The Arab Revolts: Neoliberalism not Primary Target

The recent decision by the Egyptian cabinet to rescind an IMF loan due to popular opposition gave voice to this resentment.

By Khelil Bouarrouj
Al Akhbar English
Thursday, September 22, 2011

Many pundits argue that the Arab revolts are a belated response against neoliberalism; often defined as free trade, reduced social spending and cuts in taxes and regulation, most prominently voiced in Walter Armbrust's The Revolution against Neo-Liberalism.

In Egypt, it is true that antipathy exists toward one of the leading symbols of neo-liberalism, the International Monetary Fund (IMF); The IMF is blamed for Mubarak era crony capitalism. The recent decision by the Egyptian cabinet to rescind an IMF loan due to popular opposition gave voice to this resentment. In the birthplace of the Arab Spring, Tunisia, the revolt was also fueled by growing anger over a sense of pauperization.

Despite all these signs, and the likely prospects of democratic Arab governments adopting some populist policies, a full-fledge backlash against neoliberalism may be a premature projection rather than a genuine domestic goal or eventual consequent of the revolution.

Armbrust argues that exploitation by regime cronies was a consequence of privatization and thus the Mubarak regime represented the "quintessential neoliberal state": privatization simply frees up assets that the politically connected collect in order to enhance their privileges at the expense of the public. Determined that Tunisia and Egypt represent the first two successful revolutions against neoliberal regimes, Armbrust warns that a failure to deconstruct that order would mean "millions will have been cheated."

But it is a leap to argue that popular anger over monopolists and theft of public resources is a reflection of a general opposition to neoliberalism. The former is concerned with the rule of law and not necessarily derived from any position regarding economic values. It is a question of economic justice and fair distribution, but nt a claim on which economic system is preferable.

Armbrust goes on to deride the "technocrats" and their belief "it was not neoliberalism that ruined Mubarak's Egypt, but the faulty application of neoliberalism."

Armbrust fails to note the popular hostility by many in the middle class, in the case of Tunisia, against the liberal-leftist UGTT union.

As most of the region remains disconnected, one should tread carefully in analyzing which social trends are domineering and which are not. Simplistic notions of a uniform political project driving the revolts are unlikely to stand the test of time. The region is more diverse in class and sensibilities.

There is very little mainstream rhetoric among Arabs for any socialist redesign along the lines of, say, Hugo Chavez's '21st century socialism'.

Revolt slogans may also be easily misread. Calls for "social and economic justice" do not necessarily imply a demand for a more statist, social welfare society. The goals of protesters may be more modest and their compliments eventually satisfied, or appeased, through modest acts. Superficiality is also a factor. Protesters, rich or poor, are prone to sum up economic grievances in simple terms; the heart of the matter: jobs, basic staples, education.

Moreover, many of the voiced economic grievances do not resemble neo-Marxist slogans. There is very little mainstream rhetoric among Arabs for any socialist redesign along the lines of, say, Hugo Chavez's '21st century socialism'. Worker strikes are mostly about pay raises and benefits and not anything radical akin to nationalization of factories.

Many in the region even promote policies often deemed neoliberal. For istance, the famous list of ten demands, championed by many in Tahrir Square before the fall of Mubarak, does not articulate proposals beyond mainstream liberal premises to index incomes and pensions to inflation and "reclaiming stolen funds and land." There isn't any language approaching populist parlance. Demands for political freedoms also seem to take precedence over economic ones.

This suggests that governments in Tunis and Cairo may end up accommodating populist demands without fundamentally transforming the political economy of their countries. The agreement reached in Tunis between the government and the UGTT for gradual pay raises offers a lesson. The UGTT initially sought re-nationalization of former state enterprises, but has since made little noise. Incremental policies may diffuse whatever appetite there is for more drastic actions. Post-revolution economic reforms in Egypt draw a similar picture. Facing calls for "social justice," the interim cabinet introduced a monthly minimum wage who earners would earn as those at the poverty line, proposed construction of cheap housing, and marginally increased the top tax rate. Instead of the broadly defined idea of "social justice" promoted by Armbrust, the reforms may be more in the manner of modest social spending.

Anti-neoliberal proponents may take some solace that Islamists, their ideological enemies but likely to emerge as key players in post-revolutionary nations, are also hostile to capitalism.

One may say that a defining feature of contemporary Islamist politics is an aversion toward free markets. What Islamists actually envision along economic lines is often nebulous, but veered towards populism. For instance, Tunisia's al Nahda declares its opposition to "a chaotic, savage free market," and offers an economy "regulated by social values and moral values." Their ability to affect policy may be greatly limited, however.

Abstract hostility is one thing; undoing, say, trade agreements or expropriating assets partly (if not entirely) held by foreign investors is another. The new governing consensus, Islamist or otherwise, will probably refrain from any radical overhauls of the economic sector, if not due to genuine conviction than certainly due to a pragmatic realization of the consequences. Scraping trade agreements will likely lead to damming retaliatory tariffs, for instance. And in both Tunisia and Egypt there is a clear eagerness to spur private growth at home through entrepreneurial aid and attraction of foreign investment, neither of which will materialize if state economic intervention grows.

New privatization may be off the agenda for now, but re-nationalization has not been a popular chant either. A less encumbered private sector, as opposed to an empowered redistributive state, would appear to be the probable outcome.

Entrenched interests will also resist drastic economic restructuring. Many former state enterprises are held by a newly ascendant business elite that will fight to protect its assets and the affluent will oppose significant tax increases. As Armbrust acknowledges, "it is almost unthinkable that the generals of the Supreme Military Council will willingly allow more than cosmetic changes in the political economy of Egypt" due to being beneficiaries of Mubarak cronyism whereby many retired ex-officers founds seats on the boards of prominent firms.

Furthermore, the tens of billions promised by Western governments will add a further deterrent toward populism as aid will be conditional on liberalizing reform; including opening up markets, reducing barriers to foreign ownership of domestic firms and cutting subsidies. In short, grandfathered economic agreements and dependency on Western assistance have established narrow parameters for acceptable economic policy with serious risks should these parameters be violated.

In sum, the Arab Spring is unlikely to bring about the radical overhaul in economic affairs that many on the left hope for. The existing socioeconomic consensus will likely see little beyond minimal adjustments. Again, Tunisia offers a lesson: The interim government has opposed unionization efforts by the over 100,000-strong police force likely due to concerns over public expenditures as unionized employees maintain higher salaries and funded pensions. Many young Arabs also admire the dynamic economies of the West, which they believe are based on open markets with social welfare playing a secondary role. The conclusion for some is that liberalization went awry due to corruption sabotaging the promising reforms, but that reforms transparently applied should bequeath a more prosperous society. New privatization may be off the agenda for now, but re-nationalization has not been a popular chant either. A less encumbered private sector, as opposed to an empowered redistributive state, would appear to be the probable outcome.

No doubt much will change in the next few years, but the condemned ruling elite may welcome such changes not as a setback, but rather as a way to secure the trajectory of their favored policies. Recalling Giuseppe di Lampedusa's The Leopard, "If we want things to stay as they are, things will have to change."

Khelil Bouarrouj is a graduate student of Middle Eastern Studies at New York University, New York.