EBRD hiding head in the sand on Egypt democracy

29 January 2014, The Daily News Egypt

Individual rights, gender equality, freedom of religion, freedom of thought and opinion, freedom of press, the right to go on strike — all these and other rights and freedoms are enshrined in the new constitution that Egyptians voted overwhelmingly in favour of.

But do these words turn Egypt overnight into a democracy? Egypt has always grappled with law-enforcement issues and there is a good likelihood that such provisions, as those quoted above, might not be implemented at all in real life. Essentially, every right and freedom stipulated in the constitution continues to be up for grabs. Military trials for civilians are still in force. And Shari’a Law is still defined as “the main source of legislation”.

The context in which the constitution was voted too is relevant for the likelihood that these articles will be implemented. The vote for the constitution has been from the start framed as a vote that would confirm Commander-in-Chief Abdel Fattah Al-Sisi’s legitimacy to rule the country. And run in the next presidential elections. In the last weeks, Al-Sisi’s posters were plastered all over Cairo. Opponents of the draft constitution have endured a severe crackdown, while aggressive “yes to the constitution” campaigns have been implemented all over the country.

Watching from Europe, we can see these things. But some of our institutions are pretending not to notice.

Soon after the Arab Spring, among the pledges of support to the region made by the EU and the US was the expansion of the European Bank for Reconstruction and Development (EBRD, originally created to promote democracy and market economy in post-Socialist countries). By now, EBRD is already financing projects in Egypt, Jordan, Morocco and Tunisia.

One of its most recent loans in Egypt is pledged to IPR Transoil Corporation, IPR Energy Red Sea, Inc. and IPR Energy Suez, Inc. for field development and upgrades at their oil and gas operations. In the near future, the bank will consider approving loans to giant food producer Nestle for expanding production capacities and another to the Egyptian government itself to then pass on to the state energy company for the modernisation of two power plants.

The EBRD actually approved the loan to the three oil and gas companies in the same period (second half of December) that the offices of NGO ECESR (Egyptian Center for Economic and Social Rights) were being raided by Egyptian police forces.

What is wrong with this scenario?

When the US and the EU pledged support to Arab Spring countries, they spoke about democracy and even recognised social justice as one of the main concerns of the revolutionaries. But among the mechanisms they proposed to help meet the goals of the revolution was this bank, the EBRD, which does not exactly fit the ticket.

The EBRD’s mandates writes (in Article 1): ”The purpose of the bank shall be to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in countries committed to and applying the principles of multiparty democracy, pluralism and market economics.” This was a mandate written for post-Socialist countries of 1989. It’s now being implemented in countries from North Africa and the Middle East who have an entirely different baggage.

One of the core ideological assumptions of the EBRD is that fostering market economies and the private sector would bring about democratisation. Again, citizens of post-Socialist countries in 1989 may have believed that but probably not many Egyptians today do.

Moreover, EBRD assumes that by merely being active in a country that has democracy or human rights issues, by working its private sector magic, it could contribute to democratisation.

But tell the Egyptians who are jailed today for speaking their minds about politics in their country that EBRD loans to Nestle and the oil and gas sector contribute to democratisation – what would they say? Would they laugh, would they be terribly offended and angered?

This week (Monday, 27 January), Egyptian and international NGOs are sending a letter to EBRD president Suma Chakrabarti, in which they write that, by lending in Egypt despite the human rights abuses committed, “the EBRD sends a very clear message that it is acceptable to implement loans while ignoring preconditions to democracy in revolutionary times within a deeply troubled and divided country”. The NGOs also ask the bank to “draw a benchmark beyond which it shall no longer engage nor expand in a country of operation.”

By maintaining its operations in Egypt, EBRD sends a clear message: it is acceptable to conduct business in a country where brutal crackdown on civil society happens daily, where prisoners are regularly raped and tortured in jails and police stations, where young women face random acid attacks in broad day light on the busy streets of Cairo, and where social justice is almost inexistent.

Although EBRD calls itself a development bank, the current EBRD actions in the country do little to profit the development of this society where a majority of Egyptians live with $200 per month.

It is imperative that EBRD and its shareholders (among them, the US and EU countries) have an honest debate over the current situation in Egypt and the role EBRD may fulfill there. For sure, giving loans to Nestle while the police are arresting people who speak their minds is not the answer.

If things continue in the same way, pretending to help Egypt via EBRD loans is nothing more than hypocrisy.