Committee for the Abolition of Illegitimate Debt

ohamed Bouazizi, a long-suffering and dispossessed farmer turned street vendor, immolated himself in protest on December 17, 2010. His desperate act ignited a popular movement that ousted Tunisian president Zine El Abidine Ben Ali a month later and sparked demonstrations in Algeria, Jordan, Morocco, Oman, and Yemen. On January 25, 2011, huge numbers of Egyptians began occupying Cairo’s Tahrir Square and other urban spaces throughout the country.

Egypt’s central role in Arab politics and culture for much of the twentieth century rendered it pivotal in determining the political significance of these movements against autocracy and economic inequality. On February 11, newly appointed Egyptian vice-president Omar Suleiman — better known as former director of the General Intelligence Directorate and as “torturer in chief” for his management of Egypt’s participation in the George W. Bush-era extrajudicial rendition program — announced that President Hosni Mubarak had resigned and that the Supreme Council of the Armed Forces would “run the affairs of the country.” Meanwhile, beyond Egypt, protests continued and developed into mass uprisings in Yemen, Bahrain, Libya, Syria, and on a smaller scale, Morocco.

By mid-2011, Robert Springborg, a well-informed, veteran Egypt-watcher and political scientist, concluded that, “The Arab Spring of 2011 may … be more akin to [Europe’s] 1848 failed revolutions than to the democratic transitions set in motion by the crumbling of the Soviet Union in 1989.”

In the short term, Springborg was correct. Just as the Europeans who rose up in the nineteenth-century “springtime of the peoples” mostly failed to win democracy and national independence, the Arab uprisings have not achieved “bread, freedom, and social justice,” as a popular Egyptian slogan articulated the movement’s goals.

Though Tunisia is now a procedural democracy thanks to the intervention of its national trade union federation, large elements of the old regime retain power, and the social and economic marginalization that drove Mohamed Bouazizi to desperation remains unaddressed. The Yemeni, Libyan, and Syrian states and societies have collapsed catastrophically — partly because their polities were previously fractured along tribal and sectarian lines and their regimes failed to maintain the social compact, and partly due to interventions by US allies comparable to those in Europe in 1848.

In his latest book, Egypt, Springborg seeks to explain why the Egyptian uprising failed. The book is packed with excellent data on economic, social, environmental, demographic, and infrastructural indicators. Ultimately, Springborg contends that the key explanatory variable for the failure of the uprising, as well as Egypt’s abysmal performance on all these indicators, is the classic political science question of how “state power has been acquired and exercised.”

Liberal Nostalgia

While Springborg’s attention to history is welcome, his historical interpretations range from romantic to demonstrably wrong. He supposes that Egypt’s “rulers and ruled” possess “special if not unique natures” because “Egypt, China, and Iran are the three great empires of antiquity that exist today as nation states.” Consequently, Egypt’s “millennia-old endowments of centralized governance coupled with cohesive national consciousness” should have created a state with strong capacity, so its actually very limited capacity must be due to “mistakes,” like failing to “take advantage of the opportunities provided by economic globalization.” But while nationalist historiography and public culture idealize Egypt’s long history as a unified polity, Gamal Abdel Nasser, who became president in 1956, was in fact the first indigenous Egyptian to rule an independent Egypt in 2,300 years. Modern Egypt is primarily an outcome of the state-formation processes of the last 200 years. Its distinctiveness lies in the fact that in all the other Arab states (except Tunisia), those processes have been underway for less than 100 years.

Springborg’s argument deploys a comparison between the “at least partially open access order” of the pre-1952 Egyptian monarchy and the “limited access order” of the post-revolutionary officers’ republic. This terminology was developed by economist Douglass North and his colleagues, who define an “open access order” as “the upper-income, advanced industrial countries of the world today [which] all have market economies with open competition, competitive multiparty democratic political systems, and a secure government monopoly over violence.” Leaving aside the problems with these analytical categories, this is not a remotely accurate description of monarchical Egypt. Here, Springborg indulges in nostalgia for the cosmopolitan and supposedly relatively liberal monarchy era, a sentiment that burgeoned among Egyptian liberals in the 2000s.

British imperialism, economic injustice, and the Arab-Israeli conflict figure only peripherally in Springborg’s history. According to him, the recent terrorist attacks in the Sinai Province by the local affiliate of the Islamic State were “the first major, violent penetration by an external force into Egyptian domestic political strife in centuries.” This assertion would shock most Egyptians. British military forces invaded and occupied Egypt in 1882 to ensure that its state debts to European banks would be repaid and the Suez Canal would remain securely in European hands. They remained until 1956. Throughout that time, ousting the British occupiers was the principal issue in Egyptian politics.

In 1922, after a nationalist uprising in 1919 led by the Wafd Party, Britain unilaterally declared Egypt nominally independent under a constitutional monarchy. But its governments never had a monopoly over violence or the power to determine policy on matters impinging on British interests. The Wafd was indisputably the most popular party and won every reasonably free election. Yet the monarchy and the British occupiers colluded to permit it to rule for no more than seven of the monarchy’s thirty years, dismissing popularly elected governments and rigging elections.

The cultivation and export of cotton remained the largest sector of the economy, as it had been since the 1860s. Some 12,000 families owned about 40 percent of the cultivated land in plots of 50 feddans (about 52 acres) or more. They constituted the largest segment of the local ruling class and its rural auxiliaries and comprised 43 percent of parliamentary deputies and 58 percent of cabinet members between 1923 and 1952. Meanwhile, by 1939 over 90 percent of rural families were landless or owned less than three feddans, the minimum required to support a household of four. Although it was not a static social formation, agrarian inequality and its attendant extra-economic coercive mechanisms were the salient features of Egyptian colonial capitalism.

An ethnically and nationally diverse business class with interlocking interests in agriculture, commerce, and industry developed in the interwar years. But the dominant fractions of capital were controlled by Europeans residing in Europe (most notably the Suez Canal Company, Shell Oil, and the National Bank of Egypt) or in Egypt, and by local minorities with foreign or Egyptian citizenship. A tendency toward Egyptianization of capital and the skilled labor force developed by the 1940s — a factor in Springborg’s rosy picture of the monarchy. However, except for the cotton manufacturing and export sectors, Muslims and Copts remained significantly underrepresented at the commanding heights of the economy, especially the financial sector.

This regime, ruled by the corrupt and debauched King Faruq, led Egypt into the 1948 Palestine War, where the army suffered a humiliating defeat. The Free Officers, majors and colonels with no unified political orientation, emerged from this bitter experience and seized power in a bloodless coup on July 23, 1952. The first item on their agenda was land reform — enthusiastically welcomed by both the vast majority of Egyptians and the US government, which considered it an anti-communist measure.

The Officers’ Republic

The core of Springborg’s argument is his assessment of the “officers’ republic,” established after the Free Officers led by Gamal Abdel Nasser overthrew the monarchy. Since then, the institutions of the “deep state” — the armed forces, the intelligence services, and the presidency — have remained constant, despite jockeying for position among them and several redirections of economic policy and international orientation.

Although the term “deep state” is sometimes used to avoid admitting that we are uncertain about the internal dynamics of Egypt’s state apparatus, Springborg is entirely correct that in 2011 the armed forces thwarted the radical and democratic impulses of the Egyptian uprising. Yezid Sayigh, who coined the term “officers’ republic,” warned in an August 2012 report that Egypt’s military was poised to “enshrine its custodianship of the country” and block a transition to democratic civilian rule. Springborg demonstrates that this process was already under way the day that the armed forces eased Mubarak out of the presidency in a “coup-volution” — an inelegant term that highlights the fact that Mubarak was not and could not have been removed solely by an unarmed popular movement lacking a history of cross-class alliances, unified leadership, national organizational structure, or coherent political program.

Fifty-five years ago, the late Anouar Abdel-Malek’s Egypt: Military Society offered a Marxist critique of the officers’ republic. Since then, there has been no excuse for idealizing Nasser’s torture of political opponents, economic miscalculations, staffing the management of the public sector with incompetent officers, and misleadership in the run-up to the debacle of the 1967 Arab-Israeli War. In retrospect, it was not a good idea for Egypt to have fought four wars against Israel (1948, 1956, 1967, 1973), although not all were of Egypt’s choosing. In 1956 Israel attacked Egypt in collusion with Britain and France, who were outraged by Nasser’s nationalization of the Suez Canal and not quite ready to abandon their imperial positions in the country. These wars had a staggering economic impact, and it would be very unusual if an army that fought four wars in twenty-five years (five, counting the 1960s intervention in the Yemeni civil war) did not acquire an outsize role in its country’s politics.

“Development,” if the term has any valid meaning, does not take place in a political vacuum. It is not, as Springborg seems to assume, the outcome of universally applicable, scientifically established techniques. For better and for worse, Egypt was a central actor in Arab politics, the nonaligned movement, and the emergent Third World from the 1955 Bandung Conference to 1967. It paid a much heavier price than any other Arab country for the failure of those alternatives to the bipolar Cold War. Should Egypt not have tried?

President Anwar Sadat (1970-81), after acknowledging those failures, made peace with Israel and switched sides in the Cold War. In exchange, from 1979 to 2003 the United States gave Egypt $19 billion in military aid, making it the second largest non-NATO NATO
North Atlantic Treaty Organization NATO ensures US military protection for the Europeans in case of aggression, but above all it gives the USA supremacy over the Western Bloc. Western European countries agreed to place their armed forces within a defence system under US command, and thus recognize the preponderance of the USA. NATO was founded in 1949 in Washington, but became less prominent after the end of the Cold War. In 2002, it had 19 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the UK, the USA, to which were added Greece and Turkey in 1952, the Federal Republic of Germany in 1955 (replaced by Unified Germany in 1990), Spain in 1982, Hungary, Poland and the Czech Republic in 1999. recipient after Israel, plus $30 billion in economic assistance. Since then military aid has been stable at around $1.3 billion a year. Nonetheless, according to Sayigh’s report cited above, “US officers and officials familiar with the military assistance programs to Egypt describe the Egyptian Armed Forces as no longer capable of combat.”

Sadat encouraged Egyptians to work in the oil-rich Arab countries and send their earnings home, an exceptional source of income augmented by the high price of oil from 1974 to 1985, although Egypt itself is only a minor producer. Springborg is critical of the Sadat and Mubarak regimes for failing to invest these revenues wisely. The criticism is correct in abstract accounting terms. But Sadat justified rolling back the Nasserist social compact in the name of “freedom,” including access to consumer goods previously unavailable. Had he appropriated a substantial portion of the remittances of citizens working abroad, Sadat would have undermined his own claim to legitimacy and his alliance with the Muslim Brotherhood, whose revival was financed to a great extent by funds transferred from the Gulf. Moreover, Sadat’s boldest initiative in adopting IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org policies — a sharp reduction in subsidies on basic consumer staples in January 1977 — was met with a major uprising that forced him to backtrack. Subsequently, Sadat and Mubarak avoided measures that might inflame popular discontent, until the 1990s.

Springborg does not ask why the US government allowed the Mubarak regime to squander its military aid. Since the inception of the Operation Bright Star joint exercises in 1980, the Egyptian and American militaries have increasingly become the principal point of contact between the two countries. However, the premise of the relationship is that the Egyptian high command will receive plentiful toys as long as it keeps the peace with Israel and limits its military ambitions. American policymakers have long understood the structure of the officers’ republic. A 2008 US embassy cable released by WikiLeaks noted that despite its declining operational capacity, the Egyptian military “retained strong influence through its role in ensuring regime stability and operating a large network of commercial enterprises.”

This new mission of the Egyptian military emerged after Mubarak purged his competent and charismatic Minister of Defense, Field Marshall Abd al-Halim Abu Ghazala in 1989. Since 1991, senior officers who go along with the program have received a “loyalty allowance” upon retirement and an opportunity to enrich themselves with second careers in the upper echelons of public sector enterprises or the state bureaucracy. In addition, relying on the cheap labor of conscripted soldiers, the military has expanded its role as a producer of bread, other food staples, and durable consumer goods, and in the construction, hotel, and gasoline industries.

The military’s escalating involvement in the economy coincided with the definitive installation of Washington Consensus neoliberalism in Egypt. In 1991, as a quid pro quo for Egypt’s symbolic participation in the US-led campaign to roll back Iraq’s occupation of Kuwait, Western states and the international financial institutions cancelled about half of its $50 billion foreign debt. The condition was that Egypt accept an economic reform and Structural Adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/ Program designed by the IMF and World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

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Springborg argues that the Mubarak regime might have survived had it invested more in physical infrastructure and human resources and sought support from the private-sector business class beyond the clique of crony capitalists led by Hosni Mubarak’s son Gamal, who became increasingly powerful in the 2000s. He does not explain how government budgets subject to IMF-imposed austerity measures could have made such investments.

Uncertain Future

Springborg believes that Egypt is facing an existential crisis and even raises the possibility that “the contemporary nation state is at risk of fracturing.” The situation is fearsomely grim. But those concerned about the future of Egypt and its people may be buoyed by social scientists’ notoriously poor record at prediction (see the demise of the Soviet Union, the rise of the Islamic State, or Trump’s 2016 election victory). Springborg candidly acknowledges that political scientists “were blindsided” by the 2011 Arab uprisings and failed to “see the depth of the indignation that was there” because too many followed an “econometric model.” He has even admitted that, “90 percent of what I say I’m guilty of myself.”

This did not cure him of his penchant for prediction or redirect his attention to social forces beyond the ambit of the state. In February 2011 Springborg and co-author Clement Henry Moore explained “Why Egypt’s military will not be able to govern” and predicted that Egypt, like Tunisia, might see “a civilian government free of military involvement.” A year later Springborg was predicting that the military would not be able to subdue the Muslim Brotherhood as it had several times in the past. Unfortunately, since the coup of July 3, 2013 and the massacre of 800-1,000 Brotherhood supporters on August 14, then-field marshal, now President Abdel Fattah el-Sisi has led a praetorian dictatorship more viciously repressive than the worst day of Hosni Mubarak’s twenty-nine-year rule, while citizens enjoy even less economic and physical security.

Springborg’s proclivity to misread history is also why his comparison of 1848 and 2011 is inapt. Despite the short-term triumph of reaction, the European revolutions of 1848 were ultimately the handmaidens of bourgeois democracy — universal suffrage, the demise of empires, independent nation states, and the end of feudal privileges. But this was not fully achieved until after World War I. The 2011 Arab uprisings did not resolve any of the political or economic questions that prompted them. A multifaceted crisis — the failure of the Arab regime of capital accumulation, human development, and authoritarian governance — continues unabated. This situation is unsustainable and will change. But we cannot know how or when.