Egyptians Are No Better Off Than Before the Arab Spring

(Bloomberg Opinion) -- Nine years ago today, the Egyptian people toppled Hosni Mubarak, their ruler of nearly 30 years. What had begun as protests against police brutality drew inspiration from the success of anti-regime demonstrations in Tunisia, and escalated into demands for the fall of the dictatorship. Among the most popular chants in Cairo’s Tahrir Square and other protest venues was the demand for “bread, freedom and social justice.” .Nearly a decade on, despite positive movement in several macro-economic indicators, those demands are just as elusive as ever. .For a time, Egyptians enjoyed a great deal more freedom. In the immediate aftermath of Mubarak’s fall, free speech flourished. New political parties were formed, with diverse ideological outlooks. Private and state-owned media began publishing stories critical of the government. On their TV sets, Egyptians were treated to the unfamiliar sight of journalists and activists openly challenging officials and politicians..But bread and social justice continued to be elusive, first under the military administration that took over from Mubarak, and then under the elected Islamist government. Egypt’s new rulers inherited structural problems that had plagued the economy for decades. These included poor infrastructure, inefficient public enterprises, a costly array of subsidies and a convoluted series of regulations that had accumulated over decades. .In the years leading to the uprising, Egypt had posted some promising macroeconomic numbers, but the gains had not reached most Egyptians. In the decade before Mubarak’s overthrow, GDP growth was relatively healthy, breaking 7% for two of the years. Foreign direct investment in those years reached the highest levels in modern Egyptian history. Hard-currency reserves were also at their peak, at $37 billion. .Despite this, the poverty rate rose steeply throughout the decade, rising from 16.7% in 2000 to 21.6% in 2010. Millions fell into poverty while the elite cashed in. In an economy riddled with corruption, much of the business elite was more adept at leveraging connections and privileges for unproductive rent-seeking activities than at building efficient productive enterprises. .Egypt’s infrastructure had long been neglected, and cities were left to decay while the elites escaped to gated compounds on Cairo’s outskirts and along the Mediterranean coast. Investment in luxury property developments ballooned as the wealthy sought safe refuge for their excess capital..Expectations following Mubarak’s overthrow were high. The new freedom of expression led to increasing industrial action and demands for long overdue raises. The interim military administration promised the wage hikes, but as economic activity stagnated and spending to protect the pound grew, much of Egypt’s reserves quickly evaporated. There were fears that the currency would require a devaluation, as it eventually did. .When the Muslim Brotherhood government took power, its inexperience, incompetence and decidedly brief tenure contributed to a general failure to successfully address the country’s economic demands..The coup in 2013 marked the abrupt end of free speech. Those opposed to General Abdel Fattah El Sisi’s power-grab were gunned down in the streets or imprisoned en masse. The media was quickly bullied into the old servility. But Sisi did promise bread and social justice. Egyptians were told they would have to endure some hardship while the new president set about fixing the economy, and for the most part they accepted the bargain of economic security in exchange for freedom. .Now, once again, Egypt’s macro-economic indicators are looking up, winning praise for Sisi’s economic management from investors and the IMF. But as before, the improvements mask problems below the surface. .While GDP growth has accelerated, the country’s private sector, aside from oil and gas, has kept contracting. January’s non-oil and gas purchasing-managers index plunged to 46, the lowest level in nearly three years. As before, the fruits of growth appear to have been cornered by the well-connected few. Roughly 5 million more Egyptians fell into poverty between 2015 and 2018; the national poverty rate rose from 27.8% to 32.5%..While Egyptians increasingly struggle to cover basic commodities, Sisi publicly defends building lavish palaces and insists he will continue to do so. As debt grows at a troubling pace, the government continues to pursue unnecessary megaprojects like the $58 billion New Administrative Capital which is slated to be home to Africa’s tallest tower..Will Egyptians once again hold their rulers accountable as they did nine years ago? Although reliable opinion-polling is scarce, there is plenty of anecdotal evidence of deepening dissatisfaction, including the spasm of protests last September, sparked by a series of online videos about corruption in government contracts..After the failure of the Arab Spring, many commentators assumed the Arab world had lost faith in the power of street demonstrations. But 2019 showed, in Algeria and Sudan, that people-power can still topple brutal regimes. In Iraq and Lebanon, demonstrators continue to demand freedom, bread and social justice. .In Egypt, despite the jailing tens of thousands of opposition politicians and activists since 2013, the threat and fear of an uprising persists—especially since, having been made to sacrifice freedom for economic security, most Egyptians now have neither..To contact the editor responsible for this story: Bobby Ghosh at aghosh73@bloomberg.net.This column does not necessarily reflect the opinion of Bloomberg LP and its owners..Timothy Kaldas is an independent risk adviser and nonresident fellow at the Tahrir Institute for Middle East Policy. .©2020 Bloomberg L.P.

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Egyptians Are No Better Off Than Before the Arab Spring

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