US pushes for more economic reform in Mideast

This week the US and Egypt plan to sign a trade agreement worth $500 million annually.

The past month has seen a flurry of friendly activity between Egypt and Israel that observers here say is unprecedented. Now, President Hosni Mubarak is about to get the payoff for a diplomatic effort that is deeply unpopular with large sections of the Egyptian public.

This week, US Trade Representative Robert Zoellick is scheduled to travel to Cairo to watch as Israel and Egypt sign a landmark agreement on the establishment of Qualified Industrial Zones, or QIZs.

It's an unwieldy name for a simple concept - tariff free entry to the US market for Egyptian goods in exchange for using some materials from Israeli businesses. Egyptian officials predict the deal will generate more than $500 million in exports to the US per year and say it could be the first step on a road to a more coveted Free Trade Agreement which would open US markets to a wide range of Egyptian goods.

The agreement illustrates a subtle shift in US policy toward Egypt and much of the Middle East, away from demands for democratic reform in the region and toward narrower issues of economic cooperation and support for regional peace initiatives.

In Egypt's case, the new economic deal comes even as the country is alleged to be engaged in one of its most wide-ranging crackdowns against its own citizens in years. Foreign and local human rights organizations claim that as many as 3,000 Egyptians have been detained near the city of Al-Arish on the Sinai peninsula over the past six weeks in a crackdown connected to a terrorist attack in the resort of Taba in October. Some of the attackers were from Al-Arish.

Amnesty International alleges that some of those arrested have been tortured, and that most have been held without charges or access to lawyers. Many of those arrested have since been released, but human rights organizations estimate that hundreds remain in detention.

"I was out there for two days and I managed to talk to about 20 people some of whom were tortured. I find their stories very credible,'' says Joe Stork, Washington Director of the Middle East and North Africa division of Human Rights Watch. He says two of those he spoke with detailed torture by electric shock and being tied up and hung from door-frames.

"The torture is very consistent with Egyptian state security's modus operandi... You don't just bring in suspects, you terrorize the population and say any more funny business and this will keep happening,'' says Mr. Stork.

Egyptian officials have told local media that the allegations have been exaggerated, with one Interior Ministry official telling the government-owned Al-Ahram weekly that no more than 800 people have been arrested. The US Embassy in Cairo declined to comment on the allegations.

The backdrop is, as ever, the Palestine/Israeli conflict, and on that front much positive progress is being made, with Egypt getting involved in helping to secure the Israeli pullout from Gaza by urging the disparate Palestinian factions and security organizations to unite. Sunday, Israel said it would release up to 200 Palestinian prisoners in a gesture of goodwill, part of an agreement the country had reached with Egypt.

But for the US, that conflict can still overshadow its broader regional objectives. At this weekend's "Forum for the Future" conference in Morocco, which the US hoped would become a showcase for regional reform efforts, Arab leaders said the biggest obstacle to political reform in the region was the Palestinian Israeli conflict, and US support for Israel.

US Secretary of State Colin Powell had departed for the conference on Friday saying Arab nations shouldn't keep "pointing to the Middle East peace process as the reason we don't undertake reform efforts."

"Let us face it,'' says Saudi Arabia's foreign Minister Prince Saud Faisal. "We perceive no clash of civilizations... The real bone of contention is the longest conflict in modern history." The prince's comments were made in a session that was supposed to be closed to the media, but a snafu led to the session being broadcast to reporters in the media center.

But despite Secretary Powell's comments - he said Saturday at the closing news conference that "reform has to go on'' - there were also signs that the US has backed away from democracy initiatives. Most of the agreements at the forum, which involved Arab nations and the G-8, were economic, with a $60 million fund announced to help start new businesses in Arab countries, an effort to strengthen regional capital markets, and another effort to make small loans available in the Middle East.

The details of Egypt's QIZ's are still being worked out, particularly how many factories will be involved in the agreement. But US officials are already calling it a key victory on two policy fronts for the US - securing Israel and increasing regional economic cooperation.

"It is a concrete, practical result of President Bush's plan to promote closer US trade ties with the Middle East so as to strengthen development, openness, and peaceful economic links between Israel and its neighbors,'' Trade Representative Zoellick said in a statement.

The economic advantages to Egypt of the new agreement are clear. Jordan, the only other country to have a QIZ agreement with the US and Israel, saw its exports to the US soar after signing its deal from $31 million in 1999 to $670 million last year.

The deal also comes less than a month before Egypt's key cotton and textile industry, with export revenue of about $1.2 billion a year, was expected to take a hit from the Jan. 1 end of a quota system on European and US textile imports that has guaranteed the industry access to those markets.

"The Egyptians are being rewarded for their closer ties with the Israelis,'' says Josh Stacher, a doctoral candidate at the University of St. Andrews in Scotland who is writing his dissertation on modern Egyptian politics. "This is an enticement to keep Egypt on the path toward strengthening US strategic objectives in the region and in the war on terror. There are massive human rights violations going on in Egypt right now, and the Americans are essentially silent about it."

Mr. Stacher says that the shift in US rhetoric closely matches that of an emerging crop of Egyptian officials with ties to President Mubarak's son Gamal. These officials, who include Foreign Trade and Industry Minister Rashid Mohammed Rashid, say that economic changes should be prioritized over political change.

"They don't want a functioning market democracy, they want a functioning market," says Stacher. "The US has returned to the more classical foreign policy posture. The Americans seem willing to forgo human rights concerns as long as there's movement on economic reform."

Despite concerns that "when it comes to security issues, US pressure on human rights seems to go out the window,'' Mr. Stork of Human Rights Watch says that changes in Egypt and other countries can't be ignored.

The fact that he was able to travel to Al-Arish to report on human rights problems there - similar trips were blocked in the 1990s - is a sign that Egyptians have generally been freer to speak out in recent years as the Bush administration has increased demands for democratic change.

"There are more people sticking their heads up now to complain and not having them chopped off,'' says Mr. Stork. "That's progress."