Maria Bartiromo spoke with Rachid Mohamed Rachid, Former Minister of Trade and Industry of Egypt about the crisis in Egypt.
Rachid called it “paralysis in the country” for the short-term.
Rachid expects the crisis to have “impact on growth numbers, production. And the faster we can go back to normality, the faster we can recover from that situation,” said Rachid. For the long-term, Rachid believes “this is going to be quite challenging.”
Mr. Rachid, along with the previous government resigned on Saturday. Rachid said the newly appointed Prime Minister Ahmed Shafiq offered him to stay in the cabinet and take the same position, but Rachid declined.
Here’s a transcript of Maria Bartiromo’s interview.
BARTIROMO:Let me begin as far as your hope for this transitional government, and what you can tell us as far as what's happening on the ground today in Egypt.
RACHID:The situation is still very, very tense. Unfortunately, we still have a disagreement between the different opposition parties on how to move forward. The President, four days ago, he announced a series of actions towards the transition, to arrange for an election to start in July. The situation on the ground is still very confusing, because all the young people have really gone to the street and made that huge change in the last ten days, they do not have a clear leadership yet.
Many of the old opposition party are jumping the bandwagon and trying to claim that they own the voice of the young people. It's not there yet. But in the meantime we are seeing every single day, real change happening. We have now a complete change in the ruling party.
We have now, the President has issued a decree to form a committee for constitutional changes. We have already almost dissolved the Parliament. We will have new election. So many things happening, too fast worrying of the speed, but at the same time we still having a lot of pressure from the different factions at the moment. Yes.
BARTIROMO:Can you take us back over the last ten days, how did this start? What was the catalyst?
RACHID:On the 24th of January I don't think a single sole on this planet was expecting what happened on the 25th, including the young people who went to the street. Nobody expected the march on the demonstration that the young people, through the Internet, and through the Facebook, have organized.
This is actually an explosion that happened inside of Egypt. Because for many, many years now, despite the fact that there was intention to do political reform, all the young people of Egypt have never been given the chance to have proper channels to express themselves. The formation of new parties were banned. The ability of young people to practice politics, in many places was not allowed. So on one hand we allowed freedom of speech, we have allowed all the access to all the internet, and the rest of the world. But we have not given formal channels for all these young people to express themselves.
And that's exactly the explosion that happened on the 25th. And from then on, Egypt has changed. What we have today is a completely new Egypt. Egypt that is hopefully on the positive side, that will be lead by young people, and the vision of the youth. And will not look back. But on the negative side, Egypt that's still facing a lot of uncertainty between now and stability in the next few months.
BARTIROMO:What do you think the economic impact of these events will have on the country in the short-term, and the longer-term?
RACHID:Well unfortunately, short-term, the impact will be negative. We have seen almost ten days of paralysis in the country. This is going to have an impact on growth numbers, it will have an impact on production. I'm sure it will have an impact on prices, also, on scarcity of goods.
The faster we can go back to normality, the faster we can recover from that situation. We already have seen signs. Today I hear that most of the production units are back to 60, 70 percent of their capacity. But still, we still have to cross that very high level of uncertainty.
Long-term, this is going to be quite challenging. Egypt has been delivering very high growth, attraction for investment, in the last five, six years. Today we still have to get to a completely different situation. There are some steps that need to be taken. One, rule and order has to come back to the street. Stability has to be established. The confidence of the business community that is a government that is business-friendly, which is in doubt at the moment.
The fact that the transition will be smooth, and the vision of what Egypt will become. All these conditions are now going to very much, create the future of the economy in Egypt in the next six to seven months. But I can tell you one thing, from my experience, Egypt is a great country. Has a huge potential.
What happened the last few days has proven that our young people can also be a huge asset.
BARTIROMO:You were part of the previous cabinet for more than six years during a real diversification of the economy, where millions of new jobs were created in the private sector. The country, of course, Egypt, the most populous in the region. Do you believe that the government can articulate clearly what needs to be done? I'm looking at expectations that the government needs growth of at least seven percent to actually create jobs.
FACING NEW CHALLENGES
RACHID:Well, the challenge we have now is that the existing government is a transitional government. It is almost an emergency government to face, of course, the instability, and the need to manage all the political change ahead, which is intense.
So obviously managing that, and at the same time delivering the economic message will be extremely challenging. But nevertheless, I think there is a lot of goodwill behind Egypt from the local, the Arabs, and the foreign investors. And we need to cross that period. Today there is a lot of uncertainty, and with uncertainty there is, of course a very high risk level, and premium that is paid at the moment. But I'm confident that if we cross that transition period, there is a very very solid base on the economy that we can build on.
BARTIROMO:The government has moved to freeze assets of former ministers, prevent them from leaving Egypt. What's your reaction to that?
RACHID:All that they are claiming is that there are some complaints that have been put against some of the ministers, and they are going to investigate them. All that I can tell you, Maria, that after the resignation of the previous government, which handed their resignation on Saturday, the new government, with a new Prime Minister Ahmed Shafiq, have offered me to stay in the cabinet and take the same position.
I explained to him I cannot do the job, he needs different people now, especially that I have different ideas about how the economy should be. He gracefully accepted my excuse. I resigned and I did not accept the new government.
And then, two days later there were charges that you know, they will take some action in terms of freezing my bank accounts, banning me from traveling under the context that there are some investigation that will be taking place. That's the only thing I know. I have not been informed about anything else. I am more than willing to face any charges. I have done my job for the last six-and-a-half years at the most the highest standard possible. Everybody knows that inside and outside of Egypt, yes.
BARTIROMO:Now, do you think this is a case of there were some in government who were not operating with integrity, and so they're freezing everyone's assets? I mean, obviously they've asked you to join the government, and you declined.
RACHID:Of course the reaction of that have been taken in the last few days was a bit of anti-business. There was an attack on the businesspeople joining the government in the previous government. The new government doesn't include any businesspeople.
I agree that there might have been corruption, different places. But I think now there is a bit of blanket approach to things which I'm sure it will be cleared in the next few days, yeah.
BARTIROMO:There are reports that there are certain members of government that have amassed fortunes topping a billion dollars, and they've moved that money. Is this true? Do you know this to be true?
RACHID:I can assure you that all the reports coming out are baseless, there is no base at the moment for any of these reports. The numbers that are floating around are all without any basis. There is not any verification of those numbers. There is so much exaggeration about what is happening at the moment in terms of individuals' corruption.
So I would just give you a word of warning. Deal with all these facts with a lot of caution, because they are not coming from any source, or any reliable source at the moment.
BARTIROMO:How should the U.S. have handled this differently? A lot of debate about the U.S. administration's reaction to this?
RACHID:We need the rest of the world to support Egypt. And definitely the United States has a long relationship with Egypt, and the interests of Egypt is very much strategic interest of the United States. But I would have preferred that they would not be in a direct interference in decision inside of Egypt.
The support of the United States, as the rest of the world, is required. But I think with what happened, it proved that there is a lot of maturity inside of Egypt, with all these young people. There is a debate going on. There is a discussion going on at the moment. And I don't think it is helpful for people to dictate what should be or should not be done at this stage.
I think the President was very clear in making his statement that he will not run for re-election, he will end his post in September. There is, of course a transition that needs to be managed. The alternative is probably a bit chaotic, and a jump into the unknown. So there is a lot of factors that we need to deal with in the next few weeks. And interference from the United States or other countries into that internal discussion is not going to be helpful at all.
BARTIROMO:Do you think President Mubarak should be staying on until September, to oversee this transition? Or do you think as President Obama has been saying repeatedly, the transition needs to start now?
RACHID:The challenge is that people like President Obama, who claimed that the transition has to start now, they need to understand that in the Constitution of Egypt, if the President stepped down today they should be a re-election in 60 days. And that is impossible to do, because everybody wants to change the Constitution before a re-election. Everybody wants to change the number of legislative arrangements in the country.
All these things will take some time. And that's why I'm saying, if there is a step down from the President today, what we will have is a completely chaotic situation, because we will not be able to follow the Constitution. So that will mean that everybody will have to invent his own way of getting out of this.
And in the spirit of what is happening today in the street, this is not going to be having a healthy outcome.
I know that there is an issue of confidence here. I think the President, since he made that commitment, things are happening on the street, things are happening in the party, things are happening in the government. Negotiations have started.
Constitutional changes have started today. The alternative, as I said, doesn't exist today. Some people say, "Fine. Let the President step down, and then we'll form a committee of three of four people that will run the country for the next year."
I don't think this is the best outcome. And I don't trust that outcome, because I don't know who will be there, and I don't know if really there are going to be respecting the process that will be agreed upon before they take over. So the best bet we have at the moment, the President stays, delivers what he has promised. And I'm sure that what is happening today in the country created enough pressure that there will be a momentum of change to deliver the democratic aspiration that have been-- articulated in the last two weeks.
BARTIROMO:Let me ask you about ripple effects in the region. For example, what kind of an impact do you expect this to have on Israel?
RACHID:Egypt is the largest country in the Middle East. Egypt has the biggest army. Egypt has a peace process with Israel. And Egypt, of course, is the catalyst in the whole region. So any instability, or any chaos in Egypt will have an impact on everybody, will have an impact on Israel, will have an impact on all the region, the Arab countries. And it could definitely have a ripple effect in the whole Middle East. That is why it is very important that we get the support of the world to contain this transition, in the most stable way, so we do not lose the country. Because losing Egypt and turning this into chaos, it will have repercussions beyond Egypt in the region.
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