Egypt - A Revolution Against Neoliberalism? (long)
A Revolution Against Neoliberalism?
If rebellion results in a retrenchment of
neoliberalism, millions will feel cheated.
by 'Abu Atris'
Al Jazeera
Last Modified: 24 Feb 2011 17:04 GMT
http://english.aljazeera.net/indepth/opinion/2011/02/201122414315249621.html
On February 16th I read a comment was posted on the wall of
the Kullina Khalid Saed ("We are all Khaled Said") Facebook
page administered by the now very famous Wael Ghonim. By
that time it had been there for about 21 hours. The comment
referred to a news item reporting that European governments
were under pressure to freeze bank accounts of recently
deposed members of the Mubarak regime. The comment said:
"Excellent news ... we do not want to take revenge on anyone
... it is the right of all of us to hold to account any
person who has wronged this nation. By law we want the
nation's money that has been stolen ... because this is the
money of Egyptians, 40% of whom live below the poverty
line."
By the time I unpacked this thread of conversation, 5,999
people had clicked the "like" button, and about 5,500 had
left comments. I have not attempted the herculean task of
reading all five thousand odd comments (and no doubt more
are being added as I write), but a fairly lengthy survey
left no doubt that most of the comments were made by people
who clicked the "like" icon on the Facebook page. There were
also a few by regime supporters, and others by people who
dislike the personality cult that has emerged around Mr.
Ghoneim.
This Facebook thread is symptomatic of the moment. Now that
the Mubarak regime has fallen, an urge to account for its
crimes and to identify its accomplices has come to the fore.
The chants, songs, and poetry performed in Midan al-Tahrir
always contained an element of anger against haramiyya
(thieves) who benefited from regime corruption. Now lists of
regime supporters are circulating in the press and
blogosphere. Mubarak and his closest relatives (sons Gamal
and 'Ala') are always at the head of these lists. Articles
on their personal wealth give figures as low as $3 billion
to as high as $70 billion (the higher number was repeated on
many protesters' signs). Ahmad Ezz, the General Secretary of
the deposed National Democratic Party and the largest steel
magnate in the Middle East, is supposed to be worth $18
billion; Zohayr Garana, former Minister of Tourism, $13
billion; Ahmad al-Maghrabi, former Minister of Housing, $11
billion; former Minister of Interior Habib Adli, much hated
for his supervision of an incredibly abusive police state,
also managed to amass $8 billion - not bad for a lifetime
civil servant.
Such figures may prove to be inaccurate. They may be too
low, or maybe too high, and we may never know precisely
because much of the money is outside of Egypt, and foreign
governments will only investigate the financial dealings of
Mubarak regime members if the Egyptian government makes a
formal request for them to do so. Whatever the true numbers,
the corruption of the Mubarak regime is not in doubt. The
lowest figure quoted for Mubarak's personal wealth, of
"only" $3 billion, is damning enough for a man who entered
the air force in 1950 at the age of twenty two, embarking on
a sixty-year career in "public service."
A systemic problem
The hunt for regime cronies' billions may be a natural
inclination of the post-Mubarak era, but it could also lead
astray efforts to reconstitute the political system. The
generals who now rule Egypt are obviously happy to let the
politicians take the heat. Their names were not included in
the lists of the most egregiously corrupt individuals of the
Mubarak era, though in fact the upper echelons of the
military have long been beneficiaries of a system similar to
(and sometimes overlapping with) the one that enriched
civilian figures much more prominent in the public eye such
as Ahmad Ezz and Habib al-Adly.
To describe blatant exploitation of the political system for
personal gain as corruption misses the forest for the trees.
Such exploitation is surely an outrage against Egyptian
citizens, but calling it corruption suggests that the
problem is aberrations from a system that would otherwise
function smoothly. If this were the case then the crimes of
the Mubarak regime could be attributed simply to bad
character: change the people and the problems go away. But
the real problem with the regime was not necessarily that
high-ranking members of the government were thieves in an
ordinary sense. They did not necessarily steal directly from
the treasury. Rather they were enriched through a conflation
of politics and business under the guise of privatization.
This was less a violation of the system than business as
usual. Mubarak's Egypt, in a nutshell, was a quintessential
neoliberal state.
What is neoliberalism? In his Brief History of
Neoliberalism, the eminent social geographer David Harvey
outlined "a theory of political economic practices that
proposes that human well-being can best be advanced by
liberating individual entrepreneurial freedoms and skills
within an institutional framework characterised by strong
private property rights, free markets, and free trade."
Neoliberal states guarantee, by force if necessary, the
"proper functioning" of markets; where markets do not exist
(for example, in the use of land, water, education, health
care, social security, or environmental pollution), then the
state should create them.
Guaranteeing the sanctity of markets is supposed to be the
limit of legitimate state functions, and state interventions
should always be subordinate to markets. All human behavior,
and not just the production of goods and services, can be
reduced to market transactions.
And the application of utopian neoliberalism in the real
world leads to deformed societies as surely as the
application of utopian communism did.
Rhetoric vs. reality
Two observations about Egypt's history as a neoliberal state
are in order. First, Mubarak's Egypt was considered to be at
the forefront of instituting neoliberal policies in the
Middle East (not un-coincidentally, so was Ben Ali's
Tunisia). Secondly, the reality of Egypt's political economy
during the Mubarak era was very different than the rhetoric,
as was the case in every other neoliberal state from Chile
to Indonesia. Political scientist Timothy Mitchell published
a revealing essay about Egypt's brand of neoliberalism in
his book Rule of Experts (the chapter titled "Dreamland" -
named after a housing development built by Ahmad Bahgat, one
of the Mubarak cronies now discredited by the fall of the
regime). The gist of Mitchell's portrait of Egyptian
neoliberalism was that while Egypt was lauded by
institutions such as the International Monetary Fund as a
beacon of free-market success, the standard tools for
measuring economies gave a grossly inadequate picture of the
Egyptian economy. In reality the unfettering of markets and
agenda of privatization were applied unevenly at best.
The only people for whom Egyptian neoliberalism worked "by
the book" were the most vulnerable members of society, and
their experience with neoliberalism was not a pretty
picture. Organised labor was fiercely suppressed. The public
education and the health care systems were gutted by a
combination of neglect and privatization. Much of the
population suffered stagnant or falling wages relative to
inflation. Official unemployment was estimated at
approximately 9.4% last year (and much higher for the youth
who spearheaded the January 25th Revolution), and about 20%
of the population is said to live below a poverty line
defined as $2 per day per person.
For the wealthy, the rules were very different. Egypt did
not so much shrink its public sector, as neoliberal doctrine
would have it, as it reallocated public resources for the
benefit of a small and already affluent elite. Privatization
provided windfalls for politically well-connected
individuals who could purchase state-owned assets for much
less than their market value, or monopolise rents from such
diverse sources as tourism and foreign aid. Huge proportions
of the profits made by companies that supplied basic
construction materials like steel and cement came from
government contracts, a proportion of which in turn were
related to aid from foreign governments.
Most importantly, the very limited function for the state
recommended by neoliberal doctrine in the abstract was
turned on its head in reality. In Mubarak's Egypt business
and government were so tightly intertwined that it was often
difficult for an outside observer to tease them apart. Since
political connections were the surest route to astronomical
profits, businessmen had powerful incentives to buy
political office in the phony elections run by the ruling
National Democratic Party. Whatever competition there was
for seats in the Peoples' Assembly and Consultative Council
took place mainly within the NDP. Non-NDP representation in
parliament by opposition parties was strictly a matter of
the political calculations made for a given elections: let
in a few independent candidates known to be affiliated with
the Muslim Brotherhood in 2005 (and set off tremors of fear
in Washington); dictate total NDP domination in 2010 (and
clear the path for an expected new round of distributing
public assets to "private" investors).
Parallels with America
The political economy of the Mubarak regime was shaped by
many currents in Egypt's own history, but its broad outlines
were by no means unique. Similar stories can be told
throughout the rest of the Middle East, Latin America, Asia,
Europe and Africa. Everywhere neoliberalism has been tried,
the results are similar: living up to the utopian ideal is
impossible; formal measures of economic activity mask huge
disparities in the fortunes of the rich and poor; elites
become "masters of the universe," using force to defend
their prerogatives, and manipulating the economy to their
advantage, but never living in anything resembling the
heavily marketised worlds that are imposed on the poor.
The story should sound familiar to Americans as well. For
example, the vast fortunes of Bush era cabinet members
Donald Rumsfeld and Dick Cheney, through their involvement
with companies like Halliburton and Gilead Sciences, are the
product of a political system that allows them - more or
less legally - to have one foot planted in "business" and
another in "government" to the point that the distinction
between them becomes blurred. Politicians move from the
office to the boardroom to the lobbying organization and
back again.
As neoliberal dogma disallows any legitimate role for
government other than guarding the sanctity of free markets,
recent American history has been marked by the steady
privatization of services and resources formerly supplied or
controlled by the government. But it is inevitably those
with closest access to the government who are best
positioned to profit from government campaigns to sell off
the functions it formerly performed. It is not just
Republicans who are implicated in this systemic corruption.
Clinton-era Secretary of Treasury Robert Rubin's involvement
with Citigroup does not bear close scrutiny. Lawrence
Summers gave crucial support for the deregulation of
financial derivatives contracts while Secretary of Treasury
under Clinton, and profited handsomely from companies
involved in the same practices while working for Obama (and
of course deregulated derivatives were a key element in the
financial crisis that led to a massive Federal bailout of
the entire banking industry).
So in Egyptian terms, when General Secretary of the NDP
Ahmad Ezz cornered the market on steel and was given
contracts to build public-private construction projects, or
when former Minister of Parliament Talaat Mustafa purchased
vast tracts of land for the upscale Madinaty housing
development without having to engage in a competitive
bidding process (but with the benefit of state-provided road
and utility infrastructure), they may have been practicing
corruption logically and morally. But what they were doing
was also as American as apple pie, at least within the scope
of the past two decades.
However, in the current climate the most important thing is
not the depredations of deposed Mubarak regime cronies. It
is rather the role of the military in the political system.
It is the army that now rules the country, albeit as a
transitional power, or so most Egyptians hope. No
representatives of the upper echelons of the Egyptian
military appear on the various lists of old-regime allies
who need to be called to account. For example, the headline
of the February 17th edition of Ahrar, the press organ of
the Liberal party, was emblazoned with the headline
"Financial Reserves of the Corrupt Total 700 Billion Pounds
[about $118 billion] in 18 Countries."
A vast economic powerhouse
But the article did not say a single word about the place of
the military in this epic theft. The military were
nonetheless part of the crony capitalism of the Mubarak era.
After relatively short careers in the military high-ranking
officers are rewarded with such perks as highly remunerative
positions on the management boards of housing projects and
shopping malls. Some of these are essentially public-sector
companies transferred to the military sector when IMF-
mandated structural adjustment programs required reductions
in the civilian public sector.
But the generals also receive plums from the private sector.
Military spending itself was also lucrative because it
included both a state budget and contracts with American
companies that provided hardware and technical expertise.
The United States provided much of the financing for this
spending under rules that required a great deal of the money
to be recycled to American corporations, but all such deals
required middlemen. Who better to act as an intermediary for
American foreign aid contracts than men from the very same
military designated as the recipient of the services paid
for by this aid? In this respect the Egyptian military-
industrial complex was again stealing a page from the
American playbook; indeed, to the extent that the Egyptian
military benefited from American foreign aid, Egypt was part
of the American military-industrial complex, which is famous
for its revolving-door system of recycling retired military
men as lobbyists and employees of defense contractors.
Consequently it is almost unthinkable that the generals of
the Supreme Military Council will willingly allow more than
cosmetic changes in the political economy of Egypt. But they
could be compelled to do so unwillingly. The army is a blunt
force, not well suited for controlling crowds of
demonstrators. The latest statement of the Supreme Military
Council reiterated both the legitimacy of the pro-democracy
movements demands, and the requirement that demonstrations
cease so that the country can get back to work. If
demonstrations continue to the point that the Supreme
Military Council feels it can no longer tolerate them, then
the soldiers who will be ordered to put them down (indeed,
in some accounts were already ordered to put them down early
in the revolution and refused to do so) with deadly force,
are not the generals who were part of the Mubarak-era
corruption, but conscripts.
Pro-democracy demonstrators and their sympathisers often
repeated the slogans "the army and the people are one hand,"
and "the army is from us." They had the conscripts in mind,
and many were unaware of how stark differences were between
the interests of the soldiers and the generals. Between the
conscripts and the generals is a middle-level professional
officer corps whose loyalties have been the subject of much
speculation. The generals, for their part, want to maintain
their privileges, but not to rule directly. Protracted
direct rule leaves the officers of the Supreme Military
Council vulnerable to challenges from other officers who
were left on the outside. Also, direct rule would make it
impossible to hide that the elite officers are not in fact
part of the "single hand" composed of the people and the
(conscript) army. They are instead logically in the same
camp as Ahmad Ezz, Safwat al-Sharif, Gamal Mubarak, and
Habib al-Adly - precisely the names on those lists making
the rounds of regime members and cronies who should face
judgment.
Ultimately the intense speculation about how much money the
Mubarak regime stole, and how much the people can expect to
pump back into the nation, is a red herring. If the figure
turns out to be $50 billion or $500 billion, it will not
matter, if Egypt remains a neoliberal state dedicated
(nominally) to free-market fundamentalism for the poor,
while creating new privatised assets that can be recycled to
political insiders for the rich. If one seeks clues to how
deeply the January 25th Revolution will restructure Egypt,
it would be better to look at such issues as what sort of
advice the interim government of generals solicits in
fulfilling its mandate to re-make Egyptian government. The
period of military government probably will be as short as
advertised, followed, one hopes, by an interim civilian
government for some specified period (at least two years)
during which political parties are allowed to organise on
the ground in preparation for free elections. But interim
governments have a way of becoming permanent.
Technocrats or ideologues?
One sometimes hears calls to set up a government of
"technocrats" that would assume the practical matters of
governance. "Technocrat" sounds neutral - a technical expert
who would make decisions on "scientific" principle. The term
was often applied to Yusuf Butros Ghali, for example, the
former Minister of the Treasury, who was one of the Gamal
Mubarak boys brought into the cabinet in 2006 ostensibly to
smooth the way for the President's son to assume power.
Ghali is now accused of having appropriated LE 450 million
for the use of Ahmad Ezz.
I once sat next to Ghali at a dinner during one of his trips
abroad, and had the opportunity to ask him when the Egyptian
government would be ready to have free elections. His
response was to trot out the now discredited regime line
that elections were impossible because actual democracy
would result in the Muslim Brotherhood taking power.
Conceivably Ghali will beat the charge of specifically
funneling the state's money to Ahmad Ezz. But as a key
architect of Egypt's privatization programs he cannot
possibly have been unaware that he was facilitating a system
that enabled the Ezz steel empire while simultaneously
destroying Egypt's educational and health care systems.
The last time I encountered the word "technocrat" was in
Naomi Klein's book The Shock Doctrine - a searing indictment
of neoliberalism which argues that the free-market
fundamentalism promoted by economist Milton Friedman (and
immensely influential in the United States) is predicated on
restructuring economies in the wake of catastrophic
disruptions because normally functioning societies and
political systems would never vote for it. Disruptions can
be natural or man-made, such as ... revolutions.
The chapters in The Shock Doctrine on Poland, Russia, and
South Africa make interesting reading in the context of
Egypt's revolution. In each case when governments (communist
or apartheid) collapsed, "technocrats" were brought in to
help run countries that were suddenly without functional
governments, and create the institutional infrastructure for
their successors. The technocrats always seemed to have
dispensed a form of what Klein calls "shock therapy" - the
imposition of sweeping privatization programs before dazed
populations could consider their options and potentially
vote for less ideologically pure options that are in their
own interests.
The last great wave of revolutions occurred in 1989. The
governments that were collapsing then were communist, and
the replacement in that "shock moment" of one extreme
economic system with its opposite seemed predictable and to
many even natural.
One of the things that make the Egyptian and Tunisian
revolutions potentially important on a global scale is that
they took place in states that were already neoliberalised.
The complete failure of neoliberalsm to deliver "human well-
being" to a large majority of Egyptians was one of the prime
causes of the revolution, at least in the sense of helping
to prime millions of people who were not connected to social
media to enter the streets on the side of the pro-democracy
activists.
But the January 25th Revolution is still a "shock moment."
We hear calls to bring in the technocrats in order to revive
a dazed economy; and we are told every day that the
situation is fluid, and that there is a power vacuum in the
wake of not just the disgraced NDP, but also the largely
discredited legal opposition parties, which played no role
whatsoever in the January 25th Revolution. In this context
the generals are probably happy with all the talk about
reclaiming the money stolen by the regime, because the flip
side of that coin is a related current of worry about the
state of the economy. The notion that the economy is in
ruins - tourists staying away, investor confidence
shattered, employment in the construction sector at a
standstill, many industries and businesses operating at far
less than full capacity - could well be the single most
dangerous rationale for imposing cosmetic reforms that leave
the incestuous relation between governance and business
intact.
Or worse, if the pro-democracy movement lets itself be
stampeded by the "economic ruin" narrative, structures could
be put in place by "technocrats" under the aegis of the
military transitional government that would tie the eventual
civilian government into actually quickening the pace of
privatization. Ideologues, including those of the neoliberal
stripe, are prone to a witchcraft mode of thinking: if the
spell does not work, it is not the fault of the magic, but
rather the fault of the shaman who performed the spell. In
other words, the logic could be that it was not
neoliberalism that ruined Mubarak's Egypt, but the faulty
application of neoliberalism.
Trial balloons for this witchcraft narrative are already
being floated outside of Egypt. The New York Times ran an
article on February 17th casting the military as a
regressive force opposed to privatization and seeking a
return to Nasserist statism. The article pits the ostensibly
"good side" of the Mubarak regime (privatization programs)
against bad old Arab socialism, completely ignoring the fact
that while the system of military privilege may preserve
some public-sector resources transferred from the civilian
economy under pressure of IMF structural adjustment
programs, the empire of the generals is hardly limited to a
ring-fenced quasi-underground public sector.
Officers were also rewarded with private-sector perks;
civilian political/business empires mixed public and private
roles to the point that what was government and what was
private were indistinguishable; both the military and
civilians raked in rents from foreign aid. The generals may
well prefer a new round of neoliberal witchcraft. More
privatization will simply free up assets and rents that only
the politically connected (including the generals) can
acquire. Fixing a failed neoliberal state by more stringent
applications of neoliberalism could be the surest way for
them to preserve their privileges.
A neoliberal fix would, however, be a tragedy for the pro-
democracy movement. The demands of the protesters were clear
and largely political: remove the regime; end the emergency
law; stop state torture; hold free and fair elections. But
implicit in these demands from the beginning (and decisive
by the end) was an expectation of greater social and
economic justice. Social media may have helped organise the
kernel of a movement that eventually overthrew Mubarak, but
a large element of what got enough people into the streets
to finally overwhelm the state security forces was economic
grievances that are intrinsic to neoliberalism. These
grievances cannot be reduced to grinding poverty, for
revolutions are never carried out by the poorest of the
poor. It was rather the erosion of a sense that some human
spheres should be outside the logic of markets. Mubarak's
Egypt degraded schools and hospitals, and guaranteed grossly
inadequate wages, particularly in the ever-expanding private
sector. This was what turned hundreds of dedicated activists
into millions of determined protestors.
If the January 25th revolution results in no more than a
retrenchment of neoliberalism, or even its intensification,
those millions will have been cheated. The rest of the world
could be cheated as well. Egypt and Tunisia are the first
nations to carry out successful revolutions against
neoliberal regimes. Americans could learn from Egypt.
Indeed, there are signs that they already are doing so.
Wisconsin teachers protesting against their governor's
attempts to remove the right to collective bargaining have
carried signs equating Mubarak with their governor.
Egyptians might well say to America 'uqbalak (may you be the
next).
['Abu Atris' is the pseudonym for a writer working in
Egypt.]
The views expressed in this article are the author's own and
do not necessarily reflect Al Jazeera's editorial policy.
==========
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