By Adam Morrow
CAIRO, Jun 11 2008 (IPS)

For the last two months, controversy has raged over planned construction of a massive fertiliser plant near the port city of Damietta. Residents fear the plant could adversely affect the local environment.

With a popular campaign against the project gaining momentum, some critics blame poor planning on the part of the government.

“The government should never have approved construction of an industrial zone only six kilometres from the city,” Hamdi Abdelazim, economist and former head of the Cairo-based Sadat Academy told IPS. “Industrial areas should be built at least 40 kilometres from population centres.”

Last year, the government initially approved the project, which is to be built and operated by Canadian-Egyptian joint venture firm E Agrium at a total cost of 850 million dollars. Construction began on the nearby island of Ras al-Barr, about 200 km from Cairo, shortly afterwards.

In April, however, residents began voicing concern over the plant’s potentially negative impact on public health and the local environment. Civil society groups expressed fears that factory emissions could cause cancer among those living nearby, and damage the coastal area’s fragile marine ecosystem.

Such concerns quickly led to a popular campaign against the project, which was soon joined – with the help of popular networking website Facebook – by a number of local political activists and environmentalist groups. In late April, with most homes in Damietta draped with black banners reading ‘No to the factory of death’, thousands of residents held demonstrations demanding that the plant be relocated.

“Our plant achieves the highest environmental safety levels,” E Agrium managing director Craig McGlown was quoted as saying in the local press. “Emissions from the plant will be half the maximum stipulated in (Egyptian) environmental laws.”

Company officials pointed out that some 500 million dollars had already been spent during the project’s initial phase of construction. Should the factory be relocated, they said, the firm would expect substantial reimbursements from the government.

According to Abdelazim, relocating the plant at this stage would have disastrous effects on the country’s image as a safe destination for foreign investment.

“Moving a major industrial project after construction has begun would further undermine Egypt’s imperfect reputation,” he said. “The local investment climate is already hampered by an overabundance of red tape and administrative corruption.”

Along with trade ‘liberalisation’ and the privatisation of state assets, attracting foreign investment to Egypt remains a central plank of the government, which – under pro-business PM Ahmed Nazif – includes a number of prominent businessmen. In a recent policy statement, Nazif announced that Egypt had lured a total of 11 billion dollars worth of foreign investment capital over the course of 2007.

Abdelazim blamed government mismanagement rather than the Canadian firm, or the local population, for the impasse.

“The coastal region around Damietta should be slated for tourism, not industrial investment,” he said. “That the government chose the area for a heavy industrial project shows a lack of intelligent overall investment strategy.”

Despite rumours that the factory would be moved elsewhere, Damietta residents were disappointed last month when company officials reaffirmed their intention to complete the project at the original location.

“The people of Damietta have expressed their concern over the plant’s impact on public health, and we listened carefully to them,” McGlown said at a press conference in mid-May. Nevertheless, he added, construction of the factory in Damietta was set to continue, as relocation would require “starting from scratch.”

An environmental consultant for the company went on to stress that the project did not represent a danger to public health or the environment, noting that the firm had obtained the approval of “all concerned governmental agencies.”

The row, however, did not end there.

In the weeks since, residents and environmentalist groups have sent numerous petitions to the office of President Hosni Mubarak, urging him to call off the project. One member of Damietta’s municipal council reportedly filed a lawsuit against the company alleging it had secured approval for the factory by paying kickbacks to government officials.

Meanwhile, popular demonstrations against perceived government unwillingness to halt the project continue to be held both in Damietta and Cairo.

On Friday (Jun. 6), thousands of Damietta residents participated in another major protest organised by the recently established Popular Committee to Protect the Environment. “If the factory isn’t removed, we’ll remove it with our own hands,” demonstrators chanted, according to the Jun. 7 edition of independent daily al-Dustour.

The issue has served to highlight the widening fissure between the pro-business orientation of Mubarak’s ruling National Democratic Party and public exasperation with a government seen to be out of touch with public interest.

“It’s as if the government were in a coma,” Magdi Hussein, general secretary of the frozen Labour party who participated in Friday’s demonstration told IPS. “It appears to be completely unaware of the public mood on this issue.”

“The entire episode proves the failure of this government of businessmen,” said Abdelazim. “Its policies work in the interests of a small ruling elite – not for the average citizen.”

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