An Interview with Shafik Gabr, Chairman of ARTOC Group
On June 10th, Meridian International Center awarded Shafik Gabr, Chairman of the ARTOC Group for Investment and Development, the 2014 Meridian Global Citizen Award. Declared by Forbes magazine as one of Africa’s most successful businessmen and by Daily News Egypt as the richest known millionaire in Egypt, Shafik Gabr splits his time between Cairo, Washington, Paris, and other major cities around the world. But it is not his travels that make him a global citizen, but rather his consummate work in bridging cultures.
The Meridian Global Leadership Awards were conceived to honor those who, by their actions and practices, exemplify the positive impact individual and corporate leaders can have in their communities and the world.
As Chairman and Managing Director of ARTOC Group for Investment and Development, Shafik Gabr leads the multidiscipline investment holding company in diversified fields including, aerospace, automotive, communication, infrastructure, steel fabrication, utility and engineered equipment, consumer products, publishing, real estate development, and energy. ARTOC’s headquarters is located in Egypt and its business focuses on emerging economies.
Beyond the corporate boardroom, you will find Shafik Gabr meeting with young Millennials as he sponsors their intercultural exchange through the Gabr Fellowship—an extension of his philanthropic work through his Foundation, which has made him a trusted voice in cultural diplomacy. Diplomatic Courier met with Chairman Gabr before the award ceremony, to discuss his passion for the Art of Dialogue and his quest to enhance understanding and cooperation amongst young leaders in the Arab World and the West.
[Diplomatic Courier:] Let’s start with your foundation, The East West Dialogue. Tell me about your campaign to fund fellows and young leaders to travel and work in each other’s countries. What is the impetus behind this program?
[Shafik Gabr:] I have always been focused on bridge building—not only in my business world, but also in trying to bring countries to know each other; and for Egyptians to know countries around the world. I wanted to give an opportunity for people to see the world, not just read about it. So, one of my focus areas at my U.S. foundation has been to try and encourage young Americans to come to my part of the world and young Egyptians to come to the United States. I’m very concerned, extremely concerned, about the gap that is widening—in terms of understanding—between East and West, and my deep feeling is, even though we’re connected by all these great smartphones and all the technological advancements that we have, that human communication—getting to know each other on our own turf—makes a huge difference. By being able to be introduced to the United States properly, coming and visiting and getting to know what the U.S. is all about, the perception changes, and vice versa. I saw young Americans who were very concerned, coming from different parts of the United States, coming to my part of the world. They were coming with great hesitation and concern. But after spending time and engaging with their counterparts, the perception that they had changed dramatically, and that is key for me in terms of building bridges amongst them.
[DC:] And I understand they’re from all types of backgrounds. They’re in business, arts, and sciences. Why not concentrate on policy and diplomacy fellows?
[SG:] I believe there are a lot of attempts by other institutions that are focusing on policy and diplomacy, and the critical problem there is that people come with pre-conceived ideas. My great worry, in a world where change is happening very fast and the challenges are numerous, is that people make fast decisions without having real knowledge. I chose those five sectors—arts, science, law, media, and entrepreneurship—to bring emerging leaders from the United States to Egypt. In the class of 2013, for example, people were from California, Oregon, Ohio, Massachusetts, New York, Washington DC, North Carolina, and all over the United States. And by bringing them without having an agenda, and their specialization having a counterpart with an Egyptian, brings a whole new dimension. After that, you put your principles and agendas forward. But in the diplomacy and policy arena, people usually have a preconceived agenda before they experience the exchange.
[DC:] They are all under the age of 35. They are, what we would call here, Millennials, or the First Globals. This age group tends to be much more receptive to new beginnings and global interactions and picking up a suitcase and moving to another country for two years. Why did you choose that particular generation and not maybe include an older demographic?
[SG:] I chose that age group because I think that’s the age group that’s going to make a big difference. I think that our generation did not succeed to understand the challenges and build bridges. There’s more conflict today than before, and there’s, unfortunately, more conflict on the horizon unless we’re able to bring young leaders the experience and empower them to play a positive role in turning challenges into opportunities. We’re all human beings. We aspire to the same things. But unfortunately sometimes we have knee-jerk reactions that cost everybody a significant amount. My hope is these young people, if they’re given that opportunity, they can play a critical role in positive change.
[DC:] In 2012, you launched the Shafik Gabr Foundation, sponsoring cultural exchange between the Arab world and the Western world. Could you discuss the role of cultural diplomacy in bridging political divides and enhancing people-to-people understanding?
[SG:] I come from a family background where my late grandfather, who I am named after, was very involved in society. One of his key principles was that every citizen has a responsibility to play a role in the society and beyond if he can. And I grew up in my grandfather’s home—raised on many of these principles—and I saw that it was a responsibility to be able to extend whatever experience or resources beyond oneself. So, with his support, and my family’s support, we established a foundation in Egypt and then we established the foundation here in the United States. The foundation in the U.S. works on some medical research, which we don’t have the capability in the Middle East to do, especially for children, epilepsy, and cerebral palsy. We hope that our medical research will produce good results in that area.
But, I was also inspired by the Orientalist painters—the travelers, as I call them—that came to my part of the world from the United States and from Western Europe in the 18th and 19th centuries. And you have to close your eyes and think for a moment: they did not jump on a plane and get to my part of the world in eight, nine hours. It would take them weeks on a ship, carrying their canvases, their brushes, and paint. Landing in ports in North Africa. Not speaking the language. There was no photography. You have to visualize these people coming, trying to communicate with a society they had no experience in, and then starting to paint. They were, what I called, early globalists. They brought their paintings back to London, Paris, and New York. It was the very beginning of cultural exchange. At that time, with no television and no technology, they provided a positive perception between East and West that even exists today, because it was person-to-person communication. It was not just seeing something on a television screen. I followed many of these painters, studied them for three years, became somewhat of an expert, and then encouraged creating foundations that would support Orientalist painters and buy their art. From that I was inspired to create the East-West, the Art of Dialogue Initiative.
[DC:] What is your favorite painting?
[SG:] It’s very difficult to choose one child from 150. I think one of the most fascinating paintings was one by a German painter who painted himself. The painting takes place in Damascus, Syria. The artist painted himself and the local citizens watching him paint. They are intrigued by what he is doing, and he is explaining to them his painting technique and the details he is putting on the canvas. It’s a major painting of communication, and for me, it’s a special painting. But they’re all very special.
[DC:] What are your thoughts about digital communications and how they’re changing our people-to-people relationships?
[SG:] Well, there are two parts to it. There’s one part where we become sort of hostages to our digital communication. I remember when you had a storm that hit New York and New Jersey, and we lost power for a few days. This gentleman came on television and said that he lived in his house in New Jersey for three days without any electricity and he got to know his family better, because they were all sitting around candlelight, and they talked. There were no iPads, no iPhones, and no television. We’ve become hostages sometimes to digital communication. But digital communication is very important as a reinforcing factor—rather than a factor that introduces you to reality. One of the greatest challenges that we have today in this world is differentiating between fact and fiction. In many cases, in the digital world, you cannot differentiate what is fact and fiction from first instincts, but in real communication, human being to human being, visiting each other’s homes, getting to know each other’s families, you are able to make a reasonable, a certain recognition of culture, traditions, and social aspects, which are extremely important in whatever you’re trying to communicate. I believe person-to-person, human being to human being is critical and more important now than it was ever before, especially with the speed of change we’re experiencing.
[DC:] There have been two classes of fellows so far. Tell us about these people-to-people relationships.
[SG:] We had about 488 applications for the East-West: The Art of Dialogue Initiative. Twenty-two were selected. What is exciting is that they come from all states. The 2014 fellows have already been selected and they’re starting their program now. There are two aspects that I’m hoping will take place. Number one, that other institutions recognize the importance of this type of initiative and support the initiative—not by fundraising—but by doing the same in their own domain. My hope is that we can leverage the concept in order to have a multiplier effect and then achieve a tipping point. I would love to see 5,000 young Americans and 5,000 young Egyptians engage in that sort of program. That’s when you have a tipping point that will make a difference. Number two, my hope is that the collaborative projects that the young fellows are working on continue after they the initial exchange. And when those projects take form, they will have a ripple effect, because they will bring the experience of those young fellows to their communities and their peers, which I think is extremely important. That’s my aspiration.
[DC:] I’d like to take us back in time to President Obama’s 2009 Middle East foreign policy speech in Cairo. How do you think the U.S. President has handled the Arab Spring crisis from Egypt to Syria?
[SG:] The speech in Cairo was very inspiring; I was sitting in the fourth row and listening to very carefully—especially since I wrote to then President-elect Obama in December of the same year that he was voted into the White House, before he even took office, asking him to come to Egypt. When I didn’t hear back, I wrote an op-ed called “President Obama, Come to Cairo”. Not that I had any role in him coming, but he came, and he had a fantastic vision. Sadly, a lot of that vision was not implemented on the ground—some of the ideas were, but many were not. And that created a gap. And then Arab Spring, as some people call it—I don’t call it Arab Spring—took place, and Washington felt that this was like the fall of the Berlin Wall. At that time I had much greater concerns. My greater concerns were that democracy is not like instant coffee. Democracy takes time, and one of the great elements of the American democracy is that you have institutions that have been built and are sustainable to create a democratic process. But you cannot turn a situation where there is no democracy an overnight democracy. As a matter of fact, by pushing hard you create an environment of chaos, and that’s what you are witnessing in several parts of the Middle East right now. One of the most important elements, from my perspective, is how to work in a proper phased manner to build the institutions so that you can have sustainable democracy. Otherwise, you end up in a situation where chaos can turn to anarchy. Thank God in Egypt, that is not the case. I think that the Egyptian people have stood up and made their case very open. We had the election in 2012, and when the elected president went beyond his term and beyond his thinking, the Egyptian people stepped up one more time and said, “That’s not what we wanted.” And today we have process in place. We have a new constitution. We have a presidential election. And I think we’re inching towards what most Egyptians have been aspiring to. I am always a realistic optimist, so I am very hopeful that we are on the right track.
[DC:] How do you think Egypt’s economy has fared compared to Tunisia and Libya?
[SG:] I think it’s unfair to look at the comparison, but let me tell you my great concern. My great concern is Egypt is a country with over 90 million people. At its best in 2010, we were growing at about 7.2 percent and we were creating about 78 to 80 percent of the jobs needed, so there was about a 20 percent gap. And when the uprising took place in 2011, that amazing growth rate went down to about 2 percent. So the last three years, our reserves went down, our unemployment went up, inflation went up, so we really had an extremely difficult three years. The economy is resilient, and we are being helped by other Arab countries in the region, but Egypt cannot survive this way. We need to take over and bring back the investments we used to have, and we need to encourage Egyptians to invest and to create jobs. Of course, on the other hand, there are forces in Egypt that are still creating an environment of tension and instability, and that is an intentional attempt to destabilize Egypt. My deep, firm belief—knowing Egyptians historically—we are a nation of over 5,000 years; we will have the resilience to overcome this challenge, but we need to do it faster just to be able to reignite the economy again.
[DC:] What do you think Egypt has to do to attract more foreign direct investment?
[SG:] First you have to have law and order and a level playing field and transparency. Without those elements, foreign direct investment is not going to come with the size that we really aspire to and the potential that Egypt has. Egypt has a huge potential in its tourism sector and in its industrial sector. One of the great things about Egypt is that we’re not dominated by one sector. So you’ll see most of these sectors are between 15 and 20 percent of the GDP. A second positive element is that 84 percent of the GDP comes from the private sector, unlike any other Arab country, where the largest portion of the GDP comes from the state. So these are really positive aspects, but to make these aspects work, we have the challenge of bringing stability back again, law and order, and a transparent, level playing field, and that would attract local, regional, and foreign investment. I am already seeing the signals of that happening. But we need to work hard on it, and we need to get the message out, not only do it, but also express it openly to the world that Egypt is open for business; that you can come invest and feel assured that your investment is safe.
[DC:] Do you feel the political environment is entering that phase where investors can feel that way now?
[SG:] I’ve already seen investors coming and looking, investigating. I see investors, specifically from the region. But we need more. We need to have the foreign investors from around the world to come. I see that’s going to be the next phase. But we still need to do our homework, and one of our key elements, although we have a good story, is that story is not in the media, and what you get in the media is the bad story, and that is unfortunately the name of the game.
[DC:] How can Egypt encourage more entrepreneurship, especially among unemployed youth?
[SG:] It starts with education, and that is what my family foundation focuses on in Egypt in a very big way. My family, for a long time, has believed that education is a key ingredient in change, so we work with schools, primary schools, in the most underprivileged areas. And we take those schools and we turn them around physically. Then, we add activity to the school. We add a clinic, a library, an IT lab, a theater, a cultural program, and a sports program. And then we bring trainers to train the teachers in modern teaching techniques. And then we select the best, youngest students in English and IT and give them additional educational capabilities. Those are going to be the next leaders and for me, Egypt was always a beacon of well-graduated young people. Today, the challenge is that those young people don’t have the opportunity, and that’s a concern. And that is why by reigniting the economy, you create the jobs that are very much needed at this time, especially for the young people.
[DC:] Do you think the revolution has helped to mitigate government corruption, which is what drives people to the informal economy? Or do you think it has worsened it?
[SG:] Two elements: first, I was pleasantly surprised by being invited in Europe to attend a program on global anti-corruption, and I saw Egypt very low on the index. We were not up there with many other bigger countries. Our corruption is government corruption and what I call mini-corruption. That has to be eliminated regardless, wherever Egypt sits on the index. But, at the very same time, by having transparency and a level playing field, you can create the environment where corruption cannot really grow. By having transparency and law and order that is effective, and a level playing field where it’s not who you know, but it’s basically on a competitive basis, then you eliminate corruption. That is a key element in what the future government that comes after the election is going to have to face. If they implement that, it is going to give huge confidence to investors, and I think would be a key ingredient in having more foreign direct investment.
[DC:] What do you see the future of U.S.-Egypt relations looking like? What do you aspire the relationship to look like in the future?
[SG:] I put my very first foot in the United States as a young entrepreneur coming here for the very first time back in 1980. I came thinking I would do business in New York. I stayed there for five days, failed miserably, and ended up flying and going to Indiana, Wisconsin, Iowa, and Arkansas before I was able to close my first big deal in the United States. The U.S. is a great country, and it’s a super power, it represents more than 30 percent of the world economy. But Egypt is a critical country in my part of the world. If you look at the history, what happens in Egypt impacts the whole region, and therefore, Egypt is a key cornerstone of any change in the region. Look at what happened when President Sadat moved towards peace. That was a transformation. Look at what happened when, in the last ten years, Egypt started changing from a centrally planned economy to a market economy. Other countries in the region were following. So that relationship—the Egypt-U.S. relationship—is a relationship that serves both countries in a big way. And when you, as an American, come to Egypt, you see many family values that are very similar to Americans right here in the United States. Regardless of what Washington and Cairo’s governments find sometimes a divergent path, they will converge once again. From my viewpoint, it is a relationship that is too strategic to be broken. And therefore, my hope and my belief is you’re going to see over the next months more building blocks. Because sometimes I get a sense that the decision makers in Washington do not have enough situational awareness of what is happening in Egypt, and some decision makers in Egypt don’t understand the dynamics of decision making in Washington. And that’s where the gap takes place.
[DC:] As chairman of ARTOC, you’re running one of Egypt’s biggest industrial companies. How do you feel business has changed because of the revolution?
[SG:] I thought I was going to retire and focus on the family foundation and art and culture programs in East-West. That’s my hope. But the answer to your question, I believe business in Egypt is a critical component of Egypt’s future, and my sense is we’ve had over the last 25 years, 30 years, the opportunity of a growing private sector. That has contributed to over 75 percent of employment opportunities. That private sector needs to be strengthened. That private sector needs to have access to capital. That private sector needs to also, within the Arab world, learn from the economic union of Europe. We in Egypt talked about an Arab Economic Union in 1948 before the concept of an EU existed, but unfortunately there was not the political will on the Arab leaders to make it happen. I hope, with the new generation of leaders in the Arab world, that they see the benefit that I, as a Saudi company, can be operating in Tunisia, or as a Moroccan company, I can be operating in Kuwait. Which is similar to how a company in Massachusetts can operate in California.
Unfortunately, today there are too many barriers, and those barriers limit the market size, and therefore we don’t have the benefits and the economies of scale of an Arab market. If we are able to do that, we can make a huge difference. I made an attempt when I was elected Chairman of the Arab Business Council back in 2002, and I crisscrossed the Arab world with a group of Arab businessmen and women, putting forward a blueprint for reform, and a key component was economic reform. It’s been difficult. Few countries have adopted some of the ideas we put on the table, but my hope is that the next generation of leaders will realize that a stronger Arab market serves everyone in a much more positive way than segmented Arab countries.
[DC:] You’re being honored with the Meridian International Center’s Global Leadership Award for being a champion of diplomacy and global dialogue. What is the role of private citizens, whether they’re artists, businesspeople, or engineers, in bridging cultures and promoting international understanding? And do you believe this is what you do?
[SG:] First, I’m humbled by being recognized by Meridian. I did not have a relationship with Meridian before this happened. But now, knowing Meridian and knowing what they’re doing, I’m hoping to have a diversified relationship with Meridian. But as I said, and I mentioned earlier what my grandfather talked about, every citizen who has the ability to do beyond his own personal interest towards his society, towards his country, and towards the world, has to do it. And the people you’ve just mentioned, in their different domains, can play a critical role in changing the landscape of our future. My deep concern if we don’t pay attention to that, is that we’re going to have more misunderstandings, more conflict, and more human loss and financial loss. We need to take the bull by the horns, and we can. We just need to focus properly and understand each other. By doing that, we can find common ground.
This article was originally published in the Diplomatic Courier’s July/August 2014 print edition.