Summary

NOTES: COL PRINT - SECOND SHOT DATE OF 05/20/00 LOCATION: EGYPT & ISRAEL. TITLE: MIDEAST ECONOMY SERVICED DATE: 05/22/79 NO: LNC 13466 / 7 / 9. DATE SHOT: 05/19/00 LENGTH: 110 FEET SECONDS: 2:56 SOUND: NATSOF DATE OF ARRIVAL: FILM SHOWS: REPORT ON ECONOMIC SITUATION IN EGYPT IN THE AFTERMATH OF THE PEACE TREATY WITH ISRAEL WHICH RESULTED IN AN ARAB BOYCOTT OF EGYPT. ALSO SHOWS ECONOMIC SITUATION IN ISRAEL AFTER THE PEACE TREATY WHICH PLACES HEAVIER RELIANCE ON UNITED STATES' SUPPORT: LEAD IN: EGYPT IS MOUNTING AN ECONOMIC COUNTER-OFFENSIVE AGAINST THE OPPONENTS OF ITS TREATY WITH ISRAEL BY FREEZING THE ASSETS OF ITS PARTNERS IN THE ARAB ORGANISATION FOR INDUSTRIALISATION - SAUDI ARABIA, THE UNITED ARAB EMIRATES AND QATAR. THIS MOVE IS IN DIRECT RETALIATION AGAINST THEIR DECISION TO DISSOLVE THE HOLDING COMPANY SET UP IN 1975 TO MANUFACTURE ARMAMENTS. THE ARAB ORGANISATION FOR INDUSTRIALISATION, WHICH WAS JOINTLY FUNDED BY THE FOUR COUNTRIES, USING EGYPTIAN LAND AND LABOUR, HAS BEEN THE BEST EXAMPLE OF PAN-ARAB INDUSTRIAL COOPERATION AND IRONICALLY THE FIRST MAJOR VICTIM OF ARAB HOSTILITY TO THE PEACE TREATY WITH ISRAEL. BUT IT IS GENERALLY FEARED THAT THE EGYPT-ISRAEL PEACE TREATY WILL MEAN A STRAIN ON THE ECONOMIES OF BOTH THE COUNTRIES. IN ISRAEL, INFLATION IS ALREADY RUNNING AT 50 PER CENT A YEAR AND IS EXPECTED TO GO UP TO 60. RECENTLY, YERUHAM MESHEL, ISRAEL'S LABOUR LEADER WARNED THAT THE PEACE TREATY IS BOUND TO WIDEN DISPARITIES IN INCOME. MOREOVER, THE ENORMOUS EXPENDITURES REQUIRED TO TRANSFER ISRAELI MILITARY INSTALLATIONS FROM THE SINAI TO THE NEGEV ARE ALMOST CERTAIN TO INCREASE INFLATION AND STRAIN THE COUNTRY'S RESOURCES, ACCORDING TO A NUMBER OF LEADING ECONOMISTS. FOR EGYPT, THE TREATY HAS MEANT GROWING ISOLATION FROM THE ARAB WORLD AND EVEN MORE CRITICAL DEPENDENCE ON THE US AND OTHER INDUSTRIALISED NATIONS. AT THE MOMENT, FOR BOTH EGYPT AND ISRAEL, AFTER THREE DECADES OF WAR AND INTERIM PERIODS OF SHAKY CEASEFIRES, MILITARY PREPAREDNESS SEEMS MORE MANAGEABLE THAN ECONOMIC PROBLEMS: FEET R/SECS 10 16 GV MARKET SCENES IN CAIRO AND GENERAL STREET SCENES (3 SHOTS) 15 24 GV PAN OF BANK ALONG NILE 25 40 MLS FARMERS WORKING IN CROP FIELDS (2 SHOTS) 35 56 GV VEGETABLE AND FRUIT MARKET (2 SHOTS) 40 1.04 MS INTERIOR OF IRON AND STEEL FACTORY 45 1.12 GV EXTERIOR BANK 50 1.20 MS INTERIOR BANK 55 1.28 GV LORRIES WITH LOADED GOODS DRIVING ALONG HIGHWAY ISRAEL 60 1.36 MS BEGIN AND OTHERS OUT OF CABINET MEETING TO DEBATE ECONOMY COMMENTARY: THE MOST COMPLEX TASK FACING EGYPTIAN PRESIDENT ANWAR SADAT AND THE EGYPTIAN GOVERNMENT IN 1979 WAS SIMULTANEOUSLY TO CARRY OUT MAJOR AND URGENTLY NEEDED ECONOMIC REFORMS, TO ACHIEVE A COMPREHENSIVE MIDDLE EAST PEACE SETTLEMENT AND TO MAINTAIN SATISFACTORY LINKS WITH THE FINANCIALLY MOST IMPORTANT MEMBERS OF THE ARAB WORLD. THESE THREE TASKS WERE INTERDEPENDENT AND FAILURE IN ONE WOULD SPELL DISASTER IN THE OTHER TWO. EVEN SO, WHEN TOUGH POLITICAL AND ECONOMIC SANCTIONS VOTED BY 18 ARAB LEAGUE STATES TO "PUNISH" SADAT WERE DISMISSED BY EGYPT AS "PSYCHOLOGICAL WARFARE". DEPUTY FOREIGN MINISTER BUTROS GHALI THEN SAID, "EGYPT IS NOT ISOLATED, NEITHER POLITICALLY NOR ECONOMICALLY, AND WE WILL KEEP THIS PEACE MOMENTUM". BUT THE SITUATION IS GRAVE. EGYPT HAS TO IMPORT 40 PER CENT OF ITS FOOD, EVEN THOUGH 42 PER CENT OF ITS WORKFORCE IN EMPLOYED IN AGRICULTURE. ITS POPULATION OF 40 MILLION IS GROWING BY 1 MILLION A YEAR. IT HAS NO FOREIGN CURRENCY RESERVES, CRITICALLY LIMITED RESOURCES, A DECAYING INFRASTRUCTURE AND URGENTLY NEEDS A PROGRAMME OF ECONOMIC REFORM. THEORETICALLY, EGYPT SHOULD NOT BE SERIOUSLY AFFECTED BY TRADE EMBARGO WITH OTHER ARAB COUNTRIES SINCE THIS ACCOUNTS FOR ONLY 6 PER CENT OF ITS TOTAL, AND IT IS A NET OIL EXPORTER. BUT IT IS NOT IMMEDIATELY CLEAR WHERE EGYPT WILL TURN TO OBTAIN PARTICULAR GRADES OF OIL, IT STILL NEEDS TO IMPORT FOR DOMESTIC CONSUMPTION. BUT WITH THESE PERSISTENT ECONOMIC UNCERTAINTIES IN EGYPT, THE SITUATION IN ISRAEL NO BETTER. THE ISRAELI CABINET MET RECENTLY TO DISCUSS THE ECONOMIC CRISIS ENSUING FROM THE PEACE TREATY, BUT FAILED TO REACH A MAJOR DECISION ON THE BIGGEST PROBLEM - INFLATION. FEET R/SECS 75 2.00 MS INTERIOR OF SUPERMARKET IN TEL AVIV (4 SHOTS) 85 2.16 MS PEOPLE IN BANK (2 SHOTS) 90 2.24 GV APARTMENT BLOCKS 100 2.40 MS PETROL STATION (3 SHOTS) 110 2.56 GV TRACKING SHOT OF BUILDINGS COMMENTARY: IN ISRAEL, THE COST OF LIVING HAS RISEN BY 8.7 PER CENT IN APRIL OF THIS YEAR ALONE, WHILE THE ISRAELI POUND IS BEING STEADILY DEVALUED AT 10 PER CENT A MONTH. OPINION POLLS INDICATE THAT INFLATION IS A GREATER CONCERN IN THE COUNTRY THAN ANY FOREIGN POLICY ISSUE. RECENTLY, THE PRICE OF BASIC FOODS ROSE BY 25 PER CENT, PROVOKING A ONE DAY STRIKE THAT WAS FAR MORE SPIRITED THAN A DMONSTRATION BY SPARSE CROWDS CELEBRATING THE PEACE TREATY SIGNING. THE SITUATION HAS CREATED A CLASS OF SPECULATORS - RICH AND NOT- SO RICH, AND TAX EVASION HAS REACHED STUNNING PROPORTIONS. OTHERS FEAR THAT INFLATION IS ERODING THE FABRIC OF ISRAELI SOCIETY BY WIDENING THE GAP BETWEEN RICH AND POOR AND DIVERTING INVESTMENT FROM PRODUCTIVE ENTERPRISES TOWARDS SPECULATION. ISRAEL HAS ALWAYS BEEN PRONE TO INFLATION. MILITARY AND DEFENSE-RELATED EXPENDITURES REPRESENT 40 PER CENT OF THE GOVERNMENT BUDGET AND ARE THE LARGEST FACTOR. INDUSTRIALISTS COVER 40 PER CENT OF THEIR INVESTMENTS WITH GOVERNMENT LOANS, ON WHICH INTEREST IS LESS THAN THE RATE OF INFLATION. THESE NEW APARTMENTS NOW COST THREE TIMES AS MUCH AS THEY DID TWO YEARS AGO - EVEN SO, THERE IS A BOOM IN BUILDING, FINANCED BY LOANS. ALTHOUGH NO ISRAELI WOULD SERIOUSLY ASSERT THAT PEACE WITH EGYPT, THE LARGEST ARAB NEIGHBOUR, IS TOO EXPENSIVE, IT CANNOT BE DENIED THAT IT HAS WORSEND BOTH THE ECONOMIES, ALREADY SHAKEN BY THREE DECADES OF WAR.