Cairo, July, 1969.

Mr. Taher Abu Wafa, Under Secretary of State, Ministry of High Dam, Cairo, July, 1969.