Kleptocrats and the Trickle Down Myth

Hadeel made some astute comments about poverty in Egypt on her blog space the other day, which in turn inspired me to post a follow up on this space.

Basically, Hadeel laments the nature of socioeconomic disparity in Egypt, where the difference between the country’s mega rich and the tens of millions of mega poor is a shocking display of injustice.

Indeed, while Egypt IS a poor country, there's heaps of money here. It’s not uncommon to see Ferraris speed past street kids peddling Kleenex.

In fact, at a recent press conference I attended at the 5-star Nile Hilton, the European Union’s finance chief Peter Mandelson said the world was witnessing the “unleashing of an economic tiger on the Nile.”

Fine, but where is all the investment capital going? Good question.

The kleptocrats* who are fostering the "explosive" growth of Egypt's economy right now (driven by commodities, real estate speculation and tourism) are squandering the country’s resources.

Rather than pumping foreign currency back into diversifying the economy (Egypt has armies of well-trained tech workers, engineers and a massive pool of young labour perfect for manufacturing), the country’s "business leaders" plow the country's capital into wasteful, unsustainable projects.

Case in point is Serrenia – a mammoth, multi-billion dollar luxury development nestled on the Red Sea coast.

According to the development company’s nauseating promotional material, Serrenia offers “palace residences of unmatched opulence, private villas, apartments, and a world class golf complex.”

Serrenia also “delivers a unique living experience, a home, a place of relaxation and repose.”

Yakk.

While the project is being developed by a London-based, Jordanian-owned holding company called SPIG, a sales representative at the Cairo office named Omar (who wouldn’t give his last name) told me that an Egyptian-based bank was also an investor in the project.

He also told me that Serrenia is a “global village” for “young jet setters and Hollywood stars.”

Some of the media have reported that the largest properties, which the developers dub as “palaces,” have a price tag of about $30 million USD. Whoa. I asked Omar what makes a palace a palace.

“Basically, the sheer size of the plot of land and the built up area around it,” he said, before getting defensive about my question.

“Look, all the media tag onto the palaces, but what we’re trying to build is a very luxurious, global community that speaks to a wide variety of consumers,” he continued, noting that Serrenia also offers apartment dwellings and a 300-berth marina.

I wonder how the apartments in Serrenia compare to the brick hovels in Imbaba, one of the world’s largest slums which is a 10 minute walk from my apartment?

It’s a shame. Unless the rich in this country get smart and think ahead, Egypt will always be a minor player in world economics. Worse yet, the numbers of slum dwellers living in extreme poverty will continue to grow exponentially until the whole system collapses.

Look, I’m not Mother Theresa and I’ve never claimed to be an advocate of worldwide socialism, but I do feel pangs of guilt every time I walk past a dusty mother of three begging barefoot on the street.

Those who live in glass houses should beware. In the words of global crusader Steven Tyler, "eat the rich."

*(I picked this word up from a book called "Planet of Slums" which my roomate Shane picked up for me in Canada last month)