On January 25 - the day which saw the first of Tahrir Square’s many mass demonstrations erupt onto the national and international stage - the IMF announced that Egypt’s economy was in excellent health. The last fiscal year had registered an impressive overall growth rate of 5%, the tourist industry was booming and, despite recent global turmoil, the banking sector was stable and profitable.
By July, however, growth had all but evaporated, tax returns from tourism had fallen to $13.5 billion, GDP had dived 9%, and a 40% slump in exports had created a massive trade shortfall. Moreover, following a series of strikes and worker-led protests, industrial productivity had halved.
In spite of the democratic advancements brought about by the revolution, there is no question that its short-term effects on the economy have been disastrous. In particular, the collapse of the former regime’s massive security apparatus - a crucial tool in its efforts to secure favourable investment conditions for international capital - has given rise to a new militancy in the labour movement, which has in turn driven away foreign direct investment.
The Supreme Council of the Armed Forces (SCAF), which assumed control of the state in February, finds itself caught between two competing pressures: on the one hand there is the market, with its drive toward fiscal consolidation on the Western neo-liberal model, and on the other, the democratic aspirations and immediate material needs of ordinary citizens. Given the nature and composition of SCAF, though, there should be little doubt which of them it favours.
Over the last three decades Egypt’s military-political elite has become increasingly entwined with US strategic and corporate interests. As much as $2bn flows annually from Washington to the top military brass in Cairo, while acting President and former intelligence chief Omar Suleiman has long-standing ties with the American intelligence community and foreign policy establishment. Other former regime figures complicit in the USAID funded Privatisation Implementation Programme who remain in power include Air Marshal Reda Mahmoud Hafez Mohamed, formerly Egypt’s chief liaison officer to Washington, and Lieutenant-General Sami Hafez Anan, who played a crucial role in co-ordinating interim arrangements for the new government.
As though to signal its continued commitment to the Mubarak-era programme of free-market reform, SCAF has set a hugely ambitious growth target of 4% over the next 12 months. In order to achieve this, it will need to take measures to reassure overseas investors that growth will not be impeded by an increasingly organised and assertive workers movement. Specifically, it will need to clamp down on the chronic industrial unrest which has massively reduced output in the manufacturing industry.
On cue, Justice Minister Mohamed el-Gendy and his colleagues have drafted a bill which, if turned into law, will criminalise strikes, protests and demonstrations that disrupt the running of ‘public and private institutions’ during periods of emergency rule. Egypt, of course, has been under emergency rule for the last 30 years, and no clear timetable has yet emerged for the return of legitimate constitutional government, despite the fact that this was one of the central demands of the Tahrir Square protesters.
In effect, then, the regime aims to persuade the international markets that the country is "open for business" by imposing a blanket ban on all industrial action. Indeed, El-Gendy has admitted as much. “We completely reject turning the revolution into chaos,” he said recently. “You won’t see people coming for tourism when they see gatherings and protests and lack of security on the street. All this worries investors. We want to attract investors.”
Yet in the immediate aftermath of the revolution, there was hope that things would be different. The appointment in March of Ahmed El-Borai as Labour Minister was welcomed by a majority of workers groups and trade unions. Before entering politics, El-Borai was a legal theorist specialising in labour law and an adviser at the International Labour Organisation. The first thing he did when he assumed office was introduce a new labour statute guaranteeing both a minimum wage and the right of unions to organise independently of the state or any political party.
However, the statute does not meet popular expections. Firstly, at 700 Egyptian pounds ($118) per month the minimum wage it offers is only slightly more than half of what the unions are demanding. Secondly, the provisions it makes for enhanced syndicate freedom cannot be enacted until the Egyptian Trade Union Federation (ETUF) - the industrial wing of Mubarak’s now disbanded National Democratic Party (NDP) - is rendered inactive. Since 1957 all unions have been obliged to affiliate to, and thereby submit to the control of, the ETUF. Under Mubarak it was used as a way of restricting strike action and disciplining radical trade union activists.
In the past few months steps have been taken to curb the Federation’s influence, including the dissolution of its executive board in the run up to internal elections in September. But official records show that it still has as many as two million members, most of whom were beneficiaries of Mubarak‘ vast system of bureaucratic patronage. The Egyptian Federation of Independent Trade Union’s (EFITU), a newly established democratic workers association, has just 500,000 members. Until the ETUF is totally dissolved and greater efforts are made to dismantle the remnant structures of NDP corporatism, labour syndicates will not be able to enjoy full autonomy.
All this suggests El-Borai’s true role is to buy the regime some credibility with workers without making any substantial political concessions to them. It seems unlikely, however, that his anaemic reforms will succeed in suppressing the challenge posed to SCAF’s economic policy by a labour movement growing in strength and confidence.
One of the key contributing factors to the overthrow of Mubarak was sustained industrial action. In the three or four years running up to the revolution, recurring strikes - in Alexandria over working conditions, in Cairo over falling living standards - caught the mood of popular discontent and eventually helped light the fire of mass revolt.
The January 25 uprising was fuelled by a sense that the contract the people had struck with the state - one which traded civil and political freedom for a measure of economic stability and prosperity - had broken down. By elevating the short-term interests of foreign investors above the long-term welfare of middle and lower income Egyptians, Mubarak, his sons and supporters forfeited what little legitimacy they had. Egypt’s military rulers appear to be making exactly the same mistake.
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