Mubarak era comes to an end

01 February 2011

After more than three decades of Mubarak rule, the lack of economic progress and social mobility has pushed Egyptians to call for change

Hosni Mubarak’s time as Egypt’s president has come to an end. Since his rise to power in 1981, the country has evolved significantly. The Arab world’s most populous nation has experienced an intense period of industrialisation and thrown open its doors to foreign direct investment. 

Although the liberalisation of politics advanced under Mubarak, reform has not been … swift

The area that has changed very little – and the one that is responsible for hastening the end of Mubarak’s presidency – is the structure of government and concentration of power in the executive. Despite several ostensive moves towards a more democratic system, Mubarak has retained a tight grip on the reins of power.

With almost complete control over the country, Mubarak’s legacy can be judged by the performance of Egypt over the past three decades. He can claim the credit for the country’s successes, but he is also responsible for its failures.

Mubarak’s rise to power

When Mubarak came to power, he faced several major challenges. The republic was less than 30 years old, but it was already tainted with bitter conflicts and strong economic imperatives.

Former president Gamal Abdel Nasser’s decision to nationalise the Suez Canal in 1956 triggered the Suez Crisis and a backlash from the West. Closer to home, tensions with Israel reached a critical level, resulting in the Six Day War in 1967. Nasser died three years later and Anwar Sadat was declared president.

During this time, Mubarak began his ascent to power, first as leader of the country’s air force academy, and then as the air force’s chief of staff. Egypt’s conflict with Israel highlighted the important role of the air force – and by association – Mubarak.

Mubarak became vice-president in Sadat’s administration. In 1979, Sadat brokered a peace treaty with Israel, which prompted a backlash from the other Arab nations and certain sections of the Egyptian public. His actions on Israel led to his assassination in 1981. This was followed by a referendum in which Mubarak was the only candidate. Egypt’s first real parliamentary elections were held in 1984 under a system based on proportional representation. Parties were required to obtain at least 8 per cent of national votes to win any seats. Those votes cast for parties that failed to clear the 8 per cent hurdle were allocated to the winning party’s score.

Corruption is frequently cited as the reason why the poor do not see the benefits of economic growth

The ruling National Democratic Party achieved 73 per cent of the votes and 87 per cent of the seats in the People’s Assembly. The elections served to reaffirm Mubarak’s dominance. It also led to widespread suspicions that the results were not the product of free and fair elections. Although the liberalisation of politics advanced under Mubarak, reform has not been sufficiently marked or swift. The difficulties faced by new political parties confirm this.

According to the Parties Law which was passed under Sadat, they must be distinct from existing parties and not based on religion or class. They must also support national unity and adhere to the principles of the constitution and underlying spirit of the July 1952 military coup.

Political suppression in Egypt

These rules have suppressed opposition parties, notably the Muslim Brotherhood, but also other groups that have emerged, particularly in the last decade. In 2003, the Egyptian Movement for Change, or “Kefaya”, was founded to oppose Mubarak and promote the cause of democracy and civil liberties.

On the whole, the regime managed to suppress opposition parties and ordinary Egyptians have largely stayed out of politics as a result. There have been a few exceptions, but protests have been limited in size and largely related to food and the condition of labourers.

Throughout most of Mubarak’s leadership, the Egyptian people have ignored the infringement of their civil liberties under a national state of emergency, which has been in force continuously since 1981, and most recently renewed in May 2008.

Many commentators have called this the unwritten contract between the government and the people, whereby the people accept an undemocratic system so long as the regime provides stability and allows economic growth.

Nasser’s ‘Arab Socialism’ policy, which saw private companies nationalised, oppressed Egyptian companies and the people, but was nevertheless widely popular right up to his death in 1970.

El-Sadat took up the presidency after Nasser and set about taking apart the centralised economy and introducing greater political freedom and an ‘open-door policy’. The policy effectively relaxed government controls over the economy and aimed to encourage investment from abroad.

Mubarak continued this legacy throughout his presidency with an added push from 2004, when the new government was tasked with aggressively pursuing outside investment.

The impetus was needed. Sluggish economic growth, a burgeoning fiscal deficit and poor monetary policies had adversely affected business confidence. A government reshuffle and a marked change in direction was essential. Ahmed Nazif, the former telecommunications and information technology minister, was brought in as prime minister, along with a raft of younger politicians in an effort to kick-start economic growth by supporting the country’s entrepreneurs.

Economic reform in Egypt

The Finance Ministry’s General Authority for Investment was central to this re-direction. The body was specifically created to support businesses. It was particularly successful in facilitating the quick registration of new companies, which was previously recognised as a painful and time-consuming process.

The government also undertook economic reforms including sharp reductions in customs and tariffs. A tax law implemented in 2005 decreased corporate taxes from 40 per cent to 20 per cent.

Despite the reforms, Egypt was not immune to the global economic crisis. Inward investment was badly hit from 2008. The country’s budget deficit climbed to more than 8 per cent of gross domestic product and growth slowed to 4.6 per cent in 2009, predominantly due to a drop in exports.

The government responded by focusing on infrastructure and public works projects aimed at alleviating stress on Egypt’s run-down and inadequate utilities and infrastructure. The capital’s road network, in particular, became a focal point. The increasing scale and frequency of electricity blackouts during summer months, however, highlighted the government’s inability to keep pace with growing demand for basic utilities. Detrimental natural gas agreements and a lack of new generation capacity have been blamed for the power undersupply.

But Egypt has been fortunate in terms of attracting grants and loans from foreign governments and development banks. Under Mubarak, the country was seen as a stable place in which to invest, but one that still fulfilled the remit of bodies, such as the World Bank and Islamic Development Bank to lend to projects in developing countries.

The US has provided the greatest support. More than $1bn a year is committed in aid by Washington. Much of this has been used to maintain the country’s security forces.

Egypt has also exploited its vast wind power resources to good effect in the Gulf of Suez through development grants from a host of governments from around the world which were keen to demonstrate their technology on a large scale.

The country has also succeeded in realising the value of carbon credits. Through monetising the carbon from its green energy projects as products for Western countries to buy, Egypt has managed to channel further investment into its power sector and provided jobs in the process.

Despite the relatively high levels of economic growth in the country over the past few years, living conditions for the average Egyptian remain poor.

When the economy began to be liberalised, inflation became a major problem. This is an issue that continues to hold back ordinary citizens. The government has been criticised for standing by while the prices of essential goods rise and there are huge disparities in purchasing power across society. The meat strike of 2010 underscored this issue. Restaurants across Cairo took meat off their menus in a one-day protest across the capital.

Corruption in Egypt

Corruption is frequently cited as the reason why the poor do not see the benefits of economic growth. Without the checks and balances that a democracy brings, corruption and nepotism have had room to flourish. The apparent misuse of taxes is particularly criticised, along with the misappropriation of funds from the US.

The use of state funds for activities such as maintaining the military have also been criticised. According to World Bank figures for 2008, Egypt employed 866,000 people in its army, while less than 60 per cent of the female population is literate.

Ultimately, it is the economy that has proven Mubarak’s downfall. Without civil rights and the option of replacing an unpopular leader democratically, Egyptians have responded in an uncharacteristically militant way. The unwritten contract between the people and president, whereby the people forego their say in leadership, in return for economic prosperity has been broken. The people have decided that the time is right for change.

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