U.S. Embassy Cairo - Public Affairs Section

"Reflections on the Vital Egypt-U.S. Partnership"
Ambassador Francis Ricciardone
American Chamber of Commerce in Egypt

Tuesday, March 25,

Ladies and gentlemen, my friends. It is my pleasure to be with you this morning. I thank Omar Mohanna, president of the American Chamber of Commerce in Egypt, for the invitation to join you today, which gives me the opportunity to meet again with distinguished businessmen, ministers, politicians, journalists, and the AmCham membership.

Let me thank also Executive Director Hisham Fahmy and especially also Deputy Executive Director Sylvia Menassa for the wonderful arrangements today. I would also like to thank my friend and the past president of AmCham, Taher Helmy, as well as all of the Members for your unrelenting efforts to promote Egyptian-U.S. relations.

It is a very special honor and pleasure to join the Members of AmCham again, just a few weeks before I complete my tenure in Egypt.

Some of you may recall that I gave my first major policy address as ambassador to AmCham members at your 2006 Annual General Meeting. Among more weighty matters of state, I remember saying how I hoped speaking at lunch, at a reasonable hour of the business day, would help me overcome the reputation I had already built for early breakfast meetings.

Well, here we are at breakfast again. Perhaps one could conclude things haven’t changed much during my tenure in Egypt.

In fact, some important things haven’t changed since the first time I came to Egypt as a backpacker in the 1970s. Most notable is the warmth and generosity of Egyptians. Thank you all for your friendship and the hospitality you’ve extended to me and my wife, Marie, who joins us here today.

It has been an honor and a pleasure to serve among a people for whom we feel such affection. I have also been deeply privileged to serve in such a pivotal country at such a crucial moment in history.

The international system today is experiencing a degree of transformation that defies precedent: The rapid growth of the Middle East economy, the emergence of truly global labor and capital markets, the spread of technology, massive new migrations of people, and environmental challenges like global climate change. Developments like these are remaking our world before our very eyes. Egypt is in a time of transition. The United States is in a time of transition. The world is. And I think Egyptians are seizing the opportunities that those transitions offer.

In 2006, I told you the take-home message of my speech was rather mundane: relations between Egypt and the U.S. are a strategic asset to both partners, and those relations are solidly on track.

You will see on the card the three priority objectives that America shares with Egypt and they can be summarized in three words: Peace, Democracy and Prosperity.

This morning I would like to reflect on the progress we have made since 2006 and why I think Egyptian-U.S. relations remain a strategic asset to both of our countries and, contrary to what some commentators say, they are solid, strong and on track.

Let me start, as I did in 2006, with peace.

The United States values the role of Egypt in promoting the regional peace and stability. We always have, certainly since Camp David and before, and we certainly do now. Egypt, with its population and with its cultural weight, its economic weight, its military weight and its dynamism, really is a force in this part of the world. It is a force for good. Force for peace and stability throughout the Middle East and all of Africa. Egypt’s security forces assure free navigation through the Suez Canal and, certainly, confront terrorism. The media and cultural vitality of Egypt are very obvious. Last night, I don’t know if some of you were staying up very late and watched Orbit TV, U.S. Congressman Ellison was interviewed. He’s the highest elected Muslim in the United States of America and he was on Egyptian television. That was delivered. We chose for him to speak from because through Egypt we can speak to not only 78 million Egyptians but to the entire region.

The United States especially values Egypt’s role in promoting a two-state solution with Palestinians and Israelis living in peace, stability, prosperity, and dignity. The Palestinian people have waited a long time for that and deserve it, and the Israelis also have waited a long time to have a peaceful neighbor to live with and to help provide real security. Without Egypt, it is hard to imagine how that can come about. Egypt saw the need for that and acted on that 30 years ago. Let’s hope that with Egypt’s help, with the good faith of the two parties in the conflict and with the energetic commitment of the United States that we see from President Bush and Secretary Rice that will be realized.

I noticed that President Mubarak even said yesterday in Moscow how much he hopes that peace will come about in President Bush’s term. Clearly we need to keep working with Egypt on this. We continue to look to Egypt to take the lead on economic and political reform in the region, including finding its own way through democratic reform. As President Bush expressed in Sharm el Sheikh in January it is our hope that, "Egypt can play a role in the freedom and justice movement..." and that the Egyptian government would build on its economic and democratic reforms to its people to give them "a greater voice in their future."

You have all heard me emphasize throughout my time here how much I value people to people contacts. The contact between business people in the United States and Egypt, the powerful relationship between tourists and students, professors, people in the specialty professional fields, doctors, scientists, artists, entertainers – all of that is the stuff of a normal, mature relationship, and I suggest to you that all of that is the stuff of the prosperity that we are both building to build in the time of the economic stresses and strains and opportunities around the world.

A good indicator is travel between our countries, and the numbers of Egyptians traveling to the U.S. continues to grow. Non-immigrant visa demand in 2007 was up 74% compared to 2004. I would also like to point out that approximately 70% of Egyptians applying for visas at our embassy receive them and thanks to the improvements we have made in our visa process, 90% of Egyptians approved for visas receive them via courier service within 3-4 workdays.

Another good indicator I often stress is educational exchange. The number of Egyptians issued student and exchange visas has more than doubled since 2004. I’m really pleased that the number of Egyptians issued student and exchange visitor visas was up 119% in 2007 compared to 2004. We’ve worked hard to encourage Egyptian young people to come to the United States to study. They know they’re welcome. The opportunities are there. It’s not that hard to get a visa.

Let’s reflect on global rise. After 9/11 the numbers of foreign students in the United States went down. Finally, it’s turned around in the past few years. We’re up to 580,000 students this year. Foreign students in the U.S. – an increase of 3% over the previous year, and this year we expect to have a record number of 600,000 foreign students.

I’m very happy to say enrollments of Middle Eastern students at U.S. universities increased by 25% in 2006/07. Egypt is following this trend but not leading it. The number of Egyptians are up 10 percent – good, but not good enough. If the region is up by 25 percent, we’d like to see Egypt leading that. We’ve got almost 1700 Egyptians students – 1,700 – in higher education institutions in the U.S. Again, good, but I think, not good enough. We’ve got the numbers on our website. You can see that much smaller countries, Jordan, Israel, Morocco, for example, each sent many more students than Egypt and … (ARABIC)……

And the reverse, many more Americans are coming to Egypt – 85 percent more Americans are visiting Egypt in 2007 than in 2004, just as private American tourists. So that’s a good thing, although the numbers still aren’t what Egypt and we would like to see.
This number includes business people, tourists and, more and more, students. The number of U.S. students in Egypt increased 31 percent in past year. These numbers are all positive. Our own two daughters came back to Egypt with us to study here. One has since returned to the U.S. Francesca, our older daughter, will be staying on even after we leave to complete her studies at AUC. The two of them fell in love with Egypt as we did all those years ago and can’t stay away.

So AUC itself is growing and doing very well and it’s attracting many Americans to come to this country and learn about this part of the world.

When we met in 2006, many of us had just come from the World Economic Forum in Sharm el-Sheikh. We talked about all those bright banners on the Peace Road between the airport and the conference center which proclaimed Egyptian aspirations to all the world that Egypt is open for business, competition, challenge, growth and change.

I believe now just as I believed then that such confidence and optimism in the future are richly merited.
I am not the only one who believes this. In December, the International Monetary Fund said Egypt's sound macroeconomic management and bold economic reforms “increased market confidence, boosted investment and helped to sustain high pace of economic growth to a record 7.1%.”

The facts are indisputable. Consider the following milestones in the Egyptian financial markets:

The Cairo and Alexandria (CASE) Stock Exchange topped the 10,000 mark, up more than 40% year by the end of 2007 and 450% over the past four years.
Market capitalization reached 700 billion Egyptian pounds.
Monthly trading of securities exceeded 29 billion Egyptian pounds.
Foreign investment surged to US$ 11 billion from just US$400 million in 2002.
International reserves reached US$ 30 billion
9,000 new companies were established and 1,750 companies expanded.

American investors are taking note and participating. US based Ripplewood Holdings LLC took an 18.7% stake in CIB bank and Citigroup Venture Capital invested US$459 Million in Amoun Pharmaceuticals. Since 2002, private U.S. direct investment in Egypt has nearly doubled to $6 billion.

And this is just the beginning. There are so many more examples. I don’t want to take up all the time. The people in this room, I think, know, that there are great grounds for optimism for investment in Egypt and, of course, we see Egyptians investing in the United States, as well. We too believe that despite economic stresses and strains in the world we remain a stable and welcoming market. We’re one of the places to do business. We have a predictable and transparent legal system, low taxes, standard infrastructure and, of course, the world’s most lucrative consumer market.

In fact, we have one of Egypt’s great business people, Mohamed Farid Khamis, he’s an investor all over the world and an investor in the United States, and Oriental Weavers is one of the world’s largest carpet manufacturers. We’re proud that he not only sells in the United States, he manufactures there, too.

US-Egyptian trade is also at an all-time high. We specifically quoted when I was at my confirmation hearing in the Senate three years ago in 2005, that for 2004, and then we pointed to a trade relationship that was good and growing but since 2004, we’ve now increased our bilateral trade to 7.7 billion dollars. That’s a 77 percent increase in three years, trade in both directions. Yes, American exports to Egypt are growing but so are Egyptian exports to the U.S. Amr Kayani is here, our Foreign Commercial Service chief, Catherine Hill-Herndon, our Economics counselor – they can give you all the data, as can our website. But the main picture to point out, U.S. exports to Egypt increased 74 percent as part of that overall 77 percent increase, and Egyptian exports to the U.S. increased 85 percent in those three years. So both sides are doing very well. The balance of trade still favors the United States, but Egyptian exports are increasing faster than American exports to Egypt. We remain Egypt’s largest national trading partner by far. We buy 33 percent of everything that Egypt exports to the world – agriculture, manufactured, you name it, we’re your biggest single country customer.

A unique part of Egyptian-US trade relations is the Qualified Industrial Zone, or QIZ, program. The QIZ is maturing into a solid component of Egypt’s trade relations with the United States. Last year, QIZ exports increased 10 percent to $689 million. This agreement has proven good for Egyptian workers, good for American consumers, and good for peace in the region by promoting economic cooperation with Israel. Even so, we noted a drop in QIZ exports in the fourth quarter, indicating that the early, rapid growth of the program is now leveling off. The United States will give full consideration to the request by the governments of Egypt and Israel to expand the program into Upper Egypt to preserve the economic and political benefits of the QIZ.

Finally, we use our USAID to support the growth of trade and investment in Egypt by providing a lot of technical assistance. This is sort of behind the headlines. In the old days we would cut ribbons on water plants, waste water plants, power plants, telephone systems, roads, schools, and we still do some of those things but we’re also investing in Egypt, its government, its business to make it more transparent, a more attractive place to invest. We do this through “Technical Assistance for Policy Reform” (TAPR) program. We’re working with several major ministries and businessmen’s associations. One of the ones I would cite here is the transportation sector – Minister Mansour also proud son of AmCham, father of AmCham actually. We’re very proud to work Minister Mansour in a variety of programs to improve transportation safety in this country and to build public private partnerships in that sector.

I would take a moment to show another way in which our relationship is maturing. You have seen and heard negative headlines about USAID diminishing. I look at that in a different way. A standard, mature, healthy, prosperous American relationship with our the most important friends and partners is one where AID plays almost no role -- sometimes no role at all, sometimes a minimal one. We are getting to that place with Egypt. Egypt is no longer a less developed country, an undeveloped country, a poor country. It has clawed its way up through strenuous efforts to become a middle developed country and it has less need of outside assistance. The need is still there. We are proud to provide it. In the security area, we have given a steady 1.3 billion dollars every year since Camp David. We intend to continue doing that. The President of the United States has requested that amount from Congress again. This year we have requested $ 200 million in economic assistance from the U.S. Congress, again, as part of our sustained commitment to supporting Egypt. Egypt’s economic assistance program remains one of our top five of six in the world.

It’s important but it is, in fact, reduced. It is reduced for good reason. It is reduced because Egypt needs less, reduced because there are other countries that are putting claims on our limited resources around the world. It is reduced because Egypt is succeeding and trade is replacing AID. That has been the concept since the beginning that Egypt grow stronger, more prosperous, stand on its own feet. And thanks to your great efforts you are getting there and we are going to stand with you. Our intention is to continue economic assistance at significant levels long into the future.

But look at those amounts compared to trade. What is 200 million dollars a year compared to 8 billion a year in trade? Which do you suppose creates more jobs for Egyptian young people? Clearly trade and investment are the future for Egypt.

I want to cite those things because so often Egyptians come to me and say the AID is being cut, relationships are under stress and strains. I really am confident. I see the power of this relationship. I see the emergence of Egypt. I see Egypt in a transition toward positive things -- not toward danger, not toward crisis but toward continued accomplishments, just as Americans see our country going to a future with confidence and optimism. You’re a young country and an old country at the same time. You’re the most ancient of states with 53 percent of the population 24 years of age or under. That’s a huge opportunity and a huge advantage. Among the advantages I hope Egyptians will keep in mind, as you look at the future with confidence, is friendship with the United States of America. The strategic asset is something you can count on, something that will help your country through the stresses and strains that you face internally, the stresses and strains of the region and something you will help our country as well. Something that will help the United States as we become more prosperous and peaceful and stable for everyone.

Let me add first a little thanks to everybody for the incredible hospitality and kindness you’ve shown to Marie and me and our two daughters in our time here. It’s too short, of course. It’s three years, is three years, that’s the normal tour. We knew in 2005, when we arrived, that 2008 – if could make it to 2008 – we would be very lucky. We feel very lucky to have done that. We look forward to coming back often. We look forward to seeing you all in Washington because I know many of you will ask -- if you haven’t asked. I will tell you, I will be joining the United States Institute of Peace for the coming year at least and I will be doing that along with the State Department. I will decide at that point whether I wish to come back to State Department or go off and do other things. There are so many other things to accomplish.

On my checklist, at the top of my checklist, is to come back to Egypt often and to do various things and to see all of you. I hope you will all stay in touch and look us up if you’re in Washington, DC. Thank you very much.