by Hossam ElShazly
Cristian Lacob from the Romanian National Institute for Economic Research offers a definition of a ‘toxic economy’ that helps to explain the Egyptian economy throughout most of its history and particularly during the past four years of the Sisi regime.
It has always been the case that politicians in Egypt promote false messages about their efforts trying to improve standards for the working class in Egypt. The talk never matches the walk; strategies have always been based on fabrications intended to spread false hope among the population. From the time of Nasser, who promised Egyptians the spaceship, to that of Sisi, who promised to position Egypt among the group of wealthy and prosperous countries, the sad story continues.
In an economic evaluation report the Central Intelligence Agency (CIA) released in May 1966, they forecast that Egypt would remain dependent on long-term assistance from abroad, also noting that the country received four times more economic aid from the free world as from the communist world. Sisi has shown that the picture has not changed, securing a Russian nuclear reactor loan of $21 billion, $10 billion in Gulf aid, a $15 billion gas agreement with Israel and an IMF three-year loan of $12 billion.
Nasser and Sisi shared other traits regarding their authoritarian and oppressive techniques of governance, with key features including the absence of freedom of expression and a policy of systematic torture used against political activists and opposition leaders. International institutes have published reports arguing that the Sisi period is one of the most oppressive eras in Egypt’s modern history. Besides placing more than fifty thousand Egyptians under arrest and killing thousands of people participating in peaceful demonstrations amid clashes with police forces, Sisi has also become the first Egyptian head of state to jail and threaten presidential candidates, during the presidential race in 2018. This sets the scene when describing the Egyptian economy as a ‘toxic economy’.
A toxic economy is one in which the figures and numbers on the macro level never have an impact on the standards of living for ordinary citizens and never serve the equitable distribution of wealth. This economic policy sacrifices the quality of life of people and causes all kinds of destruction in order to secure an IMF loan or provide decorations to the image of the country’s investment climate abroad. A toxic economy is a product of an economic strategy whereby harsh decisions, steps and policies – such as the reduction of subsidies and the floating of the Egyptian pound – are imposed on people using riot police and emergency laws. In this type of economy the regime employs media to spread propaganda, stoke fears and brainwash the public in favour of the IMF loan programme or harsh economic reforms. As such, dreams remain dreams and figures never become facts.
Linking Prosperity to Political Stability
The question of how prosperity is linked to political stability and the democratic environment is an essential one. There is no way to drive economic growth in an environment of oppression and dictatorship. There is always a strong link between a lack of democracy and the spread of corruption, monopoly and Byzantine structures serving the ruling regime. Egypt is a typical case; corruption has remained institutionalised and flourishes during Sisi’s reign, with specific sectors of society having secured unlimited protection from the rule of law, including members of the armed forces, the police force and the judicial system.
Egypt was ranked 117th in the Corruption Perception Index in 2017 with a score of 32/100, sharing the rank with Togo and Gabon. Based on the Freedom House report of 2017, Egypt is ‘not a free country’ and Sisi governs Egypt in an ‘authoritarian manner’, with an aggregate score of 26/100, one of the lowest worldwide. According to the Human Rights Watch report of 2017, investigations by national security officers, often without any hard evidence, formed the basis of many of the 7,400 or more military trials of civilians brought since a decree was issued widening the scope of military jurisdiction in 2014.
Education is one sector that reflects the real face of the country. In Egypt, the Global Competitiveness Report for 2013–2014, issued by the World Economic Forum, placed Egypt at the bottom regarding the quality of primary education. On the LEGATUM Prosperity Index 2017, Egypt was ranked 120 out of 149 countries, falling 3 positions from 117 in 2016. On the Quality of Life Index for 2018, Egypt was ranked 59 out of 60 countries in the global index, considered one of the worst places to live on Earth.
This all leads to the central question. How can we consider an economy to be improving when all the parameters of corruption, education, health, prosperity, freedom and quality of life prove the contrary? It is clear that Egypt is suffering from the phenomenon of the ‘toxic economy’, in which economic reforms represent a lethal dosage of toxins that are administered to supposedly treat the economic problems in the country. Economic reforms should be evaluated based on the enhancement of the quality of life of ordinary citizens, in addition to their contributions to political stability, freedom, democracy, human rights and prosperity. Annual growth rates and GDP figures that have no impact on people’s living standards and keep the country occupying the worst rank on every quality of life parameter serve only institutional corruption, channelling money to the pockets of those in power. A toxic economy is a dangerous phenomenon that must be fought by the entire free world, as it creates instability within and without national borders, acting as a precursor for poverty, refugees and economic collapse, itself catalysing the mechanism whereby dictatorships are created.
Hossam ElShazly is an International Political and Economic Advisor, and Secretary-General of the Egyptian Change Council. He is also President and CEO of the CPI International Group. He tweets at @cpich