Tuesday, May 31, 2011

Arab Spring Wary of Economic Lifelines

By Cam McGrath

"CAIRO, May 31, 2011 (IPS) - Governments and international institutions that once bankrolled the authoritarian regimes of Tunisia’s Zine El-Abidine Ben Ali and Egypt’s Hosni Mubarak have begun floating aid packages to speed up the economic recovery and transition to democracy in these countries. Arab revolutionaries have reason to be wary.

"Very few details have been offered about the form this aid will take," cautions Amr Hassanein, chairman of MERIS, a regional affiliate of Moody’s credit ratings agency. "But as generous as the packages may seem, you can be sure there are strings attached."...."With these kinds of packages the devil is in the detail," says Hassanein.

Governments and institutions that provide funding – whether as loans, grants or debt swaps – are invariably seeking to maximise their benefits, he says. While there is no harm provided both sides understand and accept the terms and consequences of the deal, the conditional aid now on offer may require Egypt and Tunisia to impose policies and legislation that contravene the demands of those who led their uprisings.

"To accept foreign aid with strings attached would betray the martyrs whose blood was spilled in the revolution," says Egyptian activist Mohamed Mansour. "Thank you Obama, but we’ll manage ourselves."

His position is understandable. Many Arabs blame Western governments and lending institutions for the decades of political repression and intolerable economic conditions that necessitated their revolts. They observed, for instance, how Washington shelled out 2 billion dollars a year in military and economic aid to Mubarak’s regime, and how European donors propped up Ben Ali’s feared security apparatus.....

In Egypt’s case, an IMF-backed economic reform programme initiated in 1991 improved the country’s monetary policy and fiscal management, but its austerity measures led to high unemployment rates, widening poverty and wage stagnation. The programme’s controversial privatisation scheme was largely responsible for the economic inequities and labour unrest that precipitated the regime’s downfall...

"There have been outcries in Egypt that our interim government has no business locking us into any lending arrangement," says Hassanein. "The parliament should agree on any decision to institute loans, and we don’t have a parliament yet."...."

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