The Egyptian government sharply raised fuel prices early on Saturday, apparently signaling the resolve of the country’s new president, Abdel Fattah el-Sisi, to forge ahead with a series of austerity measures despite official concerns about a public backlash.
Fuel, bread and other goods are heavily subsidized in Egypt, where nearly 50 percent of the population lives under or near the poverty line. As Egypt has weathered years of economic crisis since the 2011 uprising against President Hosni Mubarak, talk of overhauling the subsidy program, which eats up more than a quarter of the state budget, has taken on added urgency.
The government, which has embarked on a wide-ranging crackdown on its opponents, has also banned unauthorized demonstrations, raising the costs of any public unrest.
General consumption subsidies are intrinsically regressive; they benefit most those who consume the most, who are naturally the wealthiest. IMF demands that Morsi institute unpopular austerity measures in return for development aid was one the primary factors leading to public outrage against his rule. Sisi has been able to avoid the issue to this point thanks almost $20 billion in loans from Gulf Allies.
Egypt does need to reform its fuel subsidies, which are fiscally unsustainable. However, it must be done in a way that is sensitive to those in poverty–nearly 50% of the population according to the Reuter’s article. The government can satisfy both these demands by changing the general subsidy to a pro-poor social program, ensuring people are not left without basic necessities as the government puts itself on a more sustainable fiscal path. Sustainability is more than a budgetary number; society’s most vulnerable must have their basic needs met. If they do not, the ensuing insecurity threaten’s any “sustainable” gains made (which may be exactly what Sisi wants, as insecurity creates the demand for his militaristic style of governance).
Further clouding the issue is Egypt’s nontransparent military budget, which was enshrined in it’s new constitutions. How can Egyptian’s make informed decisions about government expenditures when they do not have access to basic budgetary information? How can the people voice their discontent, given draconian restrictions on protests? The answer is, simply, they cannot.
Democratic governance goes beyond free and fair elections (which, by no stretch of the imagination, did Egypt have). Rule of law (including judicial independence), budgetary transparency, freedom of association and protest, access to information and media independence are all crucial democratic institutions missing from Sisi’s government.
I have been a very outspoken critic of President Sisi’s brand of authoritarian governance. He has maintained since he overthrew President Morsi and assumed power that he was fulfilling “the will of the people”; that he has Egyptian’s best interests at heart, that a strong-handed rule is needed to provide the security needed for growth and development. The extent to which Sisi, a career military man turned politician, has manufactured this threat to justify an unaccountable military-industrial complex is open to debate–I would say this is exactly what he has done.
These austerity measures mark the first real governance test for President Sisi. This is a problem he cannot blame on “terrorists”, and one to which there is no military solution. Does Sisi truly care about the Egyptian people, or will he let the poor go without basic needs while the military enjoys carte blanche?