David Johnson
Egypt’s economy goes from bad to worse. Workers and the poor suffer even more sharply as a result. Food prices shot up 59% in May, forcing many to a single meal a day. Even middle-class families have had to reduce meat, eggs, and dairy products.
After the pandemic hit Egypt’s key tourist industry and remittances sent home from Egyptians working abroad, for a while the economy was sustained by an inflow of speculative money attracted by high interest rates. Then its main suppliers of wheat and tourists, Russia and Ukraine, went to war, bursting this balloon of speculation.
$20 billion was pulled from Egypt’s foreign currency reserves to so-called ‘safe havens’ after the war began. The government was forced to devalue the Egyptian pound three times during 2022 and asked for a $12 billion loan from the International Monetary Fund (IMF), eventually having to settle for $3 billion.
The IMF loan came with strict conditions attached: further devaluation (leading to more inflation); austerity public spending cuts (including subsidised fuel and basic foods); a slowdown of President Abdel Fattah al-Sisi’s grandiose infrastructure projects (including the new capital city under construction); and privatisation of many industries, including those owned and run by the armed forces.
In recent crises, Sisi’s government could rely on bailouts from oil-rich Saudi Arabia and Gulf states. They have been less willing to help their larger neighbour this time. “The Qataris are willing to put in the money, but it needs to be a smart investment, it needs to be making money, or in a few rare cases at least breaking even,” the Financial Times reported. “They won’t just throw money away. . . they are trying to find the right opportunity.” Qatar offered to buy state-owned companies, striking hard bargains over their valuations. 32 companies have been identified for sale and $2 billion worth are due to be sold off.
Over half of all government spending (56%) is now debt repayment. But the government raises almost half (49%) its income by further borrowing. It may not take another pandemic or war to topple this unstable arrangement. “Within months, the country could be forced to choose between honouring its debt payments and feeding the many poor Egyptians who depend on government-subsidised bread.” (New York Times)
Sisi is trying to balance between creditors’ demands and getting more of the money that his government desperately needs, while at the same time keeping senior armed forces officers’ support. After retiring from the forces they are typically rewarded with well-paid directorships and executive positions in military-owned businesses. Sisi also wants support from workers employed in construction and other industries involved with his mega-construction projects, as well as those relying on these workers’ wages.
When Sisi and his fellow senior officers first seized power, Egyptian capitalists mostly united in supporting his regime. It promised stability after the mass uprisings and upheavals that took place between the overthrow of President Hosni Mubarak in January-February 2011 and the downfall of Muslim Brotherhood President Mohamed Morsi in July 2013,
Ten years later, Mubarak’s circle of business cronies, who had profited from his family’s patronage, feel more resentful at being squeezed out by armed forces-owned companies. Sisi may not be able to rely on their continuing support when future mass opposition develops.
Foreign multinationals, such as BNP Paribas, Toyota, and Vodafone, have withdrawn from Egypt in recent years. “Restrictive economic and repressive political climate were factors,” according to Associated Press. It’s not the repression of strikers or democracy activists that concerns the directors of these corporations, but that even wealthy businessmen have been imprisoned. The father and son owners of Egypt’s largest dairy company, Juhayna, were charged in 2020 and 2021 with being members of a “terrorist organisation”, meaning the banned Muslim Brotherhood, after they refused to hand over company shares to the government. They were released from prison this January.
Sisi under pressure
The developing split between sections of the capitalist class and senior military officers reflects a growing recognition that the past decade’s ‘stability’ is ending. Economic crisis, the pandemic and the Ukraine-Russia war mean Sisi’s previous methods of rule are no longer working. Both capitalists and senior officers fear a return of mass workers’ action, as in the final years of Mubarak’s regime.
From 2006-2011 the biggest strike wave in Egypt’s history saw growing challenges to Mubarak’s dictatorship, which state-run trade unions, police, prisons, and torture could not stop. Workers grew in confidence, losing fear of taking action, inspiring and being inspired by the growing movement for democratic rights. Eventually, the spark of the Tunisian mass uprising in December 2010 ignited the January 2011 uprising, ending Mubarak’s 30-year rule after 18 days.
Sisi reinstated state repression, even harsher than under Mubarak. Strike leaders have been imprisoned and sacked. Independent media outlets have been closed down. People have been arrested after being stopped in the street by police checking social media ‘likes’ on their phones. Torture in police stations and prisons is widely used. An estimated 60,000 political prisoners are locked up, often without trial or access to lawyers. 538 people were sentenced to death in 2022, without fair trials.
But needing foreign finance and sensing growing opposition within Egypt, Sisi has been trying to appear a little more conciliatory. 1,000 political prisoners have been released over the past year, although new arrests have also been made. A toothless ‘national dialogue’, announced in April 2022, eventually started this May. Handpicked opposition figures gain a platform to discuss with government representatives. The Muslim Brotherhood, various liberals and, of course, any genuine workers’ representatives are not invited. Topics such as Egypt’s constitution, security issues, and foreign policy are excluded.
Meanwhile, as a sign of ‘business as usual’, dozens of thugs identified from the government-supporting Mustaqbal Watan (Nation’s Future Party) violently attacked the Engineers Syndicate election count. Representing professional engineers, the syndicate’s current head, Tarek el-Nabarawy, has links to the political opposition. A vote of ‘no confidence’ had been called by Mustaqbal Watan members but 90% of the members rejected it – despite thousands of government employees in the syndicate being transported in and given a free meal. The count was interrupted, ballot boxes smashed and voting papers destroyed.
Days later, the ‘national dialogue’ was suspended after just one month, supposedly after a sandstorm damaged the building where the talks took place. Sisi is caught between wanting to widen his base of support while at the same time not feeling secure enough to make any genuine democratic concessions.
The potentially powerful working class has yet to make its presence felt in this situation. The strikes reported earlier this year have not yet led to a wider movement. The combination of security forces and state-controlled unions make it very difficult for workers to take action, but as the five years before the mass uprising leading to Hosni Mubarak’s ousting showed, when workers take mass action even the strongest repression cannot halt their movement.
Building the nucleus of independent trade unions can prepare for future strikes. Laying the base for a future mass workers’ party with a revolutionary programme for socialist change and democratic rights is needed. Discussing the programme, strategy, and tactics that will gain support among the working class and other oppressed layers is vital preparation for a socialist Egypt as part of a socialist Middle East and North Africa.
