What is neoliberalism and how did it work under the infitah?
Neoliberalism is a term that often gets thrown around in academic circles, usually in a negative light. It is, at the core, a policy model that highlights the importance of privatizing the economic market and giving importance to the private sector above all else. Privatization refers to making businesses and services owned and run by the private sector, or, the people rather than the government. This political and economic system comes with many benefits including the possibility of increasing gross domestic product (GDP), creating better relations abroad, and increasing gross national income (GNI). Although these numbers give off the impression of an economy that is developing, neoliberal policies often come with a catch: an increasing class gap.
Egypt experienced a particularly clear example of neoliberalism during its period of infitah under Anwar el Sadat’s rule. This infitah began in 1974, about four years after Sadat took power, and is highlighted in his October Working Paper. Through support from the IMF and the United States, Egypt transitioned from being a moderately socialist nation into one that is a neoliberal haven. Sadat increased foreign direct investments (FDIs) – between 1974 and 1981, a mere seven years, FDIs increased from $130,000 to approximately $752,571,429 (World Bank). Aid from the United States, particularly, began increasing quickly as they supported the privatization of the Egyptian market and the move away from socialist principles. Egypt’s GDP also became highly dependent on foreign trade, with dependency on foreign trade as a percentage of GDP increasing from 35 to 97 percent (Mellor, 2016). It is notable that under this infitahEgypt experienced a period of extreme growth. GDP per capita steadily grew at a rate ranging from 2 to 10 percent starting 1975 until the end of Sadat’s reign, and GDP itself ended up at $22,136,081,081 by 1981 when it had been at $9,228,963,224 the year the infitah started, meaning that GDP more than doubled during these seven or so years. Gross national income and school enrollment also consistently grew during the entire period. These predictors show the signs of a healthy, developing economy – yet, the price of privatization was the people who were left behind.
The problem began to show with people who did not belong to the rising elite classes. While some people continued to benefit from the policies of the infitah, many were left behind in public sector jobs that did not have rising salaries amidst rising inflation. As inflation rises, the value of the salaries being given decreases even if the number itself doesn’t fall. With foreign forces pushing for more privatization techniques, Sadat removed subsidies on bread which had been placed for years before, leading to the 1977 riots calling for the subsidies back and highlighting the people left behind in these policies. Furthermore, in order to save money for other expenditures, the government did not increase its expenditure on education at the same rate that school enrollment grew. With rising inflation rates, this led to teachers and public-school officials being paid less and less as time goes by. This pushed for the increase in private education and may have helped push Egypt into the issue of private tutoring that it is, until now, attempting to recover from. All of these policies helped to continue expanding the class gap.
Although neoliberalism may provide numbers that look good on paper, it is important to note the effects this economic system has on the people it is being inflicted on. Many of the policies of the infitah helped Egypt rise in the eyes of the International Monetary Fund, the World Bank, and other international development organizations – but this came with repurcussions. The world is not past neoliberalism and its capitalism-focused policies, nor are we past the effects. Balance is key to a healthy economy. Neoliberalism may have been supported by the IMF, but that doesn’t necessarily mean it should be.
Citations and sources for further reading:
El-Sadat, Mohammed Anwar. “The Egyptian Man.” The Working Paper, Apr. 1974, pp. 89–101.
Waterbury, John. “The ‘Soft State’ and the Open Door: Egypt's Experience with Economic Liberalization, 1974-1984.” Comparative Politics, vol. 18, no. 1, 1985, pp. 65–83. JSTOR, www.jstor.org/stable/421658.
Weinbaum, Marvin G. “Egypt's ‘Infitah’ and the Politics of US Economic Assistance.” Middle Eastern Studies, vol. 21, no. 2, 1985, pp. 206–222. JSTOR, www.jstor.org/stable/4283061.
World Bank. “Egypt, Arab Rep..” Data, data.worldbank.org/country/egypt-arab-rep?view=chart.
