Luxor killings highlight role of economic reform




By Mark Huband in Cairo

Financial Times, 19 November 1997

The dramatic exposure of Egypt’s vulnerability to Islamist militant violence has intensified pressure for a radical review of both security measures and the character of future economic reform.

President Hosni Mubarak yesterday publicly berated Hassan al-Alfi, the interior minister responsible for security and the architect of the government’s hardline policy toward militant organisations, for the catastrophic security lapse which left one of Egypt’s most popular tourist sites unprotected and 57 foreign tourists dead.

During a tour of the massacre site near Luxor yesterday Mr Mubarak turned to Mr al-Alfi, who subsequently resigned, and told him: “You have failed. You don’t move. You only stay in Cairo.” The government remains intent upon pursuing its security-centred policy toward the Islamist militants rather than opening political dialogue.

“The scale of the slaughter is totally incommensurate with the size of the Islamist organisations, and the issues involved are no longer questions of economics or religion,” a senior government minister said yesterday. “It is purely a security issue, and we have taken care of it by cutting the head off the snake. But the tail is still wiggling.”

Even so, the militants’ ability to have a devastating impact despite being a tiny minority lies at the heart of the government’s vulnerability. The failure fully to counter the security threat has heightened the importance of economic reform intended ultimately to raise living standards and undermine the militants’ constituency.

The tourism industry has played a big role in this reform strategy, with receipts standing at $3.2bn so far this year. New tourism developments on the Red Sea are almost entirely reliant upon construction labourers brought from Luxor and other areas of Upper Egypt in which the militants are most active.

Tourism also underpins the economy of towns such as Luxor, which attracts 2m visitors a year. Cairo tour operators were yesterday deluged with cancellations from all over the world.

“Many groups who are already in Egypt want to leave before the end of their tours,” said Hanan Nour of Golden Pharaoh tours. Other operators are still recovering from a 20 per cent drop in business following the killing of nine German tourists by gunmen in central Cairo in September.

Despite the ferocity of the latest attack, investment in tourism is unlikely be affected dramatically as only one hotel group – Misr Hotels – is quoted on the stock exchange. However, the government is now likely to accelerate its extensive reform programme to avert a crisis of investor confidence.

“This has strengthened my resolve and the government’s resolve to diversify the economy, so the impact of a problem in one sector is diminished. We should have tourism grow, but we should have everything else grow, so that tourism is one sector out of fifty,” said Yousef¬† Boutros Ghali, Egypt’s economy minister, yesterday. “Even so, I don’t think investment will be affected by what has happened, though tourism will take a hit.”

Yesterday the Gama’a al-Islamiyya, Egypt’s main militant organisation, claimed responsibility for the attack. The organisation said gunmen had intended to take foreign tourists as hostages who would be freed in return for release of Omar Abdel Rahman, the militants’ spiritual leader now serving life in the US.

Five months ago jailed members of the organisation called for a unilateral truce in the five-year conflict with the government. However, its exiled supporters rejected the truce call and have since precipitated a split within the group. It was they who yesterday claimed responsibility for the attack and threatened more violence.

“The exiled leaders don’t agree with the truce, mainly because the government hasn’t done anything positive since the truce was called,” said Yassir al-Sirri, a London-based Egyptian exile with close links to the Gama’a al-Islamiyya.

© Financial Times