Egypt, IMF, and Neocolonialism
Quoting from the English edition of Al Ahram:
“Spending cuts, more efficient tax collection, more varied debt sources, wage-cuts for high-ranking officials and a slashing of energy subsidies. These are the main economic strategies the Egyptian government will discuss with an International Monetary Fund (IMF) delegation when it restarts negotiations for a $3.2 billion loan later this month, according to Hani Qadri Dimyan, Egypt’s deputy minister of finance.”
The deputy foreign minister went on to stress that the deal would not include any “imposed conditions” by the IMF. But what need is there for the IMF to impose conditions when the negotiations start with cuts in spending and subsidies offered outright by the Egyptian government? To be clear about it, presenting these cuts as part of an internal economic strategy is an attempt to spare the regime of the humiliation of having the IMF link such conditions with the loan package. The regime voluntarily submitting to IMF conditions doesn’t make it any less imposed on the people of Egypt who will suffer directly from higher energy costs and indirectly through inflated food prices.
Egypt isn’t a nation without experience in foreign debt and the grave threat such debt is to national sovereignty. Eric Hobsbawm in his book “The Age of Capital” covers this history:
“The bankers, through the pashas, battened on the Egyptian people, and when Khedive and pashas could no longer pay the interest on the loans they had accepted with frivolous enthusiasm – in 1876 they totalled almost half of the actual revenue receipts for that year -the foreigners imposed control. The Europeans would probably have remained content to exploit an independent Egypt, but the collapse both of the economic boom and of the administrative and political structure of the Khedive’s government, undermined by economic forces and temptations its rulers could neither understand nor manage, made this difficult. The British, whose position was more powerful and whose interests were much more crucially involved, emerged as the new rulers of the country in the 1880s.”
This offers us, not just Egypt, a broader lesson. That even in the 19th century there were circumstances when countries were consumed by imperialism via means entirely separate from military conquest. And still today they can be subject to imperialism through non-military coercion, and we may just witness this once again in Egypt through an IMF loan unless the revolution of last year can expel a foe far more dangerous than Mubarak.