Masses poorer than Mubarak’s era
When the angry mobs at Cairo’s Al Tehrir Square had entered into the final round of their path to revolution, they were more than confident to anticipate that the long and dark night of deprivation will come to an end with the dawn of a new era. They had mistakenly termed revolution and economic freedom as the two branches of the same tree with low-hanging fruits of prosperity and economic freedom. The Egyptian revolutionaries ignored one bare fact that raising a fist in anger or digging in seriously to make things happen are not the same things. The masses who expected a better life after the revolution were instead laid off from their jobs as a result of recession and ended up frowned to the hilt. People in the neighbourhood are talking about going back to the streets for another revolution — a hunger revolution. The revolution of Egypt has left the people poorer than the Hosni Mubarak era as revolt stopped new foreign investment and decimated the pivotal tourist industry. The annual growth slowed down to less than 2 per cent from a projected 5 per cent, and Egypt’s hard currency reserves plunged 25 per cent. In a region where economic woes enraged an entire generation, whether and how Egypt can fix its broken economy will be a crucial factor in determining the revolution’s success. A new crop of impatience, however, is re-growing in the streets of Cairo. Squeezing of the opportunities, closures of factories and small business resulting large scale manpower lay off has aggravated the problems of the common man. Many people in Egypt, who just want to be able to survive, believe this revolution has turned out to be a curse on the country’s poor folks.
Restructuring the economy
In a region where economic woes enraged an entire generation, whether and how Egypt can fix its broken economy will be a crucial factor in determining the revolution’s success. It could also influence the outcome of the revolts across the Arab region, where economic troubles are stirring fears of continued instability, authoritarian crackdowns, or even a backlash against what had appeared to be a turn toward Western-style market reforms. The wave of resistance sprung in Gulf Cooperation Council (GCC) countries, where the public wished to follow the Egyptian Model, has dampened following the post-revolution effects. For obvious reasons, statistics on the poorly organized informal economy are hard to come by. No one knows how many Egyptians have been put out of work since the uprising began in January. It is because Egypt has uncounted millions of small entrepreneurs that employs 40 per cent of the national workforce. But it is clear that tourism, which provides one job in seven and 11 per cent of GDP, has been badly dented. International arrivals were 35 per cent lower in April this year than the April last year, according to the government. In the first quarter, the year-on-year drop was a calamitous 46 per cent; this cost Egypt an estimated $2 billion. In the summer, tourists from the Gulf usually flock to Egypt. This year their numbers are down, not least because the Gulf media—much of which are owned by princes—portray pro-democracy protests as terrifyingly bloody. Five-star hotels in Garden City, Cairo’s diplomatic area, have reduced their prices by 50 per cent or more. Tourist packages in Sharm El Sheikh, a seaside resort that attracts more visitors than the pyramids, are also heavily discounted. In the short term, however, the loss of jobs is the most alarming aspect of Egyptian economy. Some 700,000 young Egyptians enter the labour market each year. If they cannot find work, they may grow restless. Political uncertainty is keeping investors away, at least for now. The first quarter of 2011 saw a net outflow of foreign direct investment of $200 million. It is pertinent to note that in the last quarter of 2010, there was a net inflow of $656 million instead.
Foreign investment to the rescue
Foreign development banks, eager to help democracy succeed, are opening their purse-strings. The World Bank’s private-financing arm, the International Finance Corporation, said in late July that it would invest $50 million in Orascom Construction Industries (OCI), Egypt’s largest listed company, and would also lend $200 million to one of OCI’s subsidiaries, a fertiliser firm. Citadel Capital, Egypt’s largest venture-capital firm, has secured $21 million from European development banks for an Egyptian river-transport fund. But investors are still wary. The corrupt and brutal Mubarak regime styled itself as business-friendly. It indeed it liberalised investment rules and cut taxes, though it also strongly favoured cronies over independent businesspeople. Now that the regime is gone, there is a danger of a backlash against all businesses, which are tarred by association. The Egyptian state pays businessmen, especially those in sectors that consume large quantities of energy, billions of dollars annually from the pockets of Egyptian taxpayers in order to increase their profits and their competitiveness on the international market. The most important sectors in this regard, for example, are cement, fertilisers, steel, and some petrochemical products and ceramics. These sectors obtain gas at a price that ranges between two and three dollars—two and a half and three dollars —per one million thermal units of natural gas. Meanwhile, the world price ranges between $12 and $14. This is a huge subsidy benefited by industrialists alone while the masses continue to suffer in silence. The owners of revolution have demanded the military government to end all such subsidies, a move that is likely to close more sectors of trade. The strategy might backfire to cause more unemployment and poverty among the already vulnerable segments.
Legacy of Hosni Mubarak
The Egyptian revolution is different in nature as it has not been able to throw up any towering personality like Imam Khomeini of Iran, who could lead and maintain unity of the movement. Moreover, the revolutionaries, under Muslim Brotherhood, hold powerful elements with diverse views and vision of life. There is a strong element of Jehadis and militants who had been confronting Mubarak for the last three decades, under the leaders with regional status only. Side by side, there are a considerable number of youth amongst them, holding liberal and moderate views on life and belong to the new cyber generation, nationalist in outlook, having respect for democracy and freedom. Many Egyptian economists and Western scholars say that the government of former President Hosni Mubarak tainted free market ideas like privatisation so that the spoils were equally distributed to the well connected only. They have serious objections to the policy of capitalism adopted by Hosni Mubarak who saw no difference between capitalism and corruption. For instance, it took on average 500 days to register a small bakery in Egypt, or ten years to obtain legal title to a vacant plot of land. Small wonder most business folk opt to work without licenses or legal protections resulting rampant tax evasion. The revolution could make Egypt more prosperous, if it leads to less corruption, stronger institutions, greater Diaspora goodwill and a more motivated population. But the fact is that everyone is jumping on the revolutionary wave and trying to reap extra benefits leading to chaos and turbulence. A free for all the drive to root out corruption has frozen business activity. The main sources of capital in this country have either been arrested, escaped or are too afraid to engage in any business. The bottom-line is that a mere revolution devoid of policy, planning and organization can further sink a nation into the rigours of irreversible poverty and uncontrollable anarchy.
