[Peace-discuss] Will neoliberalism win or lose in the Arab Spring?

[C. G. Estabrook]

A revolution against neoliberalism?
If rebellion results in a retrenchment of neoliberalism, millions will feel cheated.
'Abu Atris' Last Modified: 24 Feb 2011 17:04 GMT

On February 16th I read a comment was posted on the wall of the Kullina Khalid 
Saed ("We are all Khaled Said") Facebook page administered by the now very 
famous Wael Ghonim. By that time it had been there for about 21 hours. The 
comment referred to a news item reporting that European governments were under 
pressure to freeze bank accounts of recently deposed members of the Mubarak 
regime. The comment said: "Excellent news … we do not want to take revenge on 
anyone … it is the right of all of us to hold to account any person who has 
wronged this nation. By law we want the nation’s money that has been stolen … 
because this is the money of Egyptians, 40% of whom live below the poverty line."

By the time I unpacked this thread of conversation, 5,999 people had clicked the 
"like" button, and about 5,500 had left comments. I have not attempted the 
herculean task of reading all five thousand odd comments (and no doubt more are 
being added as I write), but a fairly lengthy survey left no doubt that most of 
the comments were made by people who clicked the "like" icon on the Facebook 
page. There were also a few by regime supporters, and others by people who 
dislike the personality cult that has emerged around Mr. Ghoneim.

This Facebook thread is symptomatic of the moment. Now that the Mubarak regime 
has fallen, an urge to account for its crimes and to identify its accomplices 
has come to the fore. The chants, songs, and poetry performed in Midan al-Tahrir 
always contained an element of anger against haramiyya (thieves) who benefited 
from regime corruption. Now lists of regime supporters are circulating in the 
press and blogosphere. Mubarak and his closest relatives (sons Gamal and 'Ala’) 
are always at the head of these lists. Articles on their personal wealth give 
figures as low as $3 billion to as high as $70 billion (the higher number was 
repeated on many protesters’ signs). Ahmad Ezz, the General Secretary of the 
deposed National Democratic Party and the largest steel magnate in the Middle 
East, is supposed to be worth $18 billion; Zohayr Garana, former Minister of 
Tourism, $13 billion; Ahmad al-Maghrabi, former Minister of Housing, $11 
billion; former Minister of Interior Habib Adli, much hated for his supervision 
of an incredibly abusive police state, also managed to amass $8 billion — not 
bad for a lifetime civil servant.

Such figures may prove to be inaccurate. They may be too low, or maybe too high, 
and we may never know precisely because much of the money is outside of Egypt, 
and foreign governments will only investigate the financial dealings of Mubarak 
regime members if the Egyptian government makes a formal request for them to do 
so. Whatever the true numbers, the corruption of the Mubarak regime is not in 
doubt. The lowest figure quoted for Mubarak’s personal wealth, of "only" $3 
billion, is damning enough for a man who entered the air force in 1950 at the 
age of twenty two, embarking on a sixty-year career in "public service."

A systemic problem

The hunt for regime cronies’ billions may be a natural inclination of the 
post-Mubarak era, but it could also lead astray efforts to reconstitute the 
political system. The generals who now rule Egypt are obviously happy to let the 
politicians take the heat. Their names were not included in the lists of the 
most egregiously corrupt individuals of the Mubarak era, though in fact the 
upper echelons of the military have long been beneficiaries of a system similar 
to (and sometimes overlapping with) the one that that enriched civilian figures 
much more prominent in the public eye such as Ahmad Ezz and Habib al-Adly.


Despite macroeconomic gains, tens of millions of Egyptians still live in poverty 
[EPA]
To describe blatant exploitation of the political system for personal gain as 
corruption misses the forest for the trees. Such exploitation is surely an 
outrage against Egyptian citizens, but calling it corruption suggests that the 
problem is aberrations from a system that would otherwise function smoothly. If 
this were the case then the crimes of the Mubarak regime could be attributed 
simply to bad character: change the people and the problems go away. But the 
real problem with the regime was not necessarily that high-ranking members of 
the government were thieves in an ordinary sense. They did not necessarily steal 
directly from the treasury. Rather they were enriched through a conflation of 
politics and business under the guise of privatization. This was less a 
violation of the system than business as usual. Mubarak’s Egypt, in a nutshell, 
was a quintessential neoliberal state.

What is neoliberalism? In his Brief History of Neoliberalism, the eminent social 
geographer David Harvey outlined "a theory of political economic practices that 
proposes that human well-being can best be advanced by liberating individual 
entrepreneurial freedoms and skills within an institutional framework 
characterised by strong private property rights, free markets, and free trade." 
Neoliberal states guarantee, by force if necessary, the "proper functioning" of 
markets; where markets do not exist (for example, in the use of land, water, 
education, health care, social security, or environmental pollution), then the 
state should create them.

Guaranteeing the sanctity of markets is supposed to be the limit of legitimate 
state functions, and state interventions should always be subordinate to 
markets. All human behavior, and not just the production of goods and services, 
can be reduced to market transactions.

And the application of utopian neoliberalism in the real world leads to deformed 
societies as surely as the application of utopian communism did.

Rhetoric vs. reality

Two observations about Egypt’s history as a neoliberal state are in order. 
First, Mubarak’s Egypt was considered to be at the forefront of instituting 
neoliberal policies in the Middle East (not un-coincidentally, so was Ben Ali’s 
Tunisia). Secondly, the reality of Egypt’s political economy during the Mubarak 
era was very different than the rhetoric, as was the case in every other 
neoliberal state from Chile to Indonesia. Political scientist Timothy Mitchell 
published a revealing essay about Egypt’s brand of neoliberalism in his book 
Rule of Experts (the chapter titled "Dreamland" — named after a housing 
development built by Ahmad Bahgat, one of the Mubarak cronies now discredited by 
the fall of the regime). The gist of Mitchell’s portrait of Egyptian 
neoliberalism was that while Egypt was lauded by institutions such as the 
International Monetary Fund as a beacon of free-market success, the standard 
tools for measuring economies gave a grossly inadequate picture of the Egyptian 
economy. In reality the unfettering of markets and agenda of privatization were 
applied unevenly at best.

The only people for whom Egyptian neoliberalism worked "by the book" were the 
most vulnerable members of society, and their experience with neoliberalism was 
not a pretty picture. Organised labor was fiercely suppressed. The public 
education and the health care systems were gutted by a combination of neglect 
and privatization. Much of the population suffered stagnant or falling wages 
relative to inflation. Official unemployment was estimated at approximately 9.4% 
last year (and much higher for the youth who spearheaded the January 25th 
Revolution), and about 20% of the population is said to live below a poverty 
line defined as $2 per day per person.

For the wealthy, the rules were very different. Egypt did not so much shrink its 
public sector, as neoliberal doctrine would have it, as it reallocated public 
resources for the benefit of a small and already affluent elite. Privatization 
provided windfalls for politically well-connected individuals who could purchase 
state-owned assets for much less than their market value, or monopolise rents 
from such diverse sources as tourism and foreign aid. Huge proportions of the 
profits made by companies that supplied basic construction materials like steel 
and cement came from government contracts, a proportion of which in turn were 
related to aid from foreign governments.

Most importantly, the very limited function for the state recommended by 
neoliberal doctrine in the abstract was turned on its head in reality. In 
Mubarak’s Egypt business and government were so tightly intertwined that it was 
often difficult for an outside observer to tease them apart. Since political 
connections were the surest route to astronomical profits, businessmen had 
powerful incentives to buy political office in the phony elections run by the 
ruling National Democratic Party. Whatever competition there was for seats in 
the Peoples’ Assembly and Consultative Council took place mainly within the NDP. 
Non-NDP representation in parliament by opposition parties was strictly a matter 
of the political calculations made for a given elections: let in a few 
independent candidates known to be affiliated with the Muslim Brotherhood in 
2005 (and set off tremors of fear in Washington); dictate total NDP domination 
in 2010 (and clear the path for an expected new round of distributing public 
assets to "private" investors).

Parallels with America

The political economy of the Mubarak regime was shaped by many currents in 
Egypt’s own history, but its broad outlines were by no means unique. Similar 
stories can be told throughout the rest of the Middle East, Latin America, Asia, 
Europe and Africa. Everywhere neoliberalism has been tried, the results are 
similar: living up to the utopian ideal is impossible; formal measures of 
economic activity mask huge disparities in the fortunes of the rich and poor; 
elites become "masters of the universe," using force to defend their 
prerogatives, and manipulating the economy to their advantage, but never living 
in anything resembling the heavily marketised worlds that are imposed on the poor.


Unemployment was a major grievance for millions of Egyptian protesters [EPA]
The story should sound familiar to Americans as well. For example, the vast 
fortunes of Bush era cabinet members Donald Rumsfeld and Dick Cheney, through 
their involvement with companies like Halliburton and Gilead Sciences, are the 
product of a political system that allows them — more or less legally — to have 
one foot planted in "business" and another in "government" to the point that the 
distinction between them becomes blurred. Politicians move from the office to 
the boardroom to the lobbying organization and back again.

As neoliberal dogma disallows any legitimate role for government other than 
guarding the sanctity of free markets, recent American history has been marked 
by the steady privatization of services and resources formerly supplied or 
controlled by the government. But it is inevitably those with closest access to 
the government who are best positioned to profit from government campaigns to 
sell off the functions it formerly performed. It is not just Republicans who are 
implicated in this systemic corruption. Clinton-era Secretary of Treasury Robert 
Rubin’s involvement with Citigroup does not bear close scrutiny. Lawrence 
Summers gave crucial support for the deregulation of financial derivatives 
contracts while Secretary of Treasury under Clinton, and profited handsomely 
from companies involved in the same practices while working for Obama (and of 
course deregulated derivatives were a key element in the financial crisis that 
led to a massive Federal bailout of the entire banking industry).

So in Egyptian terms, when General Secretary of the NDP Ahmad Ezz cornered the 
market on steel and was given contracts to build public-private construction 
projects, or when former Minister of Parliament Talaat Mustafa purchased vast 
tracts of land for the upscale Madinaty housing development without having to 
engage in a competitive bidding process (but with the benefit of state-provided 
road and utility infrastructure), they may have been practicing corruption 
logically and morally. But what they were doing was also as American as apple 
pie, at least within the scope of the past two decades.

However, in the current climate the most important thing is not the depredations 
of deposed Mubarak regime cronies. It is rather the role of the military in the 
political system. It is the army that now rules the country, albeit as a 
transitional power, or so most Egyptians hope. No representatives of the upper 
echelons of the Egyptian military appear on the various lists of old-regime 
allies who need to be called to account. For example, the headline of the 
February 17th edition of Ahrar, the press organ of the Liberal party, was 
emblazoned with the headline "Financial Reserves of the Corrupt Total 700 
Billion Pounds [about $118 billion] in 18 Countries."

A vast economic powerhouse

But the article did not say a single word about the place of the military in 
this epic theft. The military were nonetheless part of the crony capitalism of 
the Mubarak era. After relatively short careers in the military high-ranking 
officers are rewarded with such perks as highly remunerative positions on the 
management boards of housing projects and shopping malls. Some of these are 
essentially public-sector companies transferred to the military sector when 
IMF-mandated structural adjustment programs required reductions in the civilian 
public sector.

But the generals also receive plums from the private sector. Military spending 
itself was also lucrative because it included both a state budget and contracts 
with American companies that provided hardware and technical expertise. The 
United States provided much of the financing for this spending under rules that 
required a great deal of the money to be recycled to American corporations, but 
all such deals required middlemen. Who better to act as an intermediary for 
American foreign aid contracts than men from the very same military designated 
as the recipient of the services paid for by this aid? In this respect the 
Egyptian military-industrial complex was again stealing a page from the American 
playbook; indeed, to the extent that the Egyptian military benefited from 
American foreign aid, Egypt was part of the American military-industrial 
complex, which is famous for its revolving-door system of recycling retired 
military men as lobbyists and employees of defense contractors.

Consequently it is almost unthinkable that the generals of the Supreme Military 
Council will willingly allow more than cosmetic changes in the political economy 
of Egypt. But they could be compelled to do so unwillingly. The army is a blunt 
force, not well suited for controlling crowds of demonstrators. The latest 
statement of the Supreme Military Council reiterated both the legitimacy of the 
pro-democracy movements demands, and the requirement that demonstrations cease 
so that the country can get back to work. If demonstrations continue to the 
point that the Supreme Military Council feels it can no longer tolerate them, 
then the soldiers who will be ordered to put them down (indeed, in some accounts 
were already ordered to put them down early in the revolution and refused to do 
so) with deadly force, are not the generals who were part of the Mubarak-era 
corruption, but conscripts.

Pro-democracy demonstrators and their sympathisers often repeated the slogans 
"the army and the people are one hand," and "the army is from us." They had the 
conscripts in mind, and many were unaware of how stark differences were between 
the interests of the soldiers and the generals. Between the conscripts and the 
generals is a middle-level professional officer corps whose loyalties have been 
the subject of much speculation. The generals, for their part, want to maintain 
their privileges, but not to rule directly. Protracted direct rule leaves the 
officers of the Supreme Military Council vulnerable to challenges from other 
officers who were left on the outside. Also, direct rule would make it 
impossible to hide that the elite officers are not in fact part of the "single 
hand" composed of the people and the (conscript) army. They are instead 
logically in the same camp as Ahmad Ezz, Safwat al-Sharif, Gamal Mubarak, and 
Habib al-Adly — precisely the names on those lists making the rounds of regime 
members and cronies who should face judgment.

Ultimately the intense speculation about how much money the Mubarak regime 
stole, and how much the people can expect to pump back into the nation, is a red 
herring. If the figure turns out to be $50 billion or $500 billion, it will not 
matter, if Egypt remains a neoliberal state dedicated (nominally) to free-market 
fundamentalism for the poor, while creating new privatised assets that can be 
recycled to political insiders for the rich. If one seeks clues to how deeply 
the January 25th Revolution will restructure Egypt, it would be better to look 
at such issues as what sort of advice the interim government of generals 
solicits in fulfilling its mandate to re-make Egyptian government. The period of 
military government probably will be as short as advertised, followed, one 
hopes, by an interim civilian government for some specified period (at least two 
years) during which political parties are allowed to organise on the ground in 
preparation for free elections. But interim governments have a way of becoming 
permanent.

Technocrats or ideologues?

One sometimes hears calls to set up a government of "technocrats" that would 
assume the practical matters of governance. "Technocrat" sounds neutral — a 
technical expert who would make decisions on "scientific" principle. The term 
was often applied to Yusuf Butros Ghali, for example, the former Minister of the 
Treasury, who was one of the Gamal Mubarak boys brought into the cabinet in 2006 
ostensibly to smooth the way for the President’s son to assume power. Ghali is 
now accused of having appropriated LE 450 million for the use of Ahmad Ezz.

I once sat next to Ghali at a dinner during one of his trips abroad, and had the 
opportunity to ask him when the Egyptian government would be ready to have free 
elections. His response was to trot out the now discredited regime line that 
elections were impossible because actual democracy would result in the Muslim 
Brotherhood taking power. Conceivably Ghali will beat the charge of specifically 
funneling the state’s money to Ahmad Ezz. But as a key architect of Egypt’s 
privatization programs he cannot possibly have been unaware that he was 
facilitating a system that enabled the Ezz steel empire while simultaneously 
destroying Egypt’s educational and health care systems.


The Egyptian army controls a range of businesses, ranging from factories to 
hotels [EPA]
The last time I encountered the word "technocrat" was in Naomi Klein’s book The 
Shock Doctrine — a searing indictment of neoliberalism which argues that the 
free-market fundamentalism promoted by economist Milton Friedman (and immensely 
influential in the United States) is predicated on restructuring economies in 
the wake of catastrophic disruptions because normally functioning societies and 
political systems would never vote for it. Disruptions can be natural or 
man-made, such as … revolutions.

The chapters in The Shock Doctrine on Poland, Russia, and South Africa make 
interesting reading in the context of Egypt’s revolution. In each case when 
governments (communist or apartheid) collapsed, "technocrats" were brought in to 
help run countries that were suddenly without functional governments, and create 
the institutional infrastructure for their successors. The technocrats always 
seemed to have dispensed a form of what Klein calls "shock therapy" — the 
imposition of sweeping privatization programs before dazed populations could 
consider their options and potentially vote for less ideologically pure options 
that are in their own interests.

The last great wave of revolutions occurred in 1989. The governments that were 
collapsing then were communist, and the replacement in that "shock moment" of 
one extreme economic system with its opposite seemed predictable and to many 
even natural.

One of the things that make the Egyptian and Tunisian revolutions potentially 
important on a global scale is that they took place in states that were already 
neoliberalised. The complete failure of neoliberalsm to deliver "human 
well-being" to a large majority of Egyptians was one of the prime causes of the 
revolution, at least in the sense of helping to prime millions of people who 
were not connected to social media to enter the streets on the side of the 
pro-democracy activists.

But the January 25th Revolution is still a "shock moment." We hear calls to 
bring in the technocrats in order to revive a dazed economy; and we are told 
every day that the situation is fluid, and that there is a power vacuum in the 
wake of not just the disgraced NDP, but also the largely discredited legal 
opposition parties, which played no role whatsoever in the January 25th 
Revolution. In this context the generals are probably happy with all the talk 
about reclaiming the money stolen by the regime, because the flip side of that 
coin is a related current of worry about the state of the economy. The notion 
that the economy is in ruins — tourists staying away, investor confidence 
shattered, employment in the construction sector at a standstill, many 
industries and businesses operating at far less than full capacity — could well 
be the single most dangerous rationale for imposing cosmetic reforms that leave 
the incestuous relation between governance and business intact.

Or worse, if the pro-democracy movement lets itself be stampeded by the 
"economic ruin" narrative, structures could be put in place by "technocrats" 
under the aegis of the military transitional government that would tie the 
eventual civilian government into actually quickening the pace of privatization. 
Ideologues, including those of the neoliberal stripe, are prone to a witchcraft 
mode of thinking: if the spell does not work, it is not the fault of the magic, 
but rather the fault of the shaman who performed the spell. In other words, the 
logic could be that it was not neoliberalism that ruined Mubarak’s Egypt, but 
the faulty application of neoliberalism.

Trial balloons for this witchcraft narrative are already being floated outside 
of Egypt. The New York Times ran an article on February 17th casting the 
military as a regressive force opposed to privatization and seeking a return to 
Nasserist statism. The article pits the ostensibly "good side" of the Mubarak 
regime (privatization programs) against bad old Arab socialism, completely 
ignoring the fact that while the system of military privilege may preserve some 
public-sector resources transferred from the civilian economy under pressure of 
IMF structural adjustment programs, the empire of the generals is hardly limited 
to a ring-fenced quasi-underground public sector.

Officers were also rewarded with private-sector perks; civilian 
political/business empires mixed public and private roles to the point that what 
was government and what was private were indistinguishable; both the military 
and civilians raked in rents from foreign aid. The generals may well prefer a 
new round of neoliberal witchcraft. More privatization will simply free up 
assets and rents that only the politically connected (including the generals) 
can acquire. Fixing a failed neoliberal state by more stringent applications of 
neoliberalism could be the surest way for them to preserve their privileges.

A neoliberal fix would, however, be a tragedy for the pro-democracy movement. 
The demands of the protesters were clear and largely political: remove the 
regime; end the emergency law; stop state torture; hold free and fair elections. 
But implicit in these demands from the beginning (and decisive by the end) was 
an expectation of greater social and economic justice. Social media may have 
helped organise the kernel of a movement that eventually overthrew Mubarak, but 
a large element of what got enough people into the streets to finally overwhelm 
the state security forces was economic grievances that are intrinsic to 
neoliberalism. These grievances cannot be reduced to grinding poverty, for 
revolutions are never carried out by the poorest of the poor. It was rather the 
erosion of a sense that some human spheres should be outside the logic of 
markets. Mubarak’s Egypt degraded schools and hospitals, and guaranteed grossly 
inadequate wages, particularly in the ever-expanding private sector. This was 
what turned hundreds of dedicated activists into millions of determined protestors.

If the January 25th revolution results in no more than a retrenchment of 
neoliberalism, or even its intensification, those millions will have been 
cheated. The rest of the world could be cheated as well. Egypt and Tunisia are 
the first nations to carry out successful revolutions against neoliberal 
regimes. Americans could learn from Egypt. Indeed, there are signs that they 
already are doing so. Wisconsin teachers protesting against their governor’s 
attempts to remove the right to collective bargaining have carried signs 
equating Mubarak with their governor. Egyptians might well say to America 
'uqbalak (may you be the next).

'Abu Atris' is the pseudonym for a writer working in Egypt. The views expressed 
in this article are the author's own and do not necessarily reflect Al Jazeera's 
editorial policy.

Source: Al Jazeera
http://english.aljazeera.net/indepth/opinion/2011/02/201122414315249621.html