In April 1974, Sadat presented what he called the October Working Paper, which described his vision of Egypt's future. The paper committed Egypt to building a strong country, continuing the confrontation with Israel, working toward Arab unity, and playing a leading role in world politics. Perhaps the most important part of Sadat's paper was the announcement of a new economic policy that came to be called infitah [Literally open door; refers to Anwar as Sadat's policy after the October 1973 War of relaxing government controls on the economy so as to encourage the private sector and stimulate the inflow of foreign funds.].

This new economic policy allowed increased foreign investment in Egypt, greater participation by the private sector in the Egyptian economy, more freedom for individuals to develop their own wealth and property, and relaxed currency regulations so that Egyptians could have access to foreign currency. The new direction gradually changed Egypt in many ways: the shops filled with foreign consumer goods; foreign companies built huge modern hotels; and new wealth was displayed in a way that had not been seen in Egypt since before the 1952 Revolution. Doubts began to be expressed, however, about how much all this was actually doing for the Egyptian people since foreign investment in long-term agricultural or industrial projects was lacking.

In January 1977, Egyptians took to the streets in antigovernment riots that demonstrated their disillusionment with infitah and the nepotism and corruption it spawned. The cause of the riots went back to late 1976 when Sadat, in an effort to solve the country's economic problems, asked the World Bank for loans. In response to the bank's criticisms of public subsidies, the government announced in January 1977 that it was ending subsidies on flour, rice, and cooking oil and canceling bonuses and pay increases.

The result was immediate and shocking. On January 18 and 19, there was rioting in towns from Aswan to Alexandria, variously described as the biggest upheaval since the 1919 riots against the British, or a second Black Saturday. It was the first time the army had been brought into the streets since 1952. For thirty-six hours, the rioters unleashed their pent-up fury on targets that symbolized the yawning gap between the haves and have-nots, the frivolity and corruption of the ruling class, and the incompetence and insensitivity of the administration. The rioters shouted slogans like, "Hero of the crossing, where is our breakfast?" and "Thieves of the infitah, the people are famished." There were also shouts of "Nasser, Nasser." In the clashes between demonstrators and police, 800 persons were killed, and several thousands were wounded, according to unofficial estimates. The rioting ended when the government canceled the price increases while retaining 10 percent wage increases and other benefits for public sector employees.