UNITED ARAB REPUBLIC (EGYPT)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A003200180001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 12, 2016
• Document Release Date: January 2, 2002
• Sequence Number: 1
• Publication Date: August 1, 1966
• Content Type: CH

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SECRET/NO FOREIGN DISSEM
August 1966
OCI No. 1925/66
Copy N2 333
Current Intelligence Country Handbook
UNITED ARAB REPUBLIC
(EGYPT)
DIRECTORATE OF INTELLIGENCE
SECRET/NO FOREIGN DISSEM
GROUP I
Emluded Iron, auron,ede
downgrading and
&,l-if-lion
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Current Intelligence Country Handbooks are designed to give the
reader ready access to the salient facts about a country and its main
current problems. They are not intended to provide comprehensive
basic intelligence on a country or to speak with th i authority of
coordinated national intelligence. The information presented is the
best available to the Office of Current Intelligence as of the date at
the top of the page. .
This material contains information affecting the national defense
of the United States within the meaning of the Espionage Laws,
Title 18, USC, Sees. 793 and 794, the transmission or revelation of
which in any manner to an unauthorized person is prohibited by law.
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August 1966 SECRET/NO FOREIGN DISSEM
UNITED ARAB REPUBLIC (EGYPT)
1. Political
Since the July 1952 coup which ousted King Farouk
and his corrupt government, the Nasir regime has effected numerous
social and economic reforms that have largely eliminated the vast
disparities in wealth and opportunity that previously prevailed in
Egypt. Egypt's growing independence and strength, epitomized in
the evacuation of the British from the Suez Canal Zone, its refusal
to join the Baghdad Pact, and its extensive arms purchases from
the Soviet Bloc, enabled Nasir to play an influential role in regional
affairs. By the mid-1960's, however, this influence was waning, even
though Egypt continued to devote an excessive portion of its re-
sources to involvement in extranational affairs. The Egyptian econ-
omy, despite impressive gains over the prerevolutionary period, was
in serious trouble in 1966, due in no small way to the regime's im-
practical, doctrinaire economic policies.
The National Charter of 1962, a summation of the concepts of
the revolution that had evolved during the regime's rule, outlines a
democratic society in Egypt. Despite the existence of constitutions
and national assemblies, however, the nation is still firmly ruled by
most of the small group of military officers who seized power in 1952.
There has been no outrageous abuse of power; neither has there been
any development of mass political consciousness and activity. All po-
litical parties and organizations are banned except for the Arab So-
cialist Union (ASU), latest of Nasir's state-controlled socio-political
organizations. Death by atrophy took its two predecessors but the
ASU showed signs in mid-1966 that, under the vigorous leadership
of Secretary General Ali Sabri, it might escape such fate. Sabri was
trying to instill life in the ASU by reorganizing it around hard-core,
appointed cadres, ignoring the pyramidal elective system specified
by the ASU statutes.
While the great majority of Egyptians
remain politically apathetic, many members o is c ucate c asses
have been alienated by regime policies that have misused Egypt's
resources, seized their property, and restricted their freedom. How-
ever, careful surveillance by the regime of the few members of the
original ruling clique who have dropped out in disagreement with
the regime's policies has prevented them from actively gathering
adherents from among the other Egyptians who are disaffected with
the Nasir government.
SECRET/NO FOREIGN DISSEM 1
25X6
25X6
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SECRET/NO FOREIGN DISSEM August 1966
The military forces, whose officer class has bencfitted more than
any other from the revolution, remain the locus of power in Egypt,
and are considered completely loyal to the regime. They are fully
capable of maintaining internal order, in the unlikely event that
Egypt's large and capable police forces could not cope with a domestic
uprising. Although they are still no match for Israel's forces, Egyp-
tian military units are much better trained and armed than they
were before 1952 and are the most powerful in the Arab world.
They have gained valuable experience in Yemen, but their inability
to win a clear-cut victory in that drawn-out engagement has prob-
ably tended to undermine their self-confidence.
2. Economic
Egypt used massive foreign borrowing and inflated public employ-
ment as tools to achieve an annual growth rate of almost 6'7c in the
First Plan period (July 1960-June 1965). With population growing
by almost 3 /c per year, the annual increase in per capita income
was about 2.9%. In the last year of the plan period, however, the
growth rate lagged noticeably, and by 1966 many serious problems
were combining to frustrate development efforts.
Egypt is primarily an agrarian country, although agriculture's
dominance of the economy has declined somewhat in recent years.
Over half the total labor force is strictly agrarian, and agriculture
provides over 1/4 of GNP. Long-staple cotton is by far the most
valuable cash crop and accounts for about 60V(_ of total export
earnings. The principal food crops are wheat, corn, and rice. Cul-
tivation of fancy vegetables, fruits, and flowers has begun to earn
sizeable returns. All crops, including livestock fodder, must be grown
on irrigated land, and over 99.5% of the 6 million cultivated acres
is under perennial irrigation that permits double and triple crop-
ping. Egyptian agriculture is exceptionally productive, and total
output has grown about 20'/". since 1960.
Egypt is not self-sufficient in food, however, and many opportunities
for increased agricultural output thus far have been neglected. Pop-
ulation growth and rising living standards have combined to make
Egypt one of the world's largest importers of wheat and flour. Farms
are legally limited in size to slightly over 100 acres, and land reform
has proceeded more smoothly than in most underdeveloped coun-
tries. The average farm, however, includes only slightly over 1.1
acres, and about 2.9 million acres still are leased under various
tenancy or sharecropping agreements. Thus, rental and credit pro-
visions of the agrarian reform laws have been more important to the
average farmer than land redistribution itself.
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August 1966 SECRET/NO FOREIGN DISSEM
The value of industrial production increased about 50% in real
terms during the First Plan period, but there was a definite slowdown
in the last year of the plan. Processing of agricultural products and
crude petroleum are the major industrial activities, but Egypt also
manufactures fertilizers, some basic chemicals, and small machinery
items, and assembles a variety of more sophisticated products. Egypt
produces about 60% of its fertilizer requirements and enough refined
petroleum products to cover domestic needs. Crude oil production
doubled during the First Plan period, and newly discovered fields
should permit Egypt to become a net exporter of petroleum by 1970.
Electric power production exceeded 5 billion kwh in 1965, compared
to less than 1 billion in 1952, and completion of the Aswan High
Dam will raise potential production to over 13 billion kwh annually.
Textile manufacturing remains the most important single industry,
while the chemical and pharmaceutical industry has been the fastest
growing, and the engineering and electrical equipment sector has
been the most disappointing. Despite obvious progress, industry
suffers acutely from mismanagement, bureaucratic chaos, shortage
of skilled workers, and lack of raw materials and spare parts.
Most of Egypt's economic problems revolve around a foreign trade
deficit that reached a record of $414 million in 1964 and totalled
$269 million in 1965. Foreign exchange reserves are almost non-
existent, and the foreign debt totals over $2.5 billion-about $1.7
billion of the total was accrued during the First Plan period.
Consumption has increased rapidly, domestic saving has lagged, and
foreign borrowing has been necessary to finance investment. Foreign
debt servicing commitments (about $240 million in 1966) use up
almost one-third of the foreign exchange available each year. In
1965, export earnings totalled $605 million, Suez Canal revenues
came to $197 million, and receipts from tourism probably aggregated
some $95 million. Imports totalled about $875 million, and other
foreign payments probably exceeded $200 million (excluding loan
repayments). Import restrictions introduced in 1964 and 1965 have
been only partly successful, and austerity measures have created
inflationary pressures. The government has announced a number
of reforms, but implementation has lagged. The development plan
has been revised, and goals formerly set for 1970 apparently have
been postponed until 1972.
Egypt is one of the world's most successful collectors of foreign
aid. By the end of 1965, Cairo had used over $1 billion in PL
480 assistance, $900 million in official Free World loans ($124 mil-
lion-U.S., $354 million-West Europe, $219 million-Kuwait, $227
SECRET/NO FOREIGN DISSEM UAR - 3
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SECRET/NO FOREIGN DISSEM August 1966
million-other), and $450 million in Communist economic credits.
The Communist countries had shipped military equipment nominally
valued at $1.3 billion-at a total cost to Egypt of about $610 million.
3. International Relations
Nasir's hopes of returning Egypt to it position of dignity and
strength included an ambition to make Egypt the leader of a united
Arab world and a strong influence in the "third world" of newly
independent nations. Confrontation with former colonialist powers
was inevitable, but Nasir has played the role of positive neutralist
shrewdly enough to obtain extensive aid (see abov