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Cablegate: Egypt Labor Strikes Force Goe Concessions

VZCZCXYZ0001
RR RUEHWEB

DE RUEHEG #7256/01 3621340
ZNR UUUUU ZZH
R 281340Z DEC 06
FM AMEMBASSY CAIRO
TO RUEHC/SECSTATE WASHDC 3060
INFO RUEHC/DEPT OF LABOR WASHDC
RHEHNSC/NSC WASHDC

UNCLAS CAIRO 007256

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ELA, DRL
LABOR FOR ILAB
NSC FOR WATERS

E.O. 12958: N/A
TAGS: ELAB ECON PGOV EG
SUBJECT: EGYPT LABOR STRIKES FORCE GOE CONCESSIONS


Sensitive but unclassified. Not for internet distribution.

-------
Summary
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1. (SBU) Seeming to catch the GOE off-guard, a major strike
crippled one of Egypt's largest textile companies this month,
successfully extracted financial concessions from the company
and GOE, and encouraged spillover strikes. While the Muslim
Brotherhood (MB) was happy to jump on the workers' bandwagon,
it does not appear to have had any hand in stirring up the
protest, despite official GOE accusations. End summary.

----------------------------------------
Major Strike in the Industrial Heartland
----------------------------------------

2. (U) Large-scale labor protests shut down some of Egypt's
premier industrial centers in recent weeks. On December 7,
17,000 night-shift workers at the state-owned Misr Al Mahalla
Textile Company stopped production over the company's refusal
to pay a two-month salary bonus, as promised by the Prime
Minister in a government decree. Also prominent among worker
complaints were charges of corruption against newly-appointed
Chairman Mahmoud El-Gibaly, who workers accuse of squandering
company revenues while lining the pockets of his coterie.

3. (U) The company and GOE argued that the workers were not
entitled to the bonuses as the company was not in a sector
covered by the decree, and, according to company Chairman
Mahmoud El-Gibaly, the company did not post a profit.
El-Gibaly and the GOE initially refused worker requests to
negotiate and disputed worker claims of corruption within in
the company, saying the company was carrying too much debt to
pay bonuses equal to LE26 million (USD 4.5 million).
Secretary General of the Textile Union, Fathi Naamatallah,

SIPDIS
contended the company's own records show a profit of LE 70
million (USD 12 million) and that production has been rising
steadily.

4. (U) The following day, day-shift workers joined the strike
and occupied the factory and an adjacent street. As the
strike progressed, the number of workers involved grew to an
estimated 27,000 to 54,000, including 4,000 women. Security
services were quickly on the scene, but did not attempt to
forcibly break up the strike. They did, however, cut power
and water to the factory in an attempt to force the striking
workers out. The GOE closed the factory December 9 as
negotiations between the workers and company management
continued.

5. (U) According to reports, the GOE initially refused to
negotiate, but pressure from Al Mahalla-area MP's prompted
Minister of Manpower Aisha Abdel Hady and Minister of
Investment Mahmoud Mohieldin to intervene. The government's
initial offer pledged a payment of a 21-day bonus, and Abdel
Hady announced that an agreement had been reached. The
workers refused the offer, however, citing the upcoming Eid
Al-Adha holiday, rising food prices, and their dependence on
the full bonuses to make ends meet. As the strike reached
its third day, the workers accepted the government's offer of
the 21-day bonus, to be supplemented by an additional bonus
of LE89 (USD 16) and a half-month's salary to be paid in
January. The strike dispersed peacefully and the company has
resumed full operations.

---------------
MB Involvement?
---------------

6. (SBU) GOE statements reported in the government-owned
press insinuated MB involvement in stirring up the protests.
The NDP issued statements requesting that its
parliamentarians lodge formal inquiries to determine whether
the MB was involved. However, labor activist contacts,
including members of a visiting Solidarity Center team,
discounted the MB's role, telling us the grievances did not
require stoking by the MB.

7. (U) An MB-affiliated MP from the Al-Mahalla district, Saad
Al Husseini, said in an online interview on December 7 that
El-Gibali's practices as alleged by the workers confirm the
spread of corruption and nepotism within Egyptian government
structures, and that a small group of cronies had seized what
was due to the workers. The MB used its website to echo
worker accusations that El-Gibali appointed under-qualified
associates to posts ranging from the company's social club
Board of Directors to key committee positions in purchasing
and marketing, and siphoned profits to himself and his
supporters. Al Husseini urged the workers to demand their
full rights and take all "legal and legitimate" means to
achieve them. Al Husseini said he would lodge a formal
inquiry with the People's Assembly about the worker's
accusations.

-----------------
Spillover Strikes
-----------------

8. (U) Perhaps bolstered by the success of the Al Mahalla
strikers, over 1,700 workers in the Helwan Cement Factory
launched a sit-in strike in protest of management's refusal
to implement salary increases and pay yearly bonuses.
Additionally, 4,000 workers in the Al-Nasr Dye Company in
Gharbiyya province took part in a sit-down strike, demanding
yearly bonus payments in advance of the upcoming Eid Al-Adha
(Great Bairam) holiday.

-------
Comment
-------

9. (SBU) The size of the Misr Al Mahalla strike and worker
rejection of the initial GOE offer seemed to have caught the
GOE and national trade union federation (ETUF) off-guard. It
is unlikely the MB had anything to do with the protests, but
the MB does appear to have happily jumped on the bandwagon to
burnish its credentials in a sector in which it has
traditionally been weak. By seeking to highlight the alleged
nepotism and corruption within the company, the MB also
perhaps recognized an easy opportunity to draw parallels with
the Presidency.
RICCIARDONE

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