Texts Reviewed

Ray Bush, Economic Crisis and the Politics of Reform in Egypt (Boulder, CO: Westview Press, 1999).
Nicholas S. Hopkins and Kirsten Westergaard, eds. Directions of Change in Rural Egypt (Cairo: American University in Cairo Press, 1998).
Marsha Pripstein Posusney, Labor and the State in Egypt: Workers, Unions and Economic Restructuring (New York: Columbia University Press, 1997).

Egypt, like many other developing countries, began experiencing serious economic difficulties in the 1980s. It was only in 1991, however, that the Mubarak government initiated a program aimed at fundamentally restructuring the economy. Seeking debt relief, it turned to the IMF and World Bank for financial assistance. These institutions were willing to extend support only on condition that structural adjustment policies be implemented. State intervention in the economy was identified as the primary reason for the persistent economic malaise and hence the Egyptian reform program entailed selling off state-owned enterprises and deregulating and privatizing the agricultural sector.

The processes of economic reform have spawned a vast literature which has sought to unravel the conditions facilitating structural adjustment. Ironically, while neoliberal scholars identified the state and the politicians who run it as direct contributors to the economic crises, these actors became the main focus of economic reform scholarship, with most studies suggesting that states which appointed technocratic change teams and insulated their bureaucracies were most likely to implement restructuring programs successfully. At first some observers feared that groups hurt by reforms would make implementation problematic, but shortly such concerns were brushed aside, and interest groups and social actors declared largely impotent and thus uninteresting as objects of study. The state was firmly back in, society was largely out.

The three books reviewed here are a welcome counterbalance to the state-centered analyses that have dominated debates about implementing reform. Not only do they seek to bring social groups firmly back into focus, but they also convincingly show that, far from being invisible, social groups — here peasants and workers — help to shape the process of economic restructuring. These studies are also an important contribution to the increasingly heated discussions concerning the long-term consequences of structural adjustment policies for sustained growth and equity.

Through examination of economic changes, health issues, informal dispute resolution mechanisms and culture in rural areas, studies in the Hopkins and Westergaard volume trace profound transformations in the Egyptian village. The book’s chapters challenge the frequent characterization of the Egyptian peasant as submissive, unchanging and ignorant. In particular, the various authors note that accelerated migration from rural areas to cities and oil-producing countries in the 1980s, and the resulting remittances, profoundly transformed village geography. With the appearance of new housing, for example, fewer people now live with extended families. As Kamran Asdar Ali suggests, “becoming modern was reflected in becoming more enclosed, private and individualistic.” The appearance of television has meant that family and neighbors are no longer the primary sources of information. Rather, the villagers have now become part of a global communications network that links them to new places and new ideas and that, at the same time, has given the state new avenues for spreading its vision of national development in the countryside. Villagers, in the words of Lila Abu-Lughod, have become cosmopolitan. While the 1980s were a time of relative rural prosperity, the 1990s — with the return of many migrants and the initiation of structural adjustment — were a time of increasing economic difficulties. Hardships contributed to changes within the family, in particular to the destabilization of gender roles as more women were forced to seek employment outside the home. Shifting patterns of migration and the evolving economic environment have also spurred peasants to become increasingly politicized and radicalized. Changes in tenancy law provoked protests in rural areas and, as James Toth points out, the growing disillusionment among rural laborers who migrated to urban areas in search of employment attracted them to Islamist movements. Toth cautions that ignoring peasants or other seemingly powerless groups can have profound long-term consequences for political stability.

A theme that emerges in Hopkins and Westergaard is that policymakers’ misconceptions about what markets are and how they are created, and insufficient knowledge about village life, have prevented many objectives of agricultural restructuring from being achieved. Tim Mitchell, for instance, notes that while reform was intended to stimulate export of high-value crops, in fact the reverse has occurred. This is hardly surprising and is the reason that free-market farming has been impossible in other places as well. Swings in international prices of agricultural commodities along with monopoly control over credit, supply of inputs and distribution means that, for many Egyptian smallholders, participation in the market is simply too risky and too expensive.

Ray Bush echoes this theme. While acknowledging that the Egyptian economy needed to be fundamentally reformed, he is highly critical of the approach adopted by the Egyptian government in the 1990s and of the advice that has come from the IMF, World Bank and USAID. He argues that the policy prescriptions dispensed by these international financial institutions (IFIs), rather than ensuring sustained and equitable economic growth, are likely to have the opposite effect, contributing to the pauperization of ever larger segments
of the population. The reasons for this, in Bush’s view, are basically twofold. First of all, economic policy decision-making takes place in an increasingly authoritarian context; there is little consultation with social groups affected by specific reforms. Consequently, the government and the IFIs have little understanding of dynamics of political and economic change in rural areas and cannot anticipate how agricultural producers will respond to particular policy measures. Neither the government nor the IFIs give adequate consideration to the crucial role of women in the organization of agricultural production, exacerbating the unpredictability of reforms’ impact. Second, both the IFIs and the Egyptian government misunderstand how markets are created, assuming that once the state withdraws from direct involvement in the economy, private entrepreneurs will move in. But Egypt’s capitalist classes are too weak and too dependent on the state to take on the role envisioned for them by the reformers. Rather than increasing agricultural productivity, Bush suggests, the recent reforms — especially the changes in tenancy law — have created a system of incentives that discourages tenant farmers, no longer certain how long they will be able to stay on their plots, from investing in irrigation and drainage systems. An unforeseen consequence of restructuring has been increasing environmental degradation.

Marsha Pripstein Posusney focuses on industrial workers rather than peasants. Tracing the development of the trade union movement in post-revolutionary Egypt, she argues that even in cases of repressive authoritarian regimes, we should not assume that social actors will have no influence on policymaking. Taking issue with much of the literature on corporatist labor institutions, she contends that labor is often able to extract concessions from the state. Whether it will be able to do so depends on the policy issue area and how policy changes are perceived by unions. Furthermore, workers can and do press their demands outside of formal union structures, whether through wildcat protests or by forming alternative organizations. According to Posusney, a moral economy framework best explains when such protest actions by Egyptian workers are most likely to erupt: labor will respond angrily when the norms established between them and the dominant class are violated by the latter. One of the entitlements that the workers have come to expect is guaranteed employment security.

Unsurprisingly, proposals aimed at restructuring and privatization of the public sector have met with intense labor opposition. In fact, throughout the 1970s and 1980s, the Trade Union Federation was very successful in ensuring that none of these proposals got off the drawing board. The increasing pressure from the IMF to push through public sector restructuring has meant that in the 1990s the Trade Union Federation reluctantly accepted privatization and began concentrating its efforts on protecting other rights and benefits of workers. While Posusney argues that the changing economic environment may impel the Egyptian labor movement to become more democratic, she is less optimistic that unions will be able to continue opposing the draft labor law which would end job security guarantees. However, as the decade drew to a close, it appeared that while the Federation was indeed prepared to accept privatization, its opposition to certain provisions of the new labor law has not wavered. The draft legislation still has not been adopted. Meanwhile, the number of strikes and protest ac- tions has risen to the highest level since the July Revolution, making the implementation of the privatization program all the more difficult for the government.

As these three studies demonstrate, the process of economic transformation is complex, and the consequences of policy decisions are often unanticipated by reformers. The dynamics of change can be more readily understood by bringing social groups more firmly into analyses. At the same time, involving social actors more directly in the process of reform design is more likely to generate equitable and sustainable growth.

How to cite this article:

Agnieszska Paczynska "Economic Reform in Egypt," Middle East Report 218 (Spring 2001).

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