Hosni Mubarak President of Egypt
“Egyptian-U.S. relations are excellent and there is strategic cooperation in all domains”

here are few countries in the world that are currently strategically more important to the U.S. than Egypt, given its close proximity to the Middle East, Europe and Africa. President Hosni Mubarak, the country’s reformist leader, has become an enduring source of support to Washington in recent years, before and after the events of 9/11. The size of the country – with a population close to 70 million – makes it a powerful regional ally.

In today’s unpredictable climate, modern Egypt is a prime example of stability and continuity, where the government has chosen the middle path: nurturing links with the West, but responsive to the needs of traditional Islamic groups at home. Security, however, remains an ongoing issue as Egypt confronts the threat of militancy within its borders.

The Egyptian government aims to expand the hydrocarbons sector into the new areas of natural gas and petroleum

Against this maturing political association, the U.S. has supported President Mubarak’s efforts to transform the Egyptian economy, which remains largely state-controlled and heavily dependent on receipts from the tourism sector and oil and gas, both highly volatile businesses. Toll revenue from ships using the Suez Canal remains another primary source of hard currency.

Certainly, the potential of the Egyptian market is huge – Cairo itself is the largest city in Africa – yet much of the country remains under-developed and many of its people poor.

Diversification into new areas – such as natural gas and petrochemicals – has been a key element of the government’s sweeping economic agenda. Enormous strides have been taken to reform the public sector, crack down on corruption and create the right conditions for the free market to prosper.

Taking major industries out of state hands – such as the privatization of all three major cement companies to foreign and local investors – has been another important thrust of the Egyptian strategy. This liberalization policy has ushered in more foreign investment, enhancing the link between the local and the global economy. Interest in certain sectors, especially oil, natural gas and industrial establishments, remains very strong. There has also been a flood of investment in the rehabilitation and expansion of the country’s infrastructure: its roads, railroads, airports and sea ports.

Though Egypt has been hit by perceptions of risk that have frightened off some tourists and potential investors, its fundamentals are sound. Since the late 1990s, gross domestic product growth has hovered consistently at around five percent – a measure of the present regime’s success in managing the macroeconomic environment. There has also been an ongoing social reform program to improve education and health and alleviate hardship. The creation of jobs for the country’s large pool of human talent remains one of the principal goals in the road to development.