NEW POLICY DIRECTIONS IN EGYPT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00875R001100160021-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 10
• Document Creation Date: December 20, 2016
• Document Release Date: April 3, 2006
• Sequence Number: 21
• Publication Date: September 25, 1973
• Content Type: IM

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Intelligence Memorandum
New Policy Directions in Egypt
Secret
25 Member 1973
No. 1457/73
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NEW POLICY DIREL ONS IN EGYPT
Sutnninry
25 September 1973
I?gypt is currently reorienting It, apptcach to both domestic and International
issues and enunciating a new "philosophy" for ['resident Sadat's government. Basic
L?'_gyptian goals remain the same; domestically, to alleviate the severe economic
difficulties that plague the country and rcause vitronic discontent; Internationally, to
regain I typlian tertitor,, from Israeli occupation. But Sadat Is experimenting
seriously with new or n'wly resurrected means to these ends.
Much of Sadal's activity in this direction is a groping rather than a clear drive
along wcil{leiettnincd lines. Much c .'tis effort will be fruitless. Many or his moves
evoke a sense of dcja vu: Sadat has announced domestic policy reforms before and
has undertaken repeated diplomatic initiatives in the past, and these have largely
come to naight. But a new set of circumstances both at home and abroad surrounds
this latest effort, gives it a new impetus and seriousness of purpose, and offcM it
some hope of success.
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Relations with the Superpowers
Sa dat's trolley reassessment is the product largely of JS-Soviet detente
and specifically of the Jude. 1973 Nixon-Brerhnev vttnmit. Sadat had long
wanted to move away from (lie Egyptian military reliance on the Soviets
that characterized his predecessor's regime, salt he did in fact move
dramatically In this direction, lie has Nevertheless retained hopes for in-
creased Soviet military assistance and a greater show of Soviet political
support.
The sumtncr'% round of US-Soviet diplomacy has added conviction to a
long-held Egyptian suspicion, that this assistance and support will not be as
forthcoming as Cairo would like, Moreover, Sadat feels that the Soviets, far
from offsetting US backing for Israel, have, by striving to maintain good
relations with Washington, only facilitated US efforts to assist the Israelis.
Sadat has now reconciled himself to a certain coolness in his relations
with Moscow, Ready to accept. if necessary, what he regards as Soviet
niggardliness but unwilling to give up all hope of assistance from Moscow, lie
has decided to maintain the relationship as it presently exists. Ile has
Eresscd, in his own public statements and through the Cairo media, the nerd
for continued friendship with the Soviets equally with the new theme of
third-world disengagement from a too-close dependence on the supcrpo crs.
Although the Soviets look with some anxiety on the darker side of this
balance. Sadat hiinscit has taken a relaxed view of his relations with the
USSR, Iwrving exttica;cd himself from a client-tats relationship with the
So,icts that he saw as. furthzting t nly Soviet interests, he probably derive- a
certain satisfaction from Moscow-s conccra for those interests. iii' is not
prepared deliberately to provoke a further deterioration of relations, i'lt he
is ready to move in his own direction without his former regard for Sot
scnsibilitics.
His curtrnt diplomatic campaign and his rrnewcd emphasis on domestic
reform constitute h;rs effort to move in that new direction and t .,j inriptovc his
ptn-itiun against hl'1acl. The reforms ai- cmhcsdied in 5adat'c "ideological
document," which h.> views as a policy tuideline tot Egypt for the test 20
or 30 years. Although not yet rompktco. Me document initially dr riled ih
July. currently under debate in political circles. and uhcduled for final
adoption later Chit, fall-- is cuscntially a statement of nonalignment, or, better.
of non dcpcndcncc on the -upctpowcrs.
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IsFC,iZl4'l
Its chief direction is away I'rom the hell; Its chiel' message is that the
Arabs, unuhle to rely on (lie superpowers, mist rely on their own cl'Iorts. It
defines ii policy of' "economic openm'ss" Ihutt will rase Egypt, poll ieally as
well its economically, away from socialism. Vor the Mills in general, it
outlines a program of' you ticuil said economic sell'-help. a program of depend.
trice on what Sudut culls "inlsi,tsie Arab power," Ihat envisions the construc-
tion of an Arab nation able to compute on more ctluul terms with Israel,
Sadat has already begun to act on many of the document's principles,
In his efforts outside the Arab world, Sudat is most Immediately
interested in using the Algiers nonaligned summit conference and the full
1973 UN General Assembly session to put Egypt forward as it leader aniottg
the nonaligned nations, 11e also hopes to expand on the support Egypt
gained for the Arab position at the UN Middle F,ast debate last summer and
to capitali,e on the isolation he hclirves this debate brought for chi US and
Israel. More ).concretely, Sadat is attempting to consolidate existing relations
with Western liurope:m nations and to expand his tics with sm;aler socialist
states. In most cases, what he has sought is military equipment and economic
assistance, but in Al cases Iris:mis are political as well.
The recent a;ipearuice of a contingent of North Korean pilots in l gypt
is it prime example of this effort. Vice President Safi and a military
delegation are currently visiting Chin,,, North Vietnam, and North Korea to
doncxilidate diplomatic relations and, undoubtedly, to seek furl Pier military
assistance, liarlict efforts this year ssilli the Chinese may have resulted iii a
rvlatt.ely low-level training agreement and arum deal. i?gyp!'s interest in
better tics with China was highlighted by a recent, probably authoritative,
Cairo editorial that pointedly con; oral C'hin,i's bonier problems with those
t., the Arabs.
eci filly espant ct t ih oma is re a tons wt i
cut ,crmany an tic enactnicnt of measures to encourage 1Vcstern invest-
incnt in t gypt are ;dso indicative of Sadat'S interest in c(lualiiing tics with
List and West.
Inter-Arab Relations
More vital to Sadat, in terms of both h gypt's own position and that of
the Arah world in general toward Israel. are his renewed efforts to achieve
Arab unity but a selcclive unity of tangible, i titualty beneficial coopera?
Lion that would gise conic substance to the otherwise clusivc and unrealistic
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goal of'all?enihracing unify. SadaI recognizes that full spectrum Arab ,jnity Is
to r iliiable, or available only oil essentially meaninglc,;s terms. Ills latest
ef'f'ort Is directed at the aItaimt''aIe. Ile is looking primarily east In the Arab
word, toward the Persian (;u!I' oil pro+Jucets and toward Egypt's sister
"cr'tl'rontation'' slates, rather than west, where the Maghreb states have no
more Ilan a peripheral, 11' vocatl, Interest in the Arab-Israeli conflict and
where Libya, tlespile its wealth, 1:; more bother than bnnel?it, Satlat's efforts
to give content to the Ideal of' mutual Arab collaboration do not specifically
exclude any Arab state; they are simply concentrated on countries able to
cooperate and willing to do so on terms he can accept.
Ills effort is double-edged. lie sees in a truly collaborative "Arab
nation" the political strength that would permit the Arabs to confront the
US and Israel without relying as in the I?ast on the USSR. Ile also looks to
Arab economic coopuratiott as a meant both of' buttressing Egypt's own
weakened eco,..itnic situation and of' strengthening its military capabilities.
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Other matters are, for Sadat, more pressing: restoring diplomatic tics
with Jordan to establish a working relationship among the confrontation
states; using Arab capital to further inter-Arab economic projects. including
even the Arab arms industry, whose establishment is envisioned in Sadat's
draft policy document; and, most important, attempting to set the Egyptian
economy on its feet. Each of these measures, Sadat feels, strengthens the
Arab "nation" and, by the cooperative efforts involve;!, forges a substantive
type of Arab unity in which each participating state has a stake. If his vision
of using Arab capital to strengthen Egypt's economy is somewhat self-
serving. he probably also believes-and hopes to convince his Arab
benefactors-that a stronger Egypt means a stronger Arab front against
Israel.
Domestic Policy
Sadat's renewed emphasis on domestic economic reform is motivated as
much by political as economic concerns, and ;t is as significant for his
foreign as for his domestic policy. Sadat has never been as enamored of
Egypt's socialist philosophy as was its author. Nasir. lie moved quickly after
Nasir's death to eliminate some of its h' her manifestations, but he was
hesitant to move decisively toward liberalizing the economy. The Egyptians
have recently restated a series of economic reform measures intended to set
the country on file non-socialistic course Sadat instituted but failed to
pursue two years ago.
The measures include a further refinement of Egypt's system of
multiple exchange rates, designed to attract add;tirnal savings from Egyp-
tians liv;ng abrva?J and to increase tourist revenue. Efforts will be made to
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diversify Egypt's foreign trade ties, and consideration is being given to
establishing a stock market to encourage the participation of private capital
in quasi-public companies. In general, the program envisions the establish-
ment of a better balance in Egypt's economic; ties between East and West
and the encouragement of greater private foreign investment.
In fact, many of the measures that have been portri~.yed as new are,
after all, not new. There has been, for instance, a multiple exchange rate
system for some years, and there have been laws oil the books to encourage
foreign investment. Many of the new measures are cumbersome and bureau-
cratic, and some increase rather than eliminate bureaucratic involvement in
the private sector. The measures as they now stand require managerial
changes that have not yet been evident in Egypt's economic planning, and
there is still much of the hesitancy that characterized Sadat's initial moves
toward desocialization two years ago. Sadat is clearly experimenting with a
new economic approach, without definitely committing himself to it, in
order to avoid foreclos(c;g any options--in order, for instance, to keep both
Libya and the USSR on the string while pursuing objectives that he and his
new, conservative Arab benefactors believe desirable.
The program's political significance, however, is another matter.
Together with the other measures for social liberalization that Sadat is
contemplating, it constitutes the desocializing and essentially the further
de-Nasirizing moves oi? a leader increasingly confident in his relations with
many of the states, Western and Arab, whose help he seeks, and one who is
increasingly assured of his domestic position.
Sadat is still not a popular, certainly not a charismatic, leader. He
remains in office largely because there is no strong group in Egypt that wants
to push him out. 't'his is one among mary reasons for his previous reluctance
to pursue further the de-Nasirization program lie began a few years ago and
for his cu--rent emphasis on approaching the changes gradually. He has
survived a number of crises, however-some of his own making-that would
have brought down a less agile leader. He had not been in office for six
months before he moved against a powerful group of rivals to establish his
pre-eminence in the government, and he has moved slowly but consistently
to remove other leftists of Ali Sabri's stripe. lie has weathered repeated
outbreaks if open dissatisfaction with the no-war/no-peace situation, caused
sometimes by his own frequent empty pledges of imminent war. He has
taken risks that Nasir would not have considered in moving coward negotia
tions with Israel. Having conic through relatively unscathed, he is now more
willing to take the greater risk of a more radical reorientation of his
government's entire; philosophy away from the path set by Nasir.
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Nasir's memory and Nasir's devotees will cause problems 'or Sadat, but
lie obviously believes that the problems, and the people, will be manageable.
He is deliberately remaining aloof from the most petty of the squabbles that
have developed over his de-Nasirization. Not the least of his problems is
Libya's President Qadhal'i, whose admiration for Nasir is well known and
wl'osc own admirers in Egypt are illustrious, if not numerous. Chief among
th se is Ai-Abram editor Muhammad Hasanayn Haylzal, who, alone among
Cairo editorialists, openly advocated the "full and immediate" merger with
Libya that was Qadhafi's consistent line. The failure of either man to push
Sadat into a precipitate union is a measure of the self-confidence the
Egyptian leader feels. Their ;&.,,k of success will also serve to reinforce his
confidence.
Where Sadat's new approach will take him and Egypt is problematic. It
is clearly not assured ol'success. The pitfalls at home are many, the problems
of generating effective Arab cooperation are stubborn, and the path of
nonalignment is not necessarily a straighter way to Egypt's ultimate goal
than was alignment with the USSR. Nevertheless, Sadat's experience with
the Soviets appears to have taught him a pragmatism that has enabled him to
set a course and a pace better suited to Egypt's capabilities.
Sadat's present undertaking is not the usual ephemeral effort to divert
the Egyptian people by alternately promising war and peace. It is a candid
admission that past policies have failed and an appeal for patience while new
ones are tried. The new policies, by their heavy reliance on mutually
advantageous cooperative efforts among the Arabs, avoid the illusory quality
of past rhetorical calls for Arab unity; Sadat's refusal to follow through more
than nominally with a patently ill-based Libyan union is indicative of his
search for the substance rather than the mere form of unity. His policy is a
frankly stated attempt to look toward the longer term. It promises neither
war nor peace but, for the first time, it holds hope for achievements that
have some chance of' being realized.
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