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August 9, 2018 No.
1411

Egyptian President El-Sisi Regime Comes Under Harsh Criticism Against Backdrop Of Egypt's Economic Crisis, Price Increases

By: C. Meital*

Introduction

In recent years Egypt has been experiencing a severe economic crisis. This crisis came to a head in 2016, prompting the government to accept an IMF reform plan which involved eliminating subsidies and raising the cost of goods and services.[1] As part of the reform, in June 2018 Egypt announced increases in electricity and water rates, fuel prices, and public transportation fares.

The austerity measures sparked public fury in Egypt. Parties, opposition forces and social media activists harshly criticized the regime, holding it responsible for the crisis, and warned that the measures would harm the middle class and could cause unrest and mass demonstrations. These warnings were echoed by Egyptian journalists from across the political spectrum.

In a bid to soften the impact of the austerity measures, the Egyptian government announced an increase in pay for various sectors as well as an expansion of social benefits for the low-income sectors. In addition, it launched a media campaign to explain and justify its actions, presenting encouraging economic data and urging the public not to heed what it referred to as vicious anti-government rumors being disseminated on social media.

This report reviews various oppositionists' and social activists' furious reactions to the government's austerity measures; the regime's efforts to rebut the criticism; and warnings by Egyptian writers about a possible worsening of the situation.

Egyptian Regime Imposes And Justifies Austerity Measures, Touts Signs of Growth

Egypt's economic crisis has been manifested by a slump in the Egyptian pound against the dollar, a steep rise in the cost of services and of basic goods, and a shortage of these goods – all of which motivated the government, in November 2016, to adopt a reform plan drawn up together with the IMF. The plan included cuts in government spending, the elimination of the subsidy for 95 octane gasoline, and the floating of the Egyptian pound.[2] In the subsequent months, public transportation fare increases have been reported, as have increased prices for medicines and cigarettes.[3]

As part of the reform, in June 2018 the Egyptian regime raised electricity rates and Cairo subway fares, and published additional fuel price hikes, causing taxi fares to spike by 20%.[4] That same month, water rates rose for the second time in 2018,[5] and the parliament even imposed taxes for street food stands.[6] These measures were harshly criticized, primarily by Egyptian opposition elements that accused the regime of increasing the economic burden on the citizen in a way that could very well lead to social unrest.

In an attempt to block the criticism of the austerity measures, the Egyptian regime passed resolutions that benefit the various sectors, such as wage increases. For example, on June 23, 2018, President El-Sisi approved unusual wage increases of 10% for public sector officials, and a 15% increase in military pension payments.[7] Likewise, the day the fuel price hikes were announced, Social Solidarity Minister Ghada Waly declared that 1.5 million families would be added to the Social Protection Program for low-income sectors.[8] Finance Minister Muhammad Maait also announced an increase in social security pension benefits, from 500 to 750 Egyptian pounds, for some three million citizens. [9]

Along with these steps aimed at easing the impact on citizens, the regime recruited senior ministers to present the media with heartening data indicating growth, in an attempt to justify the economic reforms. The government media even published articles on the positive impact that the reforms had achieved so far.[10]

In a July 3, 2018 speech in parliament, Prime Minister Mustafa Madbouly said: "The harsh economic measures taken by the government in the recent period will bear fruit in the next period, since 85% of the economic reform program has already been implemented." Addressing the citizens, he said: "I direct from here a true message, and to the Egyptian citizen [I say]: You have greatly suffered and borne the burden, and I want you to know that the worst is already behind you, and there is only a little left, and the good outcomes are about to arrive, Allah willing."[11]

Some four weeks later, President El-Sisi joined the attempts to defend the economic policy of the Egyptian government. At the Sixth National Youth Conference, held July 29, 2018 at the University of Cairo, he said: "Without the firm economic measures taken by the government, we would not have been able to control the [public] debt service... Egypt's economy would have reached a critical point and everyone would have felt the consequences..."[12] He added that Egypt was in the last stage of overcoming the economic crisis and that by 2020 it would be in a better situation. He also promised that railway fares would not be raised until the trains and railway systems were fully upgraded.[13]

The Government Information and Decision Support Center also mobilized for the campaign countering the criticism of the austerity measures, denied so-called "rumors" about the intent to impose new taxes, and quoted the Finance Ministry's announcement stating that since 2016 no new taxes had been imposed, in an attempt to ease the burden on the citizens. The center noted further: "Everything being propagated on this matter [of imminent new taxes] is baseless rumor aimed at enraging the public." It asked media to ascertain the credibility of information before publishing rumors that, it said, would confuse the public and encourage rage among the citizens.[14]

Another way in which the regime attempted to silence criticism was by enlisting the religious establishment in informational efforts. For example, Religious Endowments Minister Muhammad Mukhtar Gum'a referred to the economic situation in statements to the press following his July 22 Friday sermon, noting that a ruler has the right to take steps when necessary to ensure oversight of the markets and stop price increases.[15]


"El-Sisi Continues on the Difficult Path of Reform" – he follows the sign pointing to "Economic Reform" – not the one pointing to "Preserving His Popularity" (Source: Al-Yawm Al-Sabi', Egypt, June 25, 2018)

Rage Among Egyptian Opposition Elements: The Austerity Measures Will Lead To Social Explosion

As noted, the recent austerity measures instituted by the Egyptian regime sparked rage and indignation among the citizens, as expressed in newspaper articles, public announcements, and social media posts. For example, the Civil Democratic Movement, comprising seven opposition parties and over 150 public figures, released an announcement criticizing the measures and warning about the public's anger. The announcement stated: "The officials' claim that such decisions are necessary in order to reduce the budget deficit, improve the economy, and increase economic growth, and that there is no substitute for this contradicts the truth."

It went on to propose three alternatives for dealing with the deficit without raising prices: fighting corruption, reducing government spending, and changing the taxation system. It also warned that there are "many risks in the event that most of the people are unable to bear the program, which could lead to random explosions with ramifications that are not secure – [and we] are already at that stage," and added: "These recurring price increases contradict previous presidential promises not to approve any price increases or subsidy cuts as long as there is no growth in citizens' income."

Various opposition parties joined the condemnation of the fuel price increases. They blamed the El-Sisi regime for the worsening of the economic situation, and demanded that the government rescind the move.[16] For example, on July 17, the opposition 25-30 Alliance called on the president and the members of parliament to cancel the decision to raise fuel prices.[17]

Another opposition party, the Socialist Popular Alliance Party, demanded the immediate rescinding of the hike in fuel prices, warning about a "legitimate increase in public fury, and its potential to explode at any moment, because of opposition to these measures."[18]

Hassan Saleh, spokesman for the veteran faction of the Muslim Brotherhood (MB),[19] also joined in the reactions, with a series of tweets on the MB Twitter account, such as: "[President] El-Sisi insists that the Egyptians must experience the festival of joy and wellbeing ['Eid El-Fitr, marking the end of Ramadan] amid cuts and suffering that have brought the middle class of yesterday down to the wretched poverty line... while the legitimate president Dr. Mohamed Morsi rejected further burdening the citizens and demanded that his government manage its affairs [without impinging upon] the livelihood of the miserable...[20]

The Egyptian Revolutionary Council, an MB body operating out of Istanbul, called on every Egyptian with a family income of under $60 per person per month to supplement it in any possible way and to avoid paying taxes and fees for public services.[21]

A Twitter hashtag marking the protests, #Get Lost, El-Sisi, emerged on Twitter, joining other trending hashtags such as #Gasoline and #Egypt, Where Are You Headed protesting against the austerity measures. User Raheeq Yasmine tweeted: "According to Newton's laws of motion, there are two forces – the force of anger, and the opposing force of the dictator and his apparatuses, which are currently bigger and stronger than the force of anger. But there is no doubt that when death by starvation becomes equal to death by shooting, there will be an explosion..."[22]

User Halima tweeted: "A message to the officials: It is known that in every society, the middle class is the safety valve. I want to issue a grave warning to officials: You are playing with fire. Many respectable middle class people are now seriously considering stealing livestock and poultry, [even] clothes [off the clotheslines] – and some are even considering counterfeiting money."[23]


El-Sisi butchers the Egyptian economy (Source: Twitter.com/A7__S, June 27, 2018).

Articles In Egyptian Opposition Press Warn Of Impact On Middle Class, Social Explosion

Opposition-affiliated Egyptian newspapers published articles opposing the austerity measures and price hikes, and warned that the middle class's descent below the poverty line will give rise to waves of protest. They called on the government to implement austerity measures on itself before it does so on the citizens, and to learn the lessons from the May 2018 anti-austerity protests in Jordan that led to the resignation of the Jordanian government and the rescinding of some of the measures.[24]

Writers In Egyptian Daily Al-Misriyyoun: The Regime's Economic Pressure On The Citizens May Lead To Terrorism; The Jordan Protests Teach Us That Citizens Cannot Bear The Burden Of The Reforms

In an article harshly criticizing the regime, Gamal Sultan, head of the board of directors of the independent daily Al-Misriyyoun, warned that increasing the pressure on Egypt's poor may lead to anger and bitterness against the regime – as happened in 1977, during the term of president Anwar Sadat, when popular anger swelled over the cost of living.

He wrote: "The Egyptian political leadership rushes into decisions that greatly burden the citizens, especially the ordinary [folk] and the poor. [These] constitute the largest class in Egypt, [in the] tens of millions, [who] are now groaning under the pressure of the living conditions that wear them down. Gasoline's five-fold price rise in the past seven years alone has vastly increased the wretchedness of life in Egypt...

"The regime's continuing pressure in the form of price hikes unaccompanied by increases in income or [even] by a marginal, pitiful supplement can have very grave political and social ramifications. From a political perspective, it creates an atmosphere charged with anger, frustration, and a desire to rebel against what is happening. Therefore, it is clear that the president is officially gambling on the deterrence apparatus's ability to control [the situation] by force of arms, on the force of harsh legal measures, or on [renewing] the state of emergency... But these tools do not deal with the situation, nor do they prevent the disease [i.e., the economic crisis] but rather exacerbate it...

"The lessons of history in all cases similar to this one show that this is a most dangerous gamble, and that when, God forbid, the explosion comes, its consequences will be disastrous... Indeed, such a thing already happened in Egypt, in the late [Anwar] Sadat era, when, on January 17, 1977, the country exploded in a wave of dangerous popular fury because of the cost of living, and over the course of two days the conflagration spread from Alexandria to Aswan...

"Additionally, in the social aspect, problems emerge from [such] severe pressure on living conditions... because the pressure of poverty and the widening of the gaps between the very small wealthy sector that is uninterested in prices and the tens of millions of those who are poor or live in dire poverty, which increase crime in society... create an atmosphere of fear and security chaos that exhausts the regime and its security apparatuses... There is no doubt that such an atmosphere is ideal for attracting extremist and terrorist groups and allowing them to recruit gangs of frustrated people who have nothing at all... The problem is always that the leadership learns this lesson too late..."[25]

Faraj Isma'il, an Al-Misriyyoun columnist, also called for learning the lesson of the May 2018 economic protests in Jordan, in order to realize that the public's rage can burst forth even in a stable country like the Jordanian kingdom. He wrote:

"We cannot require a person to pay the price of the [economic] reform in a way that harms his life and his livelihood and stretches him beyond his [financial] ability, in exchange for a good and wonderful life for his descendants in a distant future – or even a few years later. Any economic measures must take into account this important aspect: a person's livelihood is his strength, and gives him some credit. When that runs out, then [he] has no control over himself and his inclinations. Hunger is ungrateful, as they say.

"The protests in Jordan are another lesson to the Arab world, particularly to the third world that is being suffocated by political and economic problems. No one thought that a stable kingdom like the Hashemite Kingdom – with its security apparatuses that are known to be capable, its experience, and its good reading of the dangers that lie in wait for it – could experience such popular rage that managed to reach... the seat of the Jordanian government in the Fourth Square [in Amman]."[26]

Other Egyptian Writers: The Government Must Set An Example For Austerity – Cut Spending, Stop The Waste In The Public Sector

Amad Al-Din Hussein, editor of the Al-Shurouq daily, argued that if the people had to swallow the bitter pill of austerity, the government was obligated to apply the same austerity measures to itself, so as to justify the harsh measures to the people. He wrote:

"If we are suffering from a suffocating economic crisis, are we, the people and the government, indeed implementing a policy of austerity?... According to what we see on the ground, we are far from austerity in its real sense, not only outwardly... If we decree that the people must swallow this bitter pill, then there is a bitter pill that the government, its apparatuses, and its institutions must swallow as well – that is, harsh austerity [measures applied to themselves], for without this, the people will not be convinced by any justifications for the [price] increases, even if they are genuine... Imagine, when they see the luxury vehicles and cars, the wasteful spending of public funds – how can they believe that there is an economic crisis in the country and that the citizens must withstand it and be patient?..."[27]

Sahar Al-Ga'ara also complained in her column in the Egyptian dailies Al-Watan and Al-Masri Al-Yawm that it is the citizens who are bearing the brunt of the burden of the economic crisis, while the government has not cut spending and has even raised ministers' wages. She stated:

"The ordinary citizen is not an intellectual who can understand complex economic activity. But he has eyes and ears, and he watches and listens, and sees that the government spending has not been cut by a single Egyptian pound. He sees salary and allowance increases for the ministers approved by parliament immediately, while his miniscule wage of a few pounds has decreased in value, and [his purchasing power] remains unchanged. [He also sees] that he is not included in the social protection package that is designated for [other] sectors that are more entitled to cultivation and allowances; he sees that he has not been provided with a health protection package, and that he is barely taken into account by the government, which is making an effort to help [only those] on the margins and the residents of the slums and to extricate them from the pit of poverty into which he [himself] has fallen!...

"The government that sees the salaries of its officials as a burden that it cannot bear must look at the millions of families in which the wages of the main wage-earner range from 1,000 to 2,000 Egyptian pounds – about $100 – and look at its Caesars, the so-called 'secret economy' that is not subject to the law and does not pay taxes."[28]

'Alaa Mu'tamad, former deputy editor of the Egyptian government daily Al-Gumhouriyya, wrote that there is a need for reforming the wage and allowance system so as to ensure a just distribution of resources. He stated: "The middle class is the basis, or the backbone, on which all society is based, and it is the standard for measuring the wealth and poverty, the progress or backwardness of any people. As the middle class in any country expands, it indicates progress and higher standard of living for its people. When this basis shrinks, it is a sign that the gap between rich and poor is widening – a dangerous sign in any country...

"The rise in the prices of goods and services... leads [people to] chip away at [their] savings, and to a drop in middle class income – which will lead to a large percentage of this class down the slope of poverty... At the same time, these [government austerity] decisions and measures will cause a small percentage of profiteers, middlemen, opportunists and lucky [speculators] to increase their capital and become richer, thus widening the gap between rich and poor.

"The government has tried as hard as it could to prevent this, drawing up an absolute social protection network, since there is an agreement with the IMF on the need to make the difficult decisions gradually and to increase the time frame for implementing the reforms...

"However, all the above are [merely] insufficient band-aids... because what is needed in the coming period is genuine reform of the wage and allowance system that will not only ensure that there no erosion of the middle class in the shadow of the price increases, but will also ensure a just distribution of resources, of growth rates, and of the fruits of the reform that we have begun to harvest."[29]

Writers In Egyptian Government Newspapers Justify Austerity Measures

In contrast, writers in the government press joined the efforts to stop the public criticism of the government's austerity measures, praising them in numerous articles.

Editorials In Al-Ahram: The Reforms Are Necessary In Order To Preserve Financial Stability

In its June 18, 2018 editorial, the government daily Al-Ahram stated: "The Egyptian government has concluded the difficult stage of the economic reforms, after releasing recent decisions on price increases for petroleum materials and products, and the previous decisions regarding raising the rates for services such as electricity, water, and subway fares. According to estimates by Finance Minister Muhammad Maait, Egypt has completed over 90% of the difficult measures and decisions of the current economic reform plan, which Egypt began implementing during the 2016-17 fiscal year and which continues for three years.

"The Egyptian government knows that the package of reforms requires harsh measures, but this is essential in order to preserve financial stability, and also in order to guide [the citizens] in proper consumption amid the desire shared by the government and its citizens to continue the economic reform, to fund the social protection networks, to increase investments, to provide more job opportunities, and to implement social justice."[30]

In its June 19, 2018 editorial, Al-Ahram stated: "Economic protection for the citizen is an integral part of his personal security, and a necessary element in his emotional and family stability, and for peace in all of society. In this framework, an urgent measure was taken by the government to restrain the market and thwart the attempt to arbitrarily raise prices too much, after the recent decisions to increase fuel and energy prices...

"The country has spared no effort to protect the citizen by restraining the market, and at the same time has done everything it can to increase his income as much as the sensitive economic situation will allow... This was the context for Finance Minister Dr. Muhammad Maait's announcement regarding the new wage supplement for civil servants, to be implemented starting July 1, [2018]... The government is also not ignoring those receiving allowances, which have been increased by 15%, or 150 Egyptian pounds. Also, the minimum allowance will be increased from 500 to 750 pounds."[31]

Al-Ahram columnist Morsi 'Atallah wrote: "[Even] if we are indeed dealing with economic and social difficulties that could continue for some time, we must know for certain that no matter how much they intensify, these difficulties are temporary and will not last long. On the contrary – they will be followed by relief, and a very good situation, Allah willing... The economic reforms so courageously adopted by President El-Sisi [had to be] implemented at some point. Could we continue to push off the day of their adoption?... The biggest changes come from the most difficult decisions."[32]

 

Columnist For Government Daily Al-Akhbar: Egypt Is Enacting Reforms Similar To Those Enacted By Other Countries Facing Economic Crises; The Citizens' Suffering Will Not Last Long

Muhammad Al-Hawari wrote in his column in the Egyptian government daily Al-Akhbar:
"All countries facing economic crisis have adopted austerity measures to overcome it, as happened in Greece, Portugal and other countries, and earlier in Argentina and Brazil. These countries' economies [began] to grow [and today] they maintain high growth rates. It is therefore only natural that Egypt [too] seeks to stabilize its economy by means of a powerful economic reform that has recently shown signs of [producing] positive [results]. This necessarily entails austerity measures, price increases and cutting subsidies that cost billions of Egyptian pounds annually... We no doubt suffer from the price hikes and reduced salaries, but this suffering will not last long, considering all the measures [being taken] as part of the economic [recovery] process, the job opportunities opening up in new projects..."[33]

Egyptian Government Press: Pay No Heed To Anti-Regime Rumors Disseminated By The Muslim Brotherhood

Like regime officials, the government press warned against "rumors" about planned economic measures that are intended to "confuse" the public and blacken the image of the regime, and some articles blamed the Muslim Brotherhood for spreading these rumors, although without mentioning it by name.[34] Al-Ahram's June 20 editorial, titled "Public Opinion and Rumors," stated: "The social media have become platforms for disseminating tendentious rumors intended to inflame and incite public opinion, while exploiting the absence of any supervision of these websites... As part of these efforts, it has been [rumored] on some social networks that the Finance Ministry plans to impose new taxes on users of iPhones and smartphones, cut the salaries of managers and dismiss public sector consultants. This prompted Finance Minister Muhammad Maait to deny these rumors, which are meant to confuse public opinion and spark feelings of rage and frustration over the economic situation. Supply Minister 'Ali Moselhi had a similar experience when social media quoted him as saying that [all kinds of] harsh measures would be announced within hours and the citizens would have to endure them... When the government's information bureau contacted him [to ask about this], he stressed that the statements [attributed to him] were completely baseless and were part of rumors and false reports intended to sow confusion in society...

"There is no choice but to handle these cases according to the law in order to put a stop to these [rumors], and to hold to account the evil people who are responsible for spreading them with the intention of inciting the public and sowing despair and frustration. Moreover, it is necessary to explain to the public, especially to the young people, that they must not be tempted to spread these rumors, and that they should ascertain [the credibility of] every report in the reliable newspapers and official media instead of falling victim to rumors that seem to have become a favorite weapon used by evil people against Egypt and its citizens."[35]

Pro-regime journalist Ahmad Moussa wrote in Al-Ahram: "We are again being harmed by those who sold Egypt and betrayed it, those who incite the people to stage a coup against the state by exploiting the recent [economic] measures and even the defeat of our football team in the Russia [World Cup tournament]. They have begun to increase their [incitement] on social media, on the terrorist [TV] channels and the mouthpieces of the terrorist Qatari regime [based in] Turkey, Qatar, London and the U.S.... The state institutions must quickly expose the truth regarding these evil calls, so that the [Egyptian] people will not be used to implement another plan of chaos and to repeat the scenario of destruction." [36]

 

* C. Meital is a research fellow at MEMRI.

 


[2] A floating exchange rate is a type of exchange-rate regime in which a currency's value is allowed to fluctuate in response to foreign-exchange market. The decision to float the Egyptian pound was welcomed by the IMF and the European Bank for Reconstruction and Development. Al-Masri Al-Yawm (Egypt), November 3, 2016.

[3] Al-Masri Al-Yawm (Egypt), November 22, 2017; Al-Quds Al-Arabi (London), March 27, 2017; rassd.com, January 17, 2018.

[4] Al-Sharq Al-Awsat (London), alarabiya.net, June 17, 2018.

[5] Al-Shurouq (Egypt), June 2, 2018.

[6] Al-Ahram (Egypt), June 24, 2018.

[7] Al-Watan (Egypt), June 23, 2018; Al-Ahram (Egypt), June 24, 2018.

[8] Al-Ahram (Egypt), June 18, 2018.

[9] Al-Ahram (Egypt), June 20, 2018.

[10] See for example Al-Ahram (Egypt), May 30, 2018.

[11] Al-Quds Al-Arabi (London), July 4, 2018. In this framework, in late May former finance minister 'Amro Al-Garhi presented statistics showing the drop in the budget deficit within the total gross domestic product and pointed at the increase in social expenditures following workers' wage increases, and the growth in support for basic goods and the number of recipients of Social Solidarity Program allowances. Referring to the fuel price increase, Supply Minister Dr. Ali Al-Maslihi said that it would not impact the prices of other goods, primarily basic goods, which would remain stable, including bread. See Al-Ahram (Egypt), May 31, 2018; Al-Yawm Al-Sabi' (Egypt), June 17, 2018.

[11] Al-Masri Al-Yawm (Egypt), June 19, 2018.

[12] Al-Yawm Al-Sabi' (Egypt), July 29, 2018.

[13] Al-Ahram (Egypt), July 30, 2018.

[14] Al-Masri Al-Yawm (Egypt), June 19, 2018.

[15] Rassd.com, June 22, 2018.

[16] Al-Quds Al-Arabi (London), June 19, 2018; Rassd.com, June 18, 2018.

[17] Al-Quds Al-Arabi (London), June 19, 2018.

[18] Al-Quds Al-Arabi (London), June 19, 2018.

[19] In Egypt, the Muslim Brotherhood is split into two main factions the veteran leadership faction led by Mahmoud 'Ezzat, who is also identified with Deputy General Secretary Ibrahim Munir, and the younger faction, which is considered more violent and is at odds with 'Ezzat's people over various issues.

[21] Ikhwanonline.com, June 18, 2018.

[22] Twitter.com/Raheeq_Jasmine, June 17, 2018.

[23] Twitter.com/acve00xxkn1hpg, June 17, 2018.

[25] Al-Misriyyoun (Egypt), June 18, 2018.

[26] Al-Misriyyoun (Egypt), June 5, 2018.

[27] Al-Shurouq (Egypt), June 5, 2018.

[28] Al-Watan (Egypt), June 19, 2018.

[29] Al-Gumhouriyya (Egypt), June 5, 2018.

[30] Al-Ahram (Egypt), June 18, 2018.

[31] Al-Ahram (Egypt), June 19, 2018.

[32] Al-Ahram (Egypt), May 31, 2018.

[33] Al-Akhbar (Egypt), June 20, 2018.

[34] See for example an article by Sabri Ghanem, Al-Masri Al-Yawm (Egypt), June 22, 2018.

[35] Al-Ahram (Egypt), June 20, 2018.

[36] Al-Ahram (Egypt), June 24, 2018.