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.