Calm May Have Returned to Egypt, but Not American Tourists

Egypt's pyramids and antiquities museums have reopened after weeks of violent protests in Cairo. A trickle of intrepid European tourists is even flowing into beach resorts like Sharm el-Sheik and Taba. But so far, most Americans are giving Egypt a miss.

"Business is down sharply," says Ahmed Elemam, CEO of Tour Egypt, a Lubbock, Texas-based tour operator that arranges group visits for Americans. "We had to cancel hundreds of thousands of dollars worth of travel."

Stability Equals Nile Cruises

Abercrombie & Kent, a luxury tour company based in Downers Grove, Ill., says it canceled all its Egyptian tours through the end of March. But Pamela Lassers, a spokeswoman for the firm, says its luxurious Nile cruises will resume as of April 1.

"We're very hopeful the situation will resolve itself," she says.

Amr Badr, managing director for Abercrombie in Egypt and the Middle East, reports the situation is stabilizing in Egypt, now that President Hosni Mubarak has stepped down.

"There have been some tangible moves back to normal such as the reopening of the Egyptian Museum," Badr says. "All major tourist sites throughout Egypt are now open and functioning normally." He says his firm has already sent visitors to Cairo locations, and the feedback was very favorable.

Warnings, Uncertainty Hurt Local Economy

Egypt earns upwards of $13 billion a year from its tourism industry -- an integral part of the nation's struggling economy.

But Masood Ahmed, director of the International Monetary Fund's Middle East and Central Asia Department, told a press conference last week the decline in tourism was likely to seriously hurt Egypt.

"The recent popular protests in Egypt will definitely have a short-term economic cost," Ahmed said. "We will see tourism and investment going down, and certainly the 5.5% growth rate that we saw in the last two quarters of 2010 will likely be considerably lower in the next six months."

And that decline in tourism isn't likely to change anytime soon. The U.S. State Department is still warning Americans to stay away from Egypt for "non-essential travel."

"Due to continuing uncertainties regarding the restructuring of Egyptian government institutions, the security situation remains unresolved," the department said in a travel warning posted on its website. "Until the redeployment of Egyptian civilian police is fully restored, police response to emergency requests for assistance or reports of crime may be delayed."

The U.S. government has also ordered the departure of all nonemergency personnel from Egypt. Cairo is one of the largest duty stations in the world, with thousands of U.S. employees administering economic and military aid.

But British Prime Minister David Cameron visited Egypt this week -- and his government is allowing British tourists to return to Sharm el-Sheik and the Red Sea resorts. So has Germany's government.

Other Regional Business Is Stable

Pamela Lassers says there has been no fall off in visits booked by Abercrombie & Kent to other Middle Eastern countries because those tours are usually booked months in advance. For those who canceled vacations in Egypt, she says, the "overwhelming majority" rescheduled for the autumn or took other tours to Morocco or Tanzania.

June Farrell, a spokeswoman for Marriott International (MAR) -- which manages 29 hotels in the region -- says while its Egyptian business was severely affected by the recent violence, most other parts of the Mideast have seen no disruption. That includes the company's two hotels in Bahrain, which haven't been affected by the violence there.

"Travel to the Middle East by long-haul travelers is down, but not local business," Farrell says. "Obviously, those areas that have experienced political unrest certainly have been negatively impacted. Travel to Cairo and the Red Sea has not gone back yet -- that's going to take a while."

Bad Timing in Libya

But Farrell says Marriott's business in places Like Qatar, Dubai and Saudi Arabia has remained "pretty much normal." Most of that business is intraregional, with visitors from Dubai visiting Saudi Arabia and vice versa. "It's too early to say what the impact of the violence is going to be long term," she says. "It depends on how all this plays out."

Marriott had the misfortune last week to open a five-star JW Marriott branded-hotel in Tripoli, Libya, complete with oceanfront rooms and a ballroom. That business came to a quick end with the violent uprising against Libya's leader, Moammar Gadhafi.

"There were guests, but I think most of them have departed," Farrell says. "We're not accepting any new reservations at the moment." It may be a while before that happens.

View all Articles » Charles Wallace is a veteran business journalist who has written about economics, corporate finance and consumer electronics for Time, Fortune, The Los Angeles Times, The Financial Times and Institutional Investor magazine. He won the Business Journalist of the Year award given by the city of London for a piece about stock markets

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Before Wisconsin: Five of American Labor's Biggest Battles

Labor unions have an image problem. Once seen as the staunch defender of America's most helpless workers, they've begun to appear bloated and unwieldy a force more bent on robbing the general public than on helping its members. Recently, New Jersey Governor Chris Christie succinctly summarized the general perception of unions, arguing that they are "Trying to break the middle class."

While it's been building for a while, this image problem hit a major milestone in 2009: For the first time in the more than 70 years that Gallup has been measuring the popularity of unions, more than half the public didn't approve of them. So, it isn't hard to see why Wisconsin Governor Scott Walker felt comfortable drawing the line against his state's public employees. And it's hardly surprising that other states began to talk of following suit.

Some governors have since softened their rhetoric about unions, but the Walker-Wisconsin battle seems likely to become a watershed moment in the relationships between state employees and the governments that pay them. With that in mind, here are five other battles that changed the relationship between unions and the rest of the country:

Pullman Cars: The Government Breaks a Strike

In the late 1800s, a brutal depression sent unemployment soaring over 18% as companies slashed wages and fired workers by the thousands. At one company, Pullman Palace Car Co. in Illinois, workers lived in Pullman-owned housing, sent their kids to Pullman-owned schools and bought food in Pullman-owned stores. But when the company cut wages and didn't reduce rents, it left thousands of employees unable to support themselves. Despite repeated requests, George Pullman, the company president, refused to meet with union representatives.

On May 11, 1894, 3,000 Pullman employees went on strike and were soon joined by an estimated 250,000 rail workers across 27 states. As rail traffic west of Chicago ground to a halt, President Grover Cleveland stepped in: Citing the threat to America's mail delivery, he sent 12,000 troops to the Pullman factory to break the strike. Within days, 13 workers were killed, 57 were wounded -- and Pullman's workers were back on the job.

Soon afterward, President Cleveland made Labor Day into a national holiday, but his attempt to soothe the hurt feelings of America's workers didn't work. Facing an angry populace, he decided not to run for a third term and left office in 1897. Later the same year, George Pullman died. Afraid that his body would be desecrated by angry employees, he had himself buried in a solid block of concrete.

1946 Strikes: Returning Servicemen Go to War. . .Against Industry

After World War II ended, millions of returning soldiers discovered that the industrial jobs they were looking forward to came with low wages, dangerous conditions and corrupt bosses. In the year after the war ended, more than 5 million workers responded by going on strike, starting with 268,000 packinghouse workers who walked off the job in January 1946. Within a week, 750,000 steelworkers joined them in the largest single strike in American history. Over the course of the year, workers from General Electric, coal miners, oil workers, Hawaiian sugar workers and the Pittsburgh Pirates baseball team all went on strike, and railroad engineers threatened to follow suit.

Alarmed by what it saw as an increasingly radical and uncontrollable labor force, Congress gave President Truman emergency powers to break strikes. In the following year, the lawmakers went one better, passing the Taft-Hartley Act. That law barred several types of strikes and boycotts, limited the types of people who could run unions and paved the way for anti-union legislation in so-called "right to work" states. The bill's greatest impact, however, was that it enabled the president to legally break strikes that "imperiled the national health or safety."

Air Traffic Controllers: The President Fires 11,345 Workers

While private unions are legally allowed to strike, public unions are not. Because of this, the professional air-traffic controllers' organization, PATCO, had to stage slowdowns and "sick-outs" to drive the government to the bargaining table. In 1970, 2,000 controllers called in sick. Although they were later forced to return to work, they were able to negotiate higher salaries, more hirings and the reopening of the national air-traffic training academy.

Eleven years later, PATCO staged a full-fledged strike, demanding higher wages and a shorter work weak. Citing Taft-Hartley, President Ronald Reagan ordered them back to work, but only 10% of the more than 13,000 controllers crossed the picket lines. Two days after the strike began, Reagan fired the striking controllers and barred them from federal service for life. It took almost a decade for air-traffic controller staff numbers to rebound to pre-strike levels. More important, Reagan set a precedent for breaking public union strikes.

1970 Postal Workers Strike: Sometimes the Unions Win

Taft-Hartley aside, it isn't surprising that PATCO thought it could go on strike. Just over a decade earlier, another public union strike had successfully driven the government to the negotiation table. In 1970, citing low wages, hazardous workplace environments and a poorly run organization, U.S. Postal Service workers staged the first national postage strike in U.S. history. Demanding the right to collectively bargain, more than 210,000 became involved.

President Richard Nixon deployed 24,000 members of the military to help move the mail while Labor Secretary William Usery Jr. negotiated with the strikers. Two weeks after the strike began, it was resolved in the union's favor: Post office employees had a new contract and had won the legal right to negotiate. Not long after, the Postal Reorganization Act of 1970 was passed, resolving many of their problems with the bureaucratic morass of the Post Office.

Divide and Conquer: Pitting Workers Against Workers

Since the '80s, membership in private sector unions has dwindled from 23% of workers to less than 8%, while public union membership has remained nearly constant at 40% of eligible public employees. Not surprisingly, this has led to a gap between the benefits enjoyed by public and private workers. While outsourcing, right-to-work laws and Taft-Hartley have whittled away at the standard of living for many employees of private companies, public employees have been treading water, continuing to enjoy benefits that were once considered standard but which now seem almost extravagant.

In this context, it's easy to see why public employee unions are getting a bad rap: Once regarded as low paid-workers who traded job security for monetary rewards, teachers and other state employees are now widely regarded as lazy and pampered workers who can't be fired. New Jersey Governor Christie stoked this perception, and pitted teachers against other workers when he said: "There can no longer be two classes of citizens -- one that receives the rich health and pension benefits, and the rest who are left to pay for them."

Governor Christie's rhetoric aside, it's worth noting that the average public union employee makes about 6% less than a comparable worker in the private sector. For that matter, some analysts have argued that public service unions help private sector workers because employers often compete on wages and benefits with union shops in order to discourage union organizing in their companies.

Given that, it's worth asking if erasing the collective bargaining rights of public unions will benefit the middle class -- or eliminate one of the forces that's helping it stay afloat.

View all Articles » Bruce Watson is a features writer for DailyFinance, focusing on the political and cultural effects of economic events. A contributor to Military Lessons of the Persian Gulf War, A Chronology of the Cold War at Sea, the Journal of American Philosophy, A Cafe in Space, and the forthcoming Peanut Butter, Gooseberries, and Latkes! He has also worked as a research assistant in the British House of Commons and at the United States Naval Institute.

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