In her 2007 book, The Shock Doctrine: The Rise of Disaster Capitalism, Naomi Klein argues that the USA’s free market ideals have been forced on some countries because they are pushed through while citizens of these countries are reacting to disasters and shocks facing their countries. In short, unpopular economic reforms are pushed in the immediate aftermath of political and economic shocks.
Greece is currently going through such economic shock, needing a bail-out after another. North Africa and the Middle East is undergoing such political shocks following the Tunisia and Egyptian revolutions and the ongoing Middle East uprising. IMF and European Union have been on Greece’s case, while the World Bank, the G8 nations and the IMF has also been quick to offer “financial packages” to the transition governments in north Africa; even though they did not support the revolutions (siding with dictators in some cases) until it was apparent that people would triumph; a right moment to impose the shock doctrine.
Egypt has said no to all the loans with strings attached. Egyptian Minister for International Cooperation, Fayza Abu Naga says Egypt has refused a loan from the World Bank “because if found the terms of the loan incompatible with the Egyptian national interests.” She added that the Egyptian government “would not accept dictated by the World Bank and the IMF.”
The minister is also reported to have lodged a complaint with the USA Embassy in Egypt, warning it not to violet Egypt’s sovereignty by dictating conditions for loans. This was “in response to an announcement by the United States Agency for International Development that it would grant Egypt US$165 million to finance projects for education, civic activities and human rights.”
Are we finally coming full-circle with regards to the aid versus sovereignty debate? Of course it is too early to tell but this sends a signal that the days of paternalistic way of providing loans and grants may be waning. Egypt is moving towards democracy, it has to be answerable to its people, not donors. That is the case with any democratic country. Even dictators always claim to work in the interest of their people.
One can only hope that Egypt is setting a standard that the rest of developing countries may follow. Developing countries need help, yes, but this does not make them naive or blind to the real issues, they know what their people want. It should be the people, the electorate, dictating how governments should spend their money. If more governments start to standup against loans with strings attached, international lenders would also have to re-think their strategy. Egypt must be commended for their stance.