Garbage Dreams in Egypt

Much of the discussion of the protests in Egypt has focused on rampant corruption in the Mubarak regime. The penury and desperation that drive defiant protesters are also epiphenomenal of larger economic trends.

The film Garbage Dreams: Raised in the Trash Trade follows three boys who recycle trash in Cairo. Though its population is nearing 20 million, Cairo has no official sanitation service. The Zabballeen are a group of about 60,000 who have survived mainly by recycling the garbage they are paid only nominally to collect. They recycle 80% of it, whereas large companies aim for 20 to 30%. Nevertheless, the Egyptian government decided in 2003 to contract with such firms, endangering the livelihood of many Zabballeen.

One activist in the film states “They don’t see that we are poor people living off trash. What are we supposed to do now?” A panel at Davos is probably considering that question right now, concluding that better education can make anyone a winner in a world of crony-capitalist creative destruction.

I don’t know how the garbage shift fit into Egypt’s economic strategy, but Nomi Prins has some interesting analysis of the broader trends. Quoting from a CIA Fact Book, she notes that:

“Cairo from 2004 to 2008 aggressively pursued economic reforms to attract foreign investment and facilitate GDP growth [but]. . . living conditions for the average Egyptian remain[ed] poor.” . . . Around 2005, Egypt decided to transform its financial system in order to increase its appeal as a magnet for foreign investment, notably banks and real estate speculators. Egypt reduced cumbersome bureaucracy and regulations around foreign property investment through decree . . . International luxury property firms depicted the country as a mecca (of the tax-haven variety) for property speculation, a country offering no capital gains taxes on real estate transactions, no stamp duty, and no inheritance tax.

But, Egypt’s more devastating economic transformation centered around its decision to aggressively sell off its national banks as a matter of foreign and financial policy between 2005 and early 2008 (around the time that US banks were stoking a global sub-prime and other forms-of-debt and leverage oriented crisis). Having opened its real estate to foreign investment and private equity speculation, the next step in the deregulation of the country’s banks was spurring international bank takeovers complete with new bank openings, where international banks could begin plowing Egyptians for fees. Citigroup, for example, launched the first Cards reward program in 2005, followed by other banks.

Shadi Hamid also discusses a two-track society:

Egypt has that dispiriting look of a developing country in decline. Its infrastructure is, literally, crumbling, overwhelmed by one of the region’s fastest-growing populations. By my count, Cairo has at best five working traffic lights, and even those require––in the absence of respect for the government and its laws––a small army of policemen to enforce signal changes.

On the other hand, the World Bank has applauded the current Egyptian government of autocrat-technocrats for its economic reforms, including privatization and deregulation initiatives. The result is impressive annual GDP growth of around 7 percent that has created a class of government-dependent multi-millionaires but failed to address disturbingly high unemployment and economic inequality. A still-bloated public sector subsidizes the country’s shrunken middle class, effectively precluding it from the role of democratic vanguard it played in Latin America and Europe.

Resentment of these “government-dependent multi-millionaires” has grown over time. As Ken Silverstein noted in a piece in Harper’s,

It is impossible to grasp Egyptians’ contempt for the Mubarak regime without understanding the startling inequality this regime has bred. A majority of Cairo’s 17 million residents live in trash-strewn slums, with open sewers running through the streets. Meanwhile, the richest Egyptians lead lifestyles so extravagant that they have become strangers in their own country.

They vacation in Europe, spend weekends at summer homes on the Mediterranean coast, and escape the indignities of life in Cairo at private clubs—like the sprawling 150-acre Gezira Club, which was founded by the British colonial rulers and still boasts a golf course and manicured lawns for croquet and tennis. The military, a critical pillar of the regime, is also well looked after. Senior officers easily move into comfortable jobs after retirement, while those still on active duty are offered perks ranging from cheap beach houses to subsidized groceries.

I hope the US media, once it gets to the bottom of the infinitely interesting question of the relative role of Twitter and Facebook in current events, contemplates the underlying political economy of Mubarak’s Egypt.

Cairo is so noisy that it “is literally like living day in and day out with a lawn mower running next to your head, according to scientists with the National Research Center.” A 2008 NYT article stated:

[Q]uiet is in short supply, especially in densely packed neighborhoods like Rhode al Farag, where the streets are alive 24 hours a day with people struggling with one another to eke out a living. In the last six weeks, 11 people have been killed in fights in lines to buy some of the cheap subsidized bread many rely on to feed their families.

Events of the past week are probably much more surprising to those who brought the “garbage dreams” of privatized prosperity to Egypt, than to the citizens who’ve had to live under Mubarak’s efforts to “attract foreign investment and facilitate GDP growth.”

Image Credit: From the film, posted here.

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