As we discussed in our last column, the US Agency for International Development’s “Governance and Democracy Program” is ostensibly intended to foster political liberalization, democracy and official accountability in Egypt and other countries where USAID provides economic assistance. Closer scrutiny suggests that its main purpose is to help the International Monetary Fund and its fellow institutions impose “structural adjustment.”

The IMF and the various bilateral development agencies are well aware that structural adjustment will exacerbate poverty and unemployment. To alleviate the damage wrought by these policies, designed to satisfy Egypt’s creditors, they have allocated up to $750 million for a new Social Fund for Development, formally under the control of the Egyptian government. The Fund is supposed to help those sectors of the population which will suffer most from structural adjustment, particularly poor people and recent graduates, in part by channeling funds to NGOs.

The Social Fund’s own officials admit that the new agency is in chaos, facing a gargantuan task and having a hard time actually targeting funds to alleviate poverty. Various Egyptian government ministries and agencies are battling for a share of the money, which some officials hope to use to pacify laid-off civil servants. Rumors of inefficiency and corruption in the Social Fund are widespread in Egypt.

Although the Social Fund’s first round of loans is to be made at an interest rate of 10 percent, the free marketeers at USAID and the World Bank are pushing the Fund to move toward market rates of 20-22 percent. These higher rates will make it even less likely that this new source of credit will benefit Egypt’s poor. Social Fund officials also seem to have discovered belatedly that those groups most likely to be hurt by structural adjustment also lack strong and effective NGOs capable of using these funds to alleviate its impact. But as we already know, USAID’s “democratization” project is explicitly designed to avoid enhancing the political clout of social groups likely to oppose structural adjustment.

Middle East Report has learned that Chemonics, the DC consulting firm in the lead for USAID’s Governance and Democracy contract, already has the contract for USAID’s $283 million project to “reform” Egyptian agriculture. Under this program, funds are to be released only as certain policies (including deregulation, termination of subsidies, improved access for imports and sale of reclaimed land to private owners) are actually implemented. Here, too, efforts are being made to move toward lending at market rates, making it less likely that this program will benefit poor farmers.

Though only about 500,000 US military personnel served in the war against Iraq, the Pentagon has handed out some 3.5 million medals for Gulf war service — an average of seven medals per person. Apparently, the services are bestowing the National Defense Service Medal upon anyone who served in the military during the Gulf crisis, no matter where they were stationed, and even those who entered military service after the war’s end. The flood of Gulf war medals makes the excess that followed the 1983 invasion of Grenada look modest. To celebrate that campaign, the Pentagon handed out 9,000 medals, though only 7,000 military personnel actually participated in the operation.

The official hoopla surrounding the Gulf war seems to have roused veterans of an earlier, more politically embarrassing and militarily disastrous campaign into action. July 1992 saw the creation of a new group calling itself Beirut Veterans of America (BVA), which will try to organize the Marines who served as “peacekeepers” in Beirut in 1982-1984 and commemorate the memory of the hundreds who died there. BVA president Robert Jordan, a retired Marine major, complained that “It’s almost like those two years of service by tens of thousands of America’s finest has [sic] been purged from our history.’ Unlike the US government, which is anxious to perpetuate public amnesia about the failed operation, the BVA’s founders have some sense of history: The new organization is also open to veterans of an ealier US military intervention in Lebanon, President Eisenhower’s dispatch of Marines to Beirut in 1958.

One of many unforeseen consequences of the Gulf war has begun to surface right in the US. Press reports indicate that some of the captured Iraqi weapons smuggled back into the US by returning soldiers have been sold to criminals, especially drug dealers. The weapons, which so far have been surfacing mainly in the Southeast where there are many military bases, include AK-47 automatic rifles (soldiers can turn a quick profit of $1,500-2,000 apiece for these), grenades, explosives and even handheld rocket launchers. Over 100 military personnel have been prosecuted for attempting to smuggle weapons, and others are facing charges for trying to sell smuggled weapons to civilians. Government officials admit they have intercepted only a fraction of the smuggled weapons and expect that the problem will grow.

How to cite this article:

Al Miskin "Softening Structural Adjustment," Middle East Report 180 (January/February 1993).

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