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Egypt’s Free Economy Excludes the Poor

By Bisan Kassab | Al Akhbar | January 25, 2013

Egypt’s 25 January Revolution produced few economic benefits for the country’s poor even though they were instrumental in overthrowing the old order. The Muslim Brotherhood has other economic priorities, including pushing measures that further economic liberalization in Egypt.

Given the Egyptian media’s focus, it might be difficult to believe that Egypt’s 25 January 2011 Revolution was not one of the educated middle class. On the TV screen, these shiny young faces appear on talk shows, portrayed as the leaders of the revolution.

But 28 January 2011’s “Friday of Anger” belonged to the marginalized who – using the tricks they learned in their daily battles with the state apparatus in the slums – were able to defeat the police forces. Regardless, the media see the revolution differently: “This is the revolution of dignity and not of the hungry,” they say.

This discourse paved the way for state repression of social demands. It even reached a point where the media began depicting Egypt’s working class – those that bolstered the revolution’s ranks with its mass mobilizations – of deliberately aiding the counter-revolution through strikes that hurt the economy. The first law issued by the Supreme Council of the Armed Forces (SCAF) following their rise to power banned strikes.

As time passed, the voices of social justice were replaced by the murmurings of political battles. These politicians, who have the upper hand in the media, wanted a piece of the revolutionary pie after disregarding its true heros.

Post-Revolution, Little Help for the Poor

Even before the revolution, experts close to the ruling National Democratic Party saw signs of unrest rooted in growing poverty. This was clear in the First Investment Report: Towards a Fair Distribution of the Fruits of Growth prepared by the General Investment Authority in 2009, which warned of sharply rising poverty rates.

Despite the steady economic growth in the last decade of Mubarak’s rule, the proportion of the population living below the national poverty line rose from almost 17 percent of the population in 2000 to 22 percent in 2008, according to the latest figures available from the World Bank.

Nevertheless, when SCAF took power after the fall of Mubarak, they ignored these facts and rejected the expansionary budget presented by Minister of Finance and prominent NDP member Samir Radwan. Instead, the first post-revolution budget was austere: workforce training funds were scaled back to 1 billion Egyptian Pounds ($151 million) from an original 2 billion, and funds for low-income housing were never raised by the expected EGP500 million ($75 million).

Furthermore, SCAF sought to protect the rich from any burdens, such as the tax increase proposed by Radwan on the distribution of capital gains by financial institutions.

Although the last days of SCAF’s rule witnessed an open struggle between the military class and Islamist forces, the conflict was not an indication of different economic policies. “The Islamist parties, which between them won a majority in the 2011-12 parliamentary election appear to favor the continuation of a broadly pro-market policy…” explained an April 2012 report from Chatham House titled “‘Bread, Dignity and Social Justice’: The Political Economy of Egypt’s Transition.”

The new Egyptian Constitution is a glaring example of the bias of the Muslim Brotherhood (MB) towards market liberalization. It stipulated linking salaries with production for the first time and neglected to set a ceiling for agricultural property.

But the constitution aligns with the Brotherhood’s previous positions: the group had been the primary opponent of agrarian reform during the Nasser era and endorsed a 1992 act liberating the relationship between landlord and tenant on agricultural land. The act had abolished gains won by peasants and was faced with wide-scale opposition in 1997.

The knockout blow to the MB’s popularity might be their attempt to implement a package of reforms for tax laws, which was frozen by President Mohamed Mursi a few hours after being announced. It would’ve raised sales taxes on several cement and communications goods and led to a steep increase on the commercial advertising tax – a move that could have hiked up the sales prices of nearly all goods and services.

It seems the MB has learned a lesson from the bread uprising against President Anwar Sadat in January 1977. At the time, the MB magazine al-Daawa described the protests as a “communist conspiracy.”

While the revolution seems to have resulted – at the very least – in a minimum wage increase to EGP700 ($105), the collapse of the Egyptian Pound against the US dollar this past January has precluded any benefits from such a raise.

January 25, 2013 Posted by | Economics, Timeless or most popular | , , , , , , | 1 Comment

Egypt: Mursi retires army chief Tantawi

Morsi changes Egypt Army leadership; cancels addendum to Constitutional declaration; appoints Mahmoud Mekki as vice president

Ahram Online | August 12, 2012

President Morsi made a bundle of sweeping decisions on Sunday afternoon, announced by the presidential spokesperson in a televised statement.

First, Morsi cancelled the addendum to the constitutional declaration, which was issued by the Supreme Council of the Armed Forces (SCAF) on 17 June. The addendum included clauses that gave the armed forces a high level of autonomy; whereas SCAF had the final say in all issues related to the military. It also stipulated that the head of SCAF, Field Marshal Hussein Tantawi, was to remain minister of defence until a new constitution is drafted.

Secondly, Morsi issued a decision to retire Hussein Tantawi, the minister of defence and the general commander of the Armed Forces.

Morsi also retired Sami Anan, the Amry’s Chief of Staff, from his duties.

Morsi also decided to award both men state medals and appoint them as advisors to the president.

Thirdly, the president appointed the head of the military intelligence, Abdel Fatah El-Sisi, as Minister of Defence to replace Tantawi.

Sedky Sobhy, the commander of the Third Army, was appointed as Chief of Staff of the armed forces.

Morsi also retired the Commander of the Navy, Mohab Memish, and appointed him as head of the Suez Canal Authority.

Reda Hafez, the commander of the Air Force, was also retired and appointed as minister of Military Production.

Mohamed El-Assar, the SCAF member in charge of armaments, was appointed as assistant to the Minsiter of Defence.

Fourth, Morsi appointed Mahmoud Mekki, the deputy head of the Cassation Court, as his Vice President.


Al Akhbar reports:

… Tantawi was defense minister for nearly two decades under Mubarak but was much despised in Egypt.

The military council’s second in command, Chief of Staff Sami Annan, was also ordered to retire.

A general told Reuters that the decisions had been made in consultation with Tantawi.

“The decision was based on consultation with the field marshal and the rest of the military council,” General Mohamed el-Assar told Reuters. …

August 12, 2012 Posted by | Aletho News | , , , , , , | Comments Off on Egypt: Mursi retires army chief Tantawi

Morsi orders release of 572 inmates

Press TV – July 20, 2012

Egyptian President Mohamed Morsi has ordered the release of 572 people detained by the Army since last year’s revolution.

Morsi, who took office last month as Egypt’s first elected civilian president, on Thursday ordered military courts to grant amnesty to the defendants, AFP reported.

The Egyptian president earlier set up a committee to examine the cases of civilians put on trial by the military. The committee says 11,879 Egyptians were detained by the military throughout out the uprising that ousted former dictator Hosni Mubarak. Out of them, 9,714 have since been released.

Human rights activists and bodies have unanimously called for the end of military trials of civilians.

“International law is crystal clear on this: No civilian, regardless of the crime, should be tried by a military court,” Sarah Leah Whitson, Middle East and North Africa director at Human Rights Watch (HRW), said this week.

“Military trials and arrests of civilians by the military have continued, despite the June 30 handover to civilian authority,” the HRW noted.

Sworn in on June 30, Morsi is locked in a power struggle with the powerful Supreme Council of the Armed Forces.

Last week, Egyptians thronged the iconic Tahrir Square in Cairo to express solidarity with Morsi over his decree to reconvene parliament.

The parliament, dominated by Muslim Brotherhood lawmakers, was dissolved in line with a ruling by the Supreme Constitutional Court, based on a decision by the military, prior to the presidential elections.

July 19, 2012 Posted by | Civil Liberties, Solidarity and Activism, Subjugation - Torture | , , , , | Comments Off on Morsi orders release of 572 inmates

Muslim Brotherhood rejects dissolution of Egyptian parliament

Press TV – June 16, 2012

The Muslim Brotherhood has rejected the military’s decision to dissolve the Egyptian parliament and has demanded that a referendum be held on the issue.

The Muslim Brotherhood, which secured the biggest bloc of seats in two rounds of parliamentary elections in December 2011 and January 2012, issued a statement on Saturday saying “dangerous days” were ahead and the political gains of the revolution that toppled former dictator Hosni Mubarak on February 11, 2011 could be wiped out.

The parliament should only be dissolved by a popular referendum, and the order to dissolve the assembly “represents a coup against the whole democratic process,” the statement added.

The Freedom and Justice Party (FJP) — the political wing of the Muslim Brotherhood — said in another statement that the decision showed the military council’s desire to “take possession of all powers despite the will of the people.”

Egypt’s ruling military council formally announced the dissolution of the parliament on Saturday following a Supreme Court ruling earlier in the week.

Some critics have compared the move to the beginning of Algeria’s civil war in 1992, when the army cancelled an election an Islamic party was winning.

Egyptians are casting their ballots in a two-day presidential runoff election that began on Saturday and runs until Sunday which pits the candidate of the Muslim Brotherhood’s Freedom and Justice Party, Mohammed Morsi, against former Prime Minister Ahmad Shafiq.

More than 50 million people are eligible to vote.

Early results of expatriates’ votes show Morsi has won 78 percent.

The ruling Supreme Council of the Armed Forces (SCAF) has vowed to hand over power to the winner of the election by July 1.

Many Egyptians fear that Shafiq is the undeclared candidate of the junta and that the military-appointed election committee overseeing the election will rig the vote in favor of Shafiq.

Angry Egyptian protesters have held many demonstrations across the country in which they urged the authorities to ban all remnants of the Mubarak regime from running as candidates in elections.

June 16, 2012 Posted by | Civil Liberties, Deception | , , , , | 3 Comments

The Unresolved Question of Egypt’s Economy

14.2 million Egyptians live on less than one US dollar a day

By Ramzy Baroud | Palestine Chronicle | June 13, 2012

A new Egypt demands a new constitution and president. Many pressing questions also need to be addressed, including the religious-secular divide, the value of Sharia in the making of law, citizenship, minority rights, the rule of civil society, foreign policy, and much more.

One issue that requires urgent attention in the current discussion is that of Egypt’s shattered economy. In the first round of elections on May 23, Egypt’s presidential candidates appeared to hold vastly different ideas regarding their vision for the future. With the elimination of independent candidate Hamdeen Sabahy before the final round on June 16-17, the economic program for the two remaining candidates seemed oddly similar and suspiciously familiar.

The oddity stems from the fact that the two contenders – Freedom and Justice Party candidate Mohamed Mursi and former Prime Minister Ahmed Shafiq – are supposed to represent the two extremes defining Egypt after the 2011 revolution. Mursi is a Muslim Brotherhood figure, long oppressed by the very regime that Shafiq dutifully served.

The “run-off in Egypt’s presidential elections between the two most polarizing candidates has escalated investor concerns of renewed unrest,” claimed Arabia Monitor, a market research company. However, both candidates are united by their advocacy of the same free market economy, the guiding model for the discredited Mubarak regime. The news is hardly shocking in the case of Shafiq, an establishment man who would not be expected to challenge Egypt’s chronic inequality; Mursi’s position is bewildering.

While “rivals portray the Brotherhood as a nebulous organization obsessed with religion,” according to Patrick Werr, “its wide-ranging plan, details of which were revealed during the buildup to last month’s first-round presidential vote, projects a pragmatism that puts rapid economic growth ahead of ideology.” The Brotherhood ‘pragmatism’ is only commended here because it promotes “a strongly free-market economic plan” and a pledge to move quickly to secure a loan from the International Monetary Fund (IMF).

Some estimates put Egypt’s current debt at close to $190 billion. The Egyptian revolution, which in part sought economic justice and equitable distribution of wealth, is yet to produce a new economic reality. Under Mubarak, the economy operated through a selective interpretation of free market economy marred by extreme corruption in favor of the ruling elite. Over 15 months of haggling between the Supreme Council of the Armed Forces (SCAF), angry masses, a new elected parliament and other forces have now wreaked havoc on an already struggling economy. The Egyptian pound is facing the prospect of ‘disorderly devaluation.’ The IMF’s original loan offer of $3.2 billion, rejected by Egypt at the time, would not be enough to rectify the damage. Per Egyptian government and IMF estimates, the country requires $10-12 billion to secure the pound.

Currency devaluation is only a small aspect of Egypt’s current economic woes. The Economist (May 19-25) reported that Egypt’s foreign exchange reserve is now down to third of its value of 15 months ago and the budget deficit has surged to 10 percent of GDP. “The budget shortfall could be resolved by a stroke of scrapping energy subsidies, but in a country where 40% of people live in poverty; this is a sizzling political potato.”

It is actually much more than a ‘sizzling political potato’. The handling of the economy will ultimately make or break the relationship between Egypt’s new rulers and its people – most of whom are not only politically disfranchised, but economically marginalized as well.

Although most Egyptians now frown at Mubarak’s legacy, the country’s economic indicators were for years perceived favorably by Western financial institutions. After all Egypt recorded steady growth. Its ‘economic reforms’ post 1991 were largely celebrated for further liberalizing trade and investment, cutting subsidies (thus forcing the poor to continue teetering at the edge of poverty and utter desolation) and dismantling the public sector. The IMF and other Western lending institutions do not settle for anything but more austerity measures – regardless of whether Egypt’s new president is a bearded Muslim or an avowed liberal. The only ideology that matters for the IMF is the free market economy.

So what must be done for the almost 14.2 million people who live on less than one US dollar a day? 1.5 million Egyptian currently live in a large graveyard at the outskirts of Cairo. Austerity and further cuts could only lead to the kind of misery that instigated last year’s revolution.

Egypt’s remaining candidates promise to revive the economy while keeping social justice on the agenda. While Shafiq has promised an abundance of perks to various sectors of society, the Brotherhood has been promoting a detailed program called Al-Nahda, or The Renaissance. Enlisting the help of internationally renowned economists such as Peru’s Hernando de Soto Polar, Al-Nahda is reportedly a study of many economic models around the world, including Turkey, Malaysia and South Africa.

The Brotherhood’s initial presidential candidate, Khairat al-Shater was the “driving force behind the project,” according to the Daily Beast (June 7). In an interview last April, he laid down the basic premise of his plan: “The Egyptian economy must rely to a very, very large degree on the private sector. The priority is for Egyptian investors, then Arab then foreign.”

It is expected that Egypt’s intense public discussions in the current phase will be fixed on foundational issues such as the formation of a constitutional assembly and a redefinition of the rule of SCAF. But Egypt’s economy is deeply flawed. An IMF-style free market economy is of no use to millions of Egyptians when they lack proper education and the most basic rights and opportunities. For an Egyptian day laborer to have a better life in a country with a huge and growing income gap between rich and poor, something fundamental needs to take place.

Referencing ‘social justice’ while negotiating IMF loans suggests a precarious start for any truly fundamental economic reforms. While Hamdeen Sabahy is no longer in the race to challenge the free market wisdom of his contenders, the debate must not end here.

June 14, 2012 Posted by | Economics | , , , , | 1 Comment

Egypt election commission disqualifies 3 leading candidates

Press TV – April 15, 2012

Egypt’s presidential election commission has disqualified 10 out of 23 candidates from the upcoming election, including the Muslim Brotherhood’s Khairat al-Shater and Mubarak’s spy chief Omar Suleiman.

The presidential race was shocked Saturday when the election body removed three leading candidates that also included Salafi nominee Hazem Salah Abu Ismail from next month’s vote.

The candidates have 48 hours to appeal against the decision.

The polls are scheduled to be held in two rounds. The first would be held over two days on May 23 and 24, while a run-off, if necessary, would take place on June 16 and 17. Final results are expected on June 21.

The disqualifications were announced two days after Egyptians held a mass rally, organized by the Muslim Brotherhood and the Salafist groups, to pressure the country’s ruling junta to prohibit members of the ousted ex-ruler Hosni Mubarak’s regime from running for president.

The huge demonstration came a day after the country’s parliament ratified a bill prohibiting members of the old guard from standing for public office.

Omar Suleiman, who served as the head of Egypt’s General Intelligence Department for 18 years, registered as one of the presidential hopefuls last week.

Many consider Suleiman a favorite of the Supreme Council of the Armed Forces (SCAF), which has ruled Egypt since Mubarak’s ouster in February 11, 2011.

The Muslim Brotherhood’s candidate Khairat al-Shater had said that Suleiman’s presidential bid could spark a second revolution in the country.

April 15, 2012 Posted by | Aletho News | , , , , , | Comments Off on Egypt election commission disqualifies 3 leading candidates

Egyptians oppose US economic aid, says Gallup

By Joseph Mayton | BikyaMasr | 6 February 2012

CAIRO: A new poll published by Gallup revealed that some 70 percent of Egyptians surveyed oppose United States economic aid to Egypt. The poll, conducted in December 2011, also said that Egyptians are against direct aid to civil society organizations in the country.

“This rebuke of US financial support may be a challenge for Egypt’s newly elected parliament and its future president as the government attempts to bolster the nation’s financial stability,” wrote Gallup in their report published on Monday.

Egyptians were not against international economic assistance altogether, however, showing signs of support from international aid groups.

Gallup reported that around 50 percent of the country favoring aid and assistance from international institutions.

Egypt’s ruling military junta and the interim government appointed by the Supreme Council of the Armed Forces (SCAF) had initially rejected assistance from the International Monetary Fund (IMF), but has since reversed their opposition.

Last month, Masood Ahmed, Director for the Middle East and Central Asia Department for the IMF, was in Egypt to discuss a potential $3.2 billion IMF loan to Egypt.

“Egyptian leaders’ ability to attract foreign aid and investment will be important to collecting the capital needed to move the nation’s economy forward,” Gallup continued.

Civil society groups have received tens of millions of dollars from the US since the January 2011 uprising ousted President Hosni Mubarak, but in the past month, the military rulers have cracked down on local and international NGOs, sending some 43 employees to a criminal court on Sunday to face charges for illegal funding.

Among those sent are 19 Americans, 5 Serbians, two Germans, three Arabs and the remaining Egyptians. Sam LaHood, the son of US Transportation Secretary Ray LaHood, who has made headlines recently after being barred from leaving Egypt, was among those charged.

The spat over American citizens being barred from leaving Egypt has left a diplomatic row between the military junta here in Egypt and the American government.

A senior State Department official said last week that a “handful of US citizens have opted to stay in the embassy compound in Cairo while awaiting permission to depart Egypt.”

The official, who was not allowed to discuss the matter on the record, would not say whether Sam LaHood, the son of Transportation Secretary Ray LaHood, was among those at the embassy.

LaHood said last week that he fears he could be jailed for up to five years after being barred from leaving the country earlier this month.

“As Egypt’s new parliament begins its work and the country’s citizens prepare for presidential elections, many Egyptians are suffering from the day-to-day realities of unemployment and price inflation. According to Gallup’s most recent survey in December 2011, Egyptians are most likely to name inflation and lack of money as the biggest problem facing their families; the second is lack of jobs,” added the report on the implications for Egypt’s future.

February 6, 2012 Posted by | Corruption, Deception, Timeless or most popular | , , | Comments Off on Egyptians oppose US economic aid, says Gallup