The feeling in the air in Cairo, post-revolution, is one of nervous energy. Already one of the most frenetic cities on the planet, Egypt’s capital now pulses with a palpable, potent sense of excitement and uncertainty, a combustible mixture that seems like it could explode – either into mayhem or delirium, whichever way the wind blows – at any given moment. Repressed for three decades, the city’s heaving populace is letting off the long-bottled-up steam with flag-waving displays, political rallies and, at times, violent protests.

While the mood on the street teeters just this side of uneasy calm, a caretaker government led by prime minister Essam Sharaf and backed by military council tries to keep a lid on tensions and ward off economic meltdown. Both urgent tasks are seen to aid the other, and Egypt’s large, young and underemployed population could either be harnessed to boost production, or left to take out its frustrations in less beneficial ways. Food prices are another pressing issue.

Bread, freedom, justice

“Our immediate priority is to provide basic commodities to Egyptians – cooking oil and gas, food, etc... ‘Bread, freedom and justice’ is a slogan here and that is the policy for the cabinet as a whole,” says the minister of solidarity and social justice, Gouda Abdel Khaleq. “For social justice we need to focus on [boosting production of] our core crops: rice, corn, wheat, cotton and sugar cane. We are deviating away from land development and towards encouraging agriculture.”

To this end, the government has announced a guaranteed price for wheat, in order to encourage farmers to grow more of this staple for local consumption (Egypt is the world’s number-one importer of wheat). Results so far, says Mr Khaleq, “are very encouraging”.

Welfare provision may be an immediate priority but job creation is another important dimension, acknowledges Mr Khaleq, who says the cabinet has been debating how to best achieve this. “Agriculture remains the sector that is the largest employer, once you remove the fuzzy sector of services, which acts as a vent for surplus labour. We need to focus on the main sectors for employment creation – agriculture and manufacturing.”

Role of tourism

However ‘fuzzy’ it may be, there is no getting around the current importance of the services-led tourism industry to Egypt’s coffers. Tourism is Egypt’s top foreign-exchange earner, supplies one in every seven jobs and last year accounted for 11.5% of GDP and $13bn in revenues. The political upheaval has cost the industry dearly: the number of international visitors dropped 45% in the first quarter of 2011. Cumulatively, the drop-off has cost Egypt more than $2bn, tourism minister Mounir Fakhry Abdel-Nour tells fDi.

The minister – an investment banker by background – calls it the worst-ever crisis for the industry, even more so than the 1997 shootings at Luxor because it is a continuous state of affairs rather than a one-off event. However, he says “things are moving in the right direction”, with tourist numbers down 80% in February from the previous February, 60% in March and only 35% in April.

Recent scenes of sectarian skirmishes between Coptic Christians and Islamist groups – some bloody – played out on international news broadcasts do not help skittishness about visiting the country. These clashes are “catastrophic” for tourism, says Mr Abdel-Nour, while stressing that he remains optimistic that tensions can be calmed; he himself is a Christian, the only one in the cabinet.

“The situation will be resolved,” he says quite simply, “because it has to be. I think Egyptian political forces who believe in a nation state should unite in order to solve this problem and save Egypt from falling into extremists’ hands.”

Wonder of the world

Meanwhile, the minister of state for antiquities affairs, Zahi Hawass – a charismatic and controversial character who is a regular on international media channels – is pulling out all the stops to show the world what they are missing by shying away from Egypt. “We had major discoveries before the revolution that we will announce that will return the magic of ancient Egypt to the world,” says Mr Hawass, ever the showman.

He is headed off to the US soon to drum up interest, and also bringing over a group from George Washington University to help raise money, and profile, for antiquities protection. The message he is taking to the airwaves is that not only does Egypt still have its magic, it is also still a safe destination in which to explore some of the world’s most historically significant sites.

“The trouble that happened was between Egyptians – as a foreigner it is safe. The 1 million tourists who were in Egypt during the revolution all made it home safely... All the sites are secure, they are protected by the police,” he says.

Job focus

Regardless of whether jobs are best created in agriculture, manufacturing or tourism, truthfully it will likely require help from all of these areas to get Egypt’s economy on stable footing, and thereby aid political and societal stability for the longer term.

“The message for Egypt is job, jobs, jobs, because if they aren’t provided, a window is going to be closed, perhaps never to be opened again,” says Llewellyn Werner, a Californian financier and chairman of C3, a holding company with footings in private equity. He is in the process of setting up Pyramid Capital Partners LLC, a $500m to $1bn fund that will provide sorely needed expansion capital for companies in Egypt. Headquartered in Cairo and London, the fund has tied up with Aon, which will provide political risk insurance for the deals, and has already received its first $25m commitment.

“Egypt’s demographics are impressive, but if there are not jobs created for all these young people, they are going to cause mischief,” concludes Mr Werner.

IN FOCUS: The threat of extremism

The US military is watching Egypt’s unemployment problem closely, against worries over bored, jobless young men turning to extremism and terrorism. 

The US Department of Defense (DoD) has been keen to expand the 'economic counterterrorism' approach used in Iraq to Egypt, albeit in a much softer manner. The approach entails getting private sector projects on the ground and geared up quickly – from factories to infrastructure building – in troubled areas to absorb excess labour and offset political frustrations that could boil over into violence.

Egyptian prime minister Essam Sharaf was recently briefed in Cairo about the DoD’s Task Force for Business & Stability Operations (TFBSO) and Mr. Sharaf, being keen for the assistance, asked that the head of the task force, Paul Brinkley, meet him in Cairo to discuss it further.

However, such support coming to fruition looks increasingly less likely as the task force finds itself caught up in an internecine war between the US State Department and DoD over what type of role the military should play in economic matters.

The diplomats look to be winning the war as the task force is set to be terminated at the end of June, as per the latest US budget bill, unless it receives a last-minute reprieve.

With its main backers, outgoing defence secretary Robert Gates and influential US army general David Petraeus, leaving the Pentagon, the TFBSO “will become an orphan and may die”, says Llewellyn Werner, a financier who has worked with the task force on projects in Iraq. He adds: “Even though the State Department does nice things, the DoD is much more effective at getting things done and creating jobs.”