The Middle East Channel

Labor and the future of the Egyptian revolution

Since February 11 when Mubarak stepped down, the Supreme Military Council, which has assumed leadership of Egypt's affairs until such time as free elections are held, has repeatedly and thus far unsuccessfully called on Egyptians to "return to work." It has even threatened to take action against striking workers in the name of national security. The civilian middle-class revolutionaries also seem to be insisting that the striking workers "return to work." Even Sheikh Yusuf al-Qaradawi, in his February 18 Tahrir khutba before hundreds of thousands of Egyptians, urged striking workers to go home, stating that it is impossible for all demands to be met immediately and counselling them to be patient.  

Meanwhile, the Egyptian Independent Trade Unionists have published their demands. Some of these demands relate to raising the minimum wage and prohibiting differences in wages in excess of 15 times between senior managers and workers. Another demand is greater job security and prohibition of the use of temporary workers. While some demands may be unreasonable to the extent they tend to decrease flexibility in the Egyptian labor market and would thus make the Egyptian economy even less competitive than it is now, others are eminently reasonable, indeed necessary, and ought to be recognized immediately. These include the following: 1) The right to organize independent labor unions; 2) The removal of corrupt managers; 3) The right to strike; and, 4) The dissolution of the Egyptian Trade Union Federation.

These demands are necessary components of any future reform package that hopes to improve the efficiency of the Egyptian economy. A strong labor movement with the power of independent collective bargaining can reduce the incidence of corrupt, self-serving management, as well as aid in a more just distribution of national income, two goals that the Mubarak regime utterly failed to achieve. And, given the deep penetration of the Mubarak political machine into the economy, dismissal of corrupt managers would seem to be a revolutionary imperative.

More generally, however, the Trade Unionists' declaration that the fair distribution of wealth, along with the establishment of formal democratic rights, must be one of this revolution's priorities, cannot reasonably be denied if this revolution is to succeed. For that reason, Egypt should adopt a social democratic model, along the lines of the so-called Nordic model. The Scandinavian countries all enjoy highly efficient economies, but yet are characterized by relatively low levels of inequality, strong social services, strong labor unions, and a strong social safety net that substantially eases the cost of (temporary) labor unemployment. Establishment of a social democracy in Egypt, however, will require the upper and professional classes to make economic sacrifices on a scale that they perhaps did not contemplate when they embarked on this revolution, demanding only greater democratic freedoms.  

Yet, they should understand that without these sacrifices, any democratic experiment in Egypt will be tenuous at best, or lapse quickly into a police state at worst. The risk of a return to the Mubarak-era police state is palpable in light of Egypt's recent experience under Mubarak: in order to control a growing population of poor and a labor force that was losing its ability to earn a decent living, the government dramatically expanded its police forces to the point that the police force swelled to approximately 1.5 million.

Since the Mubarak regime embarked in the early 1990s on the IMF and World Bank sponsored structural adjustment programs, Egypt has become more unequal; its police forces have swelled; and its commitment to public education as a proportion of the national budget and Egypt's GDP decreased substantially: public spending on education declined from 16 percent of the national budget in 2005 to 11.9 percent in 2008; and educational spending as a proportion of Egypt's GDP declined from 4.8 percent to 3.8 percent over the same period.

Yet, during the last 20-odd years, the economy grew substantially. From this perspective Mubarak's Egypt confirms the wisdom of the 2002 UN Arab Human Development Report's refusal to consider solely macroeconomic indicators such as rising national income to measure development. That report documented the disturbing long-term trend in the Arab world of declining relative investment in education, from 20 percent of that spent by industrialized countries per capita in 1980 to ten percent in the mid-1990s. The 2002 Report also warned against the rise of a bifurcated education system: an expensive system of private education accessible only to the relatively well-off, and a poorly funded public educational system incapable of assisting the less well-off achieve social and economic advancement. Only a commitment to social democracy can reverse these destructive trends.

These figures confirm that the lion's shares of growth in Egypt over the last two decades redounded to the benefit, almost exclusively, of the relatively well-off. But this is not simply a story of transferring wealth from the have-nots to the haves: it is also a story of a state that was unwilling to invest in improving the capacities of its own people. The Mubarak regime effectively purchased temporary macroeconomic stability at the price of future growth by failing to make the necessary social investments in Egypt's people that would assure continued stable growth. 

That bill is now due. The upper quartile of Egypt's society by wealth and income must understand that if they truly want a stable democratic regime, with competitive elections and peaceful transition of power among civilians, then they must share more of the economic pie with the rest of Egyptian society. This can take place along two axes: the first is the reduction in subsidies that benefit largely the well off. The gasoline subsidy is one such example. So is free tuition to all public university students without regard to their wealth. Reducing subsidies to the well-off will free up valuable resources to support the poor and the working classes, who are eminently more worthy of state support than families sufficiently well-off to buy imported cars, or even own several apartments.  

Likewise, the well-off will need to accept substantially higher taxes. A wealth tax may be easier to implement in the current circumstances than a rise in income tax rates, if only because it avoids the difficulty of documenting taxpayers' earnings, especially if much of that income is generated from real property rather than documented salaries or interest, dividends or capital gains from stock, bonds and certificates of deposit. The government could impose a progressive-style property tax, for example, which would take into account whether the property is the taxpayer's primary residence, its location, and its size, i.e., number of bed rooms; whether the property is the tax payer's first or second home (or even third, etc.); whether the property is occupied or unoccupied. A punitive tax on unoccupied housing as a means to encourage absentee landlords to rent their properties should be considered, in order to increase the supply of rental units in the housing market and thereby make housing more affordable. At the same time, rent-controls should be gradually lifted in at least more well-to-do neighbourhoods to allow appreciations in the values of those properties which in turn could also increase the tax base. A wealth tax could also be levied upon bank accounts, certificates of deposits, bonds and publicly-traded shares, without necessarily causing wealthier Egyptians to shun such investments.  

While tax experts might have better suggestions, it is clear that Egypt will not be able to solve its economic problems without responding to the ongoing immiseration of Egypt's working classes and poor. And it will not be able to respond to those problems without risking runaway inflation unless the state's tax base and tax revenues substantially increase. This can only be accomplished if the relatively well-off agree to pay more in taxes.

If Egypt can implement the Nordic model of capitalism, its economic future will be much brighter than if it persists in its current anti-labor, anti-social policies: direct foreign investment would likely increase with evidence of a genuine political commitment to address the structural sources of instability in Egypt; namely, authoritarian rule and gross economic inequality. The resumption of social investments in Egypt's people will also increase Egyptian labor's productivity, thus increasing Egypt's attractiveness as a destination for labor-intensive investments . 

Policies such as those described above would also reinforce Egypt's nascent democratic institutions because it would succeed in broadening the base of the citizenry who have a stake in the preservation of parliamentary democracy. With 40 percent of the population living on $2/day or less, it is not too difficult to imagine scenarios of vote-buying or worse. After all, don't the Mubarak thugs, the baltagiyya, come from the poorer classes who are eager to find any kind of work, even if it means acting to repress the rights of their fellow citizens? Accordingly, without a solution to the structural inequality of Egyptian society, there is good reason to fear that any democratic gains from this revolution will be quickly lost. The best way to guarantee that these gains are preserved is for the well-off to commit that they are prepared to make economic sacrifices in the form of social policies that will allow the great mass of Egyptians to share in future prosperity.

There is some evidence that the Supreme Military Council has begun to realize that Egyptian labor has legitimate demands and that the transition to a new government cannot proceed without incorporating labor's views. Today's edition of the Egyptian daily al-Ahram is reporting that the Supreme Military Council has finally agreed to meet with the leaders of the Egyptian Independent Trade Unionists. This is a crucial first step in giving Egyptian labor the recognition that is its due, but until meaningful commitments are made to protect workers' interests, don't hold your breath waiting for labor to get back to work. Nor should they.

Mohammad Fadel is the Canada Research Chair for the Law and Economics of Islamic Law and Assistant Professor at the University of Toronto Faculty of Law.  

The Middle East Channel

Will slow and steady win the race?

Egypt's Muslim Brotherhood has declared that it will form a political party -- it has settled on a name (Freedom and Justice) and asked one of its leaders (Sa`d al-Katatni) to oversee the effort. Since its founding more than eight decades ago, the Brotherhood has never been able to take such a step. What should those who care about Egypt's future look for in this new party?

In the early days of the Egyptian revolution, international attention seized on whether the Brotherhood would move immediately to "hijack" the revolution. Now it has begun to sink in that the Brotherhood is a cautious and deliberate actor less likely to seize anything tomorrow but very careful about its long-term positioning. Just as it declared it would form a party, for instance, it also rejected any idea of applying for recognition under the current legal framework. If it is not an impetuous actor, it still seems to be an imposing one -- indeed, it is often described as the "best organized" of all political forces in Egypt right now. And indeed, if a democratic order does emerge in Egypt, the Brotherhood party will be an important actor. But the transition may be a bit more difficult for the Brotherhood than many observers anticipate.

Muslim Brotherhood movements pride themselves on being simultaneously principled and practical; they hold fast to their general beliefs but insist they are flexible in application. Indeed, part of the motivation to establish a party is to allow a group of leaders within the movement to develop the specialized skills and structures to take full advantage of political opportunities. But the challenge of political activity is that it can force a choice, at least in the short term, between their strategic vision and their tactical calculations. If kept far from power, they can finesse the gap between ideology and reality. When they play partisan politics on a daily basis, that becomes harder.

Part of the challenge for the Brotherhood will be to convert selected parts of a movement with a broad social, religious, and political set of agendas into a more narrowly focused political party. And another part (as I have argued elsewhere) will be to enter a political field that will be far more crowded in a society that is much more politically conscious -- and populated now by hardened and experienced political organizers -- than it has known in the past.

Brotherhood movements are large and broad enough to seek to be many things to many people.  A week ago I sat in the living room of a senior Hamas leader in the West Bank. He argued forcefully that Israel was illegitimate and explained that while an Islamic state would hardly slaughter the Jews and instead let them live in peace, there was no other solution than an Islamic one to the Israeli-Palestinian conflict. His son, sitting next to him, listened respectfully but then said, "What my father said is completely correct from a religious point of view. However, from a political point of view, Hamas accepts a Palestinian state on the 1967 borders." When he finished, his father nodded as if in agreement. They both looked at me as if Hamas was being perfectly clear. And, in its own way, it was. Both religious and political logic could be right -- for now. Hamas can be militant and compromising at the same time as long as it does not have to take a decision. Other Muslim Brotherhood movements are like Hamas -- with their broad members, wide range of interests, and deep social and political engagement that can thrive on ambiguity.

And in that one limited but real sense, Egypt's authoritarian political order has thus been kind to a Brotherhood movement by allowing it to live in the grey zones. Those days may be numbered. Hard decisions will have to be taken soon. The Brotherhood will not rush into any of them, but it cannot avoid them forever. How can those interested in the Brotherhood understand what direction it is taking?  What are the choices that it will have to make? Let me turn to three important questions: what, who, and how.

What will it stand for? In 2007, the Brotherhood drafted an extremely detailed platform in preparation for forming a political party. While there was no prospect of gaining legal status any time soon, the Brotherhood wished to begin to prepare itself for any opening that might develop, resolve some internal arguments, and communicate to external audiences that it had a comprehensive political vision. The goals were not realized: the draft platform was never finalized but it sparked tremendous controversy both within the movement and outside of it. Later that year, when the regime effectively embedded the ban on a Brotherhood party into the constitution itself, the leadership put the brakes on the project -- there was no point in sparking divisions or courting controversy for the sake of a party any time soon; as the head of the Brotherhood's parliamentary bloc told me last year, the feeling was that if the Brotherhood actually attempted to form a party at that time, it would be tantamount to signing its own death warrant.

That is obviously no longer the case, and the Brotherhood leadership has therefore indicated that it will dust off the platform and nail down the outstanding details. While the platform ran to more than 100 pages, much of the debate focused on two articles -- one that favored limiting high state positions to Muslim males and another that proposed that Egyptian religious scholars elect a body that would have the authority to review legislation and measure it against the Islamic shari`a. 

In reviving the project, indications are that the second proposal has been dropped. (The idea of having religious scholars elect their own leadership rather than have the government appoint them is gaining traction outside of the Brotherhood and was probably the main thrust of the original Brotherhood proposal; leaders seem to have been taken aback by the vociferous criticisms of the draft platform's further suggestion of allowing such a body veto power over legislation and have dropped the idea). On the restrictions on high state positions, retreat has been more limited: the Brotherhood is insisting on its position but seems to be limiting its focus for the ban on non-Muslims and women to the presidency alone. But it is also attempting to finesse the debate by explaining that while the movement itself would not support a Christian or a woman candidate running for the office, it would not reject the legitimacy of anyone who was elected to the post in accordance with constitutional provisions. Indeed, that was where the debate was suspended in 2007, and in the intervening three and one-half years, there appears to have been little change.  

But perhaps most frustrating for the Brotherhood was that the rest of their program was ignored in that earlier debate.  By presenting itself as the potential party of "freedom" and "justice" it seeks to revive the idea that its conception of an Islamic agenda is not just about narrow religious strictures but also about broad social, economic and political reform. 

Who will lead it? The Brotherhood's choice of Sa`d al-Katatni to lead the effort is highly suggestive.  Al-Katatni himself has been identified variously as both a conservative and a pragmatist. (My vague impression is that the former description may be more accurate but is less than useful, since he is not strongly identified with any particular set of positions.) More significant than his private thoughts are his public and institutional positions. First, al-Katatni was the leader of the parliamentary bloc from 2005 to 2010. He seems to have been selected for his political skills and he has certainly demonstrated them in recent years. While far from charismatic, he comes across as gentle and conciliatory in tone as well as honest and thoughtful. With a solid reputation inside the movement, al-Katatni is also the kind of figure that other political leaders would find easier to deal with. He will set few crowds on fire but will reassure many who are suspicious of the movement. In that sense, his selection can be taken as an indication that the Brotherhood is serious about playing politics in a pluralist environment.

But al-Katatni is also a member of the movement's Guidance Bureau, the highest decision-making body in the organization. His selection suggests the party will have a gentle face but also a short leash, at least for the moment; the movement wishes to keep a very close eye on the development of the party. And that leads to the third question about the Brotherhood party. 

How will it be organized? The subject of the relationship between the movement and any potential party has been a subject of internal discussion for years; in past meetings with the designated founder, I had the impression that al-Katatni personally wished to see a party that had considerable autonomy in day-to-day decision making but was still anchored firmly in the Brotherhood vision. 

Mindful that his designation sent the signal that the Brotherhood might seek to control the party, al-Katatni insisted that his mission is a temporary one to get the party off the ground; after that point, its membership will select the leader and guide the party's direction. And one newspaper account attributed to him the statement that if a permanent leader came from the Guidance Bureau, he should resign that position.

That suggests a far more autonomous body, free to take positions, make compromises, and forge alliances with more of an eye to the short-term exigencies of electoral and parliamentary politics. An autonomous Islamist party could still take strong positions likely to antagonize less religious forces (especially if it saw such positions as likely to pay off in electoral terms), but it would still be far easier to integrate as a political actor because it would be operating according to a political logic. Morocco's Justice and Development Party (PJD) and Turkey's AKP are sometimes cited as examples of such parties.  But Jordan's Islamic Action Front is an example of how formal autonomy can be undermined by closely overlapping structures: in Jordan, because the same individuals move back and forth between movement and party positions, it becomes very difficult to discern where the organizations are distinct. The party's ability to escape micromanagement from the movement is limited. 

Up to this point, therefore, the Brotherhood has been able to keep to its past patterns of living in ambiguity. It has suggested a broad reform agenda but also kept firm hold of some positions that disturb more liberal political forces; it has selected a conciliatory figure to head the movement but given very mixed signals indeed on the shape that the future organization will take.

The movement will likely not decide these matters more definitively before it has to do so. But if a true transition takes place in Egypt, the hurly-burly of daily politics will soon require Brotherhood leaders to make up their minds.

Nathan Brown is a professor of political science and international affairs at George Washington University.

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