The formal adoption of the Open Door Policy (infitah) was not forced upon Egypt by capitalistic investors nor by international Western Creditors. The policy was chosen in light of internal economic and external political factors, and provided relief from the countries failure to achieve a truly socialist economy’’. Sadat’s neoliberal open door policy relied on free market forces to revive and expand what was left of the private sector. As Sadat shunned Soviet support after the 1973 war, the US was on hand to aid Sadat at a time when the economy was in trouble, and in March 1975 the US congress had agreed to send 750 million dollars in aid to Egypt, 300 million of which was...
The formal adoption of the Open Door Policy (infitah) was not forced upon Egypt by capitalistic investors nor by international Western Creditors. The policy was chosen in light of internal economic and external political factors, and provided relief from the countries failure to achieve a truly socialist economy’’.
Sadat’s neoliberal open door policy relied on free market forces to revive and expand what was left of the private sector. As Sadat shunned Soviet support after the 1973 war, the US was on hand to aid Sadat at a time when the economy was in trouble, and in March 1975 the US congress had agreed to send 750 million dollars in aid to Egypt, 300 million of which was to be used for commodities.
The open door policy required investment regulations for all sectors of the Egyptian economy to be relaxed, and this led to both domestic and foreign investors looking to areas that would yield the highest return. Agriculture was one of the first sectors targeted by Sadat’s policy of infitah. Investment in agriculture fell nearly 20 percent, from 25 percent in 1965 to only 7 percent in 1977. The growth rate for agricultural production in the liberalization period of 1973-1979 dropped to 2.7 percent as opposed to 3 percent just a decade earlier. This reduction in production was felt most notably when the Sadat government in 1975 was forced to undergo major food importation programs, coupled with an exploding population importing half of its food at the cost of 4 billion dollars. The government raised the prices of subsidized goods such as ‘Aish Baladi’ (national bread) without any legislation being passed in January 1977. Cooper in his narration notes that the next day ‘’Egyptians woke up to find their purchasing power reduced by 16 percent’’. This immediately led to what later become known as the January 1977 riots, with the country in complete chaos. The International Monetary Fund (IMF) in 1976 required Egypt to cut subsidies and public spending when the economy was in arrears, as part of the IMF’s Structural Adjustment Program (SAP). Despite this, just two days after the riots, Sadat restored the subsidies.
