Pillage not development: Egypt’s military junta & the European public banks

29 Nov 2011 admin

(this article initially appeared in Bankwatch Mail 50)

Bread, freedom, dignity, social justice. These were core demands articulated during the democratic and inspirational Egyptian revolution in Tahrir Square at the beginning of this year. Beyond this, there was widespread support for improved public services to the poor, a shift from subservience to US foreign policy, a reduction in Egypt’s foreign debt and an end to and reversal of privatisation policies.

Tahrir Square on Tuesday 22 November

Now, under the mantle of “supporting democracy”, the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) are working with the military junta-appointed government – an increase in Egypt’s debt burden and the promotion of privatisation “as a necessity” both look inevitable.

Reading statements from the banks and speeches made by the EBRD’s president Thomas Mirow, it feels like bank officials should spend some time in Tahrir learning about the democratic demands and desires of Egyptians that toppled Mubarak, before driving on with their lending plans.

But, instead, a lot of the dialogue taking place is with the same old tired elites, including with the remnants of Mubarak’s NDP apparatus: the “fluul”.

In late October and under the banner “A big day for EBRD in Egypt”, the EBRD reported on a conference it organised in Cairo, declaring that: “It was with a sense of optimism that Egypt’s minister of planning and international cooperation, Fayza Abou el Naga, summed up the mood in her country as she talked about the many challenges ahead for the economy. ‘We are now in the tenth month of our revolution and we can say that the worst is behind us,’ she said.”

Aboul Naga is widely recognized as fluul, a pre-revolution minister still in the cabinet, playing the same role as before. The fluul are widely despised in Egypt for robbing the country of its wealth and the repression before and during the revolution, and are in the process of being banned from participation in upcoming elections. Just the day before the EBRD’s event in Cairo, Aboul Naga released a statement slamming Egyptian NGOs for accepting funding from abroad, in a direct attack on civil society that revealed her paranoid perspective on politics. Even at the conference itself she complained that there were still “various demands from civil society”, although “the worse is behind us”.

Hence, when an EBRD press release quotes Aboul Naga claiming the Egyptian revolution as “our revolution”, it reveals just how detached the bank is from both public opinion and the political situation in Egypt.

But the problematic engagement doesn’t stop with one particular minister. Egypt is ruled by a military junta that aims to entrench its rule beyond any “transition”. To defend its power, the Supreme Council of the Armed Forces (SCAF) is using political repression against any who criticise it. Twelve thousand civilians have been court-martialed, including bloggers, journalists and activists charged with defaming or insulting the military. The torture of prisoners remains normalised, alongside impunity for the police and military forces. High profile attacks such as the Maspero massacre, where 28 civilians were killed in October in downtown Cairo, weaken civil society. The military prosecutor has since charged the victims – including one of those killed by the army – with causing the violence.

These are not accidents or “failures” in policy, but pragmatic and conscious steps taken to ensure that the SCAF junta maintains control over Egypt’s future. At the same time as repressing popular democratic movements for change, the military is dominating the constitution drafting plans. This is the context in which the EBRD and EIB are promising billions of taxpayer-backed money to ensure stability and “reform”.

Lack of democratic accountability

But maybe the EBRD and EIB do recognise this? For it is precisely the current lack of democratic accountability that make the banks’ stated aims achievable. Without the continued disenfranchisement and repression, pushing through neoliberal and privatisation measures would be largely impossible.

The EBRD has already begun commissioning an assessment of the Egyptian transport sector, aiming to assess potential public-private partnership opportunities, and is making big promises, including over USD 1 billion per year to boost Egypt’s SMEs, struggling housing sector, water, food and energy – with “full investments” by early next year. “The potential is huge,” purrs the EBRD’s Mirow. The EIB is also clear that it aims to continue investing in Egypt to develop the private sector and create an investment-friendly environment.

Mention this to many Egyptians, and the response is: “But that’s not what the revolution was for. That doesn’t further our democracy, and it could set it back.” Demands for jobs and social justice are many, but they’re connected to a social politics – debt audits, re-nationalisation, community and worker control, strengthened regulation. Not to the radical vision of economic restructuring that the EBRD and EIB espouse, prioritizing the private sector, increasing exposure to international financial institutions. These are, in fact, diametrically opposing visions for Egypt’s future.

And the past does not bode well. The EIB’s history in the country includes financing the Damietta liquefied natural gas plant to export gas to Spain. Local communities and campaigners have raised concerns about the discount prices – gas was sold at 50 percent of the market price – amid wider unhappiness that local resources are exported to Europe and Israel at a loss to Egyptians. Yet the EIB’s website contains no project documents or further details about the investment, aligning neatly with the lack of transparency or accountability associated with the SCAF junta or previous Egyptian governments.

As this article is being written, the port and roads of Damietta, 200 miles north of Cairo at the confluence of the Nile and the Mediterranean, have been shut down by a popular environmental justice uprising against a petrochemical-fertiliser plant built by Canadian Agrium and Mopco, with several residents killed by the military. Though not for this plant specifically, Mopco is another Mubarak-era beneficiary of EIB lending.

Both the EBRD and the EIB have pinpointed energy – especially fossil fuels – as a primary target sector for their move into Egypt. These investments are intended to be cohesive on a policy level with the European External Energy Policy. This is easy to conceptualise, as under Mubarak, Egyptian foreign policy and energy policy pandered to western interests. However, this was not representative of public opinion in Cairo, Alexandria or the poorer cities of Upper Egypt, generating widespread anger. Many Egyptians don’t consider Europe’s external energy policies to be in their interests – placing energy projects and investments framed by and aligned with this policy on a collision course with a more democratic government.

This is not development, it’s pillage

Despite widespread public opposition to increased privatisation and neoliberalism, the EBRD and EIB could get their way. Egypt is in a state of flux, and there is scope for international institutions to take advantage of the “Shock Doctrine”. Formal structures and accountability mechanisms to debate and decide on changes are few. Claims of “technocratism” obscure power imbalances. Unpopular laws are passed by a military junta, the Egyptian economy is weak – and anti-democratic “solutions” can be imposed.

Asking people in Tahrir Square what they think about the EBRD’s plans, I’m told “OK, they want us to privatise, to change our economy. Even if we wanted these changes – and we don’t – we need to be ready, to engage with these banks as equals. We need to have our country together before we can negotiate.”

And “if they try to restructure and change Egypt’s economy now – when we’re still fighting for our freedoms – this is not development, this is pillage.”

In a speech from June this year, Thomas Mirow intoned: “Revolutions may begin the same way but they often end differently. The great political thinker, Alexis de Tocqueville, wrote that ‘revolutions are like novels, the difficulty is not writing the beginning but fashioning the correct ending.’ At the EBRD, our task, whether in our existing countries of operations, primarily in the former communist bloc, or our future ones in the southern Mediterranean region, is to help people bring about the right ending.”

The chutzpah here is breathtaking. How can someone based in London think that it’s his job to help Egyptians fashion the “correct ending”? How does a German technocrat know what the “correct ending” is? How is this arrogance different from that of the SCAF military junta, from Mubarak, even from the British occupation?

Standing in Tahrir, Mirow’s words echo a refrain of “We know what’s best for you – we will organise your development – just accept our rule and our reforms”. A refrain that the revolution was trying to end.

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