Egypt-Tunisia: Western financial aid plan could divert the revolution’s goals

Protesters at Tahrir square

Sources: Counter Balance (in English), ANND (in Arabic)

 A group of 67 civil society organizations from across 12 Arab countries raised concerns about the European Union (EU) and United States backed financial aid packages for Tunisia and Egypt, on the grounds that it could damage the process of democratic transitions and divert their revolutions’ economic and social justice goals.

“The democratic change pursued by the peoples of the region is not served by increase in aid that comes tied with policy conditionality, further liberalisation of trade and investment, deregulation, and orthodox recipes that contributed to the injustices that Tunisian and Egyptian people faced,” said Kinda Mohamadieh, programme manager at the Arab NGO Network for Development. 

“Such conditionalities should not be re-enforced through various forms of partnerships and aid packages promoted in the name of democracy support. The path to development of each country should be decided by its own people, via constitutional processes and national dialogue,” she added.

The statement was also signed by other focal points of Social Watch in the region, as the Tunisian Association for Human Rights, the Egyptian Association for Community Participation Enhancement, the Human Rights Information and Training Center (Yemen), the Jordanian Women's Union, the National Civic Forum (Sudan), Espace Associatif (Morocco), the Palestinian NGO Network and the Iraqi Al- Amal Association. 

“Western governments tend to confuse the transition to democracy with a transition to liberalisation because it serves their interests, not necessarily those of the people they pretend to support,” explained Caterina Amicucci, from Counter Balance, a European coalition of development and environmental non-governmental organisations that supports the statement. 

“The European Investment Bank for instance – who will be lending the biggest share of EU money – has been active in the region for 30 years without tangible development results for the people. It has been criticised for its lack of transparency and its focus on fossil fuel projects,” she added

The G8 group of most developed countries meeting in May this year called on the International Monetary Fund (IMF) and other multilateral development banks, mainly noting the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the World Bank to deliver “support … to strengthen governance and bolster the business climate” in post-revolutionary North African and Middle Eastern countries. 

The G8 Summit announced that multilateral development banks could provide over $20bn for Egypt and Tunisia for 2011-2013. Along this, the G8 countries offered a package of “deep and comprehensive free trade agreements and investment” to accompany their efforts. The EU would provide an extra €1.24 billion to the foreseen €5.7 billion support to its southern and eastern neighbours. 

European Commission President Barroso noted that aid was not enough to respond to the socio-economic challenges in the EU’s neighbourhood and that “we (the EU) need to do more to boost growth and jobs… push(ing) for faster free trade agreements, targeted concessions and smart investment facilities”.

According to the statement released by the 67 groups, the international financial institutions now sponsoring the aid package have been systematically promoting the unjust economic models that led to the impoverishment and marginalization of many in North Africa and the Middle East – and against which the pro-democracy movements rose. 

For example, as late as September 2010, the IMF was still lauding Tunisia’s “sound macroeconomic management and structural reforms over the last decade” and was even calling for more of the same by “contain(ing) public spending on wages and food and fuel subsidies.” Those same economic models are now being promoted via the conditionalities attached to the new aid package.

Out of €1.87bn lent by the EIB to Egypt between 2006 and 2010, 92% was directed at energy projects – and four-fifths of this to promote fossil fuels. Of the €1.8bn lent to Tunisia in the same period, half went to energy projects, and 10% was invested in infrastructure for transporting gas to Italy.

If the West really wants to support the democratic movements in the region, the 67 groups argue, it could start by helping with: completely eliminating policy conditionalities from aid addressed to support the peoples’ revolutions in the region, ensuring this support is directed to serve development priorities resulting from national participatory and democratic processes, assessing previous lending by development banks in the region, guaranteeing full transparency of any new aid, undertaking audits for debts taken on by former dictators and cancellation of odious debt, and allowing for assessment and renegotiation of international trade and other economic commitments signed by past governments.

More information
Read the statement (in English)