“Washington Consensus” a disaster to Egypt, Tunisia

The recent uprisings in Egypt and Tunisia had one common feature. The uprisings were more of a crash of Neoliberal policies supported by global institutions like the IMF and World Bank. Both of them were caused by economic crisis inflicted on the people by regimes largely supported by the west. The Washington Consensus Neoliberal policies previously adopted by the Tunisian and Egyptian governments failed to bring prosperity to the countries, just like it had done to Argentina decades ago.

“Both Tunisia and Egypt undertook free-market restructuring in recent decades. Tunisia traveled such a distance in that direction that it was touted as a role model for other Arab countries. But the results were dismal for the Tunisian population,” Amitabh Pal wrote in his article: Middle Easterners Protest Against Failed Economic Policies.

“Tunisia—more than almost any country in the region—has followed the dictates of Washington and the International Monetary Fund in instituting ‘structural adjustment programs’ in privatizing much of its economy and allowing for an unprecedented level of ‘free trade,’” Professor Stephen Zunes wrote to  TruthOut.com.

“These policies have increased rather than decreased unemployment while enriching relatives and cronies of the country’s top ruling families,” he added.

A similar story happened in Egypt. The current Egyptian ruling dispensation traces its lineage back to Gamal Abdel Nasser, the second President of Egypt from 1956 until 1970, who instituted a slew of welfare measures. Later on, since the mid 1980s, the World Bank, the IMF, and USAID have sought to encourage policies that limit the role of government in the economy, cut budget deficits, and give more influence to the private sector and corporations.

The undertaken reforms were guided by the neoliberal economic ideas (endorsed by the United States and U.S.-dominated international institutions) that have benefited only a few, while pauperizing the masses. The World Bank figures show that more than 40 percent of all Egyptians live at or near the poverty line.

According to analysis by Emad Mekay for the All Africa website, “Egypt could soon be looking for a new economic model – one that will be different from the traditional system that has been promoted for years by international financial institutions such as the World Bank, the IMF, and the U.S. Agency for International Development (USAID), under the reign of ousted president Hosni Mubarak.”

“Lots of Egyptians after the revolution realized the level of injustice against them, and that they were being ripped off for many years,” Abulezz Al-Hariri, a former opposition member of parliament, told IPS.

In very complicated circumstances in January this year, when inflation rate grew up to 10.3% in the year to December from 10.2% in November, the prices of food and beverages, which account for 44% of the inflation measuring basket, increased to 17.2% year-on-year in December compared to 17.1% in November, IMF officials in Cairo prescribed for Egypt the paradox of cutting its budget deficit by reducing subsidies and implementing value added tax – policies that would push up inflation, Ahram Online reported.

“Subsidies represent 6 per cent of GDP, this is huge. They are not benefiting the poorest. If these sums are redirected to the most vulnerable, there will be a better income distribution,” Ratna Sahay, deputy director of the IMF’s Middle East and Central Asia department, said.

This kind of advice by IMF could only worsen the situation in the country and add oil to the fire. It took place in January, one month prior to the beginning of the riots. It was precisely the high inflation rate and high food prices that took many poor people to the streets in Tunisia and Egypt.

The people of North Africa who participated in the revolutions were not only looking for the political freedoms. They were also looking for freedom from the economic policies that put them to the edge.

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