Millionaire hotel owners in Sharm el-Sheikh are worried

Originally published in The Sunday Telegraph, 9 February 2013

It’s the Egyptian destination that drew more than 300,000 Britons last year to its combination of sand, sunshine and scuba diving, in Red Sea waters that are clear, calm and warm all year round.

Its 100-plus hotels can accommodate 200,000 visitors a week, willing to pay between £60 and £120 a night for a double room in a luxurious beachside location, all set in the dramatic desert landscape at the mouth of the Gulf of Aqaba.

Yet just 40 years ago Sharm el-Sheikh was little more than a sleepy fishing village, with a handful of guesthouses and other tourist facilities erected after the Israelis occupied the Sinai peninsula during the Six Day War.

The transformation of the barren stretch of desert coastline into the glittering resort of palm trees and pools that stands today was due in large part to an array of entrepreneurs who, after the Sinai was handed back to Egypt in 1982, were persuaded to plough astronomical sums into developing Sharm el-Sheikh.

Now some of those same multi-millionaire businessmen say the resort’s future is in doubt because of a clampdown on foreign ownership by the government led by Islamist president Mohamed Morsi.

They accuse Mr Morsi of stabbing them in the back – and jeopardising a vital part of Egypt’s tourist industry, an important source of cash for a country struggling to reboot its economy – over a controversial law which appears to give them a six-month deadline to sell all of their property and land in the region.

“How can I trust a government that does something like this?” said Ozorees el-Ghazawy, a hotelier who has invested tens of millions of pounds into his chain of seaside Sinai resorts since the late 1980s. “Perhaps the Muslim Brotherhood thinks it is acceptable, but I never thought they would act in this way.”

Along with a number of other high profile businessmen – many of whom have joined a campaign to have the law revoked – he has vowed to overturn the new administration’s proposals. “I will fight to the end to protect my investments,” he said.

It was under the government of President Hosni Mubarak that wealthy expatriate Egyptians were encouraged to buy up miles of beachfront on the south eastern tip of the peninsula in a bid to transform the region into a tourist hotspot.

The drive turned Sharm el-Sheikh – along with the nearby resorts of Dahab and Nuweiba – into Egypt’s biggest single tourism draw, attracting four million visitors each year before the revolution that drove Mubarak from office after 30 years in power. Even the then president himself eventually got in on the act, spending much of his later years in office relaxing in his plush seaside villa, adjoining a luxury golf resort.

Like Mr el-Ghazawy, who is Egyptian but has an American passport due to family connections in the US, many of those who chose to invest their cash were wealthy businessmen with dual nationality.

But under a law implemented by Mr Morsi’s new cabinet in September, dual national Egyptians were told that within six months they must sell any land or property they acquired to buyers who had been “born to Egyptian parents”.

Dr Adel Taher, an expert on decompression sickness who helped develop the Red Sea diving industry during the 1990s, said the first that many people knew about the decision was in November, when locals in Sharm el-Sheikh began knocking on the doors of homes owned by dual nationals and telling them they would have to sell-up.

He said the legislation – which could also prevent the children of investors from inheriting property – discriminated against the very people who had helped turn Sharm el-Sheikh into a lucrative, multi-billion pound money spinner.

“We were ready to put all we had into this area and this land because we believed in it,” said the father-of-two, who holds American and Egyptian nationality. “The government cannot come to me and tell me I’m less patriotic than other Egyptians.”

The clumsy wording of the new law has also led to fears that the measures could be applied retroactively, although campaigners say they have received verbal assurances from officials that this will not be the case.

Major General Shawky Rashwan, head of the government agency charged with implementing the changes, told The Sunday Telegraph that officials were simply trying to seek “justice” for Egyptians over land rights in the region. Despite the explicit references to dual nationals in the legislation, he said holders of two passports would not be affected.

But not everybody is reassured.

“Hundreds of people with dual nationality are panicking,” said Nader el-Sharkawy, a liberal politician from Sharm el-Sheikh and a leading campaigner on the issue. “We cannot accept such a discriminatory law after our revolution.”

Some believe that the Muslim Brotherhood, the group to which the current president swears allegiance, wants to wreak revenge on those beneficiaries of the 1990s Sinai construction boom who were ex-military men or Mubarak stooges. The bountiful profits often spilled over into a nefarious web of crony capitalists and former army officers.

One of those who made a killing was Hussein Salem, the Spanish-Egyptian tycoon and Mubarak ally who owns a luxury hotel and golf resort in Sharm el-Sheikh.

Mr Salem fled Egypt just days after the uprising and is currently in Spain, fighting an attempt to extradite him to face trial for alleged corruption. Some businessmen speculate that the new law was designed to strip him, and others with ties to the former regime, of their assets.

Such a move would not necessarily find favour in Sharm el-Sheikh, an area where the economy has been battered by revolutionary turmoil and where political perspective on the Mubarak era is often rosier than elsewhere in Egypt.

Locals are now organising a campaign to persuade Egypt’s upper house of parliament to revoke the law. Meanwhile, tempers among hotel owners remain frayed.

“I fell very sad and very angry,” said Ozorees el Ghazawy. “I cannot believe that these people are trying to sabotage everything we have done.”