Remarks by Undersecretary of State for Economic Growth, Energy and the Environment, Mr. Robert D. Hormats
American Chamber of Commerce
August 29, 2012
Thank you very much, Ahmed, for that very kind introduction. This is a very important opportunity to discuss a number of important issues in Egypt-U.S. economic relations with a very distinguished group of business leaders here in Cairo.
I particularly want to thank you, the American Chamber of Commerce in Egypt. I have had the pleasure of addressing you before and I look forward to the opportunity of addressing this group many times in the future.
I’m also pleased that we have with us today members of the Egyptian Business Development Association, and I want to thank you for your attendance as well
I’m also delighted and honored to be here with my friend and colleague Ambassador Anne Patterson. Anne is really one of the truly great ambassadors of our era, and has done an enormous amount to strengthen relations between our two countries in this very challenging period and it is a great pleasure to have her with us today.
I’m also pleased to be here with our delegation; their names have already been mentioned:
- Special Assistant to the President Caroline Atkinson;
- Middle East Transitions Coordinator Ambassador Bill Taylor;
- USAID Assistant Administrator Mara Rudman;
- Assistant U.S. Trade Representative Dan Mullaney;
- OPIC Vice President Robert Drumheller, and
- Deputy Assistant Secretary of the Treasury Andrew Baukol.
They are all part of a team, and this is an important part of what we are doing here. We have come as a team. Our relationship is not a relationship with one agency or one individual. We work together, because of the importance we attach to the relationship with Egypt and particularly because we see this as a multi-faceted relationship. It’s not just foreign assistance. It’s not just financial assistance. It’s not just trade. It’s not just investment. It’s all of those things together. We think that’s where the U.S. can make its most important contribution, and that is pulling all these things together and providing the maximum amount of support we can to Egypt’s democratic transition.
It is an honor to speak to you today in the midst of such historic changes that are taking place in Egypt and the historic opportunities that we see before us in Egypt and in our relationship with Egypt. This country’s political and economic transformation has required, and will continue to require, difficult decisions on an array of complicated but profoundly important issues.
Only Egyptians can address these issues and make these very tough decisions. But we have come to Egypt, as Secretary Clinton said in July, to reaffirm the strong support of the United States for the Egyptian people and for Egypt’s democratic and economic transition – recognizing that success in one area supports success in the other areas as well.
We have come here to begin a practical and concrete dialogue on how we can work together to help create a strong economic foundation for a democratic Egypt, for an Egypt that provides new and broadly shared opportunities for its population, and for our partnership.
We have deeply shared interests in several areas of Egyptian reform:
- One: Egypt’s strong and inclusive economic growth; we see this as extremely important as do I believe most Egyptians
- Egypt’s ability to expand job opportunities for the people of Egypt obviously is extremely important to millions and millions of people and the stability and the growth of Egypt.
- And also Egypt’s increasing integration into the regional and global economy through the growth of trade and investment. We see enormous opportunities for both of these areas, working with companies represented here, working with American companies that are invested here, and working with the kinds of American companies who will be coming on the delegation that you have just heard mentioned which I’ll talk about in a few moments.
The United States has a wide range of capabilities to bring to bear in strengthening this relationship:
- One: Our capacity to mobilize support within the international financial and economic community, especially international financial institutions; which are playing and will continue to play a very strong role in support of Egypt and we’re encouraging that in a variety of ways.
- Second: to provide significant amounts of direct financial and development support on our part to the people of Egypt in a variety of ways. We have representatives here of various groups and agencies in the U.S. government. They’re actively involved in this and we’ve had conversations already on this and we’ll continue to have practical concrete support.
- Our efforts also are to strengthen Egypt’s trade and investment ties with the United States and with the rest of the world in order to create new opportunities for the people of Egypt and for Egyptian companies, such as many of you who are represented here today.
Let me go back a bit before I go into the details and talk about Egypt in historical context.
In times of transition, it is all too easy to become absorbed in the many challenges of the moment and those are formidable challenges to be sure. But it is also possible to lose perspective about the underlying strengths of this great country.
It is therefore worth taking a step back to put the past year and a half in the context of Egypt’s deeper history.
I have been a frequent visitor to Egypt since the early 1970s. I have traveled throughout many parts of this nation – up and down the Nile through Sinai and all the way over to the Western Desert. Each time I come I learn more and more about this country’s rich history and its people.
For millennia, Egypt has made significant contributions to the progress of mankind. As a junction between East and West, between North and South, Egypt has been a crossroads for diverse peoples, diverse goods, and diverse ideas.
The source of this continual innovation has always been the ingenuity and the resolve of the Egyptian people. Egypt was a leader in scientific discoveries and innovations that defined the foundations of many fields, including astronomy, mathematics, chemistry, medicine, and, of course, engineering. The Library of Alexandria, constructed in the third century BC, was a center of knowledge for many centuries that brought together scholars from all over the world.
This thirst for knowledge and achievement of the Egyptian people can still be seen today.
Egypt also has, of course, experienced its share of tumultuous times. But faced with each setback or crisis, Egypt has redoubled its efforts, drawn from the dynamism of its people, and emerged stronger and more resilient than before, and we believe it can do so again.
Today Egypt faces many new challenges, but also many new opportunities.
One of the key and most immediate challenges is stabilizing the economic and financial situation this country faces. Achieving this is vital to providing a solid base for sustainable and for inclusive growth.
Egypt also faces the need to increase domestic investment, and attract more overseas investment. That is vital to boost growth, to ensure diversification of the economy, and to create new and better jobs for more and more people. To do this during a period of downturn in large parts of the global economy is difficult. Doing so during a period of dramatic internal change makes it doubly difficult. But it can be done.
Improving this country’s business climate is one of the principal ways to encourage domestic and foreign investment – doing so through such steps as regulatory reform, and maintaining an open and stable investment climate, can over the course of the next several years bring far more resources and far more new technologies to Egypt than foreign loans or foreign assistance can bring. We plan to help on all of these fronts.
President Morsi, through his Renaissance Plan, has indicated his desire to adopt a serious and impressive economic reform agenda. This agenda has highlighted reform of the banking sector, support for small and medium-sized enterprises, and enabling women to play a greater role in national development, which is extremely important, because a country that mobilizes the talents and resources of its women is going to have a much better chance of succeeding in development than a country that does not. A couple of times ago when I was here, I had a chance to meet with a number of very dynamic women business leaders, who are making and want to continue to make an important contribution to this country’s economy.
With a president, a prime minister, and a cabinet ready to engage, now is the moment for Egypt and the international community to work together with renewed commitment and energy on several levels and in several ways:
We welcome Egypt’s engagement with the IMF as a first step toward securing financial support for a robust, Egyptian-led stabilization and economic reform program that will reinforce confidence among international lenders, potential donors, and private investors; private Egypt investors and private foreign investors. Just as importantly, it will provide a foundation for sustained growth and inclusive economic opportunity.
And the World Bank has identified several ways in which it can provide support for Egypt as well. It also has supported ways to improve Egypt’s business climate. In particular, the Bank has suggested streamlining regulatory procedures for businesses, developing infrastructure, and advancing tax reform.
Egypt could also benefit from facilitating additional franchising agreements. For example, the U.S. company Dairy Queen has opened four outlets in Egypt. It plans to expand further, capitalizing on U.S. financing, some of which will come from OPIC, bringing more jobs, more entrepreneurship opportunities, and more training. Other franchises could do the same.
Bankruptcy reform could also benefit Egyptian business. People should be able to reap the rewards of their successes when they do succeed; but, if they fail they should be given the opportunity to come back to try again. That is the essence of a vibrant entrepreneurial environment. Easing the ability to obtain concessional opportunities and construction permits – construction permits in particular as many companies find it difficult to obtain construction permits or obtain them quickly – and clear procedures for the enforcement of contracts would also produce investment and jobs. So could advancing progress on dispute settlement reform. These are all areas where progress can be made and areas where reforms could improve the investment environment, and by improving the investment environment also improve the ability of companies to create new jobs and new job opportunities.
The Egyptian marketplace would also benefit from meaningful trademark and other types of intellectual property protection. This will sustain the ability of this country to develop an innovative society and support Egypt’s entrepreneurs.
Let me now turn to some areas in which the U.S. believes it can play a strong partnership role with Egypt:
President Obama and Secretary Clinton have both expressed their commitment to support Egypt’s democratic transition. They want to ensure that the United States is a partner with the Egyptian people and their leaders in building the New Egypt.
I am here because I share that view – as do my colleagues on our team that you see seated before you and members of our Embassy and all of us in Washington who are working on U.S.-Egyptian relations. We want to use this visit to make concrete progress in advancing our common efforts.
The American people have a deep reservoir of goodwill for Egypt. We want to demonstrate our friendship and our partnership through concrete actions, and build a relationship based on mutual interests and mutual respect.
We believe that Egypt’s transition to democratic governance has given both of us new opportunities to talk sincerely about our shared values and our shared interests.
Our trip to Egypt this week is focused on making concrete progress on the timing and the details for the support that has been laid out by President Obama and by Secretary Clinton.
My colleagues and I have listened carefully to what the leaders and the people of Egypt have said about this country’s needs.
In our meetings over the last two days, we have heard from your government and heard from many Egyptians about your most important and urgent economic priorities. Egypt’s priorities are where we want to focus our attention and our efforts.
To address a top priority, the United States is working to help relieve Egypt of part of its immediate financial and balance of payments pressures in support of the Egyptian government’s own, home-grown reform plan. As with all our assistance, our discussions will be conducted in very close consultation with our Congress and anticipating a supportive overall environment.
Other bilateral initiatives will focus on helping to unlock the potential for sustained growth in Egypt’s small and medium-sized enterprises, or what we call SMEs. We want to do this for Governorates throughout Egypt. We see this is not just benefiting one part of Egypt but all of the governorates around this country.
The Overseas Private Investment Corporation, or OPIC, is the U.S. government’s development finance institution. It has committed $250 million to an SME Loan Guarantee program for Egypt. Through leveraging the loan guarantees, OPIC will support up to $700 million in small SME lending by local banks and other institutions.
OPIC has also approved $125 million in financing for Cairo-based Citadel Capital to provide loans to medium-sized Egyptian companies into which Citadel has already invested equity – in the transportation, finance, information and communication technology, and consumer food sectors.
To date, OPIC has provided $300 million of insurance to the Apache Corporation’s investments in Egypt since 2004. Apache is the largest producer of liquid hydrocarbons and natural gas in the Western Desert and the third largest in Egypt.
The United States is also supporting SMEs in Egypt through USAID’s Egypt Competitiveness Project. Through this new partnership, announced in November 2011, USAID will work with HSBC Bank to offer $34 million to SMEs. USAID has programs in many parts of this country, including Upper Egypt, Sinai and other regions of the country.
USAID continues to fund projects across Egypt to help improve health and education, including in Sinai and Upper Egypt. In Sohag for instance, USAID has installed or upgraded potable water services in homes, improved health, sanitation and convenience, and also created 116,000 labor-days of employment. In Sinai, USAID has funded the construction of 54 schools and partnered with the Ministry of Education to improve vocational training for 1500 students and 135 teachers, more than 30% of whom are women.
We are also working to create and are almost ready to unveil a new U.S.-Egyptian enterprise fund that will also focus on stronger investment ties, leverage other investors, and help Egyptians launch and grow SMEs. The initial capitalization of this fund will be USD60 million but we expect that that amount will grow significantly and we are working with our Congress to ensure that it does so.
Enterprise funds of this nature were initially established to promote private sector development during the democratic transitions in eastern and central Europe and we see similar possibilities here in Egypt. Most of them were very successful and we believe that the one in Egypt will be very successful as well.
In addition, we see opportunities to promote direct business to business connections. The U.S. believes that Egypt is a good place to invest and sees promise in a number of important areas such as information and communication technology, energy, transportation, port facilities, agribusinesses and other areas. Egypt also can be an increasingly important trading partner in many sectors. This delegation that is going to come here, which I will talk about in a moment, is going to look into all of these areas
We are organizing the visit of this delegation along with many of you participating here and the Chamber. We are organizing this visit on a level and a scale that has rarely been done before and this is going to be a big business delegation with over 100 men and women, as Ahmed announced, 49 companies, and these people are eager to participate. Some of the companies are here already, some of them are not as familiar with Egypt, but they will be here with great enthusiasm to meet with your leaders, to meet with you, to meet with other members of business community and to get a real feel for the New Egypt and the dynamic opportunities here in the New Egypt. This is something that we have placed a lot of emphasis on, in our State Department and other agencies of government, and certainly working with members of our business community to ensure that we have very strong representation.
In the coming months and years, you, the leaders of the business community here, will also have an historic opportunity to support a rejuvenated Egypt. You are ideally suited to send a signal to the rest of the world that Egypt is open for business and that there are important business opportunities here, important partnership opportunities here, and important trade opportunities here. We will help you carry that message to potential partners in our country.
Let me conclude with a few final remarks:
In sum, we see new opportunities for cooperation and partnership with Egypt. That is why we are here, because we are optimistic about these new opportunities, we’re optimistic about cooperation, we’re optimistic about the potential for our partnership. This moment presents an historic opportunity to work together to help the Egyptian people and the Egyptian government develop opportunities for more inclusive growth and new employment opportunities throughout this great country.
The groundwork has been set with a new political leadership, a new level of energy and new opportunities for robust, substantial reform.
And, as in other countries, including my own, progress will only be possible if the talents of all citizens are drawn upon and all citizens have a voice – men and women, all religious groups, all age groups, and all parts of the country. And, as in other nations, economic reform can only work if it is based on a partnership among business, government, and workers, and grounded in sustained communication, mutual respect, and mutual confidence.
Egypt is in a process of continued transformation. It will no doubt encounter additional challenges. Periods of dramatic change always provide unexpected challenges. But this is also a moment of historic opportunity. And we are taking the long view of these historical opportunities.
The United States has confidence in the ability of the Egyptian people to overcome new obstacles, to modernize the Egyptian economy, and to succeed in building this new democracy.
It is through these changes that a prosperous and democratic Egypt will revitalize this nation’s historic role of prominence and leadership in the Middle East and around the world. The U.S. wants to be your partner, the U.S. is committed to being your partner, and we in this delegation are very honored to have a chance to participate in this process.
I want to thank all of you for coming today, I want to thank all of you for your leadership, and I want to assure you that the United States government wants to continue to work with you, work with the people of Egypt, work with the government of Egypt, to enable these democratic reforms and these economic reforms to succeed.
I thank you very much.