America’s got 99 problems… but Russia ain’t the main one

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By Khaled Diab

The assault on American democracy and its global standing originated not in Moscow but in Washington, and across the length and breadth of the United States. Like the Soviet Empire before it, America is crumbling under the weight of its own contradictions

Friday 27 July 2018

“If you can’t explain something to Middle Easterners with a conspiracy theory, then don’t try to explain it at all.”

This was rule number three of Thomas Friedman’s ‘Mideast Rules to Live By’. The New York Times columnist wrote the piece in 2006 as an apparent response to harsh criticism of his support of George W Bush’s catastrophic invasion of Iraq, which Friedman had bellicosely supported, until he ran out of ‘Friedman Units’, which seem to be based on what you can call the neo-con ‘Kristol Ball’ that predicted the war in Iraq would be over in just two months.

Like other cheerleaders of the Iraq war, Friedman not only blamed Arabs for failing to play along with his fantasies but also criticised, in rule number seven, what he perceived as the Arab tendency to tell America: “It’s all your fault for being so stupid.”

Failing to heed his own advice to Arabs of not blaming foreign conspiracies for their plight, Friedman is part of the deafening chorus of blaming Russia for Donald Trump, while Trump supporters blame the Four Ms for America’s perceived decline: minorities, Muslims, migrants and the media. Friedman called alleged Russian meddling “code red” and the “biggest threat to the integrity of our democracy” back in February, and, following the Putin-Trump summit in Helsinki, he endorsed the notion that Trump’s approach to Russia is “nothing short of treasonous” – in fact, “treason” has been trending on social media.

When I observe the unedifying debacle that passes for politics in America these days, I wonder why it is the American establishment does not follow its own ‘sage’ advice, which it has delivered for generations to anyone complaining of American meddling, whether it be in Latin America, Southeast Asia or the Middle East, that they should stop complaining about foreign interference and get their own house in order.

That is not to suggest that Russia played no role in attempting to stack the odds in Donald Trump’s favour – the evidence that it did so is increasingly compelling. But it would be like blaming the current Gulf crisis on America, when Donald Trump has only been profiting and benefiting from existing bitter divisions and rivalries between the region’s wasteful and petty-minded autocrats as they seek to keep revolution at bay and jockey for what they perceive to be regional ascendancy.

Moreover, the alleged use of hacking, political dirt and social media bots looks positively minor league compared to the clandestine and covert tactics used by America (and Russia) to shape the political climate in many less powerful nations.

More importantly, America is not some weak and vulnerable “banana republic”, like Guatemala was when the CIA plotted and implemented a coup against the democratically elected revolutionary government of Jacobo Árbenz, which included not just disinformation but also paramilitary shock teams, just because Árbenz’s small-scale agrarian reforms had upset the United Fruit Company.

No, America is (still) the world’s most powerful and richest country. It cannot and will not be brought to its knees by a band of alleged mercenary Russian hackers, oligarchs and intelligence operatives, though they likely had some kind of distorting effect.

No, the assault on American democracy and its global standing originated not in Moscow but in Washington, and across the length and breadth of the United States. Like the Soviet Empire before it, America is crumbling under the weight of its own contradictions, its imperial hubris, and its squandering of vast amounts of resources to enrich the very few at the expense of the very, very, very, very many, both abroad and at home.

Russia did not create Donald Trump, the brash, abrasive and corrupt opportunist and chancer. Russia did not transform this self-centred and self-serving business tyrant into a counter-factual television and (social) media sensation, admired by millions, who has been marketing hollow image without any substance and pedalling falsehoods for decades.

Russia did not put a gun to the heads of white, conservative voters and force them to elect an alleged billionaire with zero political experience and zero interest in the plight of other people as the representative of ordinary folk who would “drain the swamp”.

Even suggesting that Russia was responsible for the brainwashing of the Republican electorate would be to give it way too much credit, and too little credit to homegrown propagandists, polemicists and twisters of truth. Of course, Moscow is an old hand at fake news and propaganda. But Sputnik and RT have limited reach in America and can simply not compete with likes of Fox News and Sinclair for the hearts and minds of Middle America.

No, America’s spiralling fall towards fascism and drift towards dictatorship is almost entirely of its own making, and the sooner the establishment owns up to this and owns it, the better for the future.

The Republican base must come to terms with the reality that even if the Four Ms magically vanished from US soil (impossible as that is), America would not magically turn into a white utopian paradise. Chances are America would, at best, become an irrelevant and poorer backwater, at worst, a country caught up in a long and bloody civil war.

The Republican ‘resistance’ must acknowledge and admit that Trump is not the sole creator of this mess. He had two incredibly destructive precursors, their hero, Ronald Reagan, and the former worst US president, George W Bush and his merry band of neo-cons, especially Vice-President Dick Cheney.

Mainstream Democrats need to recognise that, even in the unlikely event that Donald Trump is impeached or resigns, this only constitutes a baby step towards making America sane again. Whether or not he is Putin’s asset, he is most certainly the useful idiot of evangelicals, the alt-right and pro-nativist tycoons. If replaced by Vice-President Mike Pence, the situation is likely to get much worse before it gets better.

And, yes, Hillary Clinton won the popular vote and would have made a far more capable and less bigoted president than Donald Trump, but she was too much a part of the establishment to have fixed it. Clinton’s failure was also partly a function of her party’s inability to nominate a true alternative, a change-maker, and its failure, along with the Republicans, to reform America’s antiquated electoral college system and its de facto two-party dictatorship, enabled by the unfair and inflexible first-past the post system.

Then there is the question of economic inequality, which has been steadily widening whether America is under the stewardship of the Republicans or the Democrats. This needs urgent and sustainable action, such as downward redistributive justice, rather than the upward redistributive injustice of Trump’s tax cuts.

Judging by the current state of affairs, it seems unlikely that the political and economic establishment will snap out of its lethargy and inertia… at least, not before it is too late. This leaves the burden on a young generation of progressive politicians, such as Alexandria Ocasio-Cortez, veteran outliers, such as Bernie Sanders, and the mounting grassroots popular resistance, which appears to grasp where America’s problems truly lie and where its priorities should be.


This article was first published by The New Arab on 19 July 2018.

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Egypt’s economic paradox: Income equality v wealth inequality

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By Osama Diab

Despite having one of the world’s highest levels of income equality, Egypt’s wealth gap is growing to become one of the widest. What is behind this paradox?

Photo: UNICEF Egypt.

Photo: UNICEF Egypt.

Wednesday 8 June 2016

From the global Occupy movement to Egyptian revolutionaries’ calls for “bread, freedom and social justice,” inequality has been a rallying point for social movements and a talking point for political players across the ideological spectrum.

In Egypt, where luxury hotels and upscale neighborhoods abut sprawling informal settlements, inequality is out in the open, bringing with it the constant potential for social unrest. Yet despite this glaring inequity, the disparity in Egyptians incomes is statistically low and the gap has narrowed since the turn of the millennium, as measured by the Gini coefficient. The answer to this puzzle — how can a country in which people have relatively equal incomes have such a marked difference in wealth? — lies mostly in government policy, or lack thereof.

Even in a completely tax-free setting, wealth gaps will grow at a larger rate than income gaps because rich people have an easier time saving and accumulating wealth, and because return on capital (the wealthy people’s income) is larger than growth in Gross National Income (the total incomes of everyone in a certain economy). But tax records show that Egypt’s extremely regressive taxation system exaggerates this trend.

Egypt performs quite well in measures of income equality. According to estimates by economists Facundo Alvaredo and Thomas Piketty, the top 10% of earners in Egypt account for roughly 30-35% of total income. This is less than the roughly 36% of income earned by the top decile of earners in Western Europe, 48% in the United States or 53.6% in South Africa.

The Gini coefficient — a method for calculating income distribution on a scale where 0 represents absolute equality and 100 absolute inequality — largely confirms this. In 2000, Egypt scored 32.76 on the Gini Index. In 2005, the figure improved to 32.14.  By 2008, Egypt improved to 30.77 on the index. By this measure, Egypt is again one of the most income-equal countries in the world. According to the World Bank, in 2000, the US Gini index was 41.1, Spain was 35.8 and Germany was 30.6.

The Gini coefficient is based on household surveys, a dataset with many shortcomings — among them the facts that well-off groups tend to underestimate their wealth, and survey takers usually lack access to people at the very top of the wealth and income pyramids. However, Piketty and Alvaredo made an effort to correct this distortion, and their results still confirmed Egypt’s relative income equality.

Regardless of the reliability of such data, the fact remains that wealth gaps are always wider than income gaps everywhere, and therefore are better as an indicator of social and economic inequality.

In the right environment and in the absence of just tax policy, even small differences in income can quickly spiral into massive disparities in wealth — and Egypt appears to be such an environment.

Imagine two people whose monthly incomes are LE1,000 (Person A) and LE2,000 (Person B), both starting with no accumulated wealth. They both need LE800 per month to meet minimum basic living expenses. On average, Person A spends LE900 a month and saves LE100. Person B, who has a larger income, spends LE1,200 and saves LE800. After four months, Person B would have a wealth of LE3,200 and Person A only LE400. Person B’s income is still only twice that of Person A’s, but her wealth is now eight times as much.

The gap would widen further if Person B now invests her money as capital and get a 20% return on it, whereas Person A could only hope for a slight raise from her employer. The idea that return on capital (a source of income that is virtually restricted to the wealthy) is larger than GDP growth (the growth in everyone’s income) was popularised by Piketty’s famous r>g formula, and means that the gap between top and low income groups will keep widening unless there is an active policy intervention.

If we look at wealth inequality, we find out that in 2000, the richest 10% of Egyptians held 61% of total wealth, despite earning just 28.3% of income. In 2007, their share of wealth shot up to 65.3%, although their share of income dropped in 2008 to 25.57%. The top decile’s share of wealth in 2014 rose even more to 73.3%, according to Credit Suisse’s Global Wealth Report. This means Egypt has one of the biggest wealth gaps in the world, despite its relative income equality.

Since the turn of the millennium, according to available household survey data, we have simultaneously seen a sharp rise in wealth inequality and a narrowing income equality gap.

Taxing explanations
Although the data is imperfect and incomplete, given both the lack of transparency in tax records and the high degree of informality in Egypt’s economy, there are indications that from 2001 to 2014, the Egyptian government’s policies and failures led to the shifting of tax burdens toward those with lower incomes.

In addition to serving as a means for the government to raise funds, taxation is a social tool that can be used to ease or intensify economic inequality. The difference depends a great deal on whether taxes are progressive — higher tax rates for people who earn or own more — or regressive, disproportionately burdening poorer and lower-earning citizens. Progressive taxation is one of the primary means of reducing inequality, and regressive taxation quite naturally does the opposite.

There are two ways to flatten tax rates. The first and the most obvious is reducing the number of tax brackets and bringing the rates of different brackets closer together, meaning that people with a large disparity in income are taxed at similar rates. The second method is increasing the reliance on taxes that are flat (or even regressive), such as consumption taxes.

As it happens, Egypt’s taxes have been getting flatter and flatter, and even regressive in many instances. Until 2005, some types of taxes, such as the payroll tax, had 32 brackets, with upper brackets being charged as much as 65% for personal income tax, 40% for corporate income tax and 32% for payroll tax. In 2005, a major tax “reform” took place, capping all taxes at 20%. The new tax code had only one bracket for corporate income tax, and four brackets for personal income tax.

After the 2011 revolution, there were modest attempts to increase the tax rate for upper brackets and add new tax brackets to introduce a new form of mild progressive taxation. These reform efforts faced fierce resistance from wealthy and powerful interest groups. The income tax rate for the highest earners briefly went up to 30% in the aftermath of the revolution, but was revised down to 22.5% in August 2015.

On top of that, even mild attempts at introducing progressive taxes have rarely been enforced. Wealthy people and big companies always have better access to tax incentives and breaks. In reality, Egypt is faced with a situation of heavy regressive taxation — that is, the more money one makes, the less taxes one will pay as a percentage of income.

To get a sense of the impact of regressive taxation on wealth, consider again the two people from our earlier example: Person A, who earns LE1,000, and Person B, who earns LE2,000. Imagine taxation of 7.5 percent for A and 5 percent for B. If they keep the same spending patterns, A will pay LE75 per month in taxes, and therefore save just LE25, while B will pay LE100 and save LE700. After four months of this regressive tax, A would have saved LE100 and B LE2,800, making the wealth disparity even bigger — 28 times bigger, in fact, compared to eight times in the tax-free scenario. Even if we reduce the income disparity a little, the wealth gap will still increase exponentially, albeit at a slower rate. This could explain why Egypt’s wealth gaps have widened while income gaps have narrowed since the turn of the millennium.

Figures from 2009 tax reports demonstrate that Egypt has an extreme form of regressive taxation. The figures show that small sole proprietorships with operations of less than LE2 million made an average profit of LE5,892 a year, and paid 28% of that as taxes. At the other end of the spectrum, giant sole proprietorships with business operations over LE1 billion had average taxable profit of LE22.6 million and paid an average of 3.5% of their profits in taxes.

The situation is less extreme for joint stock companies, but follows the same pattern. Small joint stock companies (with volume of business under LE2 million) made on average LE124,122 annually of taxable profits, and paid an effective tax rate of 9.8%. Firms with a business volume of over LE1 billion made LE471 million on average, but only paid 5.7% of their profits in taxes (see table 4).

Flattening tax rates isn’t done just by smoothing out tax brackets. It can also come from increasing reliance on taxes that are flat by definition, such as sales tax or Value Added Tax (VAT).

Consumption taxes might also be key to understanding how taxation can cause a widening wealth gap even as income gaps are shrinking. With a smaller pot of money to work with, people with lower incomes are more likely to spend a greater percentage of their earnings every month, while people with higher incomes have enough funds to put a chunk of their earnings into savings and investment. Although consumption taxes are flat when measured by what people spend (everyone pays 10 percent of their expenditures), when measured as a percent of earnings, they become clearly regressive. The poorer a person is, the more consumption taxes she will pay as a percentage of her income.

Let us again return to the earlier scenario of Person A, who makes LE1,000 and spends LE900, and Person B, who makes LE2,000 and spends LE1,200. If they were Egyptian, they would be subject to a 10% sales tax on most goods. For Person A, this would be LE90 a month, or 9% of her income. For Person B, it would be LE120 a month — a larger amount, but only 6% of her income. If we count this as a percentage of their saved income, the results will be even more striking. If we factor in wealth from inheritance, or from other sources like transfers of public land to private ownership, the difference becomes even more extreme.

In the last two decades, consumption taxes, most importantly sales tax, have become increasingly important to Egypt’s budget. In fiscal year 1995/96, sales tax constituted a modest 27.1% of total tax revenues. In fiscal year 2000/01, that rate went up to 31.6%. This year, officials estimate sales tax will make up 43.6% of tax revenues.

This increased reliance on consumption taxes reflects the state’s continuous failure or unwillingness to impose income or wealth taxes on high-income groups. There have been a few modest attempts since the revolution, but implementation has failed. A 10% tax on income from stock trading was suspended within months of being introduced, a suspension that was renewed last month. The newly introduced property tax is facing great difficulties in implementation and great resistance.

By contrast, the government seems determined to go ahead with its plans to replace the sales tax with VAT, which is expected to further increase the government’s income from taxes on sales of goods and services to half of tax revenues, compared to a quarter two decades ago. If official policies continue to head in this direction, Egypt’s wealth gap is likely to keep widening.


This article first appeared on MadaMasr on 23 May 2016. 

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A utopian refuge for refugees?

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By Khaled Diab

Can an Egyptian billionaires vision of turning a Mediterranean island into a just republic for refugees help solve the refugee crisis?

Monday 14 September 2015

Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me.”

This verse from the poem by Emma Lazarus titled The New Colossus was not quite the words used by Naguib Sawiris, but it seems to be what he meant. The Egyptian billionaire caused a tempest when he announced his wish to purchase a Mediterranean island – possibly near Rhodes, where the original Colossus stood – to provide shelter for the region’s desperate refugees.

“Greece or Italy sell me an island, I’ll [declare] its independence and host the migrants and provide jobs for them building their new country,” Sawiris tweeted. And this brave, new refugee republic would be named Ilan, the Egyptian tycoon later elaborated, in  honour of Aylan Kurdi, the drowned Syrian child whose haunting image shook the world.

With neighbouring countries unable to cope further with the influx of Syrian refugees and wealthy Gulf states doing almost nothing to take them in – while even contributing by proxy to the Syrian refugee crisis and directly in Yemen – Sawiris is the latest entrepreneur to step into the void. One prominent example was Turkey’s yoghurt moghul, Hamdi Ulukaya, who pledged to give away more than half his $1.4 billion fortune to help Kurdish and other refugees.

Sawiris’s proposal resonated so widely because it is an appealing and symbolic notion which tugs at the heartstrings. As untold thousands of refugees take to the sea to escape the shipwreck of failed and failing nation states, Aylan island will provide them with a safe haven from the storm, and a place where they can live in dignity, and not be “treated and used like cattle,” in Sawiris’s word.

The scheme, though extremely costly for the Egyptian billionaire, sounds impressively self-sufficient. Housing, educational and other infrastructure on the uninhabited island would be built, and presumably operated, by the refugees themselves, providing them with a shot at independence and dignity, rather than the marginalisation and unemployment that often greets those fleeing conflict.

Sawiris’s implied faith in the refugees’ abilities, work ethic and potential for productivity is an implicit jab at Europe’s anti-immigrant right, who regard refugees and migrants as  lazy layabouts and a threat to their way of life. It would also help boost Europe’s capacity to absorb refugees by providing it with a purpose-built refuge.

That said, despite the presence of numerous candidate islands and the welcome income to the cash-strapped treasuries of Greece or Italy, it seems unlikely that either country will take enthusiastically to the scheme.

One major stumbling block is the question of sovereignty. Which European country would be willing to cede territory, which would be declared “independent”, to the eccentric scheme of a foreign billionaire?

Even if they were to accept this or were to retain sovereignty, there would be the possible fear that, rather than an alternative for refugees which would sidestep the European mainland, the island would simply become a stepping stone to Europe, rather like the Italian island of Lampedussa or the Greek island of Kos. This would especially be the case if Sawiris’s idealistic project ends up becoming little more than a glorified refugee camp, rather than a utopian republic.

But it is Sawiris’s almost Platonic discourse of  a just republic for refugees that is probably the most appealing to the Arab public’s ear, especially if, against the odds and expectations, this idealised and idyllic oasis can succeed where Arab regimes have failed. In fact, it would be extremely poignant – even poetic – if refugees fleeing murderous dictatorships and blood-thirsty non-state groups managed to construct a functioning and productive society which respects individual freedom and dignity. If successful, I imagine it would attract Arab immigrants, not just refugees.

In addition to the challenge of building an effective society from scratch by truamatised people from diverse backgrounds, one wonders whether Sawiris will have the commitment to carry through such a feat.

It is true that Sawiris was a self-declared supporter (and fairly enthusiastic for a businessman who made the bulk of his fortune under Mubarak) of the 2011 revolution, helping set up the “Council of Wisemen” which was rejected by Egypt’s revolutionary youth.

However, like with many Egyptians, the rise of the Muslim Brotherhood and Mohamed Morsi spooked him, and the party he established, the Free Egyptians Party, backed Abdel-Fattah al-Sisi’s campaign for president, despite the clearly undemocratic way al-Sisi had got to where he was and his violent repression of dissent.

This raises the question of whether rich Egyptians and Arabs can help lead their societies down the path to freedom, justice, equality and prosperity.

Some Arab tycoons are joining the growing movement of billionaires committed to philanthropy. For example, Saudi Arabia’s Prince Alwaleed bin Talal has voiced his intentions to give away his considerable fortune.

Despite the undoubted value of philanthropy and the importance of interclass solidarity, the world’s billionaires are more a part of the problem than the solution, especially when you consider that the richest 1% own more than the rest of the world, and 85 or so billionaires are worth as much, in economic terms, as half of humanity.

This is the case in the Arab world, and perhaps more so. Not only is economic inequality massive, and widening, the region has become a living laboratory for unfettered neo-liberal economics and a stronghold for crony capitalism.

The intimate links, both explicit and implicit, between the business elites, the military and repressive regimes across the region mean that, no matter how well-meaning, the individual efforts of (relatively) enlightened tycoons are no substitute for systematic and fundamental change and reform.

More than greater philanthropy, the Arab world is crying out for greater social democracy, equity, solidarity, welfare systems, education and justice for all.


Follow Khaled Diab on Twitter.

This article first appeared on Al Jazeera on 7 September 2015.

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The death throes of Arab thuggery

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By Khaled Diab

Arab civilisation has not collapsed but the thuggish political, economic and religious mafias dominating the region are dying violently.

Prompted by social media, pro

Prompted by social media, pro

Friday 17 October 2014

In an influential essay in Politico, the veteran Lebanese journalist Hisham Melhem who is the Washington bureau chief of Al Arabiya, sounded the death knell for Arab civilisation.

“Arab civilisation, such as we knew it, is all but gone,” was his bleak prognosis. “The Arab world today is more violent, unstable, fragmented and driven by extremism… than at any time since the collapse of the Ottoman Empire a century ago.”

Melhem then goes on to detail a long list of ills plaguing the Arab world: from the apparent defeat of the Arab Spring revolutions in most countries to the failure of Arab secular and monarchist regimes, not to mention the proliferation of fundamentalist violence.

“Is it any surprise that, like the vermin that take over a ruined city, the heirs to this self-destroyed civilisation should be the nihilistic thugs of the Islamic State?” he asks.

But to my mind, the domino-collapse of one state after another is not a sign of the death of Arab civilisation, but is rather the result of the implosion of three bankrupt forms of despotism: that of the tyrannical Arab state, Islamist demagoguery and foreign hegemony.

Despite the massive differences in the forms of government and the nature of the governed, most post-independence Arab states shared one thing in common: they all served a narrow elite to the detriment of society as a whole. Wherever you turn your gaze, you will find, almost without exception, seated in the place of the previous imperial overlords are local masters.

In addition, the foreign rule of yesteryear did not go away, it just changed its face and modus operandi. The loose-knit Ottoman empire in which local leaders and elites paid lip service and tribute to the Sultan but sometimes behaved like independent leaders, such as in Egypt, was replaced by the British and French who spoke the language of independence but often engaged in direct rule.

When the United States muscled out the old-world European powers, it spoke the language of self-determination and anti-imperialism but created its Pax Americana empire which exercised control through vassal leaders in client states and a ruthlessly punitive approach, including crippling sanctions and invasions, towards those who rejected its hegemony. The upshot of this is that Arab populations have lived under a double oppression: that of their native rulers and that imposed on them from distant capitals.

Just like Washington tolerates little regional dissent, domestically, Arab regimes have shared, to varying degrees, a ruthless attitude to opposition. This had the dual effect of robbing their societies of a clear cadre of effective alternative leaders and empowering ever-more extreme forms of opposition by side-lining or eliminating moderates.

Although a lot of attention has been directed at regime crackdowns against the Islamist opposition, especially the various chapters of the Muslim Brotherhood, less well-known is that secular dissidents suffered repression easily as harsh or more so, especially leftists.

This is to be expected of the Gulf monarchies whose claim to legitimacy is founded on dubious religious pretexts. However, the revolutionary republican regimes of Egypt, Syria and Iraq, despite their reputation in America for having been closet communists and pro-Soviet, not only dealt ruthlessly with the liberal opposition but were also bitterly anti-communist. For example, Nasserist Egypt not only banned the liberal nationalist al-Wafd party in 1953 but also carried out a harsh crackdown against leftists and communist critics. This was partly out of distrust of Moscow and partly to maintain their claim as the sole representatives of progressive values.

In Iraq, the communist party was, for decades, one of the most influential opposition currents, yet was not tolerated neither by the “liberal” royalists nor the “progressive” Free Officers and Ba’athists which came later. The most brutal anti-communist crackdowns were probably those carried out by pro-British Iraqi Prime Minister Nuri al-Said in the late 1940s and in the 1960s following a failed anti-Ba’ath coup attempt. Saddam Hussein also dealt ruthlessly with the party, both as head of security and intelligence in the late 1960s and on the eve of becoming president in the late 1970s.

Though the reasons varied, the decades-long oppression of secular opposition forces in the Arab world had far-reaching consequences. One was the decimation of the ranks of viable alternative leaders, which was acutely felt when the leaderless Arab uprisings did not manage to assemble a credible leadership quickly enough to consolidate their gains.

This, along with the weak, corrupt, incompetent and dysfunctional nature of Arab secular regimes – not to mention the “democratic” fig leaf the West used to disguise its interests – led to the discrediting of secularism in the minds of many, and, after decades of being in vogue, Westernisation became a dirty word rather than something to aspire to.

This left an ideological and political void which radical, anti-authoritarian Islamism managed to occupy, for a time.

To counter both the secularist and Islamist threat to their legitimacy and rule, a number of Gulf states went on the offensive and actively exported, lubricated by petro-dollars, their own brand of Islam, such as the ultra-conservative Wahhabi ideology from Saudi Arabia or Salafism from Qatar.

For a while, political Islamism’s simple “Islam is the solution” formula apparently won a lot of supporters as a counter to the failure both of secular pan-Arabism and conservative monarchism, but this is waning.

Though the secular opposition forces may have been down, they were definitely not out. This was reflected in the progressive, leftist, pro-democracy nature of the 2011 Arab uprisings, especially in Tunisia, Egypt and Syria.

This set alarm bells ringing in what had become the trinity dominating Arab politics: the Arab autocracies (whether republican or monarchist), the Islamist opposition and the US-led West. And each of these set in motion their own anti- or counterrevolutionary forces.

The one country where these forces did not manage to cause major mischief is the only place where the Arab Spring has been a relative success: Tunisia. For a time, Egypt looked like it might also escape this fate but, instead, turned into a battleground for regional and international forces.

But the worst proxy battleground has been Syria. Caught between the intransigent and murderous Assad regime and its allies in Russia, China and Iran, on the one hand, and the unholy alliance between the United States and the conservative Gulf monarchies, on the other hand, the peaceful, secular uprising didn’t stand a chance.

What the above reveals is that it is not Arab civilisation which has died, but the political order put in place almost a century ago following the collapse of the Ottoman empire is going through its death throes. And like dying wild animals, these beasts are at their most dangerous when fatally wounded.

Despite the surface decay in Arab society, submerged underneath are the fresh shoots of a robust, youthful, dynamic civilisation kept from blossoming by the stranglehold of the suffocating weed on the putrid top soil of the established order.

This is visible in the courageous youth who led the revolutionary charge against despotism, neo-liberalism and socioeconomic inequality. It can be seen in how tens of millions of Arabs have lost their deference to their leaders and their awe of authority. It can be traced in the innovative reinvention of religion and in the growing assertiveness of the a-religious, not to mention in the pent-up creative social, economic and even scientific energies eager to be unleashed and harnessed.

Once the crushing weight of the oppressive weed has been removed, future generations will have the space and opportunity to enable a true Arab Spring to bloom. But the road to recovery and then progress is long, hard and gruelling.


Follow Khaled Diab on Twitter.

This article first appeared in Haaretz on 2 October 2014.

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From the Chronikles: My plan for a democratic Egypt

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By Khaled Diab

With the right president, Egypt could rid itself of nepotism and inequality to become a prosperous and egalitarian society.

Wednesday 23 May 2012 (first published Sunday 17 January 2010)

This article was written a year before the revolution erupted in Egypt and envisioned the then fantastical notion that Mubarak would be convinced to step aside in 2011 and allow free and fair elections to choose his successor. With that in mind, I dreamed of what I would do as president to fix Egypt, and much of my imaginary programme is still relevant: limiting the powers of the presidency, rooting out nepotism and corruption, addressing the issue of sectarian strife, promoting greater economic justice, slashing military spending, abolishing conscription and spending more on education and research. So, I am republishing this now as my modest advice to Egypt’s next president.

While in most countries, even the most democratic, becoming president or prime minister is a far-fetched dream for almost everyone, in Egypt, the prospect exists mostly in the realm of fantasy. In the six or so decades since the 1952 revolution, Egypt has had just four leaders, none of whom were elected – at least not in free and fair elections.

The current president, Hosni Mubarak, has held the top seat for the past three decades or so. This means that the majority of Egyptians, given the country’s “youth bulge”, have known no other leader.

Next year, Mubarak’s current term will end and, given his age and health, most Egyptians don’t expect him to seek a sixth term. Egyptians dream of massive positive change in 2011, fear terrible instability and disruption, and some might even settle for “business as usual” in the form of Mubarak’s son, Gamal – at least for a few years.

Reform-minded Egyptians hope that Mubarak will step aside honourably and take the unprecedented step of calling free and fair elections to find a replacement. The most popular potential candidate at the moment is former IAEA chief and Nobel peace laureate Mohamed el-Baradei, despite the fact that he has lived and worked outside Egypt for decades.

el-Baradei’s popularity is not only a sign of his international standing but also indicates the Egyptian regime’s unofficial policy of engineering the political landscape so that Mubarak appears to be the only show in town. Personally, I fear that, rather than undergo a democratic rebirth, Egypt will either get a second Mubarak or a period of instability until another dictator takes the helm, though I doubt that Islamists are ready in the wings to take over. Nevertheless, I cannot help but hold out hope that 2011 will mark the birth of true Egyptian democracy.

Upon taking office, and to avoid the temptations of power that have led so many initially well-meaning Egyptian leaders astray, I would probably begin with strengthening and shoring up Egypt’s institutions, from the parliament to the judiciary, to ensure an effective separation and balance of powers. But top-down reforms can, at best, only play the role of a catalyst, and not bring about lasting change in themselves. In order to harness Egypt’s massive grassroots potential, I would end the culture of fear and intimidation – at least, the state-sponsored side of this – that keeps Egyptians down.

I would strive to remove all the unconstitutional and undemocratic laws, such as those hindering freedom of expression and conscience, and dismantle Egypt’s enormous police and state security apparatus.

In order to counteract and reverse growing religious fundamentalism and communal strife I would dig up the roots, rather than chop violently away at the outgrowth. A fish rots from the head down, so it is important to launch a serious campaign to root out corruption, first from the highest echelons of society.

More generally, it is essential to challenge the widespread practice of wasta – which permeates all levels of society and causes widespread cynicism and disenchantment – by strictly enforcing the rule of law, without making exceptions for the well-connected. This will be no mean feat, given how deeply ingrained the notion is, but if Egypt is to become a true meritocracy it is a crucial battle that must be won.

Then there’s the economy, which is often erroneously viewed as somehow separate from society. Seeking political and social justice is meaningless if their economic counterpart continues to be denied – in fact, rather than more growth, Egypt needs more economic justice. Egypt’s economy needs not only to continue to develop, but to do so sustainably and equitably.

In a country where economic inequality has grown to chronic proportions, the chasm between the have-alls and the have-nots needs desperately to be bridged. This should be done through a fair, effective and enforced progressive taxation system, as well as the reinstatement and further development of the country’s dismantled social safety net and concerted government investment directed at stimulating Egypt’s impoverished rural hinterland and neglected south.

This requires not just internal reform but also a revamping of the global economic system to make it fairer for developing countries. In addition, the strong arm with which the US-led west imposes its hegemony could foil such efforts if my “pinko” reforms are deemed somehow to be antagonist to US interests in the region.

In parallel with promoting economic justice, competitiveness also needs to be stimulated in order to generate the necessary wealth to boost everyone’s well-being. This requires robust and enforceable regulations that level out the economic playing field and weed out the de facto monopolies and cartels that plague the Egyptian economy, as well as reforming the country’s bloated and inefficient bureaucracy.

One reason why superstition reigns and people hark back to a mythical and glorious past is because they feel they lack a future. To give the coming generations a sense of purpose and to allow current generations to build a better future, I would slash military spending and abolish conscription, then use the released resources to invest heavily in education and scientific research.

Of course, I realise that my vision is but a dream untainted by political realities. Even a well-meaning, democratically elected president would have his or her work cut out simply steering Egypt away from the rocks towards which it is currently heading. The kind of transformation I dream of cannot be implemented by any one leader but will take generations of patient and careful change. But with the right political and civil leadership, Egypt can reinvent itself as a prosperous, modern and egalitarian society.


This article first appeared in The Guardian‘s Comment is Free section on 17 January 2010.

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Secular Egypt: dream or delusion?

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By Khaled Diab

Is Egypt on the road to theocracy or will it manage to build a secular, pluralist democracy?

Thursday 15 December 2011

The roller-coaster sensation of elation followed by deflation which I and millions of others felt in the early weeks of the revolution has been back recently. Dozens of protesters killed and hundreds injured – anger and depression. Activists defiantly risk life and limb to launch part two of the revolution and demand the army returns to the barracks – admiration mixed with pride.

Generals ignore their demands and go ahead with faulty parliamentary elections – bitter disappointment. Millions turn out and queue for hours (miraculously for Egypt, in orderly lines) to make their vote count – delight. Islamists make the biggest gains in the first round – concern mixed with a little fright.

For those of a progressive and secular disposition, the preliminary results of the first phase of Egypt’s first post-revolution parliamentary elections make for sobering reading. The Muslim Brotherhood-dominated Freedom and Justice party (FJP) list is unsurprisingly in pole position, with some 36% of the vote.

Al-Nour (The Light), the coalition of Salafist parties, emerged, almost out of the blue, to eclipse partially the dawn of Egyptian democracy by garnering an impressive quarter of the first phase vote, almost double what the secular leftist Egyptian Bloc – a major force in the revolution which was expected to come second – managed to salvage from their electoral train wreck.

Despite its bright name, if al-Nour ever has its way completely, Egypt would be run according to its ultra-conservative interpretation of shari’a, albeit in a “gradual way that suits the nature of society”, because, in their fundamentalist view, Islam cannot be separated from the state and secularism is tantamount to atheism (a common misconception among Egyptians).

The unexpectedly strong performance of the Salafists and poor showing of the secularists has been the subject of frenzied and worried debate in liberal and progressive Egyptian circles, including among my friends and acquaintances. Overseas, the early fears that Egypt would become the next Iran have been reawakened, and some Western friends who have been terrified by the prospect of an Islamist takeover of Egypt have been wagging an “I told you so” finger at my alleged naivety.

But is there cause for panic?

Of course, the Salafist vision for Egypt is not only terrifying to “godless” secularists, socialists and liberals but many aspects of it trouble pious Egyptians, even many of those who voted for the parties.

And sadly Salafism has regressed a long way from its original proponents. In the 19th century, “Salafis” were at the forefront of Egypt’s modernising drive and revival, which has come to be known as the “Egyptian Renaissance”. Muhammad Abdu, a reformist Azharite cleric, for example, once famously summed up his thought by saying: “I went to the West and saw Islam, but no Muslims. I returned to the East and saw Muslims, but no Islam.”

In his and other early reformers’ worldview, the West had successfully captured the ingredients of early Islamic greatness, and the only way for Islam to catch up and match this was to return to the spirit of the “Salaf”, the early generations of Muslims who innovatively and creatively interpreted their faith to suit the spirit of the times.

Inspired by the reactionary Ahmad ibn Hanbal, who believed that the graves of even pious “innovators” within religion was a “barren pit”, and spearheaded by such figures as Sayyid Qutb, the spiritual father of modern, radical Islamism, the contemporary brand of Salafism became not only hostile to the West but also to its values. In order to counteract Western hegemony, Salafists believe, Muslims must reject the West and live as the early Muslims did. This idealised view of the past has led many Islamists to interpret their religion rigidly and literally, at least the parts of it that suit them, and to get caught up in the minutiae of how the prophet walked, talked and even urinated.

An example of this is their fossilised attitude towards tourism. Although al-Nour’s economic platform has focused on reforming the banking sector along Islamic lines by outlawing interest (something that is bound to be popular among borrowers), it has steered cleverly away from delving too deeply into its position on tourism as being “un-Islamic”.

Salafists are well-known for their opposition to tourism for its “immorality” and “decadence” and many leading Salafi preachers call for it to be banned, while the violent extremists of the 1990s specifically targeted tourists, not only to undermine the government but also as a reflection of their rejection of the industry. One wacky manifestation of this opposition is the bizarre call by al-Da’awa al-Salafiyya (which founded al-Nour) to cover all Egypt’s ancient statues in wax veils.

But this kind of idol gesture is unlikely to go down well, since millions of Egyptians depend on tourism for their economic well-being and millions more are proud that their country – “the mother of the world”, as they call it – is the subject of such international fascination and reverence, and they love to say “Welcome” to foreigners.

But do the gains made by Salafists and the more moderate Muslim Brotherhood indicate that Egypt is on the slippery slope to theocracy or can it still build a democracy, albeit one with a pronounced Islamic flavour?

Although this result would suggest Egypt is far from the secular, progressive society I and like-minded Egyptians dream of seeing emerge, it is far from being the unmitigated disaster that doomsayers have been warning about.

For a start, the fear that the Islamists will form some kind of unified bloc in parliament is possible but appears unlikely at this juncture. After all, the Brotherhood and the Salafists, though their worldviews may overlap on numerous issues, are bitter rivals and the al-Nour party was formed by a breakaway faction from the FJP alliance that was unhappy with the moderate, pluralist line the FJP was towing.

Moreover, the FJP did not actually collect 36% of the vote – it was the entire Democratic Alliance of 11 parties, mostly secular ones. As the dominant member, the FJP is estimated to account for some 60-70%, which means that it captured between 22% and 25% of the vote.

On the bright side, this means that, combined, the Islamist vote accounts for half the total and the secularist for the other half. On the downside, it means that the relatively moderate Muslim Brotherhood and the extremist Salafists are neck and neck.

In addition, there is a good chance that the FJP will do more than pay lip service to its expressed commitment to secularism and pluralism in order to avoid spooking SCAF and the West and to avoid a replay of what occurred in Algeria. And after 90 years of oppression and inhabiting the political wilderness, the Muslim Brotherhood finally wants a shot at some form of direct power.

And perhaps after all these decades, it’s time they actually got an official stake in running the country, partly because this is only fair, and partly because allowing the movement to join the mainstream in earnest would finally rob them of the luxury of criticising loudly from the sidelines without actually having any of their ideas and contradictions put to the test. In parliament, the electorate can judge them on their actual performance and not just their sloganeering and grandstanding. Then voters can truly learn whether Islam, at least the version of it they preach, is the solution or part of the problem.

Perhaps one reason behind al-Nour’s unexpected success actually has little to do with religion, but is related to the far more mundane and worldly reality of economic inequality. With the revolutionaries focusing all their efforts on what might seem to the average Egyptian like abstract issues of political reform and the liberal parties, particularly the neo-liberal FJP, refusing to countenance the idea of radical income redistribution, al-Nour’s calls for a “fair and equal distribution” of not only income but wealth is bound to appeal to Egypt’s oppressed and downtrodden masses, many of whom are forced to live on less than $2 a day.  And so the unexpected success of the Salafists may actually be more of a protest vote against the other parties than a vote of confidence in al-Nour.

Some months ago, I cautioned that the revolution and the interim regime ignored or downplayed the economic aspect of the uprising, what I called the revolution’s bottom line, at their peril. “You can have all the democracy and personal freedoms in the world, but without addressing the bread and butter issues of poverty and economic injustice, reform will be incomplete and hollow,” I wrote.

Given Egypt’s pressing practical socio-economic issues, we may actually find that the first parliament is not preoccupied with identity politics but rather with more urgent bread-and-butter issues (at least, any sensible parliament should be). This may, paradoxically, lead to some weird alliances of convenience forming not around cultural or identity issues but around economic outlook. So, just as the Muslim Brotherhood has allied itself to al-Ghad partly based of the similarity in their economic outlook, so too might al-Nour, if it is sincere about its economic programme, find itself in an uncomfortable partnership with secular leftists, at least on issues of economic justice.

But there is another bottom line that we have not yet explored. Will the new parliament have real legislative teeth, will it manage to challenge the “pharonic” powers of the eventual president, or will it be yet another rubberstamp assembly? There is a widespread fear among activists and revolutionaries that SCAF has no intention of ceding (at least ultimate) power to the people. Even if the army does ostensibly return to the barracks, there is the real and present danger that they will form a shadow government there that will exercise an ultimate veto over the civilian government.

And SCAF’s behaviour has done little to allay these concerns. Not only has it said that it will have final say over the country’s new constitution, it has also indicated that the new parliament will have no oversight over the military’s budget.

It also seems that the generals are unimaginatively following the well-trodden path of Egyptian leaders over the past three decades and playing with Islamists fire. It is true that the Islamists undoubtedly hold appeal to certain segments of the population and the nascent revolutionary groups’ failure to score significant electoral success so far is partly due to their disorganisation and disarray.

Nevertheless, all indications reveal that the dice were loaded in favour of the Islamists, as part of what appears to be a counterrevolution. Not only did the country’s provisional constitution make it difficult to form parties, which handicapped the secular activist who launched the revolution, the rule that bans the formation of religious parties does not seem to have been applied to the salafists for some mysterious reason.

In addition, the SCAF’s policy of obfuscation and delay since the revolution erupted harmed the electoral chances of the revolutionaries because it enabled the regime and the Muslim Brotherhood to convince quite a number of Egyptians that the resulting instability was the fault of the activists and not the old guard. Had the army handed over power immediately to an interim “Council of the Wise” and had genuine elections been held during the early period of euphoria following Mubarak’s downfall, then the courageous and visionary revolutionary youth could well have led the political pack in Egypt’s parliament, rather than being left with almost nothing.

But why would the SCAF form an unholy alliance with the Islamists? For a number of reasons. Pragmatically, the generals realised that the Brotherhood, particularly its old and conservative leadership, was the lesser of two evils. The revolutionaries want complete regime change. In contrast, the Brotherhood – whose current leadership has been saying for years that good Muslims are obliged to obey their leaders even if they are tyrants – is willing to compromise and live with a power-sharing arrangement.

Additionally, there is an element of intergenerational conflict: the young revolutionaries, including the younger members of the Brotherhood itself, appeared to be a common enemy both to the ageing generals and the ageing Islamists at the top of the movement. And with the Brotherhood’s commitment to free market economics and its reassurances that it would not rock the boat with Egypt’s allies, the FJP must seem like the best guarantor of the elusive “stability” Washington so covets.

And like Mubarak before them, Field Marshall Tantawi and his inner circle may be trying to put the fear of God, so to speak, into the hearts of Egyptian secularists and the Western powers alike – perhaps as a prelude to freezing, rolling back or delaying further reforms.

When all is said done, this is still only the first phase of the elections, and the staggered nature of the vote may actually work in favour of the secularists, whose poor showing so far may prod them to redouble their efforts to win over voters in the rest of the country. It may also focus the minds of voters and prompt them to deny the Islamists, particularly the salafists, further significant gains. At the very least, it might encourage more Egyptians to vote for the FJP as the only realistic bulwark against al-Nour.

That said, what effect would an Islamist-dominated parliament have on vulnerable groups, including women, Christians and other minorities, such as Baha’is, atheists and simply those with alternative interpretations of their faith?

Well, at a certain level, the Islamisation of Egypt culturally and socially has been taking place for decades. When the 1952 revolution failed to deliver on its promise of granting Egyptians their full political and social freedom, and Gamal Abdel-Nasser mercilessly stamped out both secular and Islamist opposition to his rule, the discrediting of secularism began in earnest. The crushing defeat of 1967, and the accompanying destruction of the pan-Arabist dream, dealt a decisive blow to secularism and empowered the Islamists.

Then, in the 1970s, Anwar al-Sadat openly and cynically (though, of course, he had once been a member of the Muslim Brotherhood in his youth) began embracing the conservative Islamic current to counterbalance the fierce secular opposition he was facing, which he crushed ruthlessly, and when the inevitable blowback came, it was too late for him to turn back the tide.

His successor, Hosni Mubarak, tried to play both sides off against each other in a classic example of divide and rule. Under Mubarak’s leadership, the regime tried both to portray itself as the guarantor of secular freedoms and the defender of Islamic decency. Meanwhile, the sectarian tensions this awoke were ignored and swept under the carpet because it went against the prevalent discourse of national unity, until the ugly monster of sectarianism had grown to unmanageable proportions.

So, even without Islamist domination of the next parliament, it will take years of effort, dialogue, education and trust building to slay the dragon of sectarianism and rebuild the confidence of Christians that they are full and equal citizens of the country. Of course, an Islamist victory could well delay or set back such a process.

Likewise, the Islamists have succeeded in setting in motion a counter-feminist revolution which has reversed or frozen many of the gains made by women in their struggle for equality. And, paradoxically, as more and more women go out into the workplace and public sphere, they must do so heavily cloaked in piety and “decency” and, hence, not as equals to men. So, as misogyny is not limited to Islamists in Egypt and the sex divide has reached an unsustainable level, it is unclear whether matters will actually get worse for women.

Liberal, pluralist secularism also became contaminated through its association with the exercise of Western hegemony in the region, which was often conducted cynically under the banner of spreading “freedom” and “democracy”.

The upshot of all this is that, without being in power, Islamists have exercised a powerful and stifling influence on Egyptian society for years, as reflected in the growing pre-eminence of the conservative religious dress and the hounding and persecution of those who criticise religion. Whereas in the 1950s-1970s, many intellectuals in Egypt and other secular republics, despite the (more tolerant) piety of the general population, held proudly sceptical and even hostile views of religion and were openly atheistic. Today, even mild criticism of religion can land you in hot water.

This has resulted in the growing marginalisation and ostracisation of Egyptians who do not fit the mainstream Islamic mould, whether they be secularists, Christians, Baha’is or non-believers, a minority that might outnumber Christians if Egypt did not turn an official blind eye to atheists and agnosts and if people were allowed to be fully open about their beliefs, some suggest.

However, that is not the entire story. The Egyptian revolution has revealed a trend that has been going on under the radar for years. Millions of Egyptians who hold a wide spectrum of socially and politically liberal and progressive views have come out into the open, while Egypt’s tattered and bedraggled secular forces are regrouping, discovering a new sense of confidence and assertiveness which they will not cede easily to the righteous bullying of the Islamists and other religious conservatives. In addition, mainstream Islamists have been undergoing a process which I call “secularism in a veil“.

This means that, rather than a theocratic Egypt, what we might well see emerge is a battle between two increasingly polarised trends: the reactionary religious and pluralistically secular. Moreover, as Islamism is truly put to the test, we may look back in the future on this period as the “high point” of the Islamist political movement, as the electorate quickly grows disillusioned when its vision too fails to deliver improvements and results.

Egypt’s first democratic parliamentary elections since the 1952 revolution – faulty as they were – began on 28 November, our son’s second birthday. This led me to wonder whether the process this will unleash will be one that will create a new Egypt that will make him proud or ashamed of his Egyptian half. A truly democratic, free, tolerant and pluralistic Egypt – even if it is achieved politically – will probably take generations to implement socially, and will depend on decent education and economic prospects for all.

Here’s to hoping that our children and grandchildren will inherit an Egypt that they can live in and have a stake in.

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Zero tolerance=zero difference

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By Khaled Diab

Belgian media hysteria over crime and calls for zero-tolerance policing miss the real issue – social exclusion in the inner city.

16 February 2010

To the outside world, the scariest thing about Brussels is probably its bureaucracy. In Belgium, however, Brussels has something of a reputation for being an unsafe city where criminals of Moroccan and other immigrant extractions rule its mean streets and certain neighbourhoods are no-go areas not only for law-abiding citizens but also for the police.

Three recent incidents, including a dramatic one in which a police officer was shot with a Kalashnikov during a getaway after a thwarted armed robbery, have confirmed this perception in the minds of many.

The predictable media frenzy – with a tone that would be familiar to a British audience – about street crime and the need for “zero tolerance” followed hot on the heels of the tragic shooting, and voices of reason and nuance have been drowned out. The police even took to the streets to call for more resources and pay, as well as stiffer sentences and faster judicial procedures.

In addition to idle musings about who polices the police during such a protest (a friend suggested that perhaps anarchists and activist should get the chance to stand on the other side of the barricades), I wondered whether the Belgian capital’s image is deserved and whether more draconian security measures are really the answer.

According to available statistics, Brussels has, by northern European standards, a high petty crime rate and it is top of the European league when it comes to domestic burglaries but is one of the safest capitals in the world – and possibly the safest in Europe – when it comes to violent crime, particularly murder. And despite the current media stampede, in the first half of 2009 Brussels registered the lowest crime rate in almost a decade.

Like many Brussels residents, my wife and I lived for years without problems beyond some minor annoyances, on the edge of what is regarded as one of the city’s more dangerous neighbourhoods.

The public debate, carrying as it does racial and religious undertones, has not surprised locals in Brussels’s problem areas but it has caused widespread disappointment. “The violence we hear about in the media is the exception and not the rule,” Kamal, a 32-year-old Moroccan, told me. “With all this talk of zero tolerance, respect has reached zero level. We need a public debate, but one based on mutual respect and acceptance.”

The sense of disillusionment is pervasive, especially in Kuregem, which is regularly portrayed as some kind of urban “war zone”. Eric Gijssen, a video artist and social worker who has lived in Brussels for two decades and works with young people in Kuregem to help them find their voice through the medium of film, has noticed a growing apathy among his charges.

“The youth I work with and other locals are becoming increasingly apathetic,” he said. This is a far cry from the active and engaged young people we met some years ago at the Alhambra centre who were keen to challenge stereotypes and misperceptions. “They no longer believe this will make a difference, and have turned their backs on the media to find their own information sources and forums online,” Gijssen added.

While he acknowledges that there are plenty of problems, he finds that the sensation-seeking elements of the media and self-serving politicians are only making a delicate situation worse. “Instead of stigmatising entire communities, we must first of all engage with the youth and offer them alternative perspectives,” he said.

Gijssen and others with grassroots experience see the fixation on security aspects of the Brussels question as short-sighted and even counterproductive. Instead of attacking the symptoms with a fist of steel, what is required is treatment of the root causes: poverty and social exclusion.

While it is not inevitable that poverty will lead to crime, ignoring the strong correlation between the two is disingenuous and an easy way for politicians and society to cop out of their responsibilities to create opportunities for the marginalised.

In Brussels, the contrast between wealth and poverty is extremely stark. As the country’s main economic dynamo, Brussels has a per-capita GDP that is 233% that of the EU average! However, most of the wealth generated in the city is earned by people who live in its plusher suburbs or who commute there from other towns.

In contrast, inner-city Brussels, unlike most other capital cities, has the highest unemployment rate in the country (17.6%) and, according to Gijssen, in places like Kuregem, youth unemployment can be as high as 50%. Unsurprisingly, this chasm can often lead to feelings of resentment on one side of the wealth divide and fear on the other.

“In places like Kuregem, young people have very little or nothing, and not much of a future to look forward to,” explains Gijssen. “One thing is essential: more investment.”

But rather than investing more, the authorities have been siphoning off funds from community projects in Kuregem and other poorer neighbourhoods in Brussels and, at a time when everyone is feeling the pinch of the economic crisis, immigrant neighbourhoods have fallen off the political radar when it comes to employment and education.

“If jobs and other opportunities are found, then this security problem will vanish,” Kamal told me. “We need to combat social exclusion through better socio-economic integration.”

This column appeared in The Guardian Unlimited’s Comment is Free section on 8 February 2010. Read the related discussion.

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Making globalisation pay

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By Khaled Diab

Big corporations are using the banking crisis as an excuse for exploiting cheap labour. Is it time for a global minimum wage?

4 February 2010

For beer lovers, Belgium is the nearest place to heaven on earth. The country’s 125 or so breweries produce an estimated 800 standard beers, each of which is served in its own distinctive glass. This mushrooms to nearly 9,000 when special editions are included.

Given this ocean of booze, you would expect that the temporary loss of a handful of beers would cause hardly a ripple. In a country where beer receives the kind of appreciation reserved for wine in other cultures, the recent threat to supplies of some of Belgium’s favourite tipples captured headlines and caused distress.

The “Beer Crisis”, as it became known, was caused by striking workers blockading three breweries owned by the world’s largest beer giant, AB InBev, which, among other things, produces the popular but bog-standard Stella Artois and the more upmarket Abbey beer Leffe.

The immediate cause of the blockade was AB InBev’s plans to trim its Belgian workforce by 300 (with another 500 to be scrapped in the UK, Germany, the Netherlands and Luxembourg), ostensibly because of falling beer consumption in western Europe.

Despite the inconvenience to the beer-drinking public, most Belgians are sympathetic with the strikers. “We’re with the strikers,” declared one regular at a café in Halle. “If the beer flows dry, that is only a relative problem.”

This is because, InBev (previously known as InterBrew), though it is admired for raising the global profile of Belgian beer, has become infamous for its cavalier attitude towards its workforces, which have endured several ‘restructurings’ in recent years to cut costs, while the management pays itself lavish bonuses, engages in expensive prestige acquisitions (such as the US makers of Budweiser), and exports jobs to countries where labour is cheaper.

Faced with this public relations disaster and the loss of market share to smaller breweries, InBev’s management has backed down for the time being and the blockade is being lifted.

Workers at the nearby Opel plant in Antwerp have not been so fortunate. Despite an offer of a €500 million bailout from the Flemish government, and voluntary pay cuts agreed by the unions, troubled US car giant GM has decided to close the 85-year-old Antwerp plant, axing 2,600 jobs in the process. The decision is all the more puzzling because the plant still turns a healthy profit.

It seems that InBev and GM are taking advantage of the current financial crisis. Both are shifting jobs to countries where labour is cheap, while GM seems to be subsidy shopping and has successfully pitted the German government against the Belgian government.

And they are not alone. With their massive revenue streams and the mobility to shift their assets rapidly, countless multinationals have used globalisation to hold governments to ransom and stack the global trading system unfairly in their favour by ‘outsourcing’ their operations to so-called low-cost countries while selling their output in higher-cost wealthy countries.

So what can be done to curb this kind of corporate excess and greed and put a brake on this undignified race to the bottom?

One idea could be to develop an international minimum wage and integrate the concept into the architecture of the World Trade Organisation, especially since the Doha round of trade talks is ostensibly aimed at triggering sustainable development. What could be more sustainable for the global economy than affording all workers a decent income?

But, even assuming that WTO member states can muster up the political will to set such a global standard – after all, both rich and poor countries would have their own reasons for opposing it – attempts to set an international minimum wage would face umpteen practical hurdles.

For example, if you set it as an absolute amount, what would you take as your reference? Universalising, say, western European levels would be unaffordable for developing economies and unfair to European workers who have to contend with some of highest costs of living in the world.

Instead, we could determine a minimum standard of living to which all workers should be entitled and use that to calculate a fair wage for each country using purchasing power parity. However, given the magnitude of global income disparities, this would disadvantage local companies in poorer countries who, compared with multinationals, do not possess the resources to pay such wages – nor can the domestic markets they cater for absorb the extra cost.

So, until we have true global economic convergence, it would be far better to start the process of fairer trade at home, and more strictly regulate our multinationals. Today’s giant corporations are often likened to small countries. However, there are important differences: they are not tied down by geography and, given the paucity of international regulations, they can get away with practices that would be considered unscrupulous or even illegal in their home territories.

Just as the vast majority of developed economies from which most multinationals hail have minimum wage systems in place, it’s time global corporations were made to apply similar practices in their overseas operations in poorer countries.

In addition to an absolute rock bottom wage which they cannot go below, multinationals should be obliged to implement an indexed salary system in which workers in their overseas operations cannot earn less than, say, half of what a worker doing a similar job in their home territory earns.

Complaints are bound to be heard about how this interferes with the efficient functioning of the free market. But I doubt CEOs and top managers would be so blase if it was their own jobs that were to be outsourced. I’m sure India and other developing countries are teeming with intelligent, capable entrepreneurs who could probably do a better job than many of our current crop of avaricious business leaders, and at a fraction of the cost.

Besides, the free market already functions inefficiently – the rich domestic markets of multinationals are still quite well-protected fortresses. And, though we may have freer movement of goods and services than in the past, the movement of labour is severely restricted. In a truly free market, workers would go where the best-paying jobs are, rather than the jobs going to where the worst-paid workers are.

More importantly, at its core, economics is about human wellbeing and if free-market orthodoxy fails to deliver on this, then something needs to be done to balance efficiency against ethics.

This column appeared in The Guardian Unlimited’s Comment is Free section on 31 January 2010. Read the related discussion.

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Introducing equanomics

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By Khaled Diab

Governments need to rethink their economy policies to make them more equitable and responsive to citizens’ needs.

January 2009

Reading the business pages is like wading through a nuclear wasteland littered with ‘toxic assets’. Gordon Brown is now working to limit the damage from this radioactive debt with a multi-billion pound safety net for the financial system. This, along with the hundreds of billions the government has already pledged, not to mention the tens of billion it has already spent, has sparked warnings of possible bankruptcy for the UK.

Since it rippled out from the subprime scandal in the United States, the global financial crisis has seen taxpayers exposed to mind-boggling liabilities, potentially counting in the trillions. While the financial sector sends the wider economy into a recessionary tailspin, what have the architects of the disaster been up to?

Rather than face paying the price for the ruin they have visited on others, top executives have been giving each other golden handshakes before donning their diamond-encrusted parachutes and leaping out of the blazing wrecks they have left for governments to keep airborne with both engines burning.

But even in the United States, it seems that people have lost patients with the executive caviar train. Last week, the Senate said it would not approve any more bailout money without strict limits being imposed on executive pay.

The brewing outrage is hardly surprising when you consider that, as millions face the prospect of the dole and losing their homes, top managers are sitting pretty and laughing. Take the Merril Lynch executive who got $25 million for three months work or, on this side of the Atlantic, the €4 million payoff received by the former chief financial officer of Belgian-Dutch Fortis Bank, which benefited from a government bailout to the tune of €11.2 billion.

Even George W Bush, a leading cheerleader of neo-liberal economics who has probably done more than any other president to fatten the bottom line of corporate America, has been making ominous threats. “Anyone engaging in illegal financial transactions will be caught and persecuted,” he recently said. Appalled as I am by the exuberant excesses at the top, as a strong believer in human rights, I cannot tolerate talk of persecution.

What needs to be done is not only to limit executive pay in banks receiving government bailouts but across the board. We need a general cap on earnings, which would be high enough to provide an incentive for people to perform and strive but low enough to prevent major economic injustice.

But that, in itself, is not enough. We need to rethink our approach to the economy and herald in a new age of what I call equanomics, where the success of an economy is judged by how well it improves citizens’ well-being, narrows the gap between them, and truly provides them with equal opportunities.

At present, there is too much of a tendency to regard the economy as somehow existing outside of society. But this false separation has led policy-makers in many countries to put the interests of the market ahead of the interests of the people. Equanomics would remove the false barriers between the economy, markets and society, and social indicators – such as quality of life, education and health – would count as much as macro- and microeconomic indicators.

In addition to maximum and minimum limits on income, under equanomics, salaries would be determined not only according to a job’s market value but also its social worth through, say, an impartial index which draws on the views of experts and the general public to assess the social value of different jobs. Of course, this might mean that top executives will be taxed extra to raise the pay of nurses.

Some will argue that only free markets can create the wealth needed to improve people’s lives and that communism only succeeded in impoverishing societies in its quest for equality. I am not advocating the imposition of a communist dystopia, but the sort of enlightened blend of socialism and capitalism that served Europe well in the post-war years and has helped Scandinavia to have its cake and allow the majority of citizens to eat it.

Besides, free market capitalism has failed dismally to create the utopia it promised. Despite the laudable talk of equal opportunities, economic disparity robs millions of the opportunity to shine and succeed. For example, an upper-class boy in the UK is 30 times more likely to land a top job than a boy from the unskilled working class. Contrast this with the countries with the highest social mobility, such as the Nordic countries and Canada, which also happen to be the countries with the lowest inequality. This means that there can be no equal opportunity without greater economic equality.

The free market, as we currently know it, is actually not an ‘invisible hand’ that dispenses impartial economic justice. The big players, from oligarchs to dominant or pseudo-monopolistic corporations, have a massive distortionary effect on the efficient functioning of the market.

This is reflected in the rapidly rising levels of global income and wealth inequality, which has led the UN to sound the alarm on the possibility of widespread social unrest, not only in developing countries, but also in the United States, Britain, Spain and Greece (which was recently plagued by riots).

In the UK, since income disparity rose at unprecedented rates in the 1980s, those Thatcherite levels of economic inequality have been perpetuated, with the super rich racing even further ahead, the middle classes getting a modest piece of the action, and the lowest income groups being left behind to eat everyone else’s dust.

Of course, given the fact that multinationals are of a size to rival small, prosperous nation states and the financial markets can punish governments for stepping out of line, the need for coordinated intergovernmental action has become all the more urgent. In this regard, governments can harness the power of the EU and other regional blocs, and even reinvent the World Trade Organisation, to make globalisation fairer and more equitable.

The current crisis risks deepening the wealth gap, as millions in the middle and lower income brackets face the prospect of imminent unemployment and pay cuts, while government funds are exhausted underwriting the welfare of the wealthy. We need governments to put equanomic principles at the heart of their policy if we are to avoid widespread social conflict and enhance socio-economic justice.

This column appeared in The Guardian Unlimited’s Comment is Free section on 19 January 2009. Read the related discussion.

This is an archive piece that was migrated to this website from Diabolic Digest

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