Beyond the 'democratic transition'

The Egyptian revolution that overthrew the Mubarak dictatorship in January also created the conditions for uniting the masses of North Africa and the Middle East with the new movements that have emerged, particularly in southern Europe, against a common enemy.

In overthrowing the corrupt authoritarian regime, the masses found themselves face to face with the harsh reality that the economic conditions which had driven on the uprising remain unchanged after Mubarak was removed. These take a unique Egyptian form. The armed forces, which were the backbone of the Mubarak state, own factories that make a range of products ranging from weapons to drugs, and even home appliances such as cookers. The state is reckoned to own a third of the economy through the army. The banking sector is also largely state owned.

Under pressure from the International Monetary Fund (IMF) and the United States, its major creditor, Egypt in recent year set about “liberalising” the economy and introducing “market reforms” through “structural adjustment programmes” (SAPs). These led to massive unemployment, rising poverty – about 44.4% of the Egyptian population were designated extreme poor to near poor in 2005 – and inflation, fuelling the revolution that swept Mubarak out.

The point of this story is that the IMF, Washington and agencies like the European Bank for Reconstruction and Development will, if they have their way, redirect the revolution’s energy into even deeper “reforms” and bigger SAPs that will integrate Egypt into the global market capitalist economy. This is also the plan for Tunisia and Libya.

The detail is brilliantly outlined in an article by Adam Hanieh for the ezine Jadaliyya. He explains:

Despite the claims of democratic transition, the institutions of the Egyptian state are being refashioned within this neoliberal drive as an enabling mechanism of the market. Egypt is, in many ways, shaping up as the perfect laboratory of the so-called post-Washington Consensus, in which a liberal-sounding ‘pro poor’ rhetoric – principally linked to the discourse of democratisation – is used to deepen the neoliberal trajectory of the Mubarak-era. If successful, the likely outcome of this – particularly in the face of heightened political mobilisation and the unfulfilled expectations of the Egyptian people – is a society that at a superficial level takes some limited appearances of the form of liberal democracy but, in actuality, remains a highly authoritarian neoliberal state dominated by an alliance of the military and business elites.

In essence, the financial initiatives announced over recent weeks represent an attempt to bind social layers such as these – Egypt’s military and business elites, the ruling families and large conglomerates of the GCC[Gulf states], and so forth – ever more tightly to the Western states. The revolutionary process in Egypt represented an attack against these elements of the Arab world. The uprising cannot be reduced to a question of ‘democratic transition’ –precisely because the political form of the Egyptian state under Mubarak was a direct reflection of the nature of capitalism in the country, the uprising implicitly involved a challenge to the position of these elites.

Hanieh is right. Democracy is neutralised while the power of the ruling corporate and military elites remains in place. That is the lesson not just of Egypt. In Spain, which had a “democratic transition” in 1975 after the death of the fascist dictator Franco, and in Britain where capitalist democracy has held sway for about 150 years, corporate and financial power predominates more openly than ever.

In Spain, the Real Democracy Now/M-15 movement is challenging the political system, while in Greece – which the IMF has bankrupted – anti-government struggles grow. In Britain, hundreds of thousands of workers are set to strike against the Coalition’s measures at the end of the month.

These confrontations effectively join with the Egyptian revolution, which is at a crucial stage. Democracy, if it is to mean anything, must embrace co-ownership and control of economic and financial resources, the repudiation of foreign debt and telling the money markets to get lost. That would constitute a genuine revolutionary, democratic transition and could be achieved through a network of people’s assemblies in each country. That’s what you’d call a structural adjustment programme of a positive kind!

Paul Feldman

Communications editor

Haiti a victim many times over

American forces have secured the airport in Port-au-Prince and thousands of Marines are on their way to Haiti, along with warships. Not for the first time in history either, which will help to explain why this week’s earthquake has had such a devastating impact on the impoverished country.

The United States has taken a hostile attitude to Haiti more or less since it declared independence from France in 1804, following a slave revolt. Haiti was occupied by US forces from 1915 to 1934. After World War I, angered by a US-instigated law requiring forced labour, as many as 40,000 Haitians rebelled. More than 3,000 Haitians were killed by American forces.

After World War II, Washington supported the notorious dictator Duvalier. When he was overthrown, the CIA helped depose elected politicians, including the popular president Jean-Bertrand Aristide. He was removed in 1991 and then again in 2004 after he got too close to Cuba and Venezuela. Several thousand people were killed in the internationally-sponsored coup which was bitterly resented by Haitians. In place of Aristide, the Haitians were sent a US-UN “stabilisation and pacification” force to secure the country for corporate-led globalisation.

In 1996, under pressure from President Clinton, who sent troops to restore Aristide to power in 1994, Haiti agreed to the draconian conditions set by International Monetary Fund and the World Bank. It called for suppressing wages, reducing tariffs, and selling off state-owned enterprises. The small amount for the countryside was designated for promoting export crops such as coffee and mangoes. The Haitian government also agreed to abolish tariffs on US imports, which resulted in the dumping of cheap US foodstuffs on the Haitian market.

Brian Concannon, director of the Institute for Justice and Democracy in Haiti, has explained how many of the earthquake victims came to live in shantytowns perched on hillsides. “The reason why the people got to the hillsides where they were most vulnerable to the earthquakes perched on the hillsides [is] they were pushed out of there by policies 30 years ago, when it was decided by the international experts that Haiti’s economic salvation lay in assembly manufacture plants. And in order to advance that, it was decided that Haiti needed to have a captive labour force in the cities. So a whole bunch of aid policies, trade policies and political policies were implemented, designed to move people from the countryside to places like Martissant and the hills — hillsides that we’ve seen in those photos.”

In July 2003, Haiti was forced to use more than 90% of its foreign reserves to service loans from foreign banks, requiring Aristide’s government to end fuel subsidies and slash spending on health and education programmes. This prompted Aristide to demand that France repay to Haiti “compensation” made after securing its independence. Six months later, France supported the coup against Aristide.

So it is no surprise that Haiti’s infrastructure has barely developed, explaining the slow to non-existent reaction by local authorities in the wake of the earthquake, as well as the large number of deaths of people living in makeshift dwellings on deforested hillsides. Instead, Haiti has been overwhelmed by aid agencies and NGOs of different sorts who come and go. No wonder Haiti is one of the poorest countries in the world and that large sections of the population have emigrated.

The country may have won independence more than 200 years ago, but Haiti has been robbed of its self-determination and its ability to meet the needs of its own people. No one can prevent earthquakes – but the swift despatch of US troops is a reminder that the power responsible for the extent of the disaster is human and headquartered in Washington, home of the American government, the IMF and the World Bank.


Paul Feldman
Communications editor

Running to stand still

So Gordon Brown’s plans to cut and run before the storm of the economic crisis turns into a hurricane have fallen victim to New Labour’s own arrogance and grubby desire for perpetual political power. The self-appointed Leader of The Party of All People (PAP) thought he just had to think the word election and the voters would be overwhelmed with joy. In fact, they were so under whelmed by the prospect of a Brown government that they deserted the PAP in droves.

It’s not difficult to see why. Today, a report reveals that disposable income is at its lowest level in 10 years. While tax on corporate profits (those that are not held offshore) is now at just 28% thanks to Brown’s continuous reductions, wage earners have been hit hard. Taxes, housing costs, phone bills and travel expenses have eaten into salaries, researchers says. In 1997, when New Labour came to power, people were left with 34.5% of their gross income once they had paid taxes, national insurance, mortgage or rent. Now they are left with 32.6%, says a report by uSwitch, a price comparison website. Earlier this year, Ernst & Young, the accountants, calculated this year that the average family had £838 left to spend each month, compared to £899 four years ago.

In the past 10 years, petrol — often the biggest cost for a family after their housing — has increased by 55% and phone and internet bills have risen 77%. The cost of getting on to the housing ladder has more than tripled. Council tax rose from an average of £688 a year to £1,321 — an increase of 92%, or three times the rate of inflation. The cost of food — which for the past decade has risen slower than inflation — is on the increase again and an estimated two million households are about to be hit by increased mortgage payments as they come off fixed-rate deals taken out two years ago. Mike Naylor, at uSwitch, said: "We are working harder, but we are not getting any wealthier — we are just running to stand still."

Under New Labour, inequality has soared while exploitation at work has intensified dramatically. These are the joys of the market economy so enthusiastically championed by Brown. Problems are then reinforced by more market-led “solutions”. House prices are out of the reach of most new households. So what does the government propose? State help to take on a mortgage that would otherwise be beyond people’s means! What lunacy.

While Brown dithered and lost his nerve about calling an election, the economic news goes from bad to worse. Rodrigo Rato, outgoing managing director of the International Monetary Fund has warned that the seizure in world financial markets will make substantial inroads into forecasts for economic growth. In an interview in today’s Financial Times he says: “Policymakers should not think that the problems will stay at the desk of the bankers. Problems are going to come to the real sector, come to the budgets – that is something we keep telling people.” The credit crisis was “not a storm in a teacup,” he added. Its impact would be felt “more quickly” in the US and to some extent in Europe and Japan rather than in the rest of the world. No wonder Brown wanted an election sooner rather than later. Now his wounded regime will have to face the music.

Paul Feldman
AWTW communications editor