Egypt was World Bank’s “top reformer”

By now, we are gradually becoming familiar with the poverty, unemployment (especially among youth) and income inequality in Egypt that seems to be fuelling the protests. But what is less well known is that Egypt, like Tunisia, had only recently been viewed as an ‘economic miracle’ after it wholeheartedly pursued standard IMF/World Bank ideas.

(Follow the ‘one million-strong’ gathering in Cairo ‘live’ over Aljazeera here.)

It’s funny that Hillary Clinton now says that Egypt has to”‘reform”. Only in August 2010, the Wall Street Journal reported that Egypt had become Washington’s economic favourite. And last year, the World Bank, in its ‘Doing Business 2010’ report gushingly (and embarrassingly) applauded Colombia and Egypt as the “top global reformers in four of the past seven years”. I kid you not. How wrong can you get? Unless they meant reforms to profit a small minority of the business elite.

Such IMF/World Bank ‘structural adjustment’ policies include privatisation, subsidy cuts, market ‘liberalisation’ and deregulation. Sound familiar?

The turmoil in Egypt, Morocco, Algeria and Pakistan is also due to a sharp escalation in commodity and food prices, part of global capitalistic speculation. In Egypt, food prices have soared 17 per cent of late and that’s going to hurt ordinary people as 40 per cent of Egyptians earn less than US$2 a day. (Don’t you think it’s time we look into our own food security? That’s something this blog has been advocating for some time now – food self-sufficiency by encouraging people to grow some of their own food and promoting organic farming in unused spaces.)

But what about the IMF/World Bank policies that Egypt pursued – that resulted in the hidden underbelly of corporate-led globalisation invisible in the posh halls of the Global Economic Forum in Davos?

Listen to Samer Shehata, assistant professor of Arab politics at Georgetown University, speaking to Democracy NOW!:

You mentioned the percentage of people under poverty. But also, beginning in 2004, of course, Egypt began implementing economic reforms called for by the IMF—or really forced on them by the IMF and the World Bank—from the late 1980s and the early ’90s, economic reform and structural adjustment programs of privatization, subsidy cuts, opening up markets, deregulation and so on. But the Egyptian government did it in a very hesitant fashion, unwillingly at first. But in 2004, something radical happened, and a new government was appointed, new ministers were appointed, who believed wholeheartedly in the ideas of the IMF and the World Bank. And they quite vigorously pursued these policies. And there was at one level, at the level of macroeconomic indicators, statistics, GDP growth rates, foreign direct investment and so on—Egypt seemed to be a miracle. And this, of course, was the case with the Tunisian model earlier. You’ll remember that Jacques Chirac called it the “economic miracle,” and it was the darling of the IMF and the World Bank, because it implemented these types of reforms earlier. Well, of course, we saw what happened in Tunisia. In Egypt also, from 2004 until the present, the government and its reforms were applauded in Washington by World Bank, IMF and U.S. officials. GDP growth rates were above six percent in consecutive years. Egypt received the top reformer award from the IMF and the World Bank, tremendous foreign direct investment.

But what all of that masked, what all of that masked, was what was going on at the level of real people and ordinary lives. Real incomes were declining as a result of incredibly high inflation, not as high as in Zimbabwe or Venezuela, but inflation rates of 25, 30 percent, eating away at people’s incomes. Basic commodities, foodstuffs, prices were increasing tremendously. In 2008, about 13 or 14 people, Egyptians, died as a result of conflicts resulting from them waiting in long bread queues, because there wasn’t enough bread, and violence would erupt. People were waiting in line for hours to obtain subsidized bread, which is also one of the bases of this regime, you see. It has to do that in order to at least have some kind of acquiescence from the public. So, what these macroeconomic indicators masked was what people were experiencing at the level of everyday life and real income. As I mentioned, poverty was increasing. Income inequality was increasing. And even corruption was increasing, according to Transparency International.

That’s precisely the danger of putting all our focus on implementing the corporate agenda: tax cuts for the rich, budget and subsidy cuts in social spending to balance the fiscal budget, a policy of low wages to attract FDI, weak unions, privatisation of profits, socialisation of losses…

The Wall Street Journal reported in August 2010:

While the Egyptian economy has been growing strongly since 2005, says Kamal Abbas, general coordinator of the Center for Trade Union and Workers Services in Egypt, the gains have gone overwhelming to well-off. “The gains touch only certain segments of the population — the upper crust of society,” he says.

“You have employees making $20 a month” in some new businesses, he argues. “What kind of reform is that?”