'I'm battling against ingrained cynicism but we will prevail'

Mahmoud Mohieldin, the face of Egyptian economic reform, is wrapping up another day on the ramparts of capitalism. He has just spent an hour with leftist political leaders explaining his latest inspiration, an investment plan to give citizens equity in public-sector companies. It was a tough concept to sell. Egyptians have never much warmed to privatisation and the plan has been condemned by conspiracy theorists as a back-door way of selling the country's prized assets to rich businessmen using the people's money. The meeting ended convivially enough, although Dr Mohieldin acknowledges it will take time to win over civic leaders. It is nearly midnight as he leaves his office in central Cairo, which at even this late hour is snarled with traffic. "This is new, so people are naturally wondering what the government's motive is in all this," Dr Mohieldin says as he and his small coterie head for the Nile Hilton, where he will convene his next meeting. "We Egyptians are a very suspicious crowd." The most dogged among Cairo's fraternity of reformers - in 2007 the World Bank named him its "top global reformer", the second time he has made the bank's top 10 list - Dr Mohieldin, 43, who is Egypt's minister for investment, has spent the past decade preaching the gospel of neo-liberalism to a nation of sceptics. The collapse of Wall Street and the global credit crunch has not made his job any easier. During a panel session at a conference jointly hosted last autumn by the International Monetary Fund and the World Bank in Washington, he responded sharply to an attendee's remark about how emerging markets such as Egypt would escape the worst of the crisis because it had "no Lehman Brothers" to worry about. "Oh no?" Dr Mohieldin replied. "Let me tell you, I have brothers in the street, brothers who are poor, brothers who can't find jobs." It was typical of a man whose capitalist drive is tempered by a populist touch. "Mahmoud understands political interactions," says Mohammed el Erian, who participated in the session as the head of US-based Pimco, the world's largest bond investor, and who studied with Dr Mohieldin at England's Warwick University in the late 1980s. "He can get his view across either in a soft or aggressive way. I have seen him persuade people and I have seen him stand up to them." In the four years since Ahmed Nazif, the Egyptian prime minister, formed a new government with an aggressive reform agenda, Dr Mohieldin and his fellow neo-liberals have reduced trade barriers, deregulated the Egyptian pound, modernised the banking sector and attracted a more-than-sixfold increase in foreign direct investment. Dr Mohieldin has personally managed one of the Arab world's largest transfers of public assets, from textile mills to telephone grids, into private hands. Now, he is overhauling Egypt's debt markets, which lack the depth and product diversity needed to exploit the country's growing reservoir of wealth. Egypt's total credit level is just 35 per cent of its GDP. The Egyptian economy grew by 7.2 per cent in the year to June 30, 2008, and while inflation rose sharply - peaking at 25 per cent - due to the spike in global commodity prices, the country's unemployment rate has dipped to 8.3 per cent this year from 11.5 per cent four years ago. Though the government has revised downwards its growth outlook for this year to 6 per cent, it shows no sign of slowing the pace of reform. Over the past few months, both the nation's president, Hosni Mubarak, and his son Gamal, the chairman of the ruling party's powerful policies committee, have emphasised the need for continued liberalisation. Such a high-level endorsement is vindication for Dr Mohieldin, who began promoting free-market capitalism 15 years ago, first as an academic at Cairo University and later as a ministerial adviser. As Egypt continued to stagnate economically, Dr Mohieldin's arguments began to resonate among increasingly influential members of the regime. That includes Gamal Mubarak, 45, the godfather of Egypt's neo-liberal transformation and his father's likely successor. It was alongside the younger Mubarak that Dr Mohieldin unveiled his stock distribution plan, the one that has so many Egyptians in such an uproar. It took Dr Mohieldin and his administrative team three years to map out the plan, which will allocate all Egyptians aged 21 years and older shares in a portfolio of listed companies. The objective, he says, is to broaden ownership of listed equity in the country while giving citizens a sense of ownership propriety over corporate Egypt. If Egyptians have been slow to embrace this vision, it is largely because the results from four years of dramatic change are inconclusive. On paper at least, deregulation has been a success. The economy is growing at its fastest rate in years. Consumer goods, from fresh fruit to affordable cars, are available in a country that was for years quarantined from the global economy by the economic nationalism of the former president Gamal Abdel Nasser. But the dividends have yet to reach Egypt's long-diminishing middle class. While liberal economists call for patience, opposition politicians and internet commentators say reform has only widened the gulf between rich and poor while creating fertile ground for corruption, particularly those businessmen with contacts among the country's political elite. "Regardless of the cosmetics of growth, the people are living a tragedy," says Mohammed Habib, the first deputy chairman of the influential Muslim Brotherhood. "We are suffering a crisis of corruption and tyranny. We see banks and companies that are being looted. One hears over and over again that the regime is plundering the country." While the government's reform agenda is deeply unpopular, its architect is a well-known and genuinely popular minister - something of an oddity in Egypt. Despite their mistrust of the capitalist system's invisible hand, Egyptians are quick to offer theirs when they encounter the stocky and ebullient Dr Mohieldin as he travels across the country. Ever the college professor, he seems to delight in taking on one opponent after another, armed with thick binders filled with charts and graphs, to vanquish old orthodoxies. It is not lost on middle-class Egyptians, points out Mr el Erian, that Dr Mohieldin still lectures at Cairo University rather than the more prestigious, but less "Egyptian", American University in Cairo. And unlike his cabinet-level colleagues, Dr Mohieldin is happy to walk from one appointment to the next, with only a single bodyguard following several paces behind him. "Mahmoud's heart is in the right place and the people know and like him," says Angus Blair, head of research at Beltone Financial, a Cairo-based investment bank. "How many other cabinet members do you see walking about the streets?" After his late-night meetings, Dr Mohieldin faces another day promoting his stock allocation plan. He has appointments scheduled with the liberal-nationalist New Wafd Party and he will meet the editors of independent newspapers including Al Masri Al Youm. At each meeting he faces people who have spoken or written critically of his vision of a capitalist Egypt. He will be criticised, and he will listen patiently before explaining his position. In the Egypt of today, this is the closest thing to consensus-driven politics and Dr Mohieldin, who says his only political ambition is to "survive the present", is clearly enjoying it. "I'm battling against ingrained cynicism but we will prevail," he says, wrapping up his meeting at the Nile Hilton. "It is the challenge and tension that keeps me together." Stephen Glain is a business columnist for The National and the author of Mullahs, Merchants and Militants: The economic collapse of the Arab World [e-mail]