There were few signs preceding the protests that began on January 25 that they would push the regime of Egyptian President Hosni Mubarak to the brink of collapse, leaving Cairo, Alexandria and much of the rest of the country in a state of chaos. Over the course of Mubarak’s 30-year-long reign, different groups of Egyptians have tried many times to openly oppose the regime in the streets, with any movement deemed threatening to the regime crushed under the truncheons of heavy-handed security forces.
This time, it was different. Within days, the ruling National Democratic Party (NDP) headquarters were in flames, gutted and charred carcasses of police vehicles littered Tahrir Square in central Cairo and vigilantes, armed with everything from kitchen knives to samurai swords and baseball bats, had set up checkpoints in the streets to protect their neighborhoods in the absence of the state security apparatus.
In short, revolution was in the air.
“Up to a week ago, I would not have believed it,” said Sarah Sirgany, deputy editor of The Daily News, Egypt’s English-language newspaper. “I did not think that people had it in them to go out in mass protests and call for one thing… [the resignation] of Mubarak.”
The Tunisian revolution earlier in the month didn’t plant the idea of the revolution in the heads of the Egyptians — it had long been there. Rather, Tunisia showed Egypt that change was possible. Still smarting from the November 2010 parliamentary elections where Mubarak’s NDP won an overwhelming majority of the seats, Egyptians were angry; opponents alleged that the election was even more rigged than previous ones.
Such political frustrations, which have pervaded Mubarak’s 30-year tenure, have been compounded of late: Egypt’s economic growth of recent years has lavished wealth on the socioeconomic elite connected with the regime and spurred inflation, while leaving nearly half of Egypt’s 80 million people in dire poverty.
The country was nearing breaking point, yet Mubarak showed no sign of reforming or giving up power. Demonstrations quickly turned into clashes on January 25, with riot police firing tear gas canisters and water cannons at first and later rubber bullets and live ammunition — but the protests did not end.
“The most extraordinary thing I’ve seen is that the protesters are relentless, or they have been [so far],” said Ahmed Moor, Executive’s correspondent in Cairo.
“People I talk to are surprised… that this kind of organic, spontaneous uprising is happening around the country,” said Matthew Cassel, a freelance journalist and photographer on the ground in the Egyptian capital.
In a pre-recorded television address in the early hours of January 29, after protesters had driven his security forces from the streets and fires raged at police stations and NDP offices across the country, President Mubarak said: “These demonstrations would not have taken place without the freedom of expression that was given to the Egyptians.” He said he empathized with Egyptians’ “suffering” and announced he was dismissing his cabinet. The sentiment, more or less, was that he was not going anywhere — at least not yet.
Foreign Affairs
While the United States government has actively pushed and encouraged protests demanding democratic reform elsewhere in the region, the Obama administration was slow to give any response to what was happening in Egypt. This is, perhaps, to be expected, as the US has long considered Mubarak a strong ally and a “force for stability” in the Middle East, as President Barak Obama described him in a 2009 BBC interview. As part of the payment for continuing to maintain the 1979 peace treaty with Israel, the US currently provides Egypt with $1.3 billion in direct military aid per year, an amount second only to the $3 billion or so the country is expected to provide Israel in 2011.
Given this relationship, past and current US administrations have been reluctant to slap the Egyptian leadership’s wrist when it comes to human rights violations and rigged elections. When asked about Mubarak while appearing on PBS’ NewsHour show on January 27, American Vice President Joe Biden said: “I would not refer to him as a dictator,” before adding that he hoped Mubarak would “respond to some of the legitimate concerns that are being raised.”
Anger on the Egyptian street against American support for Mubarak’s repressive regime has only been further inflamed by the spent teargas canisters security services have fired on protesters which are labeled “Made in USA.”
But US diplomatic language does seem to be shifting. The White House announced on January 28 that it was “reviewing” its military assistance to Egypt, which has been interpreted by some as a veiled warning to the Egyptian Army that it must act with restraint when dealing with the protesters. In a January 30 address, US Secretary of State Hillary Clinton also said: “I want the Egyptian people to have a chance to chart a new future.”
While the reorientation of American rhetoric may be seen as significant within the US administration, it has had scant resonance on the Egyptian street. Speaking to a crowd of tens of thousands gathered at Cairo’s Tahrir Square on January 30, Egyptian opposition figure Mohammed ElBaradei said that the US is “losing credibility by the day.”
However, the slogans and chants that define protests continue to focus solely on deposing Mubarak. Dealing with the Americans’ management of the situation may have to wait until after the tear gas disperses and the last shots have been fired.
Revolution’s economic roots
Before the protests began, Egypt enjoyed strong gross domestic product growth — between roughly 4 and 8 percent over the last decade — and a boom in foreign investment over the past few years. The country’s large population, which made it an ideal place for investors given the sheer number of potential consumers, also helped feed socio-economic unrest. With an estimated 40 percent of the population living on less than $2 per day, poverty in Egypt has always been much more apparent than in most of the rest of the Middle East and North Africa.
While the country’s official unemployment figure was a manageable 9.4 percent in 2009, approximately 80 percent of that figure was comprised of people between the ages of 15 and 29. According to Egypt’s Central Agency for Public Mobilization and Statistics, the labor force today stands at approximately 26 million and is expected to grow by 20 million people over the next 25 years. To avoid massive unemployment the country will need to accelerate its rate of job creation — currently about 400,000 jobs per year — to approximately 750,000 jobs per year.
That may not be easy to do if the current protests continue to have a negative effect on the economy, particularly on tourism. Cancelations of cruise stops and tours have been immediate; this is worrisome in several regards. According to international labor studies, tourism employs, albeit often not well-paid, substantial numbers of low-to-medium skilled people. Moreover, inbound tourism in Egypt is a strategic development sector and has seen greater growth than the economy at large, with 8 to 9 percent increases reported even during the economic stress years of 2008 and 2009.
It would be imprudent at this stage to project the impact of the January revolution on 2011 tourism earnings. However, in 1997, terrorist attacks on tourists in Luxor were linked to a drop in Egypt’s international tourism receipts of more than $1 billion in 1998.
While a long-term downturn in tourism revenue has not been observed after limited terrorist attacks in countries such as Egypt and Turkey, the role of tourism in the Egyptian economy has expanded significantly, suggesting a potential amplification of economic detriment from even a one-year contraction. According to Euromonitor, tourism receipts in Egypt were estimated at $12.8 billion in 2010, with a significant medium-term gain from $9.3 billion in 2007.
Tourism aside, two other of Egypt’s main sources of income should not be threatened, unless all-out war is declared. The income from the Suez Canal, another one of Egypt’s key hard currency earners, is vulnerable to global economic issues but insulated from the local economy. However, while a shut-down of the canal at the moment looks like a super-long-shot threat, it would deprive the country of billions. In concrete terms, the revenue of the Suez Canal rose from $3.45 billion in 2005 to more than $4.5 billion in 2010.
Remittances — money sent home by Egyptian workers abroad — might be more likely to see a boost than a reduction. For fiscal year 2009/10 (FY09/10) which, in Egypt, ends on June 30, Egyptian central bank numbers put the amount of private inbound transfers — remittances mostly — at $9.5 billion.
The flow of foreign direct investments (FDI) and bond investments into Egypt warrants a measure of concern because of the economic importance of each, with FDI reported at $6.8 billion and foreign portfolio investment at $7.9 billion in FY09/10. Investments in the private sector economy as well as the operations of some major companies could face uncertainty; according to reports by Al Jazeera, protestors singled out government figure and tycoon Ahmed Ezz, whose Ezzsteel Group is described as the largest independent steel producer in the Middle East and North Africa and Egypt’s market leader.
The institutional stability of Egypt’s ministry of finance and central bank will be watched carefully by international ratings agencies over the coming months. Monetary stability and the value of the Egyptian pound are among the concerns, while public sector finances could easily come under stress from attempts at appeasing social discontent through expansion of already massive cost-of-living subsidies, Moody’s warned on January 31.
Street value
In the end, the durability of the current protests may actually depend on how long the poorest Egyptians can afford to stay on the street.
“You have to bear in mind that a lot of Egyptians are employed in the informal sector, which means that they work on daily wages,” says Sirgany. “In demonstrations they risk their lives, they risk being shot at, but they know for sure that they won’t have what will feed them on this day… But they’re still going on.”
