GCC starts tightening its belt on glimmers of future austerity

Middle East Eye

http://www.middleeasteye.net/columns/gcc-starts-tightening-its-belt-glimmers-future-austerity-gcc-1500-529206777

The GCC can weather low oil prices for now, but if this continues in the medium term, wide reforms will become necessary

In economics, markets are considered cyclical. Markets slump and after a period of contraction, rebound, more bullish than before. Gulf Cooperation Council (GCC) countries are banking on such a cycle to keep the status quo.
In the 1980s and 90s, oil prices were low and GCC states were running deficits. Once the oil price started moving upwards to the $100 a barrel territory, surpluses increased and the GCC had the liquidity to embark on vast spending programmes to open up and diversify their economies away from hydrocarbons. The 2000s were a boom period, epitomised in the glitz of Dubai, the skyline of Doha's West Bay, and the global spending spree of the Gulf Sovereign Wealth Funds (SWFs).
The 2008 financial crisis hobbled the boom times, but petrodollars kept these economies buoyant to ride out the crisis better than much of the world. The so-called Arab Spring from 2011 onwards presented a political challenge, but the cash was there.
The 45 percent drop in oil prices over the past twelve months has been a much bigger blow, although only the most optimistic opponent of the GCC order would consider it a nail in the coffin of the Gulf monarchies. The region simply has too much access to capital, and with small local populations – Saudi Arabia aside – able to fund its way out of this downturn in the near term.
Keeping the status quo, however, is proving costly. “It has become quite a bit more expensive to be a state in the region following the Arab uprisings, calculated in the vicinity of 10 to 15 percent more costly following large [government] handouts. It will be hard to roll that back, but eventually that's what will need to happen,” said Martin Hvidt, professor at Zayed University in Dubai.

Downward shift

The drop in oil prices is slated to reduce GCC energy export receipts from $743bn in 2012 to around $410bn in 2015, according to the Institute of International Finance (IIF), a 45 percent slide. This is projected to lead to the consolidated fiscal balance of the GCC to go from a surplus of 4.8 percent of GDP in 2014, to a deficit of 7.5 percent of GDP this year.
“For larger GCC economies this is not an issue in the short term, there is confidence, but it does affect fiscal strategies. Except for Qatar, all economies are slowing down and this will affect the private sector,” said Steffen Hertog, associate professor in Comparative Politics at the London School of Economics.
All the GCC states' budgetary break- even oil price is above the current barrel price of around $56. Qatar has the lowest at $65.3 per barrel, followed by Kuwait at $68.2, and the UAE at $78.2, but for Saudi Arabia it is $104.6, Oman $113.2, and $130.2 for Bahrain, according to April figures from the IIF. “Bahrain has pretty much no liquid solvent savings. Oman has a fair amount but it will burn through reserves quickly if it doesn't cut spending, which looks unlikely,” added Hertog.
Bahrain, the GCC's problem child since the 2011 uprising, will need to be financially propped up, with $10bn pledged by the GCC Fund. “Bahrain will be bailed out by the UAE and Saudi Arabia. I don't think it will be a generous bail-out, so will perhaps be the first one to do substantial reforms,” said Hertog.
While Qatar is expected to be the least affected, the fiscal break-even oil price is expected to increase 14.2 percent this year, according to the IIF, but with the bulk of government revenues coming from liquefied natural gas (LNG), this poses a further challenge, as gas prices are not expected to rise in the short to medium term. Indeed, with Australia and the US ramping up LNG output, Qatar has been knocked out of pole position as the world's largest LNG exporter.
Somewhat opportunely for Doha, having had its wings clipped by Riyadh and the UAE after a decade as an expansive regional foreign policy actor, culminating in the “loss” of Egypt when the Muslim Brotherhood was overthrown in 2013, there are fewer external funding constraints.
“If Qatar was continuing its expansionary approach at full pace, perhaps we'd look closer at the consequences,” said Richard Mallinson, geopolitical analyst at London-based Energy Aspects.
For the GCC's big economic and political players, Saudi Arabia and the UAE, constrained times are ahead. Saudi Arabia's budget expenditure grew by 12 percent a year from 2009 to 2014, almost doubling from $126.7bn to $228bn, and overspent last year by $38.6bn. But Riyadh has the cash and the economic clout to weather a deficit for the immediate term.
“Saudi Arabia has substantial reserves, some $100bn in overseas bank deposits and can withdraw them any time, so it doesn't need to liquidate investments and has significant deposits in local banks,” said Hertog.

No austerity, but no handouts either

Riyadh's budget this year is $230bn, up on 2014, and will strive to not go over budget again. As for all GCC states, the government is looking into areas to cut funding. Military spending could be one area, budgeted at $80bn in 2014, according to Citi figures, but with the war in Yemen any cuts there are unlikely.
The kingdom will be hoping that instability doesn't spread from its southern neighbour, particularly to its restive eastern provinces, lacking the largesse to fork out “loyalty handouts” to citizens, as happened in 2011 when Riyadh shelled out $100bn. In February, following the accession of King Salman, two months additional salary was given to state employees, costing some $32bn, according to Citi figures.
“Current spending is more politically sensitive. They would be wary of another handout if there is a political crisis to keep citizens happy. Something really bad would need to happen” for that to occur, said Hertog.
The fiscal squeeze is going to have significant knock-on effects, especially as the GCC states have not diversified away enough from hydrocarbon revenues. Indeed, the GCC is in a Catch-22 situation, needing petrodollars to bankroll diversification efforts, but, with less revenues, not able to do so at the rates needed. Furthermore, much of the diversification is on the back of the hydrocarbon sector, such as downstream petrochemicals.
“The atmosphere in the UAE is a wider economic slowdown. Low oil prices isn't just about government spending, the whole economy is linked to it,” said Mallinson.
The GCC's diversification attempts, particularly getting citizens into the private sector through nationalisation programmes – Saudisation, Qatarisation etc. - have broadly failed due to high public sector salaries. If low oil prices continue, and budgets are increasingly squeezed, GCC governments will have to carry out reforms, be it introducing value added tax, slashing energy subsidies, and/or reducing benefits.
“It will very much be up to the ruling families to persuade nationals of the need to reduce benefits, to make everyone see they are all in the same boat, that there is a crisis, to maybe survive without any political problems,” said Hvidt. “If low prices keep up for another year, there is no doubt in my mind they'll have to readjust their budgets.”

Impact on rest of MENA

The economic slowdown in the GCC due to the low oil price is going to have a wider ripple effect, lowering consumer spending, impacting financial services, and halting the infrastructure and related projects that provides much needed regional employment.
To what degree financial assistance and FDI from the Gulf to the rest of the region will be impacted is hard to gauge. The lower oil prices are clearly having an impact at the MENA level though, with current account balances projected to slide from 7 percent in 2014, to negative 2 percent in 2015.
“Largesse may become a bit more limited but I don't think the taps will be turned off entirely. You can see from the crisis in Yemen a lot of premium is paid to regional alliances, and the GCC realises the expectations of less wealthy states for inward investment, as seen with the relationship with the [Abdul Fattah al-]Sisi government,” said Mallinson. Indeed, the UAE, Kuwait and Saudi Arabia have provided Egypt with over $12bn in aid, central bank deposits and for petroleum products, while cumulative Saudi investments in Egypt are estimated at nearly $32bn.
As GCC states eat through their reserves, such funding could become more constrained, especially given global economic volatility and the turbulence in the MENA. Egypt will continue to need major funding - it is not as easily propped up as Jordan - and Yemen will need significant funds for Riyadh to capitalise on its military adventurism to shore up future political support. As such, the GCC, Riyadh in particular, could face tough choices as to whether to direct financial support externally or internally.
“Egypt is considered a priority, but between domestic needs and funds to Egypt, the domestic needs will be grandfathered,” said Hertog.
Ultimately, the GCC faces tough choices to rein in budgetary spending unless oil prices rebound. “In the short to mid run they're fine, if low prices continue it could be a really severe crisis, although reforms could postpone the reckoning. Now it’s like the mid-1980s, maybe soon back to like the 1990s,” added Hertog.
A full cyclical return to the boom times of the 2000s however, seems unlikely, and in the midst of geopolitical turbulence, major challenges lie ahead.

Mist on the Nile – an Egyptian Record

Money Laundering Bulletin

Political turmoil in Egypt since the uprising that ousted President Hosni Mubarak four years ago has served anti-money laundering as both stimulus – through pursuit of embezzled state funds – and brake with delays in the introduction and implementation of new supervisory standards and good practice. Paul Cochrane reports from Cairo.

Unrest and Context
There were high hopes that Egypt was embarking on a new, clean financial era following mass protests in January 2011 that ousted President Hosni Mubarak. Popular calls for an end to the corruption and cronyism that had characterised Mubarak's 30 year rule appeared to be heeded.
In April 2011, Mubarak along with his sons, Alaa and Gamal, were arrested for misuse of government funds. In July 2011, former interior minister Habib el-Adly was convicted and sentenced to five years for involvement in a no-bid government contract that squandered some US$15 million. Former Prime Minister Ahmed Nazif was arrested for "squandering public funds and profiteering." The foreign accounts of Mubarak and other high-level officials were frozen in Switzerland, Britain, Canada and the European Union (EU), pending investigations.
In the meantime, Egypt went through more political turbulence following the Muslim Brotherhood coming to power in 2012 with Mohamed Morsi elected president. In July 2013, following further mass demonstrations, Morsi was put under house arrest, with the military taking control of the country, formalised with the election of General Abdel Fattah el-Sisi as President in April 2014.

Qualified Progress
Despite the political chaos, Egypt does seem to have made progress in fighting money laundering. The US State Department in its 2014 International Narcotics Control Strategy Report noted that: “In the past two years, the Government of Egypt has shown increased willingness to tackle the issue of money laundering, especially with regard to investigating allegations of illicit gains or corruption of public figures and organisations.”
But this has been far from a spotless record. There have been no anti-money laundering legislative proposals in the past two years. El-Adly and Nazif were both cleared in February (2015). Mubarak's sons, who were convicted for embezzling over US$13.5 million in state assets in May 2014, were released in January under a technicality in Egyptian law as they had served the maximum period of 'preventative detention'. It is a sore point with advocates for greater accountability. “They knew how to hide everything,” said a compliance officer at an Egyptian bank who wanted anonymity.

Judicial investigations dealing with frozen assets abroad have not moved forward either. “The handling of the looted funds of Mubarak's regime was very badly handled, starting from the Morsi regime and ending with the Sisi regime. They spent a lot of money appointing famous legal firms abroad but without proper documentation or court orders. Counterparts were not able to release or breach banking secrecy,” said Hany Abou-El-Fotouh, president of Alraya Consulting and Training in Cairo.

Corruption costs

Meanwhile, corruption remains a major issue in Egypt. According to an interview with the head of the Central Auditing Organisation aired on Nile News TV in November 2014, financial and administrative corruption is estimated to cost Egypt around USD28 billion a year. Egyptian media reported in January that the country’s Administrative Prosecution Authority investigated 151,000 corruption cases in 2013, an increase of 80,000 cases on 2012, and more than double the cases in 2011.
Which is good news. But while the prosecutor is being more active, this does not always extend to public tenders. “We are in a similar situation, in a broad sense, to the South American military dictatorships of the 1980s. Sweeping legal reforms are taking place in secret through a committee made of judges connected to the president. We don't have any judicial oversight of the administrative court, or of public contracts,” said Amr Adly, a nonresident visiting scholar at the Carnegie Middle East Centre, in Cairo.

Military intervention – in the economy

To get the economy back on its feet, the government is trying to attract US$15-20 billion a year in foreign investment, particularly from Gulf allies the United Arab Emirates (UAE) and Saudi Arabia, which have been providing financial aid. The government organised an Egypt Economic Development Conference which was to be held in mid-March (2015) in the Red Sea resort of Sharm el-Sheikh, with some US$12 billion earmarked for infrastructure projects. Many of the major infrastructure projects, however, are expected to be carried out by the military, with its commercial arms estimated (by a leaked US government diplomatic cable) to account anywhere from 5% to 30% percent of the overall economy.(1) “Since the military came to power they are having an expanded economic role, with mega projects financed by the state and executed by the military, driving out the public sector. Emirati (firms) are asking for direct partnership with the military to avoid tenders and inefficient bureaucracy,” added Adly.

Terrorist finance

Despite this torpor over public contracts, the authorities are more active in enforcing the rule of law is in its own domestic CFT (combating the financing of terrorism).
In December 2013, Sisi designated the Muslim Brotherhood – formerly in government - a terrorist organisation. The move was followed by Gulf allies Saudi Arabia in March 2014, and the UAE in November, 2014. Previously, only two other countries had listed the group: Russia in 2003, and Syria in October 2013.
The security forces have detained an estimated 41,000 people on political charges since Morsi's ouster, according to European Parliament figures from January 2015; some 29,000 of that figure were arrested for suspected ties to the Muslim Brotherhood. Prominent members of the Brotherhood have been arrested and had assets seized by the state, including two supermarkets run by businessmen with alleged links to the group. In February, 2015, 169 non-governmental organisations (NGOs) linked to the group were dissolved, with funds and property seized.

Compulsive viewing; inadequate screening
The Central Bank of Egypt (ECB) sends financial institutions blacklisted names and accounts to be blocked that includes the Brotherhood, said the compliance officer. Not all of those arrested for ties to the Brotherhood are being blacklisted. “If there's no proof from the ECB, a customer cannot be prohibited. Otherwise, we'd need to sit in front of the TV all day to see who is named [by the authorities to carry out due diligence], which wouldn't work. We don't know if somebody voted for or supports the Brotherhood,” said the compliance officer. Family members of Muslim Brotherhood leaders are “the ABC of politically exposed persons (PEPs),” he added.
The ability of banks to screen blacklisted names and designated individuals by the Egyptian and international authorities is complicated by only 10 out of the country's 40 banks having adequate software, added the compliance officer.

“Automated screening systems are not widespread. With the exception of the big banks, most just perform basic checking on either manual lists or databases. This is one big hurdle and challenge for the sector,” said Abou-El-Fotouh. “Very few buy these filters to screen blacklists, so how would they identify a potential Brotherhood leader and associates? They wouldn't be able to identify these persons because of their screening techniques.”

Such shortcomings in screening may be addressed soon. “At the last ECB meeting they said such software may become mandatory, to save banks from United States Office of Foreign Assets Control (OFAC) sanctions,” said the Middle East bank compliance officer.

KYC – an aspiration

The last know-your-customer (KYC) update from the ECB came in 2011. Such compliance is not always up to par. “Mostly HR people are hired for customer service, and they have to do KYC, insisting on filling four or five pages with signatures, but the problem is they don't see what is being done with the form in the back office. If I say my annual income is [Egyptian Pounds] EGP 50,000 [USD6,565], and want to open account with EGP500,000 [US$65,659), is anyone stopping me? No,” said Ahmed Hussein, partner at Developers for Training and Consultancy (DTC), in Cairo.
Complicating overall compliance and regulating the sector is that just 7% of Egyptians are estimated to have a bank account, according to Dubai-based online payment provider PayFort; Egypt's population is 88 million. Furthermore, 80% of GDP is estimated to come from small-and-medium-sized enterprises that are unregulated and part of the informal economy.
“Banking culture is not clear to all Egyptians and people like to keep money at home. KYC is new to society; some people are annoyed if you ask them if they are married, have kids, or rent or own a place,” said Hamdy El Sayed, partner at DTC.

Supervision in catch-up

One potential engine of reform is the main financial regulator the Egyptian Financial Supervisory Authority (EFSA) which was established in 1997, and has been active in relation to improving financial control standards, especially at the Egyptian Exchange (the stock exchange). However, the political upheaval has delayed implementation of recent international standards on, for example, corporate governance.

Abou-El-Fotouh is not that impressed though: “The EFSA is far behind international best practices - they have their own local issues, particularly after the revolution.”

FATF scorecard

Egypt was one of the founding members of the regional AML body MENA-FATF, and was last subjected to a FATF Mutual Evaluation Report in 2009. Egypt was deemed ‘compliant’ for five and ‘largely compliant’ for 20 of the 40+9 Special Recommendations; it was ‘partially or non-compliant’ for three of the six core Recommendations, notably regarding regulation, supervision and monitoring of designated non-financial business and professions (DNFBP).

As regards the Special Recommendations, Egypt was deemed partially compliant in implementing UN instruments; criminalising terrorist financing; freezing and confiscating terrorist assets; international cooperation; wire transfer rules; and cash at border declaration and disclosure systems.

“The ECB is strong, but they are not as strong as they should be,” said Abou-El-Fotouh. “I severely criticise [the country’s financial intelligence unit – (FIU)] the Egyptian Money Laundering Combating Unit,” he said, as Egypt's Anti-Money Laundering Law and its Amendments No.80 of 2002 stipulates that an FIU should have annual statistics on cases and STRs (suspicious transaction reports) filed by financial institutions, “but until today, 10 years since it started, I haven't seen any.”

According to El Sayed, STRs are only shared with other FIUs. The US State Department (2014) reported that 1,549 STRs were received by the Egyptian Money Laundering Combating Unit, which is part of the central bank, between July 2012 and June 2013. There is no data on prosecutions, while El Sayed said there has been “no public naming and shaming.” The ECB's FIU did not respond to interview requests.

Notes

1) According to a leaked US Embassy cable from 2008, the Egyptian military “retains direct economic management of one-third of the Egyptian economy.”

Peaceful Drones

 MIT Technology Review Pan Arab
http://techreviewpanarab.com/en/computing/peaceful-drones/

 The UAE is encouraging the development of non-militaristic drones. 

Wadi Drone, Martin Slosarik on the right

Drones, or Unmanned Aerial Vehicles (UAVs), have a reputation problem. Media attention has overwhelmingly focused on military use, particularly the United States’ controversial use of UAVs for extra-judicial assassinations, the circumvention of sovereign airspace, and the ‘collateral damage’ of civilians killed in Pakistan, Yemen and elsewhere. Indeed, the mosquito like buzzing of overhead drones is a source of nightmares for some, fearing death from the sky. Surveillance drones are also viewed with suspicion, while the unlicensed use of off-the-shelf UAVs is causing regulatory issues in multiple jurisdictions.
To counter such militaristic and ‘Big Brother’ type uses of UAVs, the United Arab Emirates launched the Drones for Good Award last year to push the development of drones for civil and peaceful purposes. The largest event of its kind globally, the tournament attracted over 800 applications.
In the Middle East, Saudi Arabia topped the list with 18 entries, followed by Egypt with eight entries, while other entries came from Jordan, Lebanon, Qatar, Algeria, Libya, Sudan, and Tunisia.
Some of the more interesting ideas submitted included a drone that can transfer organs for transplant from donor centers to the receiver in the shortest period of time, a drone that can eliminate fog from the atmosphere in an environmental friendly way, and a project that makes detection of land mines efficient and safe.
Awards were given along three categories: Government, National and International. Local telecom provider Etisalat won the Government award with its Network Drone, which can expand GSM network coverage vis UAVs during emergencies and disaster relief.

 

Inspired from insects

Patrick Thevoz, co-founder and CEO of Flyability in Switzerland, won US$1 million in the International category for Gimball, a lightweight, spherical collision-proof drone for search and rescue. A failing of search and rescue drones, indoor and out, has been censors’ blind spots, leading to crashes or damage to the drone. Gimball can collide with an object and keep on going, enabling the drone to enter restricted areas with numerous obstacles bolstering search and rescue capabilities.
While the US military is researching the use of insects’ exoskeletons for adaption in robots and as body armor, Thevoz utilized millions of years of insect evolution as an inspiration. “Insects don’t have a protective cage, so Gimball is not mimicking how insects fly but how to collide and continue flying without falling,” he said.
Already, Flyability has garnered interest from customers in Europe and the US with an aim to make the drone widely available in 2016. “There are a lot of drones with protective cages, but the separate aspect of the drone and its protection, we’ve not seen that flying anywhere so far (…),” he added.

Testing Wadi Drone

Supporting park rangers

Wadi Drone won the AED 1 million ($272,253) National prize, developed by four students at the New York University in Abu Dhabi, overseen by Matt Karau, a visiting instructor and research associate. The drone is a fixed wing airplane with a 2.5-meter wingspan carrying a small communications payload that retrieves information from ground-based scientific measurement devices including camera traps. Covering Wadi Wurayah National Park in the Emirate of Fujairah, the drone is able to fly for up to 40 kilometers and collects data from 120 camera traps that photograph wild animals, and gathers images of flora and fauna to aid research and monitoring by park rangers and conservationists.
“We sought to design something that respects the sensitivities of the Gulf, so there is no camera on the plane itself – no aerial photography – which rings alarm bells in many parts of the world,” said Karau.

While drones are already used for conservation purposes, there are many gaps in available technology that the team chose to develop. The drone is a Mobile Ubiquitous Land Extension (MULE), which carries a computer onboard to create a data communication link with the remote areas. While the concept of a data MULE is not new, “nobody put a data MULE and conservation together in a specific application,” such as for retrieving photographs in remote locations, said said Martin Slosar“Rangers have to hike three days to get these (camera) SD cards, and in the summer use a helicopter that costs 100,000 AED ($27,000) a day to employ,” he added.
The team’s non-urban setting will help them develop the concept further, as ironically in March 2015, Abu Dhabi banned the sale of recreational drones. New legislation is underway, and drone developers are slated to engage with the government to get the right balance between recreational use and development.

More competitions ahead

The Drones for Good Award has certainly sparked more interest in drone technology and related development. With 2015 designated by the UAE government as an innovation year, the success of the awards gave rise to another upcoming competition, the Artificial Intelligence (AI) & Robotics Award for Good, which was launched in February 2015 with the aim of improving government services for citizens through combining robotics, AI, and technology. The award is to take place at the 2016 Government Summit in Dubai.
As with drones, the competition’s aim is to show that AI and robotics are more than just for militaristic and surveillance purposes as they can be applied real for positive good in society and nature.

Photos courtesy Martin Slosarik

Egypt’s Bet on Nanotechnology

MIT Technology Review Pan Arab

http://techreviewpanarab.com/en/materials/nanotechnology-egypt/

Universities in Egypt are investing in nanotechnology to address some of the country’s pressing problems.

 

 A silicon wafer in the clean room

A khamseen engulfs Cairo; dust is everywhere, coating all surfaces and there is grit in one’s teeth. It is not an ideal day to visit a ‘clean room’ where technology is used at the nanoscale. Nano means one-billionth, so a nano-meter is one-billionth of a meter, or 1/1,000th the thickness of a human hair. At that scale, dust particles are huge. But safely zipped up in an all-in-one protective suit and the air-filtration system pumping away, the environment can live up to its name.
The 150 square meter clean room at Zewail City of Science and Technology in 6^th of October City, outside of Cairo, is the largest in Egypt and aims to take nanotechnology development to the next level. The American University of Cairo (AUC) is equally at the frontiers of nanotech, but does not have the same facilities – just 20 square meters compared to Zewail’s three rooms, including a wet area. Zewail City, brainchild of the 1999 Nobel Laureate in Chemistry, Ahmed Zewail, aims to address some of the core challenges scientific research and development faces in Egypt. The country is not short of brains, but access to funds, equipment and cooperation with industry has been lacking.
It is still early days, said Professor Sherif Sedky, Academic President of Zewail City and Director of the Center for Nanotechnology, with expectations for greater application of nano devices and smart nano gels, for example, in the next two years. Zewail City is tapping into the local talent available by actively cooperating with other education institutions. Professors from AUC, like Sedky and Dr Nageh Allam, assistant professor of physics at AUC, are pushing such developments.

Addressing pressing problems

The dust storm ranging outside is thematically appropriate. Some of the nanotech research underway at Egyptian institutions is aimed at tackling climate change and other pressing problems such as water and energy. For instance, Allam, who also teaches at Zewail City, is working at the micro and nano level on desalinization to address the issue of water scarcity. “We have the Mediterranean and Red seas, so the aim is to make nano materials hold the salt from sea water to give fresh water,” he said. Through a grant from Qatar Foundation, a further project is to convert carbon dioxide in the presence of sunlight into natural gas. Related research is to produce natural gas from agricultural or kitchen waste, which, as Allam notes, in a country with 88 million people and counting, there is not a shortage of.

Despite the challenges

However, Allam is facing obstacles in his research. While facilities have improved, with Zewail’s clean room being utilized by Egyptian researchers, they pale in comparison to those elsewhere in the globally burgeoning nanotech field. MIT’s lab for instance supports 2,000 researchers, while other institutions have clean rooms of over 1,000 sq.m, several times larger than Zewail’s and 20 times larger than AUC’s.
“For Egypt the huge problem is funding, and secondly, there are no companies to supply us with chemicals or the small factories to make specialized items,” said Allam. “It may take eight months for a delivery, during which time someone else may have published (relating to my research). When I am at MIT, if I order in the morning it is on my desk that day.”
Despite such challenges, cutting-edge research is underway in Egypt. Dr Wael Mamdouh, assistant professor at the Nanotechnology Graduate Program at AUC, specializes in molecular systems at the nano scale. After groundbreaking work and numerous publications at European institutions, he returned to Cairo to shift the scope of his research in line with the needs of applied science in Egypt and the region. One such area is bacterial infections, a particularly common problem at local healthcare facilities.
To develop affordable solutions, Mamdouh and his team – including undergraduates – are researching natural properties for use in nano-fibers for dressings, such as the insulin in honey, herbs and shrimps. “We are investigating how to design novel techniques from these materials and analyze their properties to come up with prototypes that could solve some bio-medical problems with cancer, especially breast cancer, and bacterial infections,” said Mamdouh. “It is really promising to transfer material to nano materials as the properties change significantly.” Broken down at the nano level, the compounds from these natural extracts create a synergistic effect. “It is amazing to see. Insulin has no anti-bacterial products, but at the nano scale it does,” he said.
One student already has a provisional US patent relating to the electro-spinning of polysaccharide nano fibers, and others filed this year for anti-bacterial coatings and wound dressings. Through an electro-spinner, the anti-bacterial properties in the nano-fiber increase tremendously, making it close to an antibiotic. “It is the first time in Egypt, maybe even in the region, that an undergraduate is developing anti-bacterial coatings and wound dressings by electro-spinning,” said Mamdouh.

Yellow lighting protects photosensitive research materials at Zewail’s wet room in the clean room

Nano in physics

The uses of nano particles in biomedical research extends from the external to the internal. Dr Mohamed Swillam, assistant professor of physics at AUC, is focused on nano-photonics or optics. This is a new field in physics, at the nano-scale, that integrates nanotechnology with light. In previous research, for which Swillam won the Best Publication in Physical Science award from Misr El-Kheir Foundation in 2013, he proposed an ultrafast method to control and manipulate a laser beam on a nanoscale. His research has application in nanolithography, whereby tiny electronic devices control and manipulate nanoparticles to deliver drugs within the human body. “It can move a drug from one location to the other using light, like a nano-optical tweezer,” he said.

Further nano developments

Far removed from the human body, Dr Hanadi Salem, Professor in Materials Science and Director of the Nanotechnology Program at AUC, is researching severe plastic deformations to take bulk materials and reduce them to the nano level. One project involving applied nanotech is to produce components of superior mechanical properties and with optimum resistance, such as self-lubricating solids and high-wear resistance materials. Such development can be used to produce gears for machines with high wear resistance, and carbon nanotubes for metal-based break pads for vehicles. Last year, Salem’s team tested a self-lubricating solid in Germany that they had produced. “We had excellent performance, with very low wear rates. It has the capability to be commercialized,” she said.
A further area under research is thermomechanical treatment associated with intense plastic deformation related to steel rebar – the steel rods commonly used to reinforce concrete in buildings. By restructuring low carbon steel it produces equal strength and toughness as conventional steel but at a lower cost and with similar properties. Salem and students have managed to refine the structure from two microns to one micron using thermo-mechanical treatment. The second stage is to take it to the nano-scale, for which Salem has applied for grants and is seeking collaboration with the steel industry.


Photos by Paul Cochrane