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Business monthly May 02
 
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You can't have your pie and eat it too El Tabei cautious about expansion
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Israeli incursions prompt new calls for boycotts CMA aims for tighter listing regulations
Oily Diplomaticy Tourism shortfall, capital flight depress economy

Israeli incursions prompt new calls for boycotts      

As the Arab-Israeli conflict entered a dangerous new phase last month, angry demonstrations erupted in almost every Arab capital, in protest against Israeli depredations in the Palestinian territories and the perceived US bias towards Israel. While most Arab governments urged the United States to exert pressure on Israel to withdraw, American bête noire Iraq called for the deployment of the Arab ace-in-the-hole: the oil weapon.

In Egypt, an estimated 80,000 people around the country – mostly university students and members of professional syndicates – protested on March 31 and April 1. Smaller demonstrations were carried out in subsequent days, despite the government’s announcement on April 4 that it was severing all contacts with Israel except for “diplomatic contacts that might help the Palestinian cause.”

At Cairo University, according to the Cairo Times of April 4, the protests resulted in “the most violent confrontation with security forces in 18 months, if not since the Gulf War,” as government troops broke up the crowd with tear gas and water cannons.

Popular wrath was aimed not only at Israel and its policies. America – in its capacity as Israel’s number one ally – was also targeted, first with slogans, then with bricks, which sailed through the windows of two nearby fast-food restaurants, McDonald’s and KFC, both conspicuous symbols of US consumerism.

Even Ahmed Donia, deputy manager for Americana Foods, which owns the KFC near the university, seemed to concede that the protesters had a point. “If the US said ‘stop’ to the Israelis, this crisis in the territories would stop immediately,” he admitted. “The Egyptian people are angry and trying to send a message because the US is the only power that can stop Israel – the only one.”

Nevertheless, he added, KFC’s local franchise is built on Egyptian investment, Egyptian labor and Egyptian raw materials, and, as such, is an entirely Egyptian enterprise. “KFC is only an American brand. Everything else is Egyptian,” he said. According to Donia, more than 75,000 Egyptians are employed in foreign brand-name franchises in Egypt, so launching a boycott – or vandalizing local outlets – ends up only hurting Egypt’s economy.

Emad Adeeb, publisher of financial daily Al Alam Al Youm, opined in his newspaper’s April 18 edition that “boycotting American goods will send an important message, but it will hurt more on the local side rather than having any effect internationally... [since] American goods come by the way of franchises, and these have Egyptian workers and Egyptian managers.”

Caroline Greiss, marketing manager of McDonald’s Egypt, described the vandalism as “senseless acts of violence,” adding that she didn’t know why the students attacked the restaurant. “McDonald’s is not involved in any political issue. There is no reason to target us,” she said. “We are a family restaurant and part of the community.”

Contrary to demonstrators’ claims that they were speaking for all Egyptians, concern about the trashing of the restaurants was not limited to franchise managers and the business elite. “If people have complaints, they shouldn’t attack Egyptian businesses, because that puts people out of work,” said Zein Abdin, a mechanic from Sayeda Zeinab, in specific reference to the assaults on the franchises. “Are the people who smashed those places going to compensate the workers who now have to look for other ways to get money? I don’t think so.”

The Internet has been rife with calls by the pro-Palestine camp to boycott both Israeli and American products.

Meanwhile, pro-boycott sentiments have been echoed to a large degree within Egypt’s business community. “The Cairo Chamber of Commerce has decided to stop all types of trade with Israel and America. Israeli and American goods have no place in the commerce of Egypt,” said Chamber president Mahmoud Al Araby, according to the April 17 edition of leftist weekly Al Ahaali. “If it was permitted for us – as merchants – to go to war for Palestine, we would go,” he was quoted as saying.

On April 2, the broader-based Egyptian Federation of Chambers of Commerce (EFCC), which represents 3.5 million Egyptian traders, announced that all the chambers affiliated with it around the country would sever trade relations with Israel. “The membership of importers who deal with Israel will be deleted immediately from the general assembly of the association until a fair settlement is reached in the region,” Moustafa Zaki, head of the EFCC’s Importers’ Association, warned.

The Syndicate of Pharmacists, too, joined the fray, calling on local pharmaceutical companies to limit the import of any American drugs that have local equivalents or can be imported from other countries, as well as to withdraw their money from American banks in Egypt and transfer it into local banks. “A couple of Egyptian firms started this campaign and transferred their money into local banks,” explained Mohamed (surname withheld), owner of a pharmacy and a member of the Pharmacists’ Syndicate. “I expect several firms to follow,” he added, “but it will take some time, since it is not easy for big companies to withdraw millions of pounds in short periods of time.”

 Zaki of the EFCC, however, disagreed with such measures. “First, some Egyptian banks have stakes in American banks, so we are not only harming American interests, but our own interests as well,” he said. “Second, boycotting medicine is a very dangerous tool that might affect the lives of millions of patients.”

He did not comment directly on what should be done about US-brand restaurant franchises owned by Egyptians.

While Zaki was sympathetic to the protestors, he added that “we have to take into consideration Egypt is the second largest aid recipient after Israel. If Arab trade with the US was negatively affected, this would harm the United States minimally.” He added, however, that a general boycott of US goods “will undoubtedly send an important message.”

Friday prayers at the Al-Azhar mosque, meanwhile, have been the scene of weekly demonstrations by a few hundred protesters, always accompanied by a gaggle of journalists. During US Secretary of State Colin Powell’s stop in Egypt on April 9, a violent demonstration at Alexandria University resulted in the death of at least one student when police fired rubber bullets to disperse the crowd.

EMAN WAHBY
WITH ADDITIONAL REPORTING BY TARIQ HASSAN-GORDON

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