Egypt on the Brink: Judicial Jihad Hunts Men Who Brought Growth and Reform

Ghali bolted from his desk, scooping up her motionless body, calling her name, administering CPR. She died in his arms.

The cause of death, a doctor told me, was an aneurysm — a rush of blood to the heart. It was almost instant. There was nothing Ghali could have done to save her, said a close family friend who described her death. The sudden loss of his vibrant, 49-year-old wife of 20 years, mother of their three sons, ages 12, 14, and 18, was a crushing blow to a man whose life had already been upended by Egypt’s revolution.

Only a year ago, Ghali was among Egypt’s most prominent officials. With a doctorate in economics from the Massachusetts Institute of Technology, he had given up a lucrative post at the International Monetary Fund to return to Cairo 18 years ago to help transform his nation’s moribund state-owned economy.

For years, he and a small team of talented reformers, led by Prime Minister Ahmed Nazif and activist Trade Minister Rachid Mohamed Rachid, battled Egypt’s entrenched bureaucracy and its military/security elite, which seemed determined to block changes that threatened its economic interests and political power.

On several key issues, the reformers had finally won, making Egypt what the IMF called an “emerging success story,” one of the region’s “fastest-growing economies.”

But since the January 2011 uprising at Tahrir Square, which toppled President Hosni Mubarak in only 18 days, the military-led civilian transitional government has been waging a judicial jihad against Ghali and others who helped free Egypt’s economy.

Once credited by U.S. officials for policies producing annual growth of some 7 percent for several years — foreign and domestic investment in industries that private investors had once shunned, and robust job creation — they have now been blamed not only for a culture of corruption that is nearly as old as Egypt’s pyramids, but also for Mubarak’s political failings.

Although the free-market policies resulted in a more equitable distribution of income than that of India, Mexico, Brazil, and several other emerging economies, the reformers are now hunted men.

Convicted by a Cairo criminal court of “squandering public resources,” based on often bogus evidence in sham trials that in Ghali’s case lasted only six minutes, they are either in jail, in exile, or on the run.

Travel bans and Interpol warrants have been issued for them, passports canceled, visas revoked, and their property and other assets in Egypt have been frozen. Washington has been focused on the rise of the Muslim Brotherhood, the 83-year-old secretive Islamist group that recently won the largest number of seats in parliamentary elections, and on its power struggle with Egypt’s military and security establishment, which also seeks to preserve its vast economic interests and the political clout it has accumulated since seizing power in a military coup in 1952. But the single greatest threat to Egypt today is the hemorrhaging of its economy. The scapegoating of the reformers and the reversal of their policies have increased the likelihood of an economic meltdown.

In an interview, Rachid said that to reignite growth, Egypt must restore security, install a government that can rule for three or four years, rather than three or four months, and finally, stop attacking the free-market system for short-term political gain. “Without this, investor confidence in Egypt will not be restored,” he warned.

Fearing reprisals against them and their families, Ghali and most other reformers refused to comment for this article. But interviews with the reformers’ friends, relatives, former colleagues, and current advisers reflect growing frustration over Egypt’s loss of economic momentum.

The reformers are now widely dispersed, exchanging news and political gossip through emails and by cellphone.

Some, like Ghali and Rachid, the first businessman ever to hold a senior Cabinet post in Egypt, have sought refuge in other countries. Others, like Ahmed Maghrabi, the former minister of housing, and Yusuf Wali, the former agriculture minister who hails from one of Egypt’s most prominent land-owning clans, are in jail.

Once-powerful men courted by the world’s financial elite, they are now largely isolated, abandoned by the country they struggled to change. Most have been assailed by Egypt’s vituperative, scandal-mongering press.

This is particularly true of Ghali, the nephew of former U.N. Secretary General Boutros Boutros Ghali, perhaps because he is Christian.

“Neither Joe nor most of the other reformers saw the Arab Spring or the end of the regime coming,” said a close friend, referring to Youssef by his Americanized nickname.

Neither, apparently, did the ailing 83-year-old Mubarak, who had become increasingly detached from affairs of state after the unexpected death of his grandson in 2009. Lacking a vision for Egypt, Mubarak invariably did too little, too late, delegating more and more of his work to his son Gamal, his heir apparent, who was anathema to the military.

Though the reformers spoke with one another and with the prime minister as protests in Tahrir Square gathered momentum, none apparently spoke directly to Mubarak in the week before he fired his economic reform team — a desperate, ultimately futile gambit to preserve his own power.

Only days after Mubarak met with his axed ministers to thank them for their service, he tried rehiring several of them, including Ghali and Rachid. But both refused, Egyptians said.

As the protests grew ever more forceful, Michelle Ghali pressed her husband to leave Egypt as his colleague Rachid had done. But Ghali hesitated. The couple finally left Cairo for Beirut only hours before Mubarak stepped down on Feb. 11. Two weeks later when Ghali had relocated to London, the first of several charges were filed against him.

Though Ghali was acquitted of some of the more obviously bogus claims, such as having illegally transferred 30 million Egyptian pounds, (about $5 million) from the state treasury to media campaigns for Mubarak’s political party (the funds were transferred to the Ministry of Information at the prime minister’s request, his lawyers told the court), the accusations kept coming.

After the six-minute trial in June, he was convicted in absentia and sentenced to 30 years in prison for allegedly using a Finance Ministry printer in 2010 to produce election materials for his campaign for parliament. American officials say he was also convicted of squandering public money by using 102 cars held in customs for his personal use.

Ghali’s lawyer had said that the cars had been impounded for customs duty violations, and that Ghali had given them not to family or friends, but to fellow ministers and his own deputies who were entitled to official cars, but whose cars were old and kept breaking down. The transaction had saved Egyptian taxpayers hundreds of thousands of pounds.

Diplomats say Ghali’s efforts to reform Egypt’s bureaucracy required creative maneuvering. In 2004, the Finance Ministry, with its 20,000 employees and $50 million budget, had almost no computers.

The ministry’s two word-processors were reserved for the minister’s office, which meant that Egypt’s budget, all 49,000 accounts of it, had to be calculated and consolidated by hand. No ministry knew the size of another’s budget, and the military liked it that way.

Ideological obstacles often proved harder to overcome than technological challenges. Field Marshal Mohamed Hussein Tantawi, who was then defense minister and remains so in “revolutionary” Egypt, is anti-American, opposed to free markets, and advocates government control of prices and production, according to diplomatic cables disclosed by WikiLeaks. To this day, economic data are gathered by the military and treated as state secrets. Still, Ghali’s team had remarkable achievements.

Between the end of 2004 and the end of March 2007, Egypt had created 2.4 million jobs, according to the IMF. Exports and imports rose sharply, along with the three largest sources of income: workers’ remittances, Suez Canal receipts, and tourism.

By 2004, Egypt had a well-functioning foreign exchange market and had lifted the restrictions on access to foreign currency that had long constrained Egyptian businesses. Ghali had slashed corporate and property taxes, tripling government revenues. In 2004, Egypt imported 60,000 cars; by 2010, imports stood at 240,000.

Some fear that the military-led government has a vested interest in reversing such reform and returning to a state-controlled economic model. While analysts estimate that Egypt’s military controls as much as one-third of the economy, some say the figure could be even higher. And many Egyptians remain incredibly poor: Forty percent of some 80 million people live on less than $2 a day.

But the military’s purge of the reformers is not only a convenient way to defuse popular fury over the Mubarak era in general, it’s a way to protect its own stake in Egypt’s economy. Had Mubarak’s son Gamal and his allies come to power, the military’s secretive ways and holdings, not to mention those of the Muslim Brotherhood, would have been in jeopardy.

The revolution, with its insistence on Islam as the source of Egyptian identity, coupled with the military’s traditional hostility to Christians, does not bode well for secular, pro-Western activists like Ghali.

Until he was named finance minister, no Copt had ever risen to so high a civilian post in modern times. Even then, a few extremist Salafi sheiks issued fatwas denouncing his promotion: Islam prohibited putting Christians in charge of Muslim treasure, they opined.

Many of the most savage attacks on Ghali in the Egyptian press have directly or indirectly touched on his religion, implying that a Christian’s loyalty to Egypt may be questioned.

Last August, Rose al Yusuf, an Arabic daily, reported that he had renounced his citizenship to become an Israeli. Still other papers have reported that Ghali was found drunk in his palace in Madrid — alcohol is banned for observant Muslims — hugging a safe filled with 2 million euros. Friends say Ghali has no safe or house in Madrid. Reports of Michelle Ghali’s death, and of Youssef Ghali’s alleged contemplation of suicide — not true, say close friends — have touched Egyptians, a sentimental people who are now worried about their own beloved country’s fate. A journalist writing in Egypt’s daily Al Masry al-Youm recently praised Ghali for reforming Egypt’s tax and customs duty systems.

Many Egyptians, friends say, are gradually acknowledging that those they have banished may not be corrupt, and that even if some of them are, Egypt’s poverty and income disparities cannot be mainly their fault.

Egyptians also sense that the government will soon be making fundamental choices about Egypt’s economic fate. If confidence is restored, analyst Ahmed Heikal notes, Egypt within 10 years can become Turkey. If not, “we risk becoming Pakistan.”

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Judith Miller, an expert on national security issues, is a Pulitzer Prize-winning investigative reporter who formerly worked for The New York Times. She is an adjunct fellow at the Manhattan Institute. Newsmax magazine.