Egypt’s Suez Canal Expropriation Fund from the Public Budget
Al-Sisi ordered the head of government to establish a revenue fund (Getty)
Egyptian parliamentary sources revealed that the Suez Canal Authority established its own fund more than two years ago under the direct leadership of President Abdel Fattah El-Sisi, that is, before the House of Representatives debated a draft law submitted by the government to amend some provisions of the Law on the Administration system no. 30 of 1975 and its approval of all its articles in plenary this week.
The draft law envisages the establishment of the Suez Canal Management Fund, which alone or with others will participate in establishing companies, increasing their capital, investing in securities, buying, selling, leasing, renting, and exploiting and using their immovable and movable assets. While sources told Al-Araby Al-Jadeed that the fund has already been established since July 2020, and the revenue of the funds directed to it from the government’s resources was about 80 billion pounds ($3.2 billion).
Sources added that the aim of the fund is to take most of the Suez Canal Authority’s resources out of the general government budget and channel them directly into what are known as “presidential development plans”, meaning they will be under direct supervision. supervision of the President of the Republic, who will dispose of them as he wishes, instead of directing these funds to the Ministry of Finance, and of course including them in the general revenues of the state.
She explained that the Suez Canal Authority fund is a copy similar to the “Long live Egypt” fund, which is directly under the supervision of Sisi, far from any supervisory bodies, warning of the possibility of imposing more taxes and fees in the general budget items in the coming period, in order to make up for the shortfall state revenues due to the establishment of the Management Fund, and directed its funds to his benefit instead of the budget.
According to sources, the Suez Canal Authority’s fund is not primarily aimed at selling the authority’s assets to foreign or Gulf investors, as some warn, but to turn public money into private money. Each agency in the state, relying on its own resources, and develop it in any possible way.
Sources stated that this approach paves the way for the dependence of important service sectors such as health and education on their own resources, and not financing their projects entirely from allocations from the general budget, and thus the privatization of services provided to citizens to gradually increase their funds.
This has recently been seen in the significant increase in public tuition fees, the expansion of the establishment of private and private universities, as well as the continuation of the public hospital sale scheme, and the presidential directive to expand partnerships with the private sector into the health sector.
Direct orders from Sisi
Last October 25, Sisi said during the activities of the economic conference: “The Suez Canal Authority directed its revenues only to the general budget and the Ministry of Finance, and when I asked the head of the government what funds he had, he told me: No funds. I told him as a Giant institution such as the government does not have the financial capacity of £300 or £400 billion.
Al-Sisi added in his speech: “I instructed the head of the authority to establish a revenue fund for it while he works on its development, and not to spend any of it except after it returns to me personally, and not to transfer money from the authority back to The Ministry of Finance, because it does not succeed that way. I leave. Every official is grinding to secure the necessary means for financing, and the sovereign fund now has 80 billion pounds, and it is expected to reach 300 or 400 billion pounds within 4 years.
The head of the Suez Canal Authority, Lieutenant General Osama Rabie, said on Monday before the House of Representatives that “the authority has recently achieved unprecedented leaps, including the transit of about 23 thousand ships in 2022, which is a clear increase from last year”, adding that ” the total tonnage witnessed by the channel in the current year was 1.420 billion tons, with a total revenue of 7.932 billion dollars.
The draft law establishes a government fund to carry out all economic and investment activities, provided that its authorized capital is estimated at one hundred billion Egyptian pounds (about 4 billion USD), and issued and paid-up capital of ten billion pounds to be paid by the Suez Canal Authority. The capital of the fund can be increased in cash or in kind with the approval of the general assembly, and in accordance with the controls and procedures established by the fund’s statute.
The funds of the fund consist of its capital, a percentage of the income of the Suez Canal Authority or from the allocation of a part of the government’s surplus funds in favor of the Fund after an agreement with the Minister of Finance at the beginning of each fiscal year, in addition to the return and income from investments of the fund’s funds, and other funds that achieve its goals, and are approved by the Board of Directors, the administration, and the Prime Minister makes a decision on acceptance.
The Fund will have a Board of Directors chaired by the President of the Suez Canal Board and a membership of four members of the Board of Directors or managers of the Suez Canal Board, determined by the Fund’s Statute, and three members with expertise in business, law, investment or other areas related to the purpose of the Fund, as chosen of the Prime Minister. Their membership lasts four years and can be renewed for the same period.
As soon as a number of representatives in the House of Representatives announced their rejection of the bill, some public figures registered their comments on it.
Former presidential candidate Hamdeen Sabahi wrote on his Facebook page, saying: “The Suez Canal is a red line. We dug it with the lives of the people, and with the will of the people we nationalized it, and with the blood of the people the army liberated it. It belongs to the people and a failed government will not is allowed to leave.”
On the other hand, the former Minister of State for Information, Osama Heikal, said: “The matter is very dangerous and needs an urgent review. The Suez Canal is a strategic facility that should not be ignored in part or in whole, nor thought about, because the canal is not only property of the state, and cannot be sold or bought for any reason.
Heikal added on his Facebook page: “This article (the draft law) should be immediately reviewed and responsibly reviewed by the national security agencies before the draft is submitted to the President of the Republic for his signature. I hope that the President will exercise his right to return the draft to the House of Representatives.” The rest for further study, except for the Suez Canal, gentlemen!” he said.
For his part, Parliament Speaker Hanafi Jabali said at the start of Parliament’s session on Tuesday: “I have been closely following the news circulating in various media or social networks regarding the discussion of the Suez Canal Authority draft law, which includes the establishment of an associated fund . I was horrified by what I saw and heard from some of those associated with the educated elite, that the provisions included in the project allowed the establishment of companies to buy, sell, rent and exploit the assets of the Fund, which they described as negligence in the Suez Canal.
Jabali (loyal to Sisi’s authority) added: “In light of the justified fears of some citizens about the law, which I greatly appreciate, and which are fueled by accusations and misconceptions issued by people who have their scientific, literary, cultural and even legal status in society , so I felt it necessary to clarify the matter.” The draft law approved by the Council as a whole, approval procedures are not complete and does not include any provisions affecting the Suez Canal as it is one of the public assets of the state and may not be disposed of or sold.
He continued: “Moreover, the state is obliged, according to Article 43 of the Constitution, to protect, develop and preserve the Suez Canal as an international waterway under its ownership. It also undertakes to develop the canal sector as a special economic center. The fund to be established aims sell, buy, rent or exploit its fixed or movable assets, which is a natural thing in accordance with the nature of the funds as a means of financing and investment, and does not directly or indirectly affect the Suez Canal.
Jabali continued: “The term (property) cannot in any way be applied to the canal itself, because it is public money that cannot be ignored. The House of Representatives, in which you have given confidence, has not and will not engage in issuing laws affecting to the provisions of the constitution which expresses the conscience of the nation. Instead, he makes every effort to carefully scrutinize the bills to ensure that they, if approved, reach the interests of the country and the citizens,” he said.