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Editor’s letter: Egyptians between the two Gamals (3 of 5): A nation on the back burner

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Maher Hamoud

Maher Hamoud

Mubarak’s propaganda machine had the habit of spreading false optimistic information about his “economic achievements” on an almost daily basis. Several governments appointed by the ousted president got used to the practice of faking reports about the country’s economic performance, or at least show or hide the data based on what would fix the government’s local and international images.  However, any simple comparison between the Egyptian economy and other developing economies that Egypt was ahead of a few decades ago shows how clearly the Egyptian economic situation was deteriorating.

During the thirty years of Mubarak’s rule, the average of inflation rate was around 12%, which is the highest in Egypt’s contemporary history. Such a high level of inflation for that long period has caused a severe imbalance in income distribution in favour of property and capital owners against those of fixed and semi-fixed incomes like employees, pensioners and irregular labour. What happened to such a majority of the society is that their real incomes in relation to purchasing power have significantly dropped, while their nominal incomes were disproportionately increasing with a big lag following inflation.

The value of the Egyptian Pound had its share of deterioration as well, as a continuation of former president Sadat’s Infitah policy, which got tougher significantly under Mubarak. This was a fiscal development that reflected an obvious defect in the Egyptian economy, especially in international transactions and foreign exchange strategies.

At the beginning of Mubarak’s first term in office, one Egyptian Pound was worth about $1.50. Towards the end of his third decade in office it dropped to about $0.17 to the pound, which means that the country’s local currency has lost more than 88% of its value against the US Dollar during Mubarak’s era alone. This in turn saw the prices of imported commodities significantly increase, among which were wheat and related products, sugar, cooking oil and other basic commodities important to every citizen’s life. It was a reality that was getting harsher on wide segments of the society from both middle and lower income groups.

Unemployment within the same period has been, and still is, concentrated among the young age groups, especially the educated ones as it is easier for the uneducated to get a low-skill job – another indirect economic loss, considering the effort and money spent on such a portion of the society to have them educated and being ready to participate in the country’s development. In Egypt, it is very frequent to take a taxi ride and find the driver a university graduate. According to The Central Agency for Public Mobilization and Statistics in Egypt (CAPMAS), 88% of the unemployed are in the age group between 15 and 30, where the educated among them represent 93%.

The high rate of unemployment in Egypt, currently almost 12%, is a clear evidence of the dysfunction of the private investments that replaced the public sector’s labour market, and the disability of the corrupt economic model introduced by Mubarak and his son to absorb the labour force growing due to both factors of excessive population growth and the diminishing public sector.

In a country like Egypt, where social welfare is almost inexistent in complete absence of unemployment allowances, the obvious result of this crisis was the fall of the vulnerable youth segment into extreme poverty and dependency on family, which led in turn to many social problems.

Corruption in the age of Mubarak was another significant growing characteristic of his economic model. It was widely practiced and normalised to a high extent. Most corruption cases in Egypt were evolving around banks and the financial institutions in general. Embezzlement was widely witnessed in the sector as a common and straight forward practice that carries no surprise to the people anymore. Corrupt behaviour included providing loans without enough guarantees to clients with political connections to the regime or family connections to banks’ presidents.

The Central Bank of Egypt (CBE) states that in 2005 alone, more than 14% of the total value of provided loans throughout the whole banking sector was not collected, which is about EGP 49bn. In many cases borrowers would take their loans and flee the country, leaving banks with insufficient assets to confiscate. (Al Naggar 2010)

Other types of fraud included tax and customs evasion, all forms of bribery, private sector commercial cheating in collaboration with government officials, all in addition to facilitation of large scale takeover operations of state owned assets and lands.

Meanwhile, the privatisation process in itself represented an unprecedented corrupt practice in a very wide range, where many Egyptian governments since Infitah in the 1970s deliberately left public sector companies to drown under mismanagement and corrupt leadership. A policy that had its goals met, leaving the sector exposed to massive losses that would eventually make it easy on whatever government to sell its assets to the private sector, whether local or foreign. It was all a part of the transformation into a free market economy, instead of working on fixing the economy’s underlying issues. All was successfully accomplished under directions and enforcement of the IMF, the World Bank and the creditor countries

It was not very challenging for corruption in Egypt to prevail. Lack of transparency in both economic and political structures made it easy on the business elite to find their way to dominating the country’s economy and ignoring the poor’s economic rights.  These practices were clearly evident in providing senior state officials and public sector senior employees with an absolute authority in issuing licenses and documents that can be used for manipulating and taking advantage of public assets. All of these characteristics of an economically and politically corrupt regime easily grew and flourished given the historical coincidence of the transformation into the free market economy and massive sales operations of the country’s wealth.

The 25 January Revolution was not a sudden reaction to such frustration and injustice resulting from Mubarak’s unfair state. There were signs of something big that would happen, but no one was clear what it could be or how big the scale of reaction to oppression can be as well. One of the early initiatives of taking a stand against this authoritarian regime was the formation of the Kefaya (Enough) movement. 300 intellectuals and public figures from very different backgrounds gathered in reaction to the 2004 ministerial and legal manipulations introduced by Gamal Mubarak and the newly appointed Prime Minister Ahmed Nazif. They issued a founding document of the movement that declares its opposition to the regime and demands a real change in Egypt that purges the system of economic and political oppression. The movement as a result suffered from several arrests among its members and organised violence by Mubarak’s Interior Minister Habib Al Adly, which helped in popularising the movement and spreading its presence in 22 of 26 governorates.

2008 witnessed the birth of the 6 April movement as another significant development in the structure of opposition and activism leading to the revolution. In that year, a big group of Egyptian youth with no particular political background had positively responded to the Al Mahalla workers’ strike on that day and promoted for support all over the country in solidarity with those oppressed textile workers in that old industrial city in the Egyptian delta.

Oppression by the dying regime and hardship caused by poverty kept growing, and the people felt angrier by the day as a reaction to the growing injustice and violence. The year 2010 also holds another sign of something big that would follow, but no one again realised what it could be. In that year, and as a reaction to the global economic crisis, subsidised bread suddenly became a rare commodity in a country where the majority of its people consider it the most important food item. People were fighting in front of public bakeries for their limited share of bread and deaths were recorded. Riots over the right to bread broke out and the army had to step in and provide it to the people in order to save the regime from serious escalations. On top of that, the government bluntly in the same year decided to forge the parliamentary elections in an attempt to keep the opposition away and introduce Mubarak’s son Gamal as Egypt’s next president. It was a move that made the political opposition, activists, intellectuals and average citizens believe that the regime was unfixable and there was no other option than bringing it down. It was just a matter of when and how.

… To be continued  

About the author

Maher Hamoud

Maher Hamoud

Former Editor-in-Chief

Former Editor-in-Chief of The Daily News Egypt, and currently Media Politics Analyst. He can be followed on Twitter @MaherHamoud1, his public page on Facebook, or email: [email protected]


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