Anwar al-Sadat's program to encourage private investment in Egypt, often called the Open Door policy.
Officially launched with the 1974 "October Paper," which called for relaxing some of the government controls applied under the Arab Socialism of Gamal Abdel Nasser, this policy actually started in 1971 as an effort to attract investment by other Arab countries to rescue Egypt's faltering economy. This policy was accelerated after the Arab - Israel War of 1973 because Egypt needed foreign exchange to finance the importation of materials and parts that would bring its economy back to full production. Egypt hoped also to convert its short-term debt to longer indebtedness under less onerous terms and to attract private investments to increase future income, jobs, and foreign exchange.
Law 43 (1974) activated infitah by giving incentives, such as reduced taxes and import tariffs and guarantees against nationalization, to Arab and foreign investors in Egyptian industry, land reclamation, tourism, and banking. Some of the advisers to Anwar al-Sadat wanted to limit infitah to encouraging foreign investment in Egypt's economy; others hoped to apply capitalist norms to all domestic firms, whether owned by the government or by private investors. Sadat adopted the latter view, causing a deterioration of state planning and labor laws.
Corruption increased under a rising entrepreneurial class of munfatihin (those who operate the open door), whose profiteering and conspicuous consumption antagonized many poor and middle-class Egyptians. Their strikes and protest demonstrations erupted almost as soon as the policy was implemented. Sadat's attempt, under World Bank urging, to remove exchange controls and reduce government subsidies on basic foodstuffs led to the January 1977 food riots, but infitah continued. Under Husni Mubarak, the munfatihin have become a distinct interest group that has resisted his efforts to reduce their opportunities for enrichment or to trim their level of consumption. The infitah policy has made Egypt economically dependent on richer Arab countries, Europe, and the United States. It has also widened the economic and social gap between rich and poor, with potentially explosive implications for Egypt's future.
Bibliography
Baker, Raymond William. Sadat and After: Struggles for Egypt'sPolitical Soul. Cambridge, MA: Harvard University Press, 1990.
Cooper, Mark N. The Transformation of Egypt. Baltimore, MD: Johns Hopkins University Press, 1982.
Heikal, Mohamed. Autumn of Fury: The Assassination of Sadat. New York: Random House, 1983.
Henry, Clement Moore. "The Dilemma of the Egyptian Infitah." Middle East Journal 38 (Fall 1984): 4.
Hirst, David, and Beeson, Irene. Sadat. London: Faber and Faber, 1981.
Ikram, Khalid. Egypt: Economic Management in a Period of Transition. Baltimore, MD: Johns Hopkins University Press, for World Bank, 1980.
Waterbury, John. The Egypt of Nasser and Sadat: The PoliticalEconomy of Two Regimes. Princeton, NJ: Princeton University Press, 1983.
— ARTHUR GOLDSCHMIDT
