18 The events of the last weeks are one of those historical turning points where the lessons of many decades can be telescoped into a few brief moments and seemingly minor occurrences can take on immense significance.
The entry of millions of Egyptians onto the political stage has graphically illuminated the real processes that underlie the politics of the Middle East. The uprising has laid bare the long-standing complicity of the US and other world powers with the worst possible regimes. It has revealed the empty and hypocritical rhetoric of Barack Obama and other leaders, exposed the craven capitulation of all the Arab regimes, and demonstrated the real alliances between these regimes, Israel and the US.
The uprisings illustrate the remarkable fragility of the nepotistic regimes across the Arab world. These regimes depended upon their networks of secret police (mukhabarat) and thugs (baltajiya) but these mechanisms of control simply evaporated as people shed their fear. There has never been a moment of such potential in the Arab world. The uprisings also show decisively that class remains the key dynamic to understanding any social transformation and that "class struggle" will take a variety of forms.
We need to think of politics and economics as part of the same struggle. To claim - as the US, other world leaders and much of the corporate media have done - that the Egyptian demonstrators are primarily concerned with Hosni Mubarak and so-called "political freedoms", is to distort and misread the nature of these protests.
Clearly, the protests have encompassed a wide variety of social layers with different demands, but their overall logic is inextricably tied to broader questions of capitalism in the Middle East. The issues raised include the global economic crisis and the nature of neoliberalism in Egypt, and Egypt's role in sustaining patterns of US domination in the Middle East. These are neither solely political nor economic questions, but revolve primarily around which class rules Egypt and in whose interest the Egyptian state functions. Global slowdown The first illustration of the class character of these popular uprisings is their link to the chain of protests that have erupted over the last three years in the wake of the global economic crisis. This is the Arab These are neither solely political nor economic questions, but revolve primarily around which class rules Egypt and in whose interest the Egyptian state functions world's response to that crisis. Decades of neoliberalism have tied the Egyptian economy into the capitalist world market in a very uneven fashion and, as a consequence, the crisis has had a devastating impact on the majority of the country's population.
The Middle East (and particularly the North Africa region), is highly dependent upon exports to Europe which have fallen precipitously due to the drop in demand that followed economic contraction. World Bank figures show that Egypt's year-onyear growth rates of merchandise exports to the EU dropped from 33% in 2008 to 15% by July 2009. Similarly, Tunisia and Morocco saw the total value of their world exports fall by 22 per cent and 31 per cent respectively in 2009. This led the World Bank to note that these countries were facing the worst recessions in six decades.
Then there has been the curtailment of worker remittances, on which the Middle East is highly dependent. In the case of Egypt, workers tend to migrate to the Gulf countries, Libya and Jordan. For the rest of North Africa, this labour migration tends to be towards Europe. Egypt is the largest recipient of remittances in the Middle East, representing approximately 5 per cent of national GDP. With the mass layoffs that continue to characterise the global crisis, particularly in sectors such as construction, remittances have fallen rapidly.
Egypt experienced a massive contraction of 18 per cent in remittances from 2008 to 2009. For a region where these flows provide the basic means of survival for millions of people, the decline has had devastating consequences.
These effects also need to be placed alongside the spiralling cost of basic food and energy items, the consequences of which have been magnified in much of the Middle East. In Egypt, annual food price inflation accelerated to 18.9 per cent in January 2011, from 17.2 per cent the previous month. These rapid increases in prices are essentially a form of severe wage cuts for those segments of the population that are compelled to spend most of their income on basic items. Neoliberalism But any mapping of this crisis needs to go beyond the immediate results of global slowdown and to be situated within the three decades of neoliberal reforms' that Egypt has experienced. Neoliberalism has made the country much more vulnerable to the crisis itself, massively widening the levels of inequality and simultaneously undermining potential mechanisms of social support. Consequently, the effects of the crisis have been sharply concentrated on the most vulnerable layers of Egyptian society, while a tiny elite has benefited enormously from these economic measures.
This reading of Egypt's neoliberal experience runs directly counter to the account of international financial institutions such as the IMF and World Bank. The IMF claimed in February 2010, for example, that Egypt had been "resilient to the crisis" because "sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary, and external vulnerabilities, and improved the investment climate." According to the IMF, the Egyptian government's successful implementation of neoliberalism had "bolstered the economy's durability and provided breathing space for appropriate policy responses.
The IMF finds evidence for Egypt's resilience in the relatively high GDP growth rates that the country has managed to sustain. From 2006 to 2008 growth was around 7 per cent annually and in 2009, when much of the world was experiencing negative GDP growth, Egypt recorded 4.6 per cent. Embedded in this GDP-centric approach, however, is the unspoken assumption that a growth trend at the aggregate level is good for the population as a whole. It hides the reality that capitalism is an exploitative system and
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the outcome of the unfettered market typically means that overall growth results in the widening of inequality. It is, in other words, a statistical expression of the Egypt is a perfect example of the reality behind this myth. Neoliberalism has produced rapid growth rates but, simultaneously, it has led to worsening living standards for the majority of the population and increased the concentration of wealth in the hands of just a handful of According to official government statistics, poverty increased from 20 per cent to 23.4 per cent from 2008 to 2009. This in itself is a significant increase, but official statistics need to be approached with a large degree of scepticism. The official poverty line is set at an absurdly low rate as some 40 per cent of Egyptians live on less than $2 per day.
The official unemployment rate is recorded at around 9 per cent, but again the reality is completely different. More than half of those outside of agriculture are found in the "informal sector" and are not properly recorded in the unemployment statistics. These informal workers live in a society that lacks any decent social provisions for education, health or broader welfare. It is estimated, for example, that one-third of the Egyptian population is illiterate. The demographic question also looms large here. In a country where the leadership consists of men in their 80s, youth make up more than 90 per cent of The onset of neoliberalism in Egypt is associated with the series of policy measures known as infitah (opening) that were launched in the 1970s under President Anwar Sadat. After Mubarak came to power following Sadat's assassination, successive governments continued the policy trajectory set by infitah. There were two prongs to this policy, particularly as it unfolded under the aegis of an IMF structural adjustment programme in First, a series of measures began to transform social relations in the rural areas. Agricultural rents were liberalised and allowed for the eviction of tenants by landowners after a five-year transitional period. Rents were raised threefold, and with the encouragement of international financial institutions, such as the IMF and World Bank, and US government bodies such as USAID, Egyptian agriculture shifted toward the type of export-oriented production that typifies much of African agriculture today. Hundreds of thousands of Egyptians lost their ability to survive on the land and streamed into the informal sector of urban centres - particularly, but not only, into Cairo.
The second prong to intifah was the dramatic cutting back of state employment with the privatisation (wholly or in part) of 209 public sector companies (out of a total of 314) by 2005. The number of workers in these public sector companies was halved between 1994 and 2001. In the banking sector, nearly 20 per cent of the banking system was transferred from public control to the private sector.
The consequence of this wave of privatisation - hailed by the IMF in 2006 as having "surpassed expectations" a massive downgrading of working conditions and the further impoverishment of wide layers the Egyptian population. This was another contributing factor to the expansion of informal workers in Egyptian cities, who have played such a critical role In response to these neoliberal measures and the complicity of the official state-linked trade union movement, independent workers organisations began to emerge in an important wave of strikes in 2006-08. During 2006 there were 220 major strikes involving tens of thousands of workers in the largest strike wave that Egypt had seen in decades. The strikes linked up with peasant movements which were resisting the loss of land due to the neoliberal measures described above. These earlier forms of organisation and struggle have been a key element to the historical experiences underpinning the But with these neoliberal measures came the concentration and centralisation of wealth in the hands of a tiny layer of the country's elite. A key feature of the 1990-91 IMF structural adjustment was the transfer of wealth to the private sector and the strengthening of a handful of massive conglomerates such as the Osman, Bahgat, and Orascom Groups, whose activities stretched across construction, import/export, tourism, real estate and finance. It was this class that benefited from the privatisation process, the access to cheap labour, the government contracts, and the other forms of largesse distributed through the channels So while the outrage at the wealth of Mubarak and the state officials associated with his regime is well deserved, Mubarak and the Egyptian state as a whole It was this class that benefited from the privatisation process, the access to cheap labour, government contracts, and other forms of largesse distributed through the channels of the state represented an entire capitalist class. The result of neoliberalism was the enrichment of a tiny elite and impoverishment of the vast majority. So the repressive apparatus of the Egyptian state was aimed at ensuring that the lid was kept on any social discontent arising from these worsening conditions. In this sense, the struggle against the effects of the economic crisis would inevitably be compelled to confront the dictatorial character of the regime. The Regional Dimension This uprising cannot be understood outside the regional context. Once again, political and economic factors are intertwined. US policy in the Middle East is aimed, first and foremost, at keeping the oil and petro-dollar rich Gulf States under its influence. Whether or not the US wants to directly own these oil supplies, it is concerned to ensure that they remain outside of the democratic control of the people of the region.
The nature of global capitalism and the dominant position of the United States within the world market rests significantly upon US control over the Gulf region. So any move towards a broader democratic transformation of the region could potentially threaten US power at a global level. This is why the US so strongly supports the dictatorships that rule the Gulf States and also why the majority of the labour in the Gulf is performed by temporary, migrant workers who lack all
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citizenship rights and can be deported at the least sign of discontent.
All relations between the US and other countries in the region are subordinated and linked to this goal of US hegemony over the Gulf region. This includes the US-Israel relationship (which is why any talk of an "Israel lobby" controlling US foreign policy is nonsense). The US sees Israel as a key pillar of its overall Middle East policy. It is an ally fully dependent upon US military and political support and can always be relied upon to act against the interests of the Arab masses.
Precisely because Israel has its origins as a settler-colonial state founded upon the dispossession of the Palestinian people, it is seen as a more stable and steadfast pillar of US power than any of the Arab dictatorships that are exposed to threat of popular revolt. This is why the interests of Israel and the Arab dictatorships are coincident - not opposed - to one another, as was so clearly illustrated in the recent uprisings in both Tunisia and Beyond the Gulf States and Israel, the third leg of US power in the region is the reliance upon autocratic leaders such as Mubarak. But behind Mubarak (as with his predecessor Sadat) has always stood the Egyptian military. US linkages to Egypt have largely been constructed through the military and this is one of the key reasons why the military plays such a dominant role in the structures of the Egyptian state.
The vast amount of military aid that Egypt receives from the US (around $1.4 billion annually) is well known as is the role that the military has played in supporting US policy across the Middle East. The highest ranks of Egypt's military should properly be considered as part of the capitalist class, with significant economic interests that overlap with the state and private sector. Precisely because of the military's central role in sustaining US power regionally, and its own stake in the reproduction of Egyptian capitalism, any belief that the Egyptian military is "part of the people" or "neutral and above politics" is a very dangerous illusion.
Over the last two decades the linkages between the political and economic configuration of US power in the Middle East has become even more explicit. United States policy has followed a two-pronged track that ties neoliberalism with the normalisation of economic and political relations between the Arab world The broader goal has been the creation of a single economic zone from Israel to the Gulf States, under the dominance of the USA. One of the mechanisms for reaching this goal has been a series of Free Trade Agreements (FTAs) signed between the US and Arab states in the region (Morocco, Bahrain, Oman, Jordan, and Egypt). The objective is that over time they would be knitted together in a single free trade area enabling the unfettered flow of capital and goods across the region.
The bond between normalisation and neoliberalism is powerfully illustrated in the character of these US bilateral FTAs, which include a requirement to lift any boycott or refusal to trade with Israel. In the case of Egypt and Jordan, the link is more advanced than any other states in the region, and is best shown in the so-called Qualified Industrial Zones (QIZ). The QIZ in Egypt provide duty-free access to the US market for the country's exports. But they contain the remarkable provision that a certain proportion of imports (around 12 per cent) must be Israeli in order to qualify for duty-free status.
The Egyptian QIZ are concentrated in the textile sector, with 770 companies operating in the zones at the end of 2009. Since the few short years of their existence they have grown to be a significant weight in Egyptian exports to the United States. Egyptian exports from the QIZ grew at an incredible 57 per cent annually between 2005 and 2008, more than ten times the rate of Egypt's exports to the US as a whole. In 2010, QIZ exports made up more than 40 percent of the value of all of Egypt's exports to the United States.
Importantly, Egyptian activists have raised the demand to shut down the zones during the recent uprising. It would be a further valuable step to open the books of the QIZ as, accurate and factual information about their operations is notoriously hard to come by. Similar QIZ exist in the Jordanian context - with the added twist that many of the workers in those zones are badly exploited migrants from Asia.
These regional processes thus further confirm the impossibility of separating the 'economic' and 'political' aspects of the current uprisings. The demand to cut ties with Israel and abrogate the regional agreements signed by Sadat and Mubarak are part and parcel of resisting the logic of neoliberalism and US power in the region. The authoritarian nature of the state is a direct outcome of these regional processes and, for this reason, if it is to be successful, the struggle for greater political freedom must inevitably take up questions of confronting US dominance of the region and the particular role Israel plays in sustaining that dominance.
In conclusion, the claim that this is a struggle for "democracy" obfuscates more than clarifies what these uprisings are about. They were a direct result of the naked class power embodied by Mubarak's rule a fact: graphically illustrated by the way in which the capitalist class essentially fled the country in the first few days of the uprising The anti-democratic character of the Egyptian regime is not accidental or a question of individuals, but is rather the political form of capitalism in Egypt. It is the necessary way capitalism functions in a society that is marked by astounding (and ever-widening) levels of inequality, and which is located in a region that is so central to the constitution of US power at a global level. For this reason, the demand for democratic expression in societies characterised by decades of atrophied public space is one facet of a much broader class struggle.
Mubarak was the public face of a military government and removing that face does not change the character of military rule, or the way in which that rule sustains the dominance of a particular class. The political form of the Egyptian state is not an ephemera. The role of the Egyptian military cannot be decisively reformed while leaving the structure of capitalism and its regional linkages unchallenged. • Adam Hanieh teaches at the School of Oriental and African Studies and we are grateful for his permission to publish this edited version of his article from the Socialist Project's e-bulletin The Bullet.