On Feb. 13, just 48 hours after the abdication of Hosni Mubarak, Egypt’s 18-member Supreme Military Council abolished the constitution, dissolved parliament and vowed to hold presidential and parliamentary elections within the year. Though promising, a series of procedural changes is not a revolution. For that to happen, Egyptians must refuse to submit to an unrepresentative elite promising state-delivered economic growth – essentially, a repeat of the Mubarak era.
To plutocracy – rule by wealth – and kleptocracy – rule by theft – we humbly add “humiliocracy,” a concept coined by Moroccan scholar Mahdi Elmandjra to explain rule by humiliation. From the lowliest civil servant to the highest military general, humiliocracy is in effect when a culture internalizes the failures of economic inefficiency. For Egypt, despite Mr. Mubarak’s downfall, the regime may very well endure. Politically connected business elites, influential party members and the powerful military remain the stewards of a crony capitalist structure that deprives Egyptians of their wealth and dignity. Despite steady economic growth over the past several years, half of Egyptians live on less than $2 a day. One can better understand Egypt’s financial woes by examining the government-led policies that have come to stunt its economic growth.
Until the early 1950s, foreigners controlled much of Egypt’s financial and trading institutions; the Egyptian government was composed of a corrupt and exploitative aristocracy that functioned through patronage and special considerations. On July 23, 1952, a revolutionary group of nationalist military officers seized control of Cairo.
National independence is not always consistent with political liberty. The revolutionary “Free Officers” would rule not as the vanguard of democratic progress, but as a movement for populist dictatorship and nationalist consolidation. After purging the civil-service ranks, dissolving political parties and jailing liberals, Islamists and communists, the military regime – in the name of Arab socialism – embraced interventionist economic policies, with devastating consequences to the country’s macroeconomic stability.
In November 1956, the military regime took control of all British and French banks and companies – about 15,000 establishments. By the 1960s, the state controlled most industries, including transport, finance and trade. Adopting a popular development model of heavy industrialization and economic state planning of the time, Cairo implemented a plan in 1960 aimed at doubling the national income in 10 years. By the end of the decade, much of the regime’s economic reforms were judged complete failures. Industry was plagued by surplus labor, low productivity and the shortcomings of bureaucratic planning. Commercial establishments produced commodities and provided services too expensive for ordinary Egyptians to purchase. Despite subsidies, bread and fuel were in short supply.
Egypt’s shattering defeat in the Six-Day War of 1967 further exposed President Gamal Abdel Nasser’s regime for the mess of incompetence and privilege it was. Rather than turn to the unglamorous task of fixing their state’s structural shortcomings, government officials increased their poor country’s dependency on foreign patronage. During the 1970s, President Anwar Sadat carried out a number of open-door reforms to improve Egypt’s dismal economic performance. These reforms, however, simply overlaid Egypt’s pre-existing state-controlled economic system. Graft increased astronomically in the country’s overregulated and overbureaucratized system, with army officers, public-sector managers and members of the old regime becoming an entrenched class of middlemen.
By the early 1990s, Egypt implemented a radical, structural adjustment program at the behest of the International Monetary Fund, producing a crony capitalist hybrid where state-controlled banks extended loans to well-connected families who supported the regime, ensuring access to capital for privileged and protected firms and industries. Egypt’s expansive and pre-existing regulatory state undergirded this system. Ahmed El Naggar, director of the economic studies unit at Al-Ahram Center for Political and Strategic Studies, explained that government officials sold state-owned land to politically connected families for low prices. They also allowed foreign conglomerates to buy state-owned companies for small sums. In exchange, he said, officials received kickbacks.
For Egypt, extricating itself from its worsening economic condition will be an almost insurmountable task, given its widespread poverty and unemployment, the movement of skilled labor abroad and crushing foreign debt. But Egypt’s abysmal state threatens not merely its political and economic institutions but also the continued existence of its people’s freedoms. To ensure that Egypt experiences real growth, Egyptians must reassess the proper role of government and its historic role in perpetuating their country’s economic injustice. As long as this legacy persists, there is little hope for genuine revolution.
By Malou Innocent, a foreign-policy analyst at the Cato Institute and Abdelilah Bouasria, a professor of Arab Studies at the International Center for Language Studies.