Greece's lessons to Egypt on resisting the IMF
For over two months, the world has been transfixed by the Greek financial crisis. It is playing out as a Greek drama between the dangerously daring, anti-austerity, and left-leaning Syriza party that rules Greek and the all-powerful European Central Bank (ECB) patriarch.
It is undoubtedly the most high-profile stand-off with an international financial system that has held liberalisation and fiscal prudence as a mantra.
Further adding to Syriza’s reputation as a maverick organisation, former Finance Minister Yanis Varoufakis revealed a Plan B to create a parallel banking system in case the banks crash, in the event of a Euro exit.
This plan, presented in the Western press, seemed to contain all of the elements of a covert economic operation, when in reality, as Mr. Varoufakis explained in a statement, "Greece’s ministry of finance would have been remiss had it made no attempt to draw up contingency plans".
Varoufakis has readily played the role of the villain to the ECB as he seemingly led the Greek charge against EU demands. It seems to be a lost battle. However, it is a battle that other countries and movement could learn a lot from; especially Egypt.
The case of Egypt
The Greek economy has been driven to the brink. Years of accrued debt, inadequate management of finance, and an unforgiving international financial climate seemed to have cornered the Greek people.
The Greeks had to choose between accepting crippling austerity and Eurozone aid package on one hand or rejecting the imposed EU policies and risking drifting out of favour of Western economies by the precepts laid out in the 1988 Washington Consensus on the other.
One aspect of the anti-austerity, anti-EU protests that has stood out is its ability to engage an entire population in a rhetoric that fundamentally contradicted the neoliberal order. In that context, the rise of Syriza and the anti-austerity movement is not isolated from global movements against systems that force profound top-down change in fiscal and monetary policies.
For instance, in Egypt, the 2012 anti-IMF loan movement emerged in order to raise awareness and lobby officials to reconsider a $4.8 billion IMF loan. Academics and activists took it upon themselves to accentuate exactly why accepting another loan would be a bad idea.
|Years of accrued debt, inadequate management of finance, and an unforgiving international financial climate seemed to have cornered the Greek people.|
This was done mainly by illustrating how the policy conditionality of international financial institutions tends to have adverse effects on social justice since it prioritises fiscal stability and market liberalisation over social safety nets.
Those effects that Egyptian activists exposed - especially those imposed in the 1980’s and 1990's - are well-documented by a host of commentators from all sides of the ideological spectrum. Yet, this point of view remains overshadowed by governments.
At the time, the Egyptian government stated that Egypt’s foreign reserves decreased by over 50% in less than two years. Egypt’s successive finance ministers since 2011 reiterated the need for liquidity as a priority, before offering economic alternatives (which would be necessary if they are to reject the loans).
However, ultimately, IMF-mandated neoliberal structural adjustments and loans served to bolster the existing regimes and further empower the privileged class while allowing Western governments to have a say in local polity.
The lesson learned
The seemingly vindictive backlash of the EU after the Greek vote is a clear indication that the "crime" of defying the financial system is far graver than flaunting unjust rules. In fact, France and Germany (the two states that were essentially negotiating Greece’s fate) were the first to break the EU’s fiscal rules by allowing their deficits to go above 3%.
Both, France and Germany, took steps to ensure that they would not face sanctions. The ECB backlash against Greece was a punitive measure to ensure that the Greeks do not dare vote in a defiant government.
Grassroots anti-IMF movements, whether in Egypt or Greece, are facing an uphill battle with the international monetary institutions that are willing to use both the carrot and the stick to ensure compliance.
|IMF-mandated neoliberal structural adjustments and loans served to bolster the existing regimes and further empower the privileged class while allowing Western governments to have a say in local polity.|
In both cases, the carrot is, obviously, loans. For Greece, the stick is expulsion from the EU and a very harsh transitional period to reintroduce the Greek Drachma currency and the stabilise the banking system that still may collapse.
Greek MP and economic expert Kostas Lapavitsas called the EU agreement a neo-colonial arrangement. In that sense, anti-ECB measures and anti-austerity movements pursue sovereignty over subservience.
On the other hand, the Egyptian government is backtracking on many popular demands, such as the promise for more equitable wage disparities in government institutions and the reversal of land and factory privatization that occurred illegally.
Until now, such movements have failed to exact profound policy change. The major blind spot of these campaigns in Greece and Egypt - as different as they are - is that they must find ways to propose different developmental models that are both comprehensive and practical.
The anti-IMF loan movement in Egypt does not really exist anymore, in an empirical sense. But its inevitable offshoots (and similar movements globally) will be encouraged by how close the Greeks were to break from imposed debilitating circumstances.
Opinions expressed in this article remain those of the author and do not necessarily represent those of al-Araby al-Jadeed, its editorial board or staff.