More to Sudan than meets the West’s eye

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By Andrew Eatwell

Despite its reputation for war and violence, there is more to Sudan than meets the West’s eye.

24 September 2010

Huge, harsh, desolate, with bloody borders and regions wracked by genocidal conflict, listed by the United States as a state sponsor of terrorism and under an international embargo, led by the only sitting leader to be indicted for crimes against humanity by the International Criminal Court, Sudan, Africa’s largest country geographically, is the quintessential pariah state. But there is much more to this land of violence and extremes than the religious fanaticism, gun-toting militias and rebel groups, famine and poverty that is frequently portrayed in the Western media.

Despite having the odds and much of the international community stacked against it, Sudan’s northern region, the largely violence-free area where the Islamist government of President Omar al-Bashir faces little opposition, is developing at breakneck speed. New roads are carving their way across the vast stretches of desert, glass and steel buildings are climbing skyward in Khartoum, and, at least for some Sudanese living away from the country’s many conflict zones, living standards are slowly improving.

“Here there was nothing but dirt before. Now there are paved roads, all in just a few years,” Hagg Said, the brother of the owner of a roadside café near the northern town of Abri, told me during a recent visit. “We can get around and trade more easily, it’s much better.”

The road running past Hagg Said’s brother’s café, like many roads, bridges and other infrastructure projects in Northern Sudan, was built by Chinese contractors, using local laborers, Chinese foremen and imported Chinese equipment. Some locals are enthusiastic about China’s growing influence – one store owner in the area has proudly hung a photo of Chinese President Hu Jintao alongside one of al-Bashir on his wall. In contrast, many northern Sudanese view the United States with disdain. They see Washington (which bombed a pharmaceutical factory in the Khartoum suburb of Omdurman in 1998 on the spurious grounds that it was producing chemical weapons and had links to al-Qaeda) and Western nations’ policies as holding the country – and their own lives – back.

While the West has sought to isolate Sudan, banning investment and blocking trade in response to the al-Bashir government’s dire human rights record, China has seized the opportunity to expand its influence. Chinese investment in Sudan accounted for a large chunk of the $5 billion the country received last year and China is one of Sudan’s largest trading partners, a relationship that has helped the Sudanese economy quintuple in size over the last decade, one of the fastest growth rates in the world. Clearly, Beijing is not just interested in selling cheap consumer products, construction equipment and completing infrastructure projects. Sudanese oil – the country is now the third-largest producer in sub-Saharan Africa – accounts for around 10% of China’s oil needs, and Chinese investment in the country’s mineral and resource-rich regions is growing. And it is precisely those regions that have put Sudan under the international spotlight.

Darfur, whose inhabitants rose up against decades of government neglect only to be slaughtered in their tens of thousands at the hands of government-backed Janjaweed militiamen, remains a dangerous flashpoint in the west of the country – one that spread across the border into neighbouring Chad in 2005.

In the south, where 70% of Sudan’s oil is pumped, a two-decade civil war between government troops and separatist rebels representing the area’s Christian-Animist population, claimed the lives of more than 1.5 million people until a 2005 ceasefire brought an uneasy end to hostilities. A referendum on independence for the south, scheduled for January 2011, is likely to be a new flashpoint in the near term.

Just recently, the Abyei border region, an area of rich pasture lands close to key oil fields where a separate referendum is to be held next year on whether the territory should join the currently semi-autonomous south, has been the site of several killings linked to conflicting territorial claims.

In all these regions, people are dying, killed not just by the bullets of soldiers, militiamen and rebels, but by the consequences of those conflicts: famine, poverty and disease. The United Nations recently warned that places such as Akobo, a town in the south-eastern region of Jonglei, is the “hungriest place on earth” with almost half of all children suffering malnutrition. The international humanitarian aid that does get to where it’s needed is essential for millions of Sudanese living in the worst areas of conflict, but international political pressure has so far had only limited impact. Killings continue in Darfur and Abyei, the south is still tense, al-Bashir remains in power – he won a widely ridiculed election in April after opposition parties boycotted the poll – and has yet to be hauled before the International Criminal Court in The Hague.

Away from Sudan’s many areas of conflict, those countries willing to deal with Sudan and al-Bashir’s regime, such as China, India and some Gulf Arab states, are having far more impact, helping not only their own interests but, by proxy, also the lives of more than 20 million Sudanese (out of a total population of around 40 million) living outside the conflict zones.

Khartoum’s souqs and commercial districts bustle with activity, traders hawk cheap Chinese-made clothes and consumer products, internet cafés abound and mobile phone shops line every other street. New buses now ply paved roads previously only served by bone-rattling pick-up trucks, and satellite dishes beam channels from across the Arab and Western world into rural and urban homes. In the city’s squares, shops and cafes, where economics, rather than politics, governs daily life, people from Sudan’s many disparate ethnic groups mingle with apparent ease.

“I go to Cairo to buy from the warehouses and bring things back to sell in Khartoum. Everything is more expensive in Sudan, but people are buying so I can make a good profit. I’ve been all over for goods,” said Ibrahim, a trader from the capital, as he sat among boxed-up washing machines, flat-screen TVs and ceiling fans on the deck of the weekly ferry across Lake Nasser from Aswan in Egypt to Wadi Halfa in Sudan.

Much of the world has sought to isolate Sudan in order to punish its political rulers. But entrepreneurial Sudanese and the few countries still willing to deal with the pariah regime, regardless of their underlying intentions, have ultimately ensured the world economy and economic opportunity have become more accessible to the average Sudanese.

Nonetheless, the unbalanced development of the country, largely based on oil wealth and with a large disparity between the center and periphery, remains a potential source for conflict and political instability, especially if oil-rich south Sudan moves to secede from the north next year.

Andrew Eatwell is currently travelling through Africa. His journey has so far taken him through Sudan, Ethiopia, Kenya, Uganda and Rwanda over the last two months. He has found the experience interesting, taxing, fun, tiring, exhilarating and saddening in almost equal measure. Sudan and Ethiopia stand out as the two most intriguing countries he has visited.

This article is published here with the author’s permission. ©Andy Eatwell. Please visit Andrew’s website at QorreO.

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By bread alone

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By Osama Diab

The Egyptian government looks to overhaul its bread subsidy system, but experts warn of a possible popular backlash.

14 April 2010

As the sun starts to set over the sprawling Sayyida Zeinab market, sellers begin to pack up their stalls, stowing fruit, vegetables and meat that have doubled in price during the last five years.

But not far away, the lines are still long at a small, worn bakery that sells subsidised bread, with dozens of men and women standing patiently, plastic bags in hand, waiting for a chance to snap up loaves at five piastres apiece.

With inflation hovering in the double digits, the lines are getting longer; a growing number of people are becoming reliant on the one food item that hasn’t seen its price change in the past two decades.

But there are signs that the government, burdened by an annual bread subsidy bill of LE 16 billion, is planning to change radically the way it supplies bread to tens of millions of poor and working class Egyptians.

That is a prospect that worries Cairenes, many of whom lived through traumatic plans to revamp bread subsidies during the 1970s.

“Everything gets expensive: gas cylinders, sugar. What’s next? Bread?” says a woman standing in line at the Sayyida Zeinab bakery, who asked to remain anonymous. “Bread means life for us. If they change its price, people will die.”

The government has not made its plans public, but a top official at the Ministry of Social Solidarity told Business Today Egypt that it was considering handing cash or in-kind subsidies directly to consumers, instead of supplying discounted flour to state-licensed bakeries, a process widely viewed as rife with corruption.

“There are no plans to eliminate subsidies, but we want… to reform the supply chain system,” said the official, who requested anonymity because he was not authorised to deal with the media. “We have a sincere will to reform and make sure the subsidies reach the right target group with a decent quality.”

The government has promised any changes to the system — which according to media reports could be overhauled as early as next year — would leave the total value of subsidies untouched.

But critics are worried that changes to the massive subsidy programme could result in a painful adjustment period. Egypt uses 13 million tons of flour per year to produce 220 million loaves of subsidised bread daily. Every day, the average urbanite has 3.1 loaves of subsidised bread, while rural dwellers consume 1.9 loaves.

What worries critics most is that the bread subsidy system itself might well be under threat. The centerpiece of the country’s social safety net, food subsidies amount to about 1.8% of Egypt’s GDP. Leaders have been eager to slash that tab in an effort to reduce the country’s deficit, which currently stands at LE 57.5 billion.

The government has cut or reduced stipends on several essentials, including gas, as part of a slate of market reforms. While the liberalisation push has resulted in significant economic growth, experts warn against repeating history and deregulating the bread market.

A half-baked plan

On January 18, 1977, news spread that the government was planning to eliminate subsidies on basic commodities, including bread.

Hundreds of thousands of Egyptians took to the streets to protest the decision, one of the biggest social insurrections in the recent history of Egypt.

The uprising was eventually put down by the army, but the government of Anwar Sadat was forced to backpedal on the reforms.

“There’s an economic term — a Giffen good,” says Karim Badr El-Din, a professor of economics at Sixth of October University. Unlike most commodities, “when incomes decline, its consumption increases.

“In Egypt, the Giffen good is a loaf of bread. It’s a good with strategic implications for the nation.”

Governments have to be careful when they fiddle with things like that or they risk sparking an outpouring of popular anger, he says.

“The poorest segment of society has most of their income allocated for food going… to bread because it’s cheap and sates their hunger. If people can’t afford that … you can expect a reaction from them.”

That was evident two years ago when the price of wheat skyrocketed on the global market and the government struggled to provide enough flour to local bakeries. Shortages led to violence in bread lines and were among the causes of Cairo-wide protests.

John Salevurakis, a professor of economics at the American University in Cairo who specialises in food subsidies, says opening up the market can be a “myopic” approach.

“What we have learned from recent events is that the wholehearted embrace of liberalisation and worshipping at the altar of efficiency has the ability to yield or hasten our approach to crisis,” he says, a nod to the global economic downturn.

A state secret

To date, the government has refused to reveal its precise plans for the bread subsidy system. But a February article in al-Masry al-Youm, quoting an unnamed source, said starting from 2011, citizens will be able to choose between either direct cash payments or in-kind subsidies, most likely in the form of vouchers. Citizens who get cash subsidies would have to buy bread at the market price, which some experts estimate could reach 20 piastres a loaf — four time the subsidised rate.

Officials are eager to make the change because up to 15% of the subsidised flour provided to bakeries is siphoned off and sold on the open market, according to al-Masry al-Youm.

Changes to the system could have a dramatic effect on the more than 18,000 bakeries authorised to sell subsidised bread, 90% of which are privately owned. For decades, they have produced relatively low-quality bread but had no shortage of customers.

Many bakers say they have no problem charging market rates, but some clearly aren’t prepared for the no-holds barred liberalisation of the sector.

“They should only allow authorised bakeries to sell bread, otherwise our business will be harmed because anyone would then have the chance to make and sell bread,” says Othman, the owner of the Sayyida Zeinab bakery, who asked his family name not be published.

Salevurakis supports a gradual elimination of subsidies so wages will have time to adjust. “The only way we can reduce or eliminate subsidies is to adopt a gradualist approach where the long-term schedule of reduction or elimination is known and credible,” says Salevurakis.

Bread in colloquial Arabic is aish, which translates to life, and for the 44% of the country living below $2 a day, according to the World Bank, the subsidies are a matter of survival.

“The humanitarian in me says that the current state of affairs is the only option,” says Salevurakis.

“The economist in me says that it’s unsustainable, and the pragmatist in me says that we can achieve economically rational results only over a very long period of adjustment.”

This article first appeared in the March 2010 edition of Business Today Egypt. Republished here with the author’s consent.

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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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