The evolution of the crisis in Lebanon during the past eighteen months has provided striking evidence of a major change in the Middle East since Nasser’s death. As that country plunges ever deeper into its morass of manipulated violence, Egypt, for two decades the central actor in Arab politics, is conspicuous by its absence from the scene. Things have not always been so. In the Lebanese-Palestinian clashes of 1969, Cairo imposed its solution. Similarly, following the ‘Black September’ of 1970 in Amman, Nasser on the eve of his death called the combatants together in the Egyptian capital. Egypt’s present withdrawal into itself is evidently one aspect of a new regional strategy on the part of Sadat and his government. This isolationism is designed to permit other forms of alliance, which in turn are seen as a vital element in the search for a different solution to the country’s problems to that proposed by Nasser. Paradoxically, the withdrawal forms part of what Sadat terms his ‘open-door’ policy.

Infitah (opening), the watchword launched by Sadat in the aftermath of the 1973 October War, had two proclaimed aims: one political, the other economic. On the political level, rapprochement with the United States was supposed to permit a rapid solution of the Arab-Israel conflict, by the same token extracting Egypt from its state of war. On the economic level, Egypt was to abandon the path of Nasserite ‘socialism’ and take that of an openly capitalist development. footnote1 In a straightforward calculation of cause and effect, this choice was supposed to attract foreign capital and inject new blood into the Egyptian economy.

In fact, these basic principles could be discerned behind Sadat’s policies well before the October War. From the moment he first took office he made no attempt to conceal his desire for rapprochement with the United States. The elimination of Ali Sabry (leader of the Nasserite pro-Soviet tendency) on 2 May 1971, the day before William Rogers arrived in Cairo, was a prelude. The expulsion of Soviet military experts on 18 July 1972, presented at the time as a nationalist gesture, confirmed the trend by giving (without any reciprocal concession) further evidence of the Egyptian government’s desire to turn towards America. What is more, during the summer of 1973, Sadat had invited the national media to consider a so-called ‘democratic dialogue’ (Al-hiwar addimuqrati), a working document whose broad outlines were supposed to prepare a transformation of Egypt. Among other things, priority was given to the need to develop the private sector, encourage foreign investment and liberalize the economy. The President wanted to amend the 1962 National Charter (which served as a Constitution in the Nasser era), to purge it of ‘certain Marxist interpretations’. All that remained was for the open-door policy to be affirmed openly.

Its confidence renewed by the achievements of the October War, Egypt threw itself into the new age of infitah. ‘Dollar knocking on Egypt’s door’, ran the headlines; every day the press reported one promised loan or another. The government led by Hegazi (with Sadat as nominal premier) stayed in office to put the new policy into effect and to prepare the ground for the foreign capital which was supposed to flow into the country. On 10 February 1974, Sadat promulgated three decrees, setting up a ‘Higher Council for International Economic Co-operation’ and an ‘Organization for Arab and International Economic Co-operation’ and amending the ‘law on investments and free zones’, to offer broader guarantees on investments and prevent nationalizations. This last measure was felt to be inadequate, and was complemented in June. Enterprises investing in the Canal Free Zones were to be exempt from taxes and duties. In the rest of Egypt, new enterprises would not be required to pay any tax on profits for a period of five to eight years. Business and investment banks were exempted from currency controls. footnote2 Alongside these ‘emergency’ measures, Sadat submitted the ‘October document’, a defence of his new policy, to the People’s Assembly (parliament) and the Arab Socialist Union (sole party) on 18 April 1974, and on 15 May to a popular referendum. This expedient was designed to commit both rulers and people to endorsing his policy by involving them in the phase of reconstruction.

In July 1974 the government put the finishing touches to an interim Eighteen Month Plan, called the ‘economic crossing plan’ (in reference to the crossing of the Suez canal), which was to prepare the ground for the 1976–80 Five Year Plan. This plan envisaged an average growth rate of 12·6 per cent a year with investments amounting to E£1,466 million for 1975 alone. footnote3 Contribution to this investment from local resources was estimated at E£366 million. Of the expected E£1,100 million from external sources, only E£468 million was forthcoming, and even this was not available at the beginning of the plan period. footnote4 The ‘economic crossing plan’ was squeezed between its high ambitions and the feebleness of the available means; its failure quickly became apparent. Though the Five Year Plan, in theory scheduled to begin in January 1976, continued to be mentioned, nothing was done to prepare for it by the relevant authorities.

The foreign investors who came to examine the possibilities offered by Egypt contributed by their presence to the general euphoria. Many, however, left the country more promises than concrete commitments. Apart from the continuing threat of war, Egypt’s run-down infrastructure, the absence of effective means of modern transport and the lack of adequate telecommunications constituted serious drawbacks. When the irksomeness of the Egyptian bureaucracy and the danger of nationalization—still very much present in the minds of capitalists—are added, there is precious little left to incite foreign capital to plunge into the Egyptian market, especially at a time of international recession. Arab investors reasoned in the same way, preferring to invest their capital profitably in European and American banks and enterprises than to risk it in Egypt—though a few, perhaps attracted by Cairene life, did engage in property dealings (foreigners are limited by law to ninety-year leaseholds) or invest in hotels.

The most rapid result of the open-door policy was the spectacular rapprochement with the United States. The October War enabled Sadat to turn an adversary into an ‘ally’. In his view this alliance, which he had been actively seeking for some time, alone would permit a solution to the conflict with Israel. Was not Tel Aviv wholly dependent on Washington? All that was needed was us pressure on the Jewish State, and the Arab-Israel conflict would move progressively towards an outcome. The alliance had, moreover, every chance of success. For the Arab world now wielded a new economic power, following its use of the oil weapon. The major advantages it offered any partner could be turned to good account by the Egyptian leadership. Egypt, on the crossroads between the American alliance and the new Arab economic strength, would find its salvation in the open-door policy.