Egypt: Regime’s ‘reforms’ and deep recession widen massive inequalities

Strikes and mass protests harbinger of social and political explosions

“Just For You” was the meaningless slogan of the recent National Democratic Party conference in Egypt. It would have been more accurate if this gathering of the country’s ruling politicians had used the slogan, “Just For Us!”

The regime has ruled in the name of this party for over thirty years. Life has never been better for the wealthy elite. But for workers and the poor, life has become an ever more difficult struggle. Even for those that in the past considered themselves middle-class find everything is getting harder.

“We are the producing force, the ones who provide services, who provide the wealth that fills the country and the banks,” said Abd el-Kadr Nada, general secretary of the newly-formed property (real estate) tax collectors’ independent trade union, at a recent Cairo meeting. “We drink polluted water because we can’t afford a filter costing 300 [Egyptian] pounds. We water and plant fields but can’t buy back vegetables. We weave the cotton but can’t buy shirts. We are the ones who live in the ghettoes and slums. We can never afford to buy a piece of land in ’6th October City’, where some ‘special people’ buy thousands of square metres. I can’t buy one hundred square metres to build a sardine tin for my family.”

Economic ‘reforms’ make poor even poorer

The Egyptian economy grew at 7%, a year, between 2006-8 and won praise from the World Bank, in 2007, as ‘top reformer’. The reforms that gained this ‘honour’ included slashing corporate tax rates, cutting income tax for top earners from 42% to 20%, and a move to self-assessment of personal tax, giving more opportunities to the wealthiest to evade paying tax altogether. A privatisation programme has led to more than half the banking system now being in private hands, as well as many other formerly state-owned companies.

Despite economic growth, absolute poverty (defined as those who have insufficient for their most basic needs) has climbed from 16.7% to almost 20% of the population. In 1991, 20% survived on less than $2 per day. Now, 44% of the population try to do so.

According to the International Labour Organization, to halve $1-a-day working poverty by 2015, gross domestic product (GDP) must grow at 4-5% a year, and to halve $2-a-day working poverty by 2015, GDP must grow by 8-10% a year. Egypt’s growth rate is closer to 3% for this year and is expected to contract to 2.4% in 2010.

Global recession has meant remittances from Egyptians abroad have fallen by $600 million. Income from the Suez Canal has fallen by about $400 million, as a result of the slowdown in world trade. Income from tourism in the first quarter of 2009 dropped by more than $2 billion, compared to total revenue from tourism in 2008 of $10.9billion. Although there appears to be has been some recent recovery, industrial output is currently 4-5% below the 2008 level.

Inflation is growing, increasing pressure on the unemployed, poor and elderly. According to government statistics, food prices rose an annual 22.2% in October, up from 17.4 % the previous month. The poor spend about half their income on food. When bread prices went up 20% in February 2008, riots occurred in March and in April. An intifada-like movement shook the textile city of Mahalla, and protesters were violently attacked by state security forces.

The minimum government wage for a university graduate of LE108 is only enough to buy 2.5 kilograms of meat. In 1979, a graduate’s minimum wage was LE28, which would buy 35 kilograms of meat, at the time.

Over the past decade, the Egyptian pound has lost almost half its value against the US dollar. A recent report by Goldman Sachs suggests a greater devaluation may be on the horizon. The cost-of-living would then increase further because of Egypt’s dependence on imports for many goods and services. This would drive below the poverty line many more millions who are struggling to stay above it.

Unemployment grows

Egypt has an overwhelmingly young population: 37% of the population is below fifteen years old, and 58% is younger than twenty-five. The working-age population is increasing by 3% per year. 650,000 more jobs are needed, every year, just to absorb new entrants into the labour market, let alone reduce the number of unemployed.

Unemployment is over 20%, according to international organisations, almost twice the official government estimate. Underemployment is widespread: 90% of the unemployed are aged 15-24.

The shortage of housing and high prices has meant that many young people cannot afford to rent or purchase a small apartment, let alone marry. Meanwhile, new luxury housing developments, surrounded by green gardens and railings, highlight the growing gap between rich and poor.

Mubarak’s succession

Sensing the growing anger of the mass of the population, the ruling clique and their business friends are looking anxiously to the future. It is clear to all that they cannot continue ruling in the same way as they have in the past – not least because President Hosni Mubarak is 81 years old. The question of ‘the succession’ looms over political discussion in the media and for every political organisation.

Leading the list of likely successors is Hosni’s 44-year old son, Gamal. Trained as an investment banker and previously having worked in London, he has been General Secretary of the National Democratic Party Policy Committee since 2002. The neo-liberal economic ‘reforms’ praised by the World Bank resulted from the policies and cabinet appointments in 2004 that followed his promotion. Other possible government candidates discussed include the intelligence chief, General Omar Suleiman, and Defence Minister Mohammed Tantawi – both in their seventies.

The glowing government-backed press coverage of Gamal’s activities and speeches has heightened speculation that he is being lined up to follow the example of Bashar al-Asad, who succeeded his father as Syrian president. But there is widespread opposition to the inheritance of the presidency. It seems likely that Hosni will try to hang on until the Presidential election is due in 2011. A rigged, undemocratic election could then see Gamal as a candidate against a number of hopeless and ineffective ‘opposition’ candidates. But such an election would not give Gamal a popular mandate to rule.

Weak political opposition

Of the legalized political parties, Ayman Nour’s Ghad (“Tomorrow”) is the most prominent, after Nour came second in the 2005 election with 7.6% of the vote. Nour, despite spending four years in prison on trumped-up charges, is a spokesperson for those wealthier sections of society who feel excluded from the Mubarak regime and who fear explosions of anger from the working class and poor. Ghad’s headquarters have recently moved to a prime site in Downtown Cairo, raising questions about its sources of income. A number of Ghad activists in Alexandria, especially youth, have recently left the party.

Nour’s programme of liberal democracy cannot be implemented by rotting Egyptian capitalism. Genuine democratic rights would give workers and the poor the means to fight for jobs, decent pay, housing and all their other needs. This would mean the capitalists and their hangers-on taking a cut in profits and the huge amount of wealth they steal from the rest of society. The capitalists were not prepared to do this when their economy was booming. They are even less likely to cut their share now the economy is in trouble. The only way real democratic rights will be won is by mass working class struggle to end the rule of capitalism, replacing it with a pro-workers’ government, with a bold socialist programme.

The government-controlled media ensure other legalised parties get little publicity. Their leaders seem to have spent time and energy negotiating with the ruling NDP to ensure they continue to sit in the National Assembly, drawing the salaries and privileges that go with that. They are widely regarded with disdain.

The retiring head of the International Atomic Energy Agency, Mohamed el-Baradei, has recently emerged as another potential presidential candidate. Two parties have already offered him their nomination. Kefaya, the democratic rights movement that organised small but determined protests in 2004 and 2005, has also backed el-Baradei. Kefaya, however, has lost its layer of activists and has been unable to mobilise for protests as it did when it first started.

Tagammu, the former workers’ party that still claims to stand for socialism, has postponed any struggle for socialist change until after a democratic state has developed. As capitalism will no tallow genuine democracy, this postpones the struggle for socialism indefinitely! After repeated arrests, a group of left activists in Alexandria joined Tagammu earlier this summer, hoping to use the legal protection this gave. However, within a short time they found themselves being expelled by the party leadership, who clearly had no wish to be associated with any genuine campaigning activity.

‘Nasserism’ no longer possible

The older generation often refers to the period of Nasserite reforms as ‘socialism’. Between the mid-1950s and early-1970s, important sections of the economy were taken into state ownership (including the Suez Canal) and reforms were carried out that benefited the poor, such as food and fuel subsidies. Although a revolution against capitalism was not carried through, Nasser’s regime was able to balance between two global super-powers (the USA and USSR) allowing a certain independence from both. Democratic rights were denied, with political power firmly gripped in the hands of military officers. Despite its use of socialist phrases, it was never a socialist regime.

After the Second World War, capitalism was abolished in China and the East European states, but not by workers’ mass revolutionary action. What genuine Marxists called, ‘deformed workers’ states’ (Stalinism) were created, mirroring the Moscow regime at the time, which allowed no real workers’ democracy or control over society. Instead, dictatorial, bureaucratic elite ruled, living similar lifestyles to the capitalist ruling classes. The abolition of capitalism allowed a more rapid economic development than could otherwise have occurred, but without a planned economy under democratic workers’ control and management, development came at a high cost in terms of colossal waste and bureaucracy, environmental destruction and eventually economic stagnation.

After the collapse of the Stalinist regimes and restoration of capitalism in 1989/90, the US remained as the only global superpower. The opportunity to perform a similar balancing act to Nasser has gone. Despite nostalgic feelings among some older Egyptian workers, the only way forward for workers and youth today is to challenge the capitalist system responsible for the misery so many endure.

Developing crisis in Muslim Brotherhood

The absence of a mass workers’ party, fighting to defend workers and the poor against neo-liberal attacks, has allowed the Muslim Brotherhood (MB) to grow over the past decade. It is the largest organised political opposition in Egypt, despite being officially illegal. However, it is not immune to the class pressures building up in society and now faces the biggest crisis in its 80-year history.

In the past few weeks, an open split has emerged within the leadership, described by one commentator as “a volcano of differences that have suddenly erupted.” This has been prompted by the impending resignation of the 81-year old leader, Mohammed Akif. Younger members in the cities, looking to the example of the ‘mild Islamist’ Erdogan government in Turkey, have argued with an older, more conservative layer. Government repression, involving regular arrests and imprisonment of activists and leading members, has sharpened this debate.

Student protests have put pressure on MB members in the universities. They have responded by taking part in and leading some protests. At the same time, a section of the older leadership has tried to keep their heads down to avoid arrests. In parliament, the MB has largely avoided taking up the economic issues facing workers and the poor, concentrating instead on religious and cultural issues. When workers have gone on strike, they have sometimes found themselves confronting a boss who is a member of the MB.

Despite their problems, the MB is likely to continue to grow if no credible workers’ alternative exists. They are seen as less corrupt than the government and have provided services, such as schools and hospitals, where the government has failed to. They have a base in the countryside that is less influenced by the sharpening class struggles in the cities.

Growing workers’ struggles

In August, this year, about half of the 48,000 public transport workers went on strike for two days until the government agreed to most of their demands. As after other recent industrial struggles, such as a postal strike, these workers are now discussing setting up an independent trade union, in opposition to the state-controlled Egyptian Federation of Trade Unions. The official unions act as an arm of management. The property (real estate) tax collectors set up the first independent trade union, last year, after their lengthy and victorious strike, which ended with an 11-day mass sit-down protest in front of the Finance Ministry in December 2007. Over 37,000 of the 45,000 tax employees signed up to join the new union.

The past three years have seen over 1,600 strikes and sit-ins. This is the largest social movement in the Middle East for sixty years, according to Professor Joel Beinin. Victories in 2007 and 2008 raised the confidence of workers to demonstrate and strike. “Every decision the Egyptian regime makes seems to meet with a workers’ strike," wrote Abdelhalim Kandil, from the independent weekly Sout Al-Umma. "The people’s insistence on realising their demands is consistently forcing the government to overturn its decrees."

The privatisation programme raises political issues for striking workers. The need for re-nationalisation is posed – and how nationalised industries should be run – as well as the right of workers to organise their own independent trade unions, free from state repression.

One thousand Tanta Oil and Flax workers, on strike for over five months this year, have blocked the Nile Delta Tanta-Zefta Highway at least three times. They have demanded re-nationalisation and some strike leaders raised the idea of ‘self-management’ – a groping towards a programme of workers’ control and management. The strike has been significant as it is the first backed by the official union since 1957, but workers tore down posters of President Mubarak and official union banners. They felt the official union leaders tried to hold back militancy and suspend strike action. An independent strike fund was launched in August to support ongoing action, fighting for the reinstatement of over 50 victimised strikers.

The National Coordinating Committees for Workers’ Organising Rights and Freedoms brings together many of the militants from different strikes and struggles. Their conference in spring 2009, agreed: “It has become obvious more than any time before that struggles against dictatorship and corruption are not disconnected from struggles against neo-liberalism.” They have now launched a campaign against privatisation of medical insurance.

Youth and students

Student protests, involving 1,500 on some campuses, have taken place on a number of national and local issues. Despite increased security measures on campus, such as searching students’ bags for leaflets, successful movements against the high cost of books have been organised, forcing university authorities to substantially cut prices.

This year, attempts to reproduce the strikes and demonstrations of April 6th 2008 were less successful. In 2008, the government had unwittingly encouraged people to stay at home by publicising activists’ call for action on a Facebook site and warning people to stay away from ‘trouble’. This year a similar site appeal saw around 75,000 sign up to a programme that included economic and democratic demands. However, the programme for action was vague and did not give the impression of a serious challenge to the regime. There was clearly a gulf between some of the April 6th Youth Movement’s leading activists and the workers and poor masses. A massive police clampdown at every place, where protests might have gathered, effectively prevented a repetition of 2008. Since then, the leaders of this movement appear to have split, with reports that some have accepted backing from Freedom House, a US-government funded body.

The lesson of April 6th is that cyberspace can only be an auxiliary to building genuine mass movements, with activists rooted in workplaces, universities and local communities. Students, by themselves, cannot change society. Those with the best understanding of the need for mass action will turn to workers’ movements, including young workers and unemployed youth. In the future, these are likely to be the most militant section of society, struggling against the corrupt regime and oppression. Explosive youth movements similar to street protests in Athens, in December 2008, could develop. The uprising in Mahalla, in April 2008, showed a linking up of workers, youth and the community, against government, police and management repression.

The recent ‘football war’, following Egypt’s two soccer matches against Algeria and Egypt’s subsequent exit from the 2010 World Cup tournament, is a distorted sign of tensions in society. Thousands of people went onto the streets following Egypt’s victory in the first match. After defeat in the second, the Algerian embassy was surrounded by a large angry crowd and cars were set on fire and shop windows broken. Of course, it is a far safer option for the Egyptian government to have anger expressed against the Algerian football team and embassy than against it. Hosni and Gamal Mubarak have even been joined by the rarely-heard other son, Alaa, in raising the nationalist temperature over this issue.

Socialist programme needed

Just as the Muslim Brotherhood found they are sitting on top of a live volcano, the Mubarak regime is similarly perched above a mountain of boiling larva. There are increasing wisps of smoke and occasional rumbles, and, at some point, the pressure of workers’ intolerable living conditions and the underlying clash between the different classes in society will erupt to the surface. The accumulated anger of workers and the poor will burst out, encouraged by the sense that the ruling class is starting to divide over how best to maintain its rule in the future.

Important sections of the middle classes are looking to the methods of mass working class struggle, shown by strikes and protests among white–collar and professional workers. Student campaigns, although still involving a minority, are growing bolder. Even the vast security forces will not be immune to future mass conflict between the poor masses and the rich ruling class.

Workers are gaining confidence through seeing strikes win concessions and are starting to draw political conclusions from these struggles. The moves towards setting up independent trade unions are a sign of workers concluding that they can only rely on their own strength and action to win their demands.

What is desperately needed is a workers’ party that can draw together activists from these different sections. A socialist programme that can win the support of the mass of Egyptian workers, the poor and youth needs to be developed. Strategy and tactics need to be discussed, drawing on experience of past workers’ struggles in Egypt and internationally.

Rigged parliamentary elections are due in 2010 and a rigged presidential election in 2011. Socialists should argue for the working class to have its own party and candidates and against supporting one or other set of pro-capitalist politicians. If Mubarak’s constitution prevents a workers’ party from standing, mass struggle could overturn the undemocratic regime, demanding genuinely free elections to a new Constituent Assembly.

The Egyptian working class is a minority in society, but the strike movement has shown it is the most powerful motor for change and can draw other sections behind it. A programme of nationalisation of the large corporations, land estates and banks, and a democratically planned economy, could ensure the resources and wealth of the country meet the needs of all. An Egyptian socialist revolution would then mark the end for every corrupt capitalist regime in the Middle East, North Africa and beyond.

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November 2009