Privileges and Challenges

Philip L. Verveer
Coordinator for International Communications & Information Policy 
USTDA Conference Egypt: Forward
Washington, DC
June 27, 2011

Excellencies, Ladies, and Gentlemen

My thanks to Lee Zak and her colleagues at USTDA for the invitation to participate in this important conference. I am particularly pleased to be with friends from the Egyptian Ministry of Communications and Information Technology.

In the midst of the worst trial in American history, President Abraham Lincoln said, “[W]e cannot escape history. We … will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the latest generation.” I don’t claim nor should I be accorded any authority as a seer, but I think that this is where all Egyptians find themselves today. And, likewise, it is where all of Egypt’s friends find themselves.

We find ourselves in the midst of history, much more evidently so than usual, at a time when, as President Obama has said, “the wheel of history has turned at a blinding pace … .” It is evident that 2011 will be remembered as a year of momentous events—much like 1989, when new possibilities were realized for the peoples of Central and Eastern Europe. And this represents both a great privilege and a profound challenge—more for the citizens of Egypt and other countries of the Arab Spring than for the rest of us.

What will eventuate from the momentous events of this year is a matter for the people of Egypt. They will decide how and where history turns. As Secretary Clinton said last month, “This moment belongs to the people of the Middle East and North Africa. They have seized control of their destiny and will make the choices that determine how the future of the region unfolds.”

As President Obama has said, “Egypt has played a pivotal role in human history for over 6,000 years.” That has been so in times ancient and modern. And it certainly is so today. This is the great privilege that today belongs to the people of Egypt, to play a pivotal role in history. And it is a privilege that, to a lesser extent, we and Egypt’s other friends share.

There are few more important issues in the world today than Egypt’s continued success. That many others both are affected by and share in Egypt’s experiences is not exceptionable. Egypt’s significance in modern times derives from its position as the largest state in the Arab world and as a leader of the African continent. As Robert Hormats, our undersecretary for economic matters, says, Egypt is in many ways the lynchpin of the region. And, to the United States, there is the added fact that Egypt is a good friend. In addition to our close cooperation on security matters, the United States has provided economic assistance totaling over $28 billion since 1975. This has contributed to 15 years extension of the lifespan of Egyptians, led to dramatic decreases in maternal and child mortality, facilitated eradication of polio, and enabled one third of Egypt’s present power capacity. But with new circumstances come new needs and new approaches. It is these new approaches that bring us here this afternoon.

Even without the inevitable short term consequences of the continuing fundamental changes Egypt is undergoing, the country needs to continue creating hundreds of thousands of new jobs each year to provide economic opportunities for Egyptians reaching adulthood. And this structural challenge reaches across all segments of Egyptian society.

And then there are the short term realities of fundamental change. Government resources are understandably severely strained. Business activity has diminished and must continue to recover fully. For example, Egypt’s tourism industry has suffered a near collapse, with perhaps two million jobs temporarily lost and as much as $7 billion less in revenues this year than last. And these things are occurring, unfortunately, in a context of the global phenomenon of rising energy and food prices.

So we have the privilege that history has cast up—to deal with significant circumstances and to produce momentous consequences. And we have the challenges that attend those significant circumstances.

I propose to spend the next few minutes reflecting on the privilege and the challenge from the perspective of the United States and from the parochial perspective of information and communications technology. Last month, President Obama described the fundamentals of our policy in a speech at the State Department. Among other things, he emphasized the expansion of economic opportunities. The President said in relevant part:

The greatest untapped resource in the Middle East and North Africa is the talent of its people. …[W]e think it’s important to focus on trade, not just aid; on investment, not just assistance. The goal must be a model in which protectionism gives way to openness, the reigns of commerce pass from the few to the many, and the economy generates jobs for the young. America’s support for democracy will therefore be based on ensuring financial stability, promoting reform, and integrating competitive markets with each other and the global economy. And we’re going to start with Tunisia and Egypt.

Last week, Anne Patterson, our nominee to become Ambassador to Egypt, described what this would mean in testimony to the Senate Foreign Relations Committee.

  • We will refocus our assistance to Egypt on projects directly linked with private sector growth and sustainable jobs.
  • We are participating with the international community to provide short term stabilization for Egypt’s economy in the event Egypt’s leaders feel it would be helpful.
  • We are seeking Congressional authorization to forgive $1 billion of Egypt’s debt and, in connection with it, to ask Egypt to invest the local currency equivalent in an activity that we mutually select. We envision this will be a major project that is high-impact, visible, and targets youth from all segments of Egyptian society.
  • The Overseas Private Investment Corporation is working to expand lending to small and medium size businesses by $700 million.
  • The State Department has made available $165 million in economic assistance that was in the pipeline, but not yet disbursed. $100 million of this amount is being devoted to job creation, private sector growth, and entrepreneurship.
  • Senator Kerry and Senator McCain are working on legislation to create a public-private enterprise fund to invest in Egypt, focused on small business. These funds have spurred private sector growth in Eastern Europe, and they will also spur private sector growth in Egypt.
  • The United States is supporting the expansion of the European Bank for Reconstruction and Development to include Egypt and other Middle Eastern countries. Like the Enterprise Funds, the EBRD has proven successful at facilitating private sector development in other countries.
  • We are working to launch a comprehensive Trade and Investment Partnership Initiative in the Middle East and North Africa to improve economic integration in the region and in the global economy.
  • We are continuing our previously launched Global Entrepreneurship Program in Egypt with the aim of encouraging and promoting both entrepreneurial activity and the venture capital style of financing that is essential to successful entrepreneurship.

In addition to these governmental initiatives, private sector initiatives are targeting the dual goals of sustainable economic growth and increased employment. By way of example, the Partnership for a New Beginning, led by three of our most distinguished citizens—former Secretary of State Madeleine Albright, Coca Cola CEO Muhtar Kent, and Aspen Institute CEO Walter Isaacson—is considering potential projects for sponsorship.

As you can see, our efforts and those of Egypt’s other friends are designed to help as best we are able to address short term requirements, but also to assist the Government of Egypt in making the economy more inclusive in the long run.

Now what of information and communications technology? ICT provides both a very strong foundation for growth throughout the economy and a very significant set of opportunities in its own right.

Over the last two decades, Egypt has invested substantially in improving its communications infrastructure. The result, among other things, has been a substantial ICT sector growth rate—on the order of 13 to 14 percent--in recent years. The consequence also can be seen in two additional statistics. First, at the beginning of 2011, Egypt had 71 million cell phone subscriptions divided among three major wireless operators. That the wireless companies are majority-owned by three of the world’s most significant and experienced operators—FranceTelecom/Orange, Vodafone, and Etisalat —is itself a cause for optimism about the strength of this very important part of the ICT sector. Second, at the beginning of 2011, Egypt had 23.5 million Internet users. And added to that is the ongoing effort to create a national broadband plan with the goal of increasing broadband availability.

Importantly, Egypt also has approximately 4,000, mostly small and medium size, Internet-related businesses. These establishments reflect the entrepreneurial spirit that our recast economic assistance hopes to encourage and further enable. But not all of the businesses are small. Among the Internet-related establishments are business outsource firms that have achieved significant prominence in the region.

There also is evidence of continued commitment to the sector in the Ministry’s effort to use a transparent and inclusive process to configure a new telecommunications law. There also is a very important, if less quantitative, factor in the ICT space to which I can bear witness. Over the time I have served as U.S. Coordinator for ICT matters, I have had an opportunity to get to know and to observe the work of many of the officials guiding the Egyptian Ministry and the National Telecommunications Regulatory Authority. They are among the best credentialed, most knowledgeable officials with whom I’ve had the opportunity to collaborate. For prospective investors in the sector, their sophisticated understanding of the sector and of its trajectory should be a source of considerable comfort.

The combination of a good and improving transmission infrastructure, a workforce experienced in ICT matters, and able government officials in policy and regulatory positions provides an attractive basis for mutually beneficial commercial interactions.

It would do no good to pretend that Egypt’s economic challenges will be overcome quickly or easily. Many experts believe that it will take at least a generation to put the economy on the kind of sustainable basis that we all hope to see. Whether it takes a generation or can be accomplished more quickly, it is certain that the ICT sector will be a very significant factor in leading the way.

Ultimately, of course, the progress of Egypt’s economy will be in the hands of the Egyptian people just as will be the progress of its political life. To the people of today’s Egypt, and to the friends of Egypt, has come a great opportunity—a great privilege. It is the opportunity to do great things. Anyone who has been exposed to Egypt’s history will find a basis for optimism. And, likewise, anyone who has been exposed to the talent and vibrancy of contemporary Egypt will find a basis for optimism.