The followers of Thatcherism in Egypt are still in control of the economy and politics, blocking all post-revolution attempts at reform and social balance, at least for now
A zombie (the living dead as we see them in hundreds of Hollywood films) is a moving corpse driven by the dark powers. According to voodoo beliefs in West Africa, a dead person could be kept alive by the bokor (magician) and be under the bokor’s control and have no independent will.
Margaret Thatcher is dead, but the political, social and economic policies that took her name, because of her legendary ruthless leadership in implementing them in Britain, remain with us, like a zombie.
In Egypt, the epitome of Thatcherism married Hosni Mubarak’s succession plan for his son, and thus the last decade of his reign changed the nature of the alliances in power and type of interests the regime represented. It favoured a new elite of businessmen while the ruling party crowded out the political support base in the bureaucracy and army, which Mubarak had always relied on.
Thatcherism is usually defined as the first launch of neoliberal policies and is sometimes called Reaganism, and also the "Washington Consensus." This all means one thing: “That grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently, and serve the public interest well,” according to prominent US economist Joseph Stiglitz — who won the Nobel Prize and previously served as senior vice president at the World Bank — in an article published in July 2008 entitled, "The End of Neo-Liberalism?"
These policies always include worldwide promotion of privatisation, liberalisation and withdrawal of the state from the economy, while implementing fiscal discipline at the expense of living standards and waiting for the tide favouring the business community and large firms to eventually lift the poor from the mud.
Just as it was everywhere in the world, this transformation was not just a matter of a technical economic decision, but primarily a political project that redistributed wealth in favour of the rich. It also extended the reach of local and international firms in domains that union movements, civil society and the marginalised had grabbed under the welfare state, or capitalism of a sponsor state which preceded it.
In Egypt, we witnessed how at the zenith of the economic reform programme it was transformed at the hands of Ahmed Nazif from public wealth to a handful of companies, banks and major financial institutions, and monopolies in trade and production. This was done in order to accumulate capital and enable the economy to compete on the international stage, albeit at the expense of millions of Egyptians. We also witnessed how the new alliance of interests, after it dominated the economy, made root changes in Mubarak’s ruling party, then in his government, then in parliament, which created growing social and political resistance since 2004.
The climax of this resistance toppled the upper echelon of the political regime in the January 25 Revolution, along with the regime’s plan to bring Gamal Mubarak in as his father’s successor. However, it only disturbed the composite of interests and ruling alliance behind it, which remained like a zombie looking for new political representatives.
Let us shake the dust of politics off from interests
Since the first spark of revolution, there was consensus without agreement to ignore its social nature as a revolution against the socio-economic project of Mubarak’s regime. A decree banning labour strikes and referring strikers to military tribunals passed without much opposition by politicians. They swept us all aside by making the revolution and its future dependent on this or that article in the constitution, or deciding on the transitional phase, or the criteria for presidential candidates, etc. When the economic crisis was uncovered much later, after life became very difficult on the street and at work for the base who made the revolution possible, the same base blocked roads, protesting and demanding better wages, to combat corruption and monopolies (the rate of social protests in 2012 jumped by five times the average rate in the years preceding the revolution). The politicians all responded as advocates of Thatcherism: the economic crisis always manifested itself as a political issue to put pressure on street protests and nothing more.
In a tweet on Saturday evening, Mohamed Al-Baradei said: “The IMF does not impose ‘conditions’. What it demands, like investors and even Egyptians themselves, is comprehensive economic policies and social consensus. The ball is in the court of the regime.”
On 1 April, another leading figure in the “civil” camp, Amr Moussa, said it is necessary for the government to begin an economic austerity plan, “as an ideal solution to deal with the economic crisis. This would indicate how serious they are about addressing the economic crisis”. The position of Al-Wafd Party, a third pillar in the opposition National Salvation Front (NSF), is similar.
The statement by the IMF delegation which left Egypt last week after meeting with “civil” opposition forces said: “The delegation was encouraged by the positions and constructive ideas of representatives of political parties regarding economic reforms, and the expected assistance of the IMF. All parties agreed on the need to protect the poor who may be harmed by implementing reform measures.”
The reforms the IMF is referring to and has consensus on (as long as the poor are protected) — which blocked a preliminary deal signed in December because some of its measures were rescinded (although we are told the loan is without conditions) — are identical to what Youssef Botrous Ghali was trying to do during his tenure as minister: reduce the budget deficit at the expense of anything and everything, and most notably public spending on health, education and other services. Tax policies broadened the base of poor taxpayers while ignoring speculators and businessmen.
Regarding the revolution’s primary goal, social justice, it appears there is a new structure that bridges the civil-religious divide: the secular and Islamist "Sons of Thatcher," in power and in the opposition, versus the ambitions of millions of Egyptians seeking a fair and efficient economic, social and political system.
The pool of interests of the Sons of Thatcher
In 2005, I was preparing a report for BBC Arabic about the political rise of businessmen in Egypt, and I asked businessman Salah Diab, at the time a leading member of the Wafd Party, about his membership of an opposition party, unlike those who joined the ruling National Democratic Party. He was surprisingly frank in his response: “We must divide ourselves among various parties to guarantee the future.”
The same seems true about these parties and politicians seeking a foothold in this pool of interests instead of representing the majority in combatting it. But what is the condition of this pool of interests two years after the revolution?
It looks like a painful blow was dealt to those who benefit from Egyptian Thatcherism; some of them are in prison, others fled Egypt, while others smuggled out their billions or transferred their businesses, and their political plan for power has failed miserably. But in reality, they still control the economy and from there the politics. They remain an integral part of running the country and are being courted by anyone with political ambitions.
Over the past two years, they have succeed in blocking all moves (that should be called reform) to restore some social balance in wages, work hours, work conditions, taxes, etc. They succeed in protecting the stock market from any logical taxation and have again and again blocked taxes on profits from capitalism, even after they were issued, while demanding government austerity measures. They succeeded in placing their loyalists in economic cabinet positions in President Morsi’s government — one minister was even employed by one of these firms, and was accused of monopoly practices before he joined the cabinet.
The circle of interests that grew under Gamal Mubarak also succeeded to hold on to key positions in labour unions and major banks. They are even members of economic committees in civil opposition parties, and succeeded in blocking measures to combat corruption, and impose conciliation policies exempting them from the crime of looting the wealth of the people and breaking the law, in return for reimbursing government coffers with a little money.
They also succeeded in protecting monopolies in production, foreign and domestic trade. The new budget that was prepared by officials from the Freedom and Justice Party’s economic committee shows a retreat in real public investments that decreases investments by 14 percent and taxes the poor before the rich. We also see expected returns from privatisation amounting to half a billion Egyptian pounds. Mohamed Gouda, the committee’s spokesman, tells us privatisation will begin again to rectify the budget deficit.
Despite the cacophony about losses on the stock market and economy, a look at the performance of sectors vital for capital accumulation when Gamal Mubarak was moving upwards tells us the profit machine is moving comfortably, with the exception of some firms implicated in cases underway in court. One need only look at the sectors of banking, communications, steel and dairy. EFG Hermes’s forecast for listed companies on the stock market in the first quarter of 2013 expects a growth in profit (compared to the previous quarter) at an average 62.7 percent led by industrial companies (with a 58.1 percent profit increase) and communications (134 percent).
Compared to last year, this growth has seen an average drop by 16 percent, but according to EFG Hermes, we see a 22 percent growth in profits for construction and building materials firms; 16.2 percent in food companies (including Juhayna); 20 percent growth for consumer companies (Ghabbour and Oriental Weavers); and 9.4 percent for banks.
These are who the Sons of Thatcher in the Muslim Brotherhood and in the civil opposition are chasing and working on behalf of.
In his article, Stiglitz lists the reasons for the global failure of neoliberalism and the Sons of Thatcher: inequality, bias towards the rich and failure to efficiently allocate economic resources. Market policies did not protect the world from sudden price hikes in energy and food, and perhaps caused them, plunging the world into the worst economic crisis since the 1930s. He rejects what he calls attempts by defenders of market fundamentalism who want to shift the blame from market failure to government failure. “Neoliberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience."
Blessed are those fighting the “bokors” of vested interests so they can topple Thatcher’s “zombies” in Egypt.