JK Alternative Viewpoint

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SIDE by side, the two leaders offered a picture of demure enthusiasm. “Should I go first?” whispered the Indian prime minister leaning towards the slender woman, striking in her mauve longyi, to his right. Given a nod, he told a small gathering of journalists, crammed into a hotel room in Yangon, Myanmar’s main city, on May 29th, of his admiration and respect for her “life and struggle, her determination…which have inspired millions of people all over the world”. Getting Manmohan Singh ever to speak with passion is near impossible, but he offered something close to real warmth, lauding family and historic ties, praising her “noble endeavour” and urging the lady to visit Delhi to give a prestigious speech.

If any foreign leader could be a close ally of India, it is Aung San Suu Kyi, the head of Myanmar’s opposition movement and now an MP, whose political role appears to be growing by the month. With flowers in her hair (and speaking into microphones propped up on copies of the Yangon phone book), she referred to close geographic, cultural and religious ties. And she added personal ones, notably her family’s respect for India’s independence leaders, especially Jawaharlal Nehru, the first prime minister—“Panditji, as I was taught to call him”. She said she hopes for a return to India soon.

She lived in Delhi when her mother was a diplomat there, in a house that now serves as the headquarters of the ruling Congress Party. India’s support for her freedom, and for the restoration of democracy, in Myanmar over the years has been feeble. The bigger country looks most concerned, even now, about stability in its north-east, where insurgents used to make use of sanctuaries over the border in Myanmar. But Ms Suu Kyi recognises the big democracy’s potential, benign influence (though she is making her first foreign trip since release from house arrest—also on May 29th—to Thailand, next door).

Mr Singh trod a relatively well-worn path, coming months later than leaders from Bangladesh, Britain, America or South Korea for example (“India has been a bit passive”, grumbles a senior Indian businessman in Yangon). He paid the obligatory visit to the immense pagoda that dominates Yangon’s skyline, and had previously called on the military rulers in their new capital, up country, in Naypidaw. In visiting at all—the last Indian prime minister came 25 years ago, when the country was still officially Burma—he acknowledged the significant reforms guided by the military men.

He offered, too, inducements for more economic and political reform. And by reaching out beyond the government, to the opposition leader, to the local Indian diaspora and journalists, India also shows it is trying to develop a more sophisticated foreign policy in its region.

Myanmar is a relative minnow: its 60m population is barely 5% of India’s, its small economy still grows more slowly than India’s much heftier one, and even the prime minister’s stated goal—to get bilateral trade to $3 billion, by 2015, beginning with a few markets on the border—looks rather modest. Yet relations could warm fast. India has offered $500m as a soft loan, mostly to build roads and railways near the countries’ shared border, plus help in training more civil servants and students in Indian colleges.

A dozen such initiatives were announced during the trip. India’s main economic interest almost certainly lies in its neighbour’s energy and mineral deposits: iron ore near the border with India, oil and gas (both onshore and off), as well as hydropower. Buddhism, too, could help to weave closer economic ties, with new direct flights between the countries, plus plans for a direct bus-link over the border, in part to allow more pilgrims from Myanmar to visit India.

Beyond the economy, however, India’s strategic concerns are well served by developing closer relations. Myanmar’s role in the Association of South-East Asian Nations (ASEAN) is getting stronger—it will lead the body in 2014—and India wants much closer economic, diplomatic and military links with the region, which it calls its “look east” policy. Mr Singh spoke later on May 29th of Indians as “intrepid traders” and Myanmar as being an “economic bridge” between South Asia and South-East Asia. A new highway, linking India, Myanmar and Thailand is supposed to be finished by 2016.

The context for all that is obvious enough. Indeed, India’s leader even alluded to the dragon in the room, the role of China, in influencing India’s wish to reach out to Myanmar. China’s close ties with Myanmar’s leaders will not disappear, even if a more robust democracy is established. China sees Myanmar as a useful trade route to the “Western Sea”—the Indian Ocean—and is equally tempted by Myanmar’s energy resources. Together that promises long-term competition by Asia’s two largest powers for influence on the small one in between. Myanmar’s fortunes, as reforms roll on, are likely to rest on how skilfully its leaders, whether military or civilian, can make use of their geography.

 
http://www.economist.com/blogs/banyan/2012/05/india-and-myanmar

Samuel Farber is the author of many articles and several books on Cuba. His most recent is Cuba Since the Revolution of 1959: A Critical Assessment, published by Haymarket Books in 2011. This article is based on a talk delivered at the Bildner Center of the CUNY Graduate Center, in New York City, on December 8, 2011. It was transcribed by Matt Korn and adapted by Sam Farber for publication.

I CANNOT really present a synthesis of my book in 20-25 minutes. What I think I can do is present some major themes discussed there that I believe are important. In any case, you should buy the book and find out the rest. The themes I want to concentrate on are the economy, politics, and the issues of racial and gender oppression.

 
For the last several years, and especially since the Sixth Communist Party Congress in April 2011, there have been many changes, and some reforms—which are not the same thing—in Cuba which the US press has to some extent covered. However, it’s striking to me that one element of what was approved at the Sixth Party Congress that I consider absolutely critical has not been talked about at all. It is a section of the Program adopted at that Congress that is crucial to the development of the Sino-Vietnamese model in Cuba, a model that combines political authoritarianism with openings to private enterprise and capitalism, with the state retaining a very strong role in the economy.

 
I am referring to the section on enterprise autonomy that was approved at the Sixth Party Congress. These specific changes have not yet been carried out, but are part of the Party Program that is supposed to be implemented over a period of five years. According to this program, state enterprise managers will get a much freer hand in handling those enterprises than has been the case until now. The section on enterprise autonomy also states, among other things, that there will be no more state subsidies for enterprises. This is a perennial feature of enterprises in Cuba: they go to the state for more money because they cannot cover their expenses. The Party Program also created the possibility of bankruptcy for state enterprises, something that happened in China quite a few years after Deng’s reforms began in 1978. That is already being announced in Cuba. Once the enterprises go bankrupt they will be transferred to the non-state sector, which means either privatization or perhaps becoming some kind of cooperative. Last but not least, this section of the Party Program promised the decentralization of some of the prices of the products of state enterprises. This will open the road to competition among state enterprises and between state enterprises and the private sector.

 
Even though this appears in black and white in the program adopted by the Congress, there is virtually no discussion of that either in the US press or among academic Cuba watchers. Why do I pick up on that particular theme? Because that part of the program fits perfectly well with the interests of a very important cadre of technocrats and administrators in the Cuban economy involved in joint ventures with foreign capital and in the army’s economic enterprises. There is a gigantic entity called GAESA (Grupo de Administración Empresarial, S.A.) that incorporates all the economic enterprises of the Cuban army. GAESA is currently run by Major Luis Alberto Rodríguez López-Callejas, who happens to be a son-in-law of Raúl Castro, and who was recently promoted to the Central Committee of the Cuban Communist Party at the Congress that took place last April. I should add that it is Army officers, either in active duty or retired, who through GAESA or other venues control over half of the Cuban economy.

 
The combination of this managerial/technical cadre with the party program, opening the road to enterprise autonomy, points to the transformation of the Cuban economy into the Sino-Vietnamese model, with elements of the Russian model of nomenklatura privatization—that is, the members of the bureaucracy individually appropriating enterprises. The Cuban political scientist Esteban Morales Domínguez got into a lot of trouble when he wrote an article pointing to that danger.

 
From the point of view of the Cuban rulers, there is no alternative to the measures adopted at the Party Congress. This is due to the severe crisis of the Cuban economy: high debt, unfavorable trade balance, very low productivity, and especially capital loss—in short, the economy using up its own capital base. The problem becomes particularly acute with the absence of a USSR to bail the country out, and with Venezuela being unreliable for all sorts of reasons that I cannot go into here.

 
Why is the Cuban economy in such a mess? Many people, especially the spokespersons for the Cuban government, have historically pointed to the criminal economic blockade that the United States that has been conducting against Cuba for fifty years, which has to be rejected absolutely, both on the principle of national self-determination as well as on pragmatic grounds. It just has to go. Period. Unfortunately, this is not about to happen. But it is absolutely inadmissible. The other side of that coin, which is not discussed by the Cuban authorities, is the disastrous bureaucratic economic system that is devoid of any real incentives. The old saying of East European workers—“they pretend to pay us and we pretend to work”—completely applies to the Cuban economy. It is also an economy of unbelievable waste. There is plenty of waste under capitalism, as we know, but in the Cuban bureaucratic economy there is a different kind of waste.

 
There are some things that the Cuban system does rather well, however. In most things, in my opinion, the system does a lousy job, but some things they do rather well. The question is: how do you explain that? How do you explain both: the few things that the Cuban economy does well, and the many more things that it does so badly? In my book, I try to take a stab at this question. I don’t pretend to have presented a grand theory, but I do make an attempt to explain it. I borrow from Charles Lindblom’s concept of “strong thumbs and no fingers,” which he discusses in his book Politics and Markets. An economy that has only “strong thumbs” is able to do homogeneous, repetitive activities rather effectively. But when it comes to the discrimination and adaptation for which the fingers of the hand are necessary, it is a total failure. Strong thumbs, no fingers.

 
Strong thumbs allow that society to line up thousands of children to be vaccinated in a mass vaccination campaign. This is a homogeneous task which is obviously important and which that society can do very effectively. Strong thumbs allow that system, in advance of a hurricane, to prepare and implement a systematic five-step evacuation plan, in sharp contrast with the criminal neglect that we saw in New Orleans in 2005. Those are the sorts of things that it does rather well.

 
But when it comes to any kind of innovation, discrimination, or adaptation to local conditions, that thumb’s economy is a disaster. That is why it has done so poorly when it comes to agriculture. Not surprisingly, the Achilles heel of the old East European Communist economies was also agriculture. Cuba is also a disaster when it comes to consumer goods. I finished my manuscript in May 2011 (about six months before the book actually came out), and that summer several reports appeared about a crisis with school uniforms involving a shortage of small sizes. That is a classic problem of an economy without fingers. It cannot get it right when it comes to the discrimination, the variety, and the adaptation required for many consumer goods.

 
So, yes, the economic blockade has hurt the Cuban economy, especially during the first years of the revolution. There is no doubt that removing the blockade—a goal to fight for—will considerably improve the Cuban economy. But to just talk about the blockade is highly misleading. (By the way, Raúl Castro himself has made fun of the notion that everything is to be blamed on the economic blockade.) Clearly, the nature of the bureaucratic economic system is at least as important as the blockade in creating the mess they are now trying to get out of—not by appealing to workers’ control and workers’ management of the economy, thus motivating the workers to give a damn about what they do, but instead by designing another method to keep a state-dominated economy going.

 
When looking at the Cuban economy and the Cuban polity as a whole, going back to the nineties, but especially in the last few years, we can see that there has been a process of liberalization, but not of democratization. By liberalization I mean the withdrawal of the state, the pulling back of the Cuban Leviathan state, which is what it is, withdrawing from some of the activities that this undemocratic Leviathan used to carry out.

 
Politically, this limited withdrawal has meant the creation of a certain space for certain elite groups in society, such as academics, intellectuals, and artists, to have a little more freedom to express themselves than was the case before. As a result, there are some good journals of limited circulation in Cuba —Temas for example—where you find excellent articles about problems of inequality, for example by Mayra Espina Prieto, an excellent social scientist, or about racial inequality in Cuba. But when it comes to drawing political conclusions that are problematic, Temas becomes very shy. When it comes to assessing the responsibility of the political leaders, then forget it. That is not going to be discussed in an article in Temas. Nonetheless, it is very good that Temas exists, and I look forward to reading it, notwithstanding its severe limitations. (I don’t look forward to reading Granma, Juventud Rebelde, or Trabajadores, which are continually a pain in the neck.)

 
So there has been a liberalization in the economic realm and, to some extent, in the political and intellectual realms. But not a democratization of a state that continues to run, and will continue to run, like in China, most of the life of the society—a state that is not subject to popular democratic control and that bans the organizational framework necessary for having popular democratic control. The mass media continues unreformed—run, as always, by the Ideology Department of the Cuban Communist Party, led by a man named Rolando Alfonso Borges, the head ideologue of the Cuban Communist Party. He gives “orientations” to the mass media, the Cuban Institute of Radio and Television, and the newspapers, and they peddle the party line. Thus, Juventud Rebelde favorably covered the demonstrations that the Syrian government organized some ten days ago [November 29, 2011]. What the Cuban mass media has reported in the case of the Arab Spring and in the case of Syria is disgraceful—that is the only word for it. I find their disgraceful coverage and support for the regime in Syria, quite frankly, disgusting in this day and age.

 
The Cuban one-party state continues unreformed. In my book, I discuss in great detail why the so-called popular power is not at all democratic, and why preparations for the Congress were more akin to the suggestion boxes that capitalist managers use in capitalist economies, where workers put in suggestions and the managers pick up on some of them. That is exactly what happened at the recent Party Congress.

 
I want to make clear that when I object to the one-party state, I object to its political and legal monopoly. I don’t do it from the perspective of a political scientist who might ask, “Now, what would be the ideal party system in a socialist society?” I don’t get into that. Not that it might not be a worthwhile discussion, but that is not my purpose. What I do get into is a reasoned but drastic critique of that party’s monopoly on political organization, and not just of that party, whose monopoly is enshrined in the Cuban constitution, but also of the monopoly of the mass organizations, which have been the transmission belts of that party; the monopoly of a single official trade union; of a single official women’s organization, all of which also have constitutional backing. Let the actual social life of the society, the actual social conflicts within society, determine the number of popular defense organizations and parties.

 
Let me say something briefly on the issues of racial discrimination and homophobia in Cuba. Traditionally, and even to this day, the Cuban government defines the problems of racism and sexism as leftovers of the Spanish colonial past and of capitalism. I take on that argument in my book. I try to explain that in terms of racism, for example, although the government carried out important reforms, it did not revolutionize race relations on the island. Continuing institutional realities in the media, in housing, and in the correctional system have perpetuated institutional racism. Cuba is one of the top countries in terms of the number of common prisoners (as opposed to political prisoners) per capita. You can find the data in my book: it ranks fifth1—the United States, of course, being number one. Black Cubans are very disproportionately represented among the population of common prisoners on the island.

 
These phenomena are manifestations of the continuation of institutional racism. Some aspects of Cuba’s institutional racism were changed after the revolution, but the rest was left untouched. Since 1962, and until very recently, the Cuban government maintained that the problem of racism in the island had been solved, and therefore the issue was seldom discussed. This racial silence has a long history, the roots of which I believe are to be found in the 1912 race war in Cuba, which was in fact not a war but a massacre of Black people. The lack of a systematic program of affirmative action, of an authentic multiculturalism, and most of all, the absence of independent political organization of Black people (as in the case of women and workers) have allowed institutional racism to continue on the island.

 
Similarly, with respect to gays: it is not true that homophobia is simply a leftover of the past. As a matter of fact, a few years after the revolutionary victory, homophobia in Cuba was taken out of the closet of civil society, where it had existed for centuries, and was politicized in order not to liberate but to persecute gays. It became an important element of the creation of a militarized, monolithic culture in Cuba. That was the whole point of it. It is simply false, notwithstanding Fidel Castro’s claims, that his responsibility for the rise of homophobia during the Revolution was limited to his lack of attention to the issue because of the urgency of other, more pressing matters. That is an absolute falsehood: he personally agitated against gays. In his speech on March 13, 1963, on the sixth anniversary of the failed attack on the Presidential Palace, he stated that young gay people had to be prevented from being gay. The old ones, there was nothing you could do about them, he said, but the young ones should be prevented from becoming like them. In that speech he also noted that the countryside did not “produce” gays. Homosexuality was a question of urban degeneracy and decay. He didn’t use those exact terms, but the clear implication was that the decayed, degenerate city produces homosexuality. These ideas were contained in various speeches; the one he delivered on March 13, 1963 was the most important on this matter. So it is simply not the case that he was merely negligent, as he has recently claimed.

 
It is undeniable that since the nineties, CENESEX (National Center for Sex Education), led by Mariela Castro Espín (a daughter of Raúl Castro), has done good work in this area. But that good work does not solve the problem of the need for gays (as well as women, workers, and Black people) to be able to organize independently of the state to defend their interests. That is the central issue, and not their mobilizing and even protesting when the government says that they can do so. Even though CENESEX has a much more liberal line than the rest of the government, it nonetheless depends on the government’s say-so over what it can do, so in the last analysis and the not-so-last analysis, it is controlled by the government.

 
Cuban women continue to have the double burden of laboring at the workplace as well as at home. In addition, they are at the center of a very serious issue that is being talked about in Cuba today: domestic violence against women. Women are not allowed to organize independently to deal with that issue. And that is the crucial issue here: the necessary development of independent organizations that will, if necessary, confront the government and its so-called mass organizations.

 
What is the way forward? It would be presumptuous of me, comfortably living in New York, to preach a program to people in Cuba. All I can say is that for Cuba to go forward, number one, its prospects depend on the total and unconditional rejection of the criminal blockade of the United States. That is a must. There is in addition, the nascent left wing. This developing left should be encouraged and supported, for example by collaborating with havanatimes.com, although unfortunately most people don’t have access to the Internet in Cuba.

 
I have no illusions that this developing left in Cuba can be a contender for power when a transition comes after Raúl Castro’s demise. But I think that this left can be essential to the development of a progressive opposition to whatever comes about in Cuba: an opposition that unites workers, blacks, women, gays, and others rather than pitting them against each other; that unites the workers, especially those in the winning sectors of the economy, such as tourism, with the workers in the losing sectors, such as “uncompetitive” manufacturing and most of the agricultural sector. In that context, a developing left can play a very important role. But most important of all is that Cubans decide what happens to them, not the people here, and especially not the government here.

 
1 On Christmas Eve of 2011, the Cuban government pardoned close to three thousand common prisoners, approximately 5 percent of the total number of common prisoners. This may marginally affect Cuba’s world ranking, discussed above. “Nota Oficial,” Diario Granma, Havana, Cuba, December 24, 2011. Vol. 15, no. 358.  Available at http://www.granma.co.cu/2011/12/24/nacional/artic09.html.
http://www.isreview.org/issues/82/feat-cubasfuture.shtml

Islamist parties have gained newfound political power across the Arab world. Four parties in particular—Tunisia’s Ennahda, Egypt’s Freedom and Justice Party, Morocco’s Justice and Development Party, and Jordan’s Islamic Action Front—have either made a strong showing at the ballot box or are expected to in upcoming elections. Their successes have dredged up fears about their political and social ambitions, with worries ranging from the enforcement of sharia law to the implications for Western tourists on these countries’ beaches. Meanwhile, the parties’ economic platforms have largely been overlooked, despite the serious challenges that lie ahead for the economies of the Arab world.

Economic realities in Tunisia, Morocco, Egypt, and Jordan alike are quite difficult. These countries face high rates of poverty and unemployment, declining productivity and competitiveness, low levels of integration with the global economy, acute disparities between classes and regions, corruption, high domestic and foreign debt, and more. All of these challenges require radical changes in the existing order and far-sighted planning. The question, then, is whether the newly empowered Islamists can deliver the economic results their publics need.

Each of these four parties has offered policies to overcome the key economic challenges facing their countries. The proposals, while ambitious, are far from revolutionary, and their programs vary in their level of detail and sophistication—Ennahda, for instance, is by far the most thorough, while Jordan’s Islamic Action Front is still struggling to develop detailed stances. The parties are generally quite pragmatic, asserting that the basic economic system will remain the same but seeking to dramatically improve the management of economic affairs.

A number of key points can be discerned from the economic agendas of these four parties. They do not call for the nationalization of industries or the renationalization of privatized state-owned enterprises and demonstrate respect for private property rights. All of the parties welcome partnerships with the private sector to implement their proposed projects, particularly when it comes to public utilities and infrastructure. They consistently agree on the need to combat corruption, strengthen the foundations of good governance, eliminate financial and economic waste, and enact socially just policies. And all demonstrate a commitment to international economic agreements, with Morocco and Tunisia in particular focusing on relations with Europe.

The Islamists vow to support local enterprises, especially small- and medium-size businesses, but their policies regarding large enterprises are ambiguous. The parties suggest restructuring public expenditures, particularly subsidies, so that aid can reach targeted groups while reducing the pressure on the budget, and party platforms propose enacting an alternative tax policy based mainly on the progressive income tax and eliminating tax concessions granted to certain sectors of the economy. Islamic financing is offered as one possible means to secure funding for development initiatives, though the Islamist parties say it should exist alongside the traditional financial system. They have taken a pragmatic approach to tourism as well, with party leaders providing strong assurances that business will continue as usual.

Some gray policy zones still exist, in three areas in particular: the role of the state in the economy, which proposals will be prioritized given limited time and resources, and the timetable according to which the parties will deliver promised economic results to the public. And overall, Ennahda, the Freedom and Justice Party, the Justice and Development Party, and the Islamic Action Front all fall short of presenting comprehensive and integrated programs that can realistically transform these states’ economies. Lacking experience, clear priorities, and ways to build and finance ambitious growth plans, all four will face serious challenges in translating their generally reasonable and well-intentioned economic agendas into results.

Introduction
Islamist parties have been winning a plurality or majority of votes in Arab countries that held elections since the beginning of the uprisings and they will play a decisive role in shaping the political and economic systems of these countries. Much of the debate concerning these parties has focused so far on their political goals, but a discussion of their economic platforms is equally important.

Three Islamist parties—Ennahda in Tunisia, the Muslim Brotherhood’s Freedom and Justice Party (FJP) in Egypt, and the Justice and Development Party (PJD) in Morocco—have won strong pluralities in their nations’ parliaments. Ennahda and the PJD have formed coalition governments with other non-Islamist parties; the Muslim Brothers in Egypt have firm control of parliament and are laying the groundwork for a future government. The Islamic Action Front in Jordan may also participate in upcoming elections, depending on the election law that will be used, and hopes to claim a share of power if it participates. All these parties have articulated economic platforms addressing five areas:

■the role of the state and its relationship with the private sector
■the responsibility of the state to combat poverty and unemployment
■rule of law and corruption
■fiscal policy
■relations with international institutions and their bearing on international trade relationships
least, Islamist parties’ ideas seem to be in line with international mainstream thinking. The Islamists are not proposing a radical change in policy in any of these areas but are simply wagering that they will be able to manage the economy more effectively than previous regimes by pursuing policies of good governance, combating corruption, and putting social justice at the heart of the process of economic development. These parties, all in some way linked to the Muslim Brotherhood, realize that the most salient challenge confronting them is delivering on economic growth, jobs, and social justice. After all, socioeconomic difficulties have been central to the social tension and popular anger that erupted around the Arab world. The toppling of regimes and the rise of Islamists to power has burdened these parties with high economic expectations. Success or failure in achieving the ambitious goals laid out in the Islamists’ economic platforms will have serious implications for their future popularity.

The Islamists are wagering that they will be able to manage the economy more effectively than previous regimes by pursing policies of good governance, combating corruption, and putting social justice at the heart of the process of economic development.
In the past, these parties depended on their ideological appeal and on charitable social service networks in the areas of health, education, and social welfare. The quality of public services offered by their governments was poor, so by providing these services, the Islamists bolstered their image in comparison to that of the state. As the main players in new governments, however, their popularity will be at least partly linked to the success or failure of their governments to deliver on economic growth and public services.

The Conceptual Framework
The economic platforms of Islamist parties in Tunisia, Egypt, Morocco, and Jordan differ from each other in the details but are all based on a common conceptual framework. Although there are no officially accredited references of economic philosophy among the Muslim Brotherhood, there are nevertheless several books by Brotherhood leaders or those close to them that cover economic matters. These writings describe the general guidelines governing economic thought in the Brotherhood, particularly at the broad, philosophical level. In that way, they define the Islamist position among the major schools of economic thought, especially socialism and capitalism, and illuminate the fundamental characteristics of Islamic economics.

Foremost among these writings are some of the letters of the founder of the Muslim Brotherhood, Imam Hasan al-Banna. He intimated the organization’s economic principles in a number of points, which include approving licit earnings and describing them as “the foundation of life itself”; declaring the inviolability of private property; affirming the need to narrow the gap between social classes; supporting a social safety net for all citizens; making the state responsible for achieving “social balance”; forbidding the exploitation of political influence to further private economic interests; and proscribing illicit sources of revenue. Al-Banna does not go into the details of economic policy but indicates that the above principles should guide Islamic economic thinking.1

Among the books that elaborated on al-Banna’s first principles are Islam and the Modern Economy and Islam and the Socialist Schools of Thought, both published in 1947 by Muhammad al-Ghazzali al-Saqa, an Islamic scholar and Brotherhood leader2; Social Justice in Islam (1949) and The Battle Between Islam and Capitalism (1951) by Sayyid Qutb, a prominent and later radical Egyptian Brotherhood thinker who wrote these works before he joined the movement; and Islamic Socialism, by Mustafa al-Siba’i, the first general leader of the Muslim Brotherhood in Syria.

A set of common threads ties these writings together. All give prominence to moral-ethical considerations, holding the economy to be part of a larger Islamic order with a reciprocal relationship between this life and the next, between religious duties and texts on the one hand and various economic concepts on the other. Also prominent is the centrist position between capitalism and socialism that Islam occupies. This is especially true regarding the balance between the rights of individuals and the public interest. Islamic economic thought does not sacrifice the individual for the sake of the public, nor does it go to the opposite extreme of rigid individualism. Nearly all of the rules and propositions of Islamic economics fall between these two extremes.

Thus Islam recognizes that individuals differ in their ability and dedication to work and rejects the idea that society should be homogenized into a single class. At the same time, Islamists view very large inequalities between classes as unacceptable. Similarly, Islam sanctions private property but imposes upon it certain limitations and conditions, emphasizing that it must be acquired and disposed of in a legitimate manner. And Islam awards the state the right to assume ownership of private property when there is an overriding need to achieve a necessary public good or create a more socially equitable system.

Although Islamists avoid explicitly invoking particular texts as direct sources of their economic policies, the works and concepts mentioned here are heavily debated in internal party circles. Thus they provide a general theoretical-ideological framework that can be used to understand the “economic philosophy” of Islamists broadly. This framework in turn influences the platforms of parties such as Ennahda, the Freedom and Justice Party, the Justice and Development Party, and the Islamic Action Front.

The Ennahda Party in Tunisia
Economic performance in Tunisia after almost eighteen months of revolution has been grim, with economic growth contracting by approximately 1.5 percent in 2011. The main sector adversely affected has been the tourism industry, the largest source of foreign income for Tunisia and one of the country’s largest sources of employment. Moreover, the Tunisian economy has felt the negative repercussions of revolution in Libya, Tunisia’s neighbor to the southeast, and of poor economic conditions in Europe, on which 80 percent of Tunisian trade depends. This bleak outlook has led some international credit rating agencies, such as Standard & Poor’s, to downgrade Tunisia’s debt, which will make it difficult for the country to access the international credit market. All this has resulted in an increase in the level of unemployment, which reached nearly 14 percent in 2011, and an increase in the budget deficit to 6 percent of gross domestic product (GDP).

In describing his party’s economic vision, Ennahda’s leader Rached Ghannouchi said in an interview: “I believe that we must adopt the form of social democracy practiced in Sweden and the other Scandinavian states. Economics must be dominated by social values, and not simply the aggressive forces of the free market.” He continued that the most prominent challenges of development lie in creating job opportunities and providing direct aid from the state to those in need. Ghannouchi also stressed that the state must eradicate the corruption—financial, judicial, administrative, or media related—that is responsible “for draining half of Tunisia’s wealth.” He highlighted the central role of Ennahda’s efforts to “stimulat[e] both foreign and domestic investment, as well as encourag[e] full-fledged Islamic banks to enter the Tunisian market for the first time.”3

Ennahda’s guiding party document advocates the abolition of disparities stemming from exploitation, hoarding, monopoly, and other illegitimate practices.
Ennahda’s guiding party document, the Basic Law, asserts that labor is the origin of earning and the basis of economic revival. According to the document, work is both a right and an obligation, and the movement’s aspiration is to build an economic life based upon humane foundations and a just distribution of the country’s wealth. This belief is in accordance with their espoused principle: “To every man what he has earned; to every man what he needs.” This may be interpreted to mean that every person is entitled to the fruits of his own labor, but that he is also entitled to have his basic needs met under all conditions. The document also advocates the abolition of disparities stemming from exploitation, hoarding, monopoly, and other illegitimate practices.4

Furthermore, the Basic Law states that the party’s overarching goal is to build a national economy resting solidly upon Tunisia’s national capabilities. It aims to work to satisfy basic needs and establish a balance between the country’s different geographic regions as well as to seek better integration with the rest of North Africa and the wider Arab and Islamic worlds.

Proposed Policies
In preparation for the 2011 elections, Ennahda was forced to move beyond the political demands for civil freedoms and human rights it articulated before the uprising and draft a more policy-oriented platform of which economic issues were an important part. After the elections, in which the party gained almost 40 percent of the seats in the Constituent Assembly (the body in charge of drafting a new Tunisian constitution), thus becoming the most important party in the ruling coalition, Ennahda had to further refine its economic thinking, particularly prior to its April 2012 presentation to parliament of a supplemental budget.

Ennahda’s electoral platform, which covers the 2012–2016 period, is quite ambitious. It envisages achieving 7 percent annual growth in GDP throughout that period, raising yearly per capita incomes from $4,189 to around $6,649 by 2016. This growth would be accompanied by a decline in the unemployment rate from the 14 percent in 2010 to around 8 percent by 2016.

Commitment to rapid growth led Ennahda to take a very pragmatic position regarding tourism, rejecting the notion that some tourism practices should be banned because they contradict sharia.
Commitment to rapid growth led Ennahda to take a very pragmatic position regarding tourism, rejecting the notion that some tourism practices should be banned because they contradict sharia. Party officials signaled they would protect the country’s crucial tourism sector and would permit alcoholic drinks and bathing on Tunisian beaches, which draw millions of European holidaymakers every year. The party’s secretary-general, Hamadi Jbeli, says tourism is too strategic a sector to be restricted: “The tourism sector is among the achievements which we cannot touch. Is it logical to handicap a strategic sector like tourism by forbidding wine or wearing bathing costumes? These are personal liberties for Tunisians and foreigners as well.”5

Many of the specific policies mentioned in the party’s platforms as means to achieve its ambitious goals show the influence of the general principles that guide the Islamists’ economic thinking.

■Fiscal, Tax, and Investment Policy: The party’s platform pledges to reduce the tax burden on medium- and low-income groups. It also reexamines the financial incentive structure, including taxes and interest rates, with the party seeking to link these incentives to broader social and economic goals and to adapt the existing financial system to the needs of Islamic finance and microcredit.

But Ennahda is not just concerned with social justice. It also aims at transforming Tunisia into a financial hub in the region and thus supports the independence of the central bank and the improvement of its performance. The goal is for the central bank to assume an effective role in developing the banking sector.

Ennahda’s platform promises to put in place laws and regulations to create a friendly climate for investment, and it promotes measures that will embolden the capital markets and modernize the products of the insurance market, with a particular emphasis on Islamic insurance. Ennahda also pledges to foster private-public partnerships and facilitate the participation of foreign investors along with domestic private entrepreneurs in the economy. In addition, the party will extend the period newly established businesses have before they must start paying taxes.
 
■Unemployment and Poverty: Issues relating to unemployment and poverty are some of the most important challenges facing Tunisia, and Ennahda’s platform details several initiatives related to the subject. For example, Ennahda promises to provide unemployed Tunisians who are actively seeking jobs with free medical insurance and a 50 percent discount on public transportation.

The main aim is to reduce the unemployment rate to 8 percent by 2016 by generating around 60,000 jobs. Ennahda pledges to provide job training to help the large number of jobless university graduates find work, especially in public administration. It will work to diversify incentives for the private sector to provide more job opportunities, to university graduates in particular.
 
■Governance: Ennahda’s platform pledges to combat corruption and wasteful consumption and to minimize bureaucratic red tape. The party proposes the establishment of a high commission for combating corruption and the adoption of disclosure policies for senior officials’ assets. The concern with corruption will serve Ennahda well with its electorate, since transparency and accountability are very popular issues that appeal to the public at large.
 
■Trade and Integration: In the realm of regional cooperation, the party seeks to revive the North African Union and calculates that closer partnership and integration with other North African countries might boost Tunisia’s GDP by 2 percent.6 The platform also focuses on achieving advanced partner status with the European Union.
Party platforms tend to be broad and superficial by definition, but additional indications of Ennahda’s policies come from its supplemental budget submission to the Constituent Assembly. By April, Ennahda had been in power for three months, and the new government called for an increase in the budget of 2.5 billion dinars ($1 billion) over the draft budget adopted earlier and endorsed by the Constituent Assembly. In the new proposal, the government admits that it only expects 3.5 percent growth in GDP for 2012, because the economy has remained shaky after the upheaval of 2011.

However, it has not dropped a more ambitious growth rate for the following years, assuming the country will have stabilized by then. Increases in spending will be allocated to both longer-term development projects requiring an increase in investment and what the authors of the supplementary budget call the “Keynesian” project—quickly disbursing expenditures on infrastructure and housing for poor and lower-middle-income families to create jobs in the short run. The newly adopted budget expects foreign grants from both the European Union and Arab countries.7

Gaps in the Party Platform
Ennahda’s economic program suffers from two major problems: It does not clearly define the limits of the state’s economic role, and it does not specify how the money is to be raised to finance its ambitious programs. Despite emphasizing respect for private property, Ennahda’s program relies heavily on the state’s role in generating investment and employment. The slogan of social justice creates wide room for intervention in economic matters. As for investment, Ennahda has an ambitious plan stretching to 2016, but it is unclear how the necessary funds will be raised to support the initiatives. The platform proposes raising money cheaply from international markets, but Tunisia’s credit rating stands at the lower-medium grade of Baa3,8 which suggests that the cost of borrowing will be fairly high.

The slogan of social justice creates wide room for government intervention in economic matters.
Ennahda’s approach is not revolutionary, but it is ambitious nevertheless. Furthermore, Ennahda is in an alliance with other parties that have different visions for the economy, and that will slow down implementation and possibly decrease the coherence of policies. The ambition of its proposals will leave the party open to easy comparisons between its campaign pledges and actual achievements, and in conditions of lingering economic recession, it will be nearly impossible to achieve the party’s desired levels of growth. As a result, Ennahda is bound to struggle economically in the years to come. Subpar economic performance will haunt the party and will certainly be a key factor in Ennahda’s evolving relationship with its electoral base.

The Freedom and Justice Party in Egypt
The Egyptian economy’s performance over the past year has been sluggish. Investors have not been convinced to resume business, even after legislative elections were held. The state’s deficit for the fiscal year that ends in June 2012 is expected to exceed 140 billion Egyptian pounds ($23 billion), about 8.7 percent of GDP. Meanwhile, Egypt’s foreign reserves have been shrinking by roughly $2 billion every month, precipitated by a sharp decline in tourism and foreign direct investment since the revolution began. In 2011, the government used more than $20 billion to prop up the local currency, and in February 2012, foreign reserves stood at $15.7 billion, enough for just three months of imports. The prospect looms of currency devaluation and subsequent inflation that could destabilize the already-vulnerable economy.

Proposed Policies
The Muslim Brotherhood’s FJP sees Egypt’s main economic problems as stemming from high rates of poverty and unemployment, a gaping budget deficit and large public debt, the widening gap between rich and poor, the increase in prices of basic goods, and the absence of social justice. Its platform distills all of these problems into a description of the economy as “suffering from distorted and undisciplined markets, as well as the rule of monopolies and monopolist profiteering.”9

To address these problems, the party proposes a number of policies that aims at stabilizing the Egyptian economy and regaining the momentum of growth. The main pillar of the FJP platform is premised on achieving more equitable growth with the minimum level of corruption and a sound governance system.

The FJP seeks to improve the business environment to encourage both local and foreign investment, including by reexamining old privatization policies so that successful public-owned enterprises can still flourish after they are privatized.
To ensure that the lucrative tourism sector contributes to that growth, the FJP has repeatedly issued assurances that it will not impose unreasonable restrictions on foreign tourists.10 For instance, Ahmed Suleiman, the head of the party’s tourism committee, said in January 2012 that tourists would be free to wear, drink, and eat what they want in Egypt. Other proposed policies are similarly mainstream.

■Fiscal, Tax, and Investment Policy: The FJP’s platform envisions reforming the financial sector by restructuring the tax system away from a reliance on sales and value-added taxes in favor of a progressive income tax. The party has also pledged to tackle financial difficulties by proposing policies aimed at reducing the budget deficit. Foremost among them is the reexamination of the policy of subsidizing basic goods like bread and fuel. The FJP aims to provide subsidies only to those in need and to minimize waste in government spending, pledging, for instance, to extend financial support and subsidized credit to small enterprises, institute zakat (Islamic tithe) payments and Islamic religious endowments, and move forward with a new law to extend the eligibility for social insurance.

The FJP welcomes foreign investment in areas that create jobs and help in technology transfer, yet they are against the kind of foreign investment that was flowing into the country during the Mubarak era. The old privatization process, according to the FJP, hindered new, much-needed investment in the economy because after the private sector acquired assets from the public sector, investment dried up and these enterprises struggled. This mismanaged process, the Muslim Brothers argue, diverted funds that could have been channeled into other productive sectors,11 and the economy was deprived of a potential stimulus to development. The FJP seeks to improve the business environment to encourage both local and foreign investment, including by reexamining these old privatization policies so that successful public-owned enterprises can still flourish after they are privatized.

The FJP hopes that its new measures will drive the national level of investment (from both foreign and domestic sources) to 30 percent of GDP.12 The party does not directly address the subject of Islamic banking—another method of financing—which is the FJP’s way of accepting the current setup in which the traditional and Islamic systems coexist.13
■Unemployment and Poverty: The party seeks to reduce income disparities by fixing minimum and maximum wages in the public sector and to alter the current wage structure so that employees’ salaries are tied to performance instead of parameters such as level of education or years of experience at a workplace. Its platform also advocates improving health care, education, and other public services, and increasing public spending on vocational training programs that would essentially redesign the education system to suit the needs of the labor market. Though the party pledges to “restructure” public expenditures with the intent of gradually decreasing them, that proposal is likely to remain merely a slogan.

Regarding poverty, the FJP seems to adhere to Egypt’s current set of policies that directs subsidies to poor individuals or communities. There is less emphasis on how the economic agenda adopted by the party would empower poor communities and prepare them to benefit from expected growth by improving the level of education and building workers’ skills.
 
■Governance: Combating corruption continues to be a central theme of the Brotherhood’s agenda. It seeks to curb illicit activity through a democratic regime in which the separation of powers, a strong and independent judiciary, and the free dissemination of information are core principles. The FJP also stresses the moral dimension of anticorruption efforts and emphasizes the importance of good governance and strengthening public supervisory bodies, such as the role of the state’s comptroller general, of the offices of financial and administrative oversight, and of public ombudsmen.14 The party rejects the so-called Selmy Document that would have kept the army’s budget immune from oversight, although this position was not stated clearly in the party’s official documents.15
■Trade and Integration: The FJP has not articulated a clear set of policies regarding trade and integration with the rest of the world. However, the party’s platform has affirmed its commitments to all international agreements that the previous government signed, including those related to trade and investment. The party sees no harm in having good relations with international institutions such as the World Bank, the International Monetary Fund, and the World Trade Organization so long as such engagement with these institutions corresponds to the needs of the Egyptian people. As for the relationship with the IMF in particular, party leaders have declared more than once that they are willing to deal with this institution in order to stabilize the Egyptian economy.
Gaps in the FJP’s Platform
The FJP’s plans have at times been compared to Mubarak-era statements. And one would be correct in noting that the official statements released by previous Egyptian governments—development plans, yearly economic plans, interim strategies, and the like—outlined pledges similar to those that appear in the FJP platform. Party leaders protest that the comparisons are unfair and contend that the previous government’s economic performance over a period of several decades amply demonstrates its failures, whereas the Islamists have not yet had the chance to implement their programs. The question is, how will the Brotherhood’s promises be translated into more successful policies, and what mechanisms will be required to do so? The party’s election platforms analyzed here fail to adequately address this issue, instead focusing on general goals whose desirability can hardly be contested.

The FJP platform lacks a clear position on monetary policy, the exchange rate, interest rates, and the role of the banking sector in lending.
Although economic affairs are centrally important to Egyptian leaders, there nevertheless remain several missing links in the FJP vision. Its platform lacks a clear position on monetary policy, the exchange rate, interest rates, and the role of the banking sector in lending. These are principal components of economic policy and some of the main tools at the hands of policymakers, yet these topics require specialized, technical knowledge of the first order, something the Brotherhood’s inner circles do not seem to possess.

The FJP is also ambiguous about how an increase in government expenditures to cover proposed programs can be reconciled with keeping the budget deficit and the public debt within acceptable limits—that is, 3–5 percent of GDP. The deficit is currently 8.7 percent of GDP while the public debt is estimated at around 82 percent of GDP. Proposals for streamlining public outlays do not take into consideration the potential loss of jobs and downsizing of certain public institutions. The public sector’s share of the workforce in Egypt is one of the highest in the world; restructuring it while the economy is fragile would be an exceedingly delicate affair, both politically and socially. Similarly, these types of policies will most likely harm professionals and middle- and low-income earners, the Brotherhood’s traditional bases of support.

The FJP’s platform does not take a clear position on how to deal with international institutions or how to cope with the global economic crisis,16 and it does not clarify the context within which economic growth will be resumed. This applies particularly to the sectors of tourism and foreign investment, considered among the main engines of growth and job creation for the Egyptian economy. It is likely that hesitation on the part of investors will continue until fuller political stability is restored, with FJP rhetoric underlining the state’s right to interfere in many areas under the banner of “social justice” further worrying investors who might be considering putting their money into Egypt.

All of this means that delivering on promises will be extremely difficult for the FJP. Economic performance so far, the response of domestic private investors, and the position taken by various international organizations dealing with Egypt do not lend themselves to the FJP vision. Neither tourism nor FDI have returned to previous levels, and it is not clear when the economy will start to recover. Indeed, so far the Egyptian parliament, dominated by Islamists, has not been able to exercise oversight on government spending and advance its economic plans.

The Justice and Development Party in Morocco
The agenda for the Justice and Development Party’s Sixth Annual Conference issued on January 2011 described Morocco’s economic difficulties. Among them were systemic structural weakness that slows the pace of development, the inequitable distribution of the fruits of growth, a decline in the growth rates of non-agricultural sectors, and the deterioration of political and economic governance, which has led to social, economic, and developmental disorder. In addition, the party cites poverty and a widening income gap between rich and poor on one hand and between the Kingdom’s various regions on the other as sources of Morocco’s current economic distress.

Morocco’s economy remains reliant on agriculture, which accounts for about 15 percent of GDP, and tourism, accounting for about 10 percent.
Morocco’s economy remains reliant on agriculture, which accounts for about 15 percent of GDP, and tourism, accounting for about 10 percent. Both of those sectors have been severely hit recently, with the central bank cutting its own economic growth predictions to less than 3 percent of GDP because of the ongoing crisis in Europe and impending drought in Morocco. This means that most of the PJD’s projections for reducing poverty and unemployment must be revised in light of the new economic realities.

In establishing benchmarks for progress, the PJD expresses considerable interest in the key indicators employed in the World Economic Forum’s Global Competitiveness Reports, the World Bank’s Doing Business Report, and Transparency International’s Corruption Perceptions Index. These indicators reflect a neoliberal approach to economics that views societal outcomes as extraneous to the development process rather than a constituent part of it—something that is reflected in the party’s platform. Indeed, the slogan “good governance” appears more frequently in the PJD’s electoral platforms than in those of any other Islamist party.

Though the party looks to Turkey and Brazil to serve as economic role models, its economic platform defies easy classification. Advocating “freedom” in dealing with the means and modes of production while simultaneously calling for the equitable distribution of wealth, the party also claims to favor “a cooperative-socialist approach in production and distribution.”17 Its proposed policies stem from various sources, including the Islamist conceptual framework examined earlier.

Proposed Policies
Operating in a 2012¬–2016 time frame with long-term projections extending to 2025, the PJD promises to raise Morocco to the 90th position in the world in the Human Development rankings (it is currently 130th). With an estimated 40 percent of the population currently illiterate, the PJD pledges to reduce that rate to 20 percent by the beginning of 2015, with a further reduction to 10 percent by 2020. It also vows to raise the minimum wage from approximately $250 per month to nearly $300 and to put a floor on retirement allowances at a level of $120.

To help foster growth, the party takes a moderate position on tourism, with official statements declaring that the PJD will support a vibrant tourism sector and refrain from banning tourism practices that run counter to Islamic sharia. As businessman Abdellatif Kabbaj, managing director of one of the largest hospitality groups in the Moroccan Kenzi Hotels Group, put it, “Promoting the PJD’s image of moderate Islamism is a key task and a real challenge,” adding that “state and private bodies working in the sector really need to focus on that if they want to keep customers coming to our country.”18

■Fiscal, Tax, and Investment Policy: In order to increase state revenues, the PJD will rely on a tax policy that will encourage economic activity and minimize tax evasion, which is currently depriving public coffers of at least 50 percent of tax revenues. The party seeks to both upgrade tax collection capacities and limit discretionary power given tax personnel while speeding up the pace of tax dispute arbitration. Additionally, the PJD pledges to revisit the value-added tax with the intention of reducing the rates imposed on some basic and primary goods and waving cumbersome procedures related to the tax. And though the PJD pledges to reduce taxes on lower-income groups, it also wants to reduce the tax rate for the top bracket of taxpayers—corporations and organizations—from 30 percent to 25 percent, in effect signaling that, unlike parties in Tunisia or Egypt, it will not shy away from offering support to large corporations.

The party intends to enact a new investment law establishing a clear plan for growth that will take Morocco through the end of 2025. These plans will depend on a financial system that incorporates Islamic financing, since such loans will come at reduced cost according to the party’s expectations. The PJD asserts that this will address Morocco’s poor liquidity and low savings rate. The party hopes to put in place a strategy for attracting foreign investment with an emphasis on cultivating local expertise and transferring technology.
 
■Unemployment and Poverty: The PJD originally pledged to improve the living conditions of Moroccan citizens, particularly the poor, by achieving a 7 percent annual rate of growth through 2015. It also vowed to reduce the poverty rate throughout the country by 2 percent annually through employment and antipoverty programs and to raise the average individual income level by 40 percent within five years.

The PJD is determined to support Moroccan companies in various private sector fields so that they can fulfill their role as engines of growth. The party emphasizes entrepreneurship by promoting economic empowerment through self-employment initiatives, as well as through the provision of funding or making loans more accessible. It calls for reexamining the guarantees and conditions for offering funding to small- and medium-sized enterprises as well as to the youth in an effort to make it easier for them to gain access to loans.

Revenue sources for such schemes include offering direct state funding, providing tax incentives to banks to award loans to start-up contractors, or mobilizing an alternative source of funds by creating joint funding schemes between the private and public sectors. The party has also pledged to support small and midsize domestic contractors to help them bid for and acquire no less than 30 percent of government tenders.
 
■Trade and Integration: In the area of foreign trade, the PJD has pledged to continue existing policies, including opening the economy to the European market and signing a free trade agreement with the United States, while attempting to diversify Moroccan exports. The party encourages investors to take advantage of free trade agreements with other states, seeking to link trade agreements with investment and the labor market, and to put in place indicators to measure progress in both fields.
Gaps in the PJD’s Agenda
The PJD’s economic agenda is complicated by the fact that it must operate within a governing coalition, and the head of the Ministry of Economy and Finance is a former opponent: Nizar Baraka, the son-in-law of Morocco’s previous prime minister. When the coalition government was formed, the expected growth rate fell from the 7 percent anticipated in the PJD’s platform to 5 percent in the government’s platform and recently to 3.5 percent. This will have many important repercussions, including a drop in expected tax revenues.

It is unclear how the PJD will increase public spending and reduce poverty without simultaneously widening the budget deficit and/or increasing the foreign debt burden.
As with many of the Islamist parties, it is unclear how the PJD will increase public spending and reduce poverty without simultaneously widening the budget deficit and/or increasing the foreign debt burden, which is now estimated at around 43 percent of GDP. The party is pinning a lot of hope on its plans to restructure government spending, minimize waste, and reduce corruption, but that will not be sufficient to put the Moroccan economy on a new path.

In early March, the Moroccan parliament approved the 2012 budget, which aims to reduce the budget deficit to less than 5 percent of GDP.19 But according to projections in the new budget, the economy is only expected to grow between 3 and 4 percent (it grew by 4.9 in 2011), reflecting downgrades brought about by bad weather conditions that have negatively impacted the agricultural sector and by the slowdown in the European Union that has affected Moroccan exports to that market. It is unlikely that the PJD will meet expectations that were based on higher growth rates. The PJD will find it difficult to justify discrepancies between what its platform promised and actual outcomes.

Moreover, the party platform does not specify the mechanisms for funding either new initiatives to create jobs for unemployed youth or small- and medium-sized enterprises. This raises questions regarding the limits of the public sector and to what extent it can be expanded.

Adhering to indicators such as the Global Competitiveness Reports, the PJD appears to have more of a private sector mentality than Ennahda in Tunisia or the FJP in Egypt. The party has embodied this position through the tax policies it has adopted and through its commitment to making large Moroccan corporations key drivers of growth and development. Perhaps the greatest challenge that the PJD will confront is how to reconcile the desire to advance the Moroccan economy’s competitiveness and improve Morocco’s standing in international rankings with its calls for social justice that so resonate with its electoral base. Moreover, how the private sector is going to respond to these seemingly contradictory policies remains to be seen.

In the face of adverse weather conditions and a struggling tourism sector, the party will clearly have to revisit its ambitious plans and confront the hard economic realities that will surely upset its electoral bases.

The Islamic Action Front in Jordan
The Jordanian economy has been slowing down over the last two years. GDP growth, which was estimated to be around 3.5 percent in 2011, is not adequate to create jobs and improve the living conditions for many Jordanians. The budget deficit is 10 percent of GDP, and the public debt is estimated to be 63 percent of GDP. Unemployment remains at 14 percent (20 percent among youth), and the poverty rate is estimated to be about 13 percent. The country lacks a clear economic vision, with many protesters taking to the streets of Jordan to demand improvements in living and working conditions.

Generally speaking, the Islamic Action Front’s program is the least detailed of all the Islamist parties in this study, and it hardly addresses the above challenges facing the Jordanian economy. With roots in Muslim Brotherhood economic theory, the Islamic Action Front tries to strike a balance between individual interests and the public good; between private property and the role of the state; and between economic liberty and social justice. But its platform has not evolved much over the last twenty years, as evidenced by its election platforms of 1993, 2003, and 2007 as well as its 2005 “Islamic Movement’s Vision for Reform in Jordan” initiative. The platforms are almost exact duplicates, though the 2007 version omits a provision that calls for bringing economic and financial legislation in line with Islamic law. In effect, the party has signaled its general acceptance of the existing legal and legislative framework.

The IAF has never drafted comprehensive economic programs because its leaders never expected to reach power.
According to one of the movement’s leaders, the IAF has never drafted comprehensive economic programs because its leaders never expected to reach power. He acknowledged that the IAF did not have a real economic platform prior to the Arab Spring.20 In response to those popular upheavals, relevant IAF committees have been busy drafting comprehensive economic programs that outline the party’s stances on key issues such as foreign trade, regional cooperation, and fiscal and tax policy, as well as its strategies for tackling the disparities between Jordan’s regions. Through recent statements and press releases, the party’s positions on a number of issues can be discerned.

Policy Positions
■Fiscal, Tax, and Investment Policy: The IAF proposes to overhaul the Jordanian tax system, arguing that the current tax code overburdens regular citizens with fees and taxes while offering extensive tax exemptions and loopholes for large corporations, such as those in the banking and telecommunications sectors.21 The party is betting on its ability to restructure the tax system, implementing one based on the progressive income tax, as well as public expenditures. It also pledges to open debate on “secret items” in the budget, including items that were not disclosed to the public or even to the parliament, such as military spending and the expenses of the Royal Court.

The party’s economic discourse does not reject privatization in principle, nor is it opposed to free markets; however, it criticizes the process by which privatization of some state-owned enterprises was executed in the past. The party demands that the economy be regulated in a way that takes social concerns into consideration when economic liberalization measures are introduced. Moreover, the party emphasizes the desirability of local investment over foreign investment, calling for investors to become “national champions” of large national enterprises to drive economic growth.

The IAF also argues that current subsidy policies involve distortions and must be reformed. Its argument is premised on the fact that subsidies do not reach their targeted groups. However, the IAF does not suggest a detailed plan on how subsidies can be restructured and what tools and institutions can be utilized to introduce their proposed policies.
 
■Governance: According to the IAF, economic challenges, their causes, and appropriate remedies are tied to the political system that governs Jordan, which suffers from weak governance and institutions. The party [IAF] argues that the economy cannot be fixed under the rule of an autocratic regime, and that democracy is the key to turning the country around.

The issue of corruption in particular has elicited the most attention. A special section of the IAF’s website entitled “Corruption-Related Complaints” is devoted to the subject, and the party has established an internal anticorruption committee. All of the IAF’s economic statements or press releases in the last three years mention the issue of corruption as a central obstacle to sustainable and equitable growth.22
■Trade and Integration: The Jordanian Brotherhood also considers economic liberalization with Israel to have been detrimental to the Jordanian economy. The IAF did, and still does, reject the 1994 peace treaty Jordan signed with Israel as well as its annexes, including the economic protocols aimed at expanding trade relations between the countries. It is not hard for the IAF to make this case; the Jordanian economy has performed poorly since Jordan signed the treaty, and Jordan has seen few real economic benefits from the free enterprise zones set up between the two countries. But exactly how the party will deal with Jordan’s official treaty obligations should it come to power remains unclear.
Gaps in the IAF’s Agenda
Rather than presenting a comprehensive, detailed vision concerning its economic policy, the IAF has focused on broad economic goals and general principles. Its economic discourse typically occupies a limited portion of the party’s public rhetoric and falls short of adequately responding to the complex economic concerns preoccupying the Jordanian public.

The IAF argues that the economy cannot be fixed under the rule of an autocratic regime, and that democracy is the key to turning the country around.
While the IAF correctly identifies the Jordanian economy’s many challenges, it does not offer a well-thought-through strategy to extricate the country from its economic crises and to achieve the goals articulated in the party’s election statements: Rejecting increases in the price of goods, the party does not identify alternative methods for turning the Jordanian economy around or reducing the country’s high level of imports and thus sheltering the Jordanian economy from changes in prices on the international market. It demands that the state reduce budget deficits and national debt but rejects additional taxation to solve those problems. It criticizes the government’s subsidy policies but has not proposed another approach, contrary to other Islamist parties, such as those in Egypt and Morocco, which have articulated clear and detailed positions regarding the issue of subsidies. And the IAF has criticized Jordan’s privatization policies without offering new suggestions for increasing the efficiency of the public sector. The FJP in Egypt, for instance, has harshly criticized certain divestments of state-owned assets but has proposed specific alternative methods of privatization, by, for example, increasing the number of people who can purchase small shares in the privatized entities.

The IAF is certainly aware of the need to develop its economic agenda further, particularly as it prepares to participate in Jordan’s parliamentary elections, which are anticipated before the end of 2012. In order to run a convincing campaign it has to persuade Jordanian voters that it has realistic solutions to the country’s wide range of problems. It is likely that the IAF will learn from the expertise of the other parties discussed here as it moves forward in the election process.

Islamist Economic Discourse and the Way Forward
Economic discourse among these Islamist movements has progressed in the last few years, both due to rising popular socioeconomic demands that were simmering even before the Arab Spring and to the liberated political space that has opened up in the wake of authoritarian regimes. In the immediate past, just before elections were held in Tunisia, Egypt, and Morocco, economic concerns did not receive much attention. Recently, the parties have refined their platforms to highlight economic issues and have attempted to position themselves closer to the concerns raised by the Arab street. Economic issues have even come to regularly overshadow political concerns.

Ennahda, the Freedom and Justice Party, the Justice and Development Party, and the Islamic Action Front all use the economy as a campaign tool, eager to show their leadership in this critical area. Statements mention the need for improving economic performance, achieving social justice, combating poverty, reducing unemployment and corruption, strengthening the rule of law, and dealing with disparities between different classes and regions, all within an Islamic context that calls for balancing public and individual interests. The parties concur on the general approach to economic policy, and this doubtless stems from their shared theoretical and conceptual framework of Islamist economics.

However, there are differences in the level of detail and expertise they exhibit. Ennahda’s program is quite advanced, and the party mainly just needs to move toward a prioritized and elaborated implementation plan. The remainder of the parties are less sophisticated. The PJD, for instance, wants to improve Morocco’s competiveness yet has not laid out a meaningful road map for doing so. The Egyptian FJP is contemplating tax restructuring, but it needs technical assistance in this field; in Jordan the IAF is still in the early stages of formulating its economic vision.

All the parties fall short of presenting comprehensive, integrated, and prioritized programs that would realistically confront their economic challenges and transform their economies.
Each is confronting difficult economic realities. Common challenges include high rates of poverty and unemployment, declining productivity and competitiveness, low levels of integration with the global economy, acute disparities between classes and regions, corruption, high domestic and foreign debt, and more. All the parties fall short of presenting comprehensive, integrated, and prioritized programs that would realistically confront these [their economic] challenges and transform their economies.

It remains unclear, for example, how funding will be secured for many of the proposed programs. The parties assume that it will be possible to secure funding for various initiatives at a reduced cost, whether through interest-free Islamic loans or through the traditional financial system. But in reality, the credit market is currently very weak; interest rates in Egypt exceed 10 percent while the interest rate on Jordanian treasury bonds is about 6 percent. The situation is similar in Morocco and Tunisia. Some additional funds could be found if corrupt practices are curbed and public spending is reformed, yet these sources will not adequately fund all the ambitious programs proposed, and certainly not within the three- to four-year timetables put forward by most of these parties.

Similarly, the assumption that the public sector’s institutions are ready to internalize and implement the anticipated reforms will surely clash with a recalcitrant reality. Among the likely obstacles are rigid and antiquated laws and regulations that will not be easy to change overnight, and building public sector capacity to oversee these new programs will take a great deal of restructuring and retraining. Other difficulties include the complexity of likely ruling government coalitions and the narrow time frames that the parties have set themselves for achieving results to satisfy their electoral bases.

Many in the Muslim Brotherhood point to the Justice and Development party (AKP) in Turkey as an example of an Islamist party that has had success with its economic policies. But are the economic platforms of the Arab Muslim Brotherhood parties comparable to those of the AKP?

Arab countries can draw useful and practical lessons from the Turkish experience.
The AKP has indeed achieved exceptional economic successes over the last decade, and Arab countries can draw useful and practical lessons from the Turkish experience.23 From the beginning, the AKP drew clear lines between its overall political platform on the one hand and the economic crisis and ways to tackle it on the other. It balanced a vigorous policy of privatizing state-owned assets, developing relationships with international institutions, and attracting investment with a serious program to combat corruption. Each of these measures—whether related to taxes, the budget, or spending and investment—constituted an essential tool in pulling Turkey out of its economic crisis.24

The AKP’s allies included dynamic and successful business entrepreneurs who believed in economic liberalism and free markets and had effective institutions built on these principles. They tied the AKP’s adoption of certain economic programs to their support for the party, which provided the AKP with important leverage to influence and engage with stakeholders especially the business community. This has not been the case in Egypt, Jordan, or Tunisia. Morocco might be the closest to the Turkish model with its proposal to establish a tax system that would openly support large businesses and create linkages with the rest of the economy.

Yet, one has to be careful when drawing comparisons between the AKP’s experience and that of the Arab countries, particularly when observers attribute Turkish economic success to the policy adopted by the AKP during the last ten years. Turkey’s traditional and industrial modernization program dates back several decades to a time when Ankara’s hopes to join the European Union were high. Expectations that, for example, Egypt could achieve the same impressive economic growth are flawed.

And in general, the Islamist parties’ inclinations toward large corporations and the role that will be entrusted to them in the near future remain ambiguous. Their social bases consist mostly of educated professionals such as engineers, doctors, and lawyers and of middle- to low-income earners. Big enterprises such as banks and communications companies are not traditional supporters of these parties. It is not clear how investors would respond if the Islamists in power decided to favor certain groups at the expense of others, and what impact that might have on economic activity. None of these parties articulates how political coalitions will be forged with businessmen, the middle class, or even opposition unions representing wide swaths of workers. Instead, they adopt general slogans of social justice and anticorruption.

Policy Conclusions
The general character of the platforms proposed by Islamist parties and the large number of disparate goals that they aim to achieve makes it difficult to judge these parties’ efficacy before they are practically tested. What is clear is that all of the challenges confronting these countries require radical changes in the existing order and far-sighted planning.

The challenges confronting these countries require radical changes in the existing order and far-sighted planning.
Tunisia’s Ennahda, Egypt’s Freedom and Justice Party, Morocco’s Justice and Development Party, and Jordan’s Islamic Action Front all appreciate the central role the economy will play in their future success or failure. Yet most of these parties lack experience in administering the affairs of the state. They will thus require assistance in developing the necessary administrative and executive capacities to put into effect the programs that they have promised.

In addition, it is unclear what sort of relationship will develop between the new governments and various economic stakeholders. So far, the Islamist parties have given mixed signals to the private sector, which has in turn been hesitant to invest. These parties must be pushed to distinguish between the duties of the private sector toward its employees, toward the public tax and regulatory framework, and toward civil society as part of corporate social responsibility. Investors fear that new demands will be placed on them and that they will have to shoulder the burden of governmental failure. The parties must thus also draft a clear covenant that defines the extent to which the state can interfere in economic matters.

The parties may benefit from the experience of other countries in the realm of laws and institutions that limit corruption, such as freedom of information acts, transparency systems, independent anticorruption commissions, and ombudsmen. It would also be useful if these parties reconsidered the way in which budgets are prepared, executed, and monitored and evaluated by independent bodies. Currently, all three of these phases of the budget process are conducted by the government itself and so the opportunities for correcting and improving budgets are very small.

Externally, these Islamist parties have evinced interest in regional cooperation and joint projects and have called for the adoption of open trade policies, but this position is not explicitly addressed in their platforms. The parties stop short of identifying certain projects that could enhance regional cooperation. Arab and international institutions could help identify a number of potential regional projects in areas such as tourism, energy, and water and begin building agreement on steps toward implementing them.

Tunisia, Egypt, Morocco, and Jordan all suffer from large budget deficits and will require financial assistance to meet their budgetary commitments. The parties are quite optimistic that they will be able to secure the necessary funding from international markets at reduced interest rates. Unfortunately, there appears to be little basis for such optimism given the current global economic environment. Still, major Arab and international financial intuitions should cooperate in securing the necessary funding for some initiatives, especially in the areas of health and education. Those initiatives must be accompanied by a clear road map for governance, adherence to the rules of democratic practice, and transparency in disclosing information. Since the level of economic discourse varies with each country, external partners interacting with these parties must vary their levels of involvement.

All of these parties acknowledge that without cooperation and engagement internally with various stakeholders and externally with international actors they will not succeed in meeting their goals. This engagement should be pursued with the objective of enhancing sustainable inclusive growth while ensuring adherence to good governance and the democratic process that brought these parties to power.

Though the Muslim Brotherhood platforms suffer from shortcomings and gaps, the four parties clearly believe that dealing with economic challenges is key to their success if they hope to be reelected. Their overreaching promises reflect their lack of experience in public administration. Compared to just a year ago, each country is facing deteriorating economic conditions. If the Islamists in power are blamed for the gloomy economic conditions or are unable to turn things around, they too could face a bleak electoral future.

1 See of Majmu’at Rasa’il al-Imam Hasan al-Banna, [The Collected Letters of Hasan al-Banna] (Beirut: Islamic Printing Institute, 2009), 230‒37.

2 Muhammad al-Ghazzali, Al-Islam Wal-Awdha’ al-Iqtissadiyyah, [Islam and the Modern Economy] 7th Edition, (Damascus: Dar al-Qalam, 2000) 2000. Islam and the Socialist Schools of Thought is an extension of the previous work. See Muhammad al-Ghazzali, Al-Islam Wal-Manahij al-Ishtirakiyyah, [Islam and Socialist Schools of Thought] (Damascus: Dar al-Qalam, 2007).

3 Muhammad al-Makki, “Interview with Rashid al-Ghannushi,” Al-Hayat, January 4, 2012, 9.

4 Ennahda’s guiding party document is available at www.nahdha.info/arabe/Sections-artid-97.html (Arabic).

5 Richard Spencer, “Tunisia’s Victorious Islamists Vow to Uphold Country’s Liberal Laws,” Telegraph, October 26, 2011, www.telegraph.co.uk/news/worldnews/africaandindianocean/tunisia/8851054/Tunisias-victorious-Islamists-vow-to-uphold-countrys-liberal-laws.html.

6 Comment by Dr. Rida Shaknadali, economic adviser to the Tunisian Ennahda Party during a workshop held in the Carnegie Middle East Center in Beirut on January 27, 2012.

7 “Lights on 2012 State Budget (Supplementary Finance Law),” Tunisian News Agency, March 8, 2012, www.tap.info.tn/en/en/component/content/article/45/11693.html.

8 Moody’s ranking as of March 23, 2012.

9 See the Policy section of FJP platform, available at http://hurryh.com/Party_Program.aspx (Arabic), www.fjponline.com/articles.php?pid=80 (English).

10 “Egypt: We respect beach tourism, says Brotherhood,” Egypt Independent Sun, available at http://imra.org.il/story.php3?id=55335.

11 See the Brotherhood’s 2007 election platform for the Shura Council.

12 See 2007 election platform. For a critical discussion of the platform see Nathan Brown and Amr Hamzawy, “The Draft Party Platform of the Egyptian Muslim Brotherhood: Foray Into Political Integration or Retreat Into Old Positions?” Carnegie Paper, Carnegie Endowment for International Peace, 2008, carnegieendowment.org/2008/01/14/draft-party-platform-of-egyptian-muslim-brotherhood-foray-into-political-integration-or-retreat-into-old-positions/4va.

13 Abde el-Hafez Sawi, Economic Expert at the FJP mentioned this at a workshop organized by the Carnegie Middle East Center, Beirut, January 27, 2012.

14 Ibid.

15 L. Azuri, “Egyptian Deputy PM’s Document of Constitutional Principles: An Attempt to Bolster Military Supremacy, Curb Islamists’ Influence on Constitution,” MEMRI, Inquiry & Analysis Series Report no. 762, November 16, 2011, www.memri.org/report/en/print5826.htm#_edn4.

16 Comment by Abd al-Hafiz al-Sawi, at a Carnegie-sponsored workshop.

17 Muhammad Najib Boulif, member of the PJD’s parliamentary bloc, one of the party’s economic experts.

18 Hassan Benmehdi, “Moroccan Islamists reassure tourism industry,” Zawya/Magharebia, December 21, 2011, www.zawya.com/story.cfm/sidZAWYA20111222044525/Moroccan_Islamists_reassure_tourism_industry.

19 Suhail Karam, “Moroccan Parliament Approves Budget for 2012,” Reuters, April 12, 2012 (Arabic), http://ara.reuters.com/article/businessNews/idARACAE83B05L20120412.

20 Nabil al-Kawfahi, remarks at the Carnegie Middle East Center workshop, Beirut, January 27, 2012.

21 See IAF election platforms from 1993, 2003, and 2007, particularly as pertains to economic and fiscal policy. See also the statement by the party’s Assembly of the Executive Office, September 29, 2010.

22 See the online archive section of published statements for the IAF party, available at www.jabha.info/section/%D8%A8%D9%8A%D8%A7%D9%86%D8%A7%D8%AA.

23 Sinan Ulgen, “From Inspiration to Aspiration: Turkey in the New Middle East,” Carnegie Paper, December 2011, http://carnegieendowment.org/files/turkey_mid_east.pdf.

24 See Mohammad Abu Roman, Khaled Hassanein, and Manar al-Rishwani, Al-Jarahah al-Tajmiliyyah Lil-’Amal al-Islami: Qira’ah fi Tajrubat Hizb al’Adalah Wat-Tanmiyyah at-Turki, [Cosmetic Surgery on Islamic Action: An Analysis of the Turkish Justice and Development Party] (Amman: Markaz al-Dirasat, 2004), 72‒78.
http://www.carnegieendowment.org/2012/05/29/economic-agenda-of-islamist-parties/b0fh#

How should revolutionaries relate to the new Left rising up across Europe? Chris Bambery argues lessons can be learned from the approach Leon Trotsky took to this question in the mid-1930s.

None of us have lived through such days. Greece is clearly in a crisis that can only be described as pre-revolutionary. Spain, Portugal and even Italy may follow if the much heralded Greek exit from the Euro occurs.

The success of Syriza in Greece and to a lesser extent the Fronte Gauche in France suddenly offers a mass left alternative to austerity, whereas before anti-immigrant and anti-Muslim parties seemed to be benefiting from the crisis.

There is much to be said about both groups but while there are real criticisms as with any party the starting point must be to welcome their successes and to stand beside their supporters. We have after all been in similar situations before, and can draw lessons and warnings from our past.

The ‘French Turn’
In the mid 1930s the pre-revolutionary situation in France and the revolutionary period in Spain created a mass radicalisation which was concentrated in the youth wings of the Social-Democratic parties in both countries.

The thoroughly Stalinised Communist parties (CP’s) were desperate to recruit the radicalised youth of the Social-Democrats who rejected the role of their leaderships in propping up capitalism whilst mass hunger and unemployment ripped through France and Spain. However, many of them were moving well to the left of the CP’s. They rejected the Communists Popular Front strategy of building alliances with liberal parties as well as social democracy to defend the status quo against fascism, thus ruling out going beyond the capitalist system.

In 1936 socialist revolution was on the agenda in both France, where mass strikes and workplace occupations (Occupation at Renault car factory pictured above) swept the country, and Spain, where working class uprisings defeated the fascist insurgency in Barcelona, Madrid and other towns and cities creating workers control in Catalonia. The more radical young Socialists looked to the small groups of Trotskyists and other revolutionaries to the consternation of the Communists.

It was against this background that Trotsky urged what was known as the ‘French Turn’ on his followers – entry into social democracy to help speed this process and to link up with radical young Socialists.

A pattern emerged of initial sectarian rejection of Trotsky’s proposal, belated acceptance and then a refusal to recognise when the insurgent wave ebbed and the social democratic leaders and the Communists blunted and contained the process of radicalisation.

This is not the place to go through the ins and outs of this episode. Suffice to say the failure of the revolutionaries to win the young socialists through their refusal to make such a turn in Spain allowed the tiny Communist Party to become a mass party with devastating effect on the Spanish revolution.

The point is that amidst the greatest capitalist crisis yet and with the working class on the streets of France and Spain, Trotsky understood the need to link with the process of radicalisation underway rather than simply repeat truths about the need to build a revolutionary party.

Of course he was not saying simply join the young Socialists and follow their line of argument. In all sorts of practical ways he suggested how revolutionaries could build up influence, developing strategies that could push them in a revolutionary direction.

From Mid-1930s to today
Today there are immense differences between the situation the left finds itself in and that which Trotsky addressed in the mid 1930s. Revolution was an immediate reality in a way it is not today, fascism held power in Italy and Germany where the most powerful working class in the world had failed to act to stop Hitler. The scale of the economic, political and social crisis was far greater than today, with the exception of Greece.

But most importantly mass membership social democratic parties rooted in working class communities and workplaces with serious youth organisations no longer exist. In the 1930s, mass social-democratic parties would inevitably divide under any upsurge in struggle as radicalisation would impact its membership base, particularly the youth.

In the last upsurge of the late 1960s and early 1970s something similar did happen but on a weaker scale, reflecting the process of decay already underway in the social democratic and Communist Parties. In Britain the rise of the Labour left under Tony Benn was part of that process, although, interestingly, this took hold after working class insurgency had peaked.

Today it’s hard to see the social-democratic parties being the birthplace of a new radicalisation, hollowed out as they are by years of conformity to neoliberalism. Significant left-wing sections have broken with Social-Democracy already over the past decade, led by Oskar Lafontaine who helped form Die Linke in Germany, Jean-Luc Melenchon with Front de Gauche in France and to a lesser extent George Galloway with Respect in Britain. In most cases the social-democratic left have either remained isolated or have given up the fight and succumbed to the ranks of ‘social-liberalism’, the term commonly used to describe the neoliberalisation of social-democracy.

The New Left: Breaking with the past
For social-democrats that have taken the leap into the dark by exiting their traditional home, success has been premised on the ability to get other sections of the left to be as brave. Like in Germany when the ex-Communists (Party of Democratic Socialism) joined ranks with Lafontaine, and in France when the Communist Party and sections of the Trotskyist left united with Melenchon.

The Greek situation in Syriza is more complicated, but it is again premised on breaking down unnecessary divides bring together small far-leftist formations with the main grouping, Synapsimos, who are ex-Eurocommunists.

Again and again revolutionaries have had to relate to new groupings thrown up by a sudden radicalisation. Those who reacted in a sectarian way would wither on the vine, those who threw themselves into the new formations that stood at the vanguard would prosper.

In the greatest economic crisis since the 1930s, with resistance to austerity mounting, radicalisation is inevitable and it will find a home. In France that home is for now the Fronte Gauche, in Greece Syriza. The attempt to create alternative, more left wing alliances in both countries has failed and its best to stop digging and recognise that. There is no virtue in isolation when the masses are on the move.

Sure, the radicalisation will take other forms such as the Indegnados in Spain but for the left in France and Greece it must be time to join the Front de Gauche and Syriza. Trotsky was clear timing was of the essence. In six months or a year the opportunity may have passed, the masses may have shifted away from the radical left or their leaderships may have succumbed to the pressure of their national and European ruling class. Trotsky’s answer was to intervene and shape the forces at the vanguard of the struggle and that should be our answer too.

From the ISG site
http://www.counterfire.org/index.php/articles/analysis/15793-trotskys-french-turn-lessons-from-crisis-and-radicalisation-in-europes-past

With the much-trumpeted Nato Summit in Chicago coming to an end, it is time to tally the scorecard for the major participants. This being an election year, the Summit had a domestic agenda apart from its foreign policy objectives. US President Barack Obama was largely successful in reassuring his unhappy voters that his promise to disengage militarily from Afghanistan was “irreversible”. Earlier, he had secured a major victory, convincing Afghan President Hamid Karzai to agree to their bilateral strategic agreement that will provide the US with the legal framework to retain control over Afghanistan’s many military facilities.

Other Nato countries can also congratulate themselves for getting the alliance’s formal approval for the departure deadline, which was important in quelling growing unrest among large sections of the American populace.

President Karzai, too, has good reasons to feel satisfied. He was not only the summit’s sought after star, but one whose role in the endgame was highlighted. This has given rise to speculation that he may seek exemption from the constitutional ban on a third term, offering his candidacy as the only politician enjoying domestic consensus as well as foreign acceptability.

It was, however, Pakistan which was the lone man out, especially after failing to honour signals from the US, indicating their readiness for the supply routes through Afghanistan to be reopened, which in fact helped Pakistan receive a last-minute invitation. Earlier, Foreign Minister Hina Rabbani Khar had acknowledged that notwithstanding her earlier rhetorical flourishes emphasising national honour and dignity, it had now dawned on her that Pakistan could not afford to annoy the Nato! Consequently, President Asif Ali Zardari had to suffer the indignity of Secretary General Rasmussen declining to meet him on the plea of scheduling problems, while President Obama rejected the request for a formal call.

The summit in Chicago did confirm that neither the US nor the Nato are interested in building a democratic state any longer, satisfied instead with what they call “Afghanistan is good enough”. President Obama admitted that there is never going to be a “point when we can say that this is perfect … it may sometimes be a messy process”, while his National Security Council chief Tom Donilon alluded to the limited nature of US strategy, when confirming that the US now aimed to ensure that al Qaeda and associated groups “cannot have safe havens unimpeded”. With the US goalposts having been lowered, it was no surprise that the summit failed to outline a post-withdrawal political strategy for Afghanistan. Nor did anyone ask as to what happens when the country is threatened by civil war, with the Taliban appearing to have lost interest in the reconciliation process, thanks to the Pentagon’s intransigence. Most likely, Nato will pursue a ‘Fortress Kabul’ strategy, while holding Pakistan responsible for the inevitable mess in that country. Both President Obama and Secretary General Rasmussen made obvious their worries on this score, with the latter pointing out that “there can be no drawdown of troops from Afghanistan without Pakistan’s help”, while President Obama was harsher, remarking: “the US did not want Pakistan to be consumed by its own extremists”.

In retrospect, it would appear that our eagerness to be present in Chicago without having first carried out necessary homework was a mistake. Confusion reigns supreme, with Pakistan claiming that the issue of supply routes lies with parliament, though demanding a much higher fee, prompting Defence Secretary Leon Panetta to reject it as “gouging”. The US says it wants to rebuild relations but instead of resolving issues, it has added to the ‘charge sheet’ against Pakistan, calling Dr Shakil Afridi’s imprisonment “unwarranted”. Both countries appear to have lost their ingenuity and imagination, frozen in mutual recriminations, while oblivious to the looming dangers in post-2014 Afghanistan, with its ill-trained and tribally fractured army incapable of ensuring peace in the country. The consequences of this are likely to be bad for everyone, but primarily so for Pakistan.

Published in The Express Tribune, May 30th, 2012.
http://tribune.com.pk/story/385776/chicagos-scorecard/?print=true

European leaders need to abandon the fetters that chain them to the interests of private wealth, and threaten European disintegration.

About the authorAnn Pettifor is a Director of PRIME Policy Research in Macroeconomics, whose work and writing has concentrated on the international financial architecture, the sovereign debts of the poorest countries, and the rise in sovereign, corporate and private debt in OECD economies. On May 15th, in what can only be described as an act of coercion, an impoverished and effectively insolvent Greece acceded to the handover of a bond payment –  €436 million – to  private financial ‘vulture funds’. The Greeks had little choice. However, in acquiescing to this handover -  facilitated by its paymasters,‘the Troika’ -  impoverished Greeks protected reckless private wealth from the consequences of their risks. Namely: losses and bankruptcy, and the discipline of market forces.

This is a perverse distortion of free market capitalism because, as Professor Kunibert Raffer has argued: “the most basic precondition for the functioning of the market mechanism (is) that economic decisions must be accompanied by (co)responsibility: whoever takes economic decisions must also carry financial risks. If this link is severed – as it was in the Centrally Planned Economies of the former East – efficiency is severely disturbed…. At a time when riskless decision making by bureaucrats is abolished in the East, there is no reason why it should be preserved in the West”.

Today this new, distorted economic order is enforced, on behalf of private wealth (hedge funds, offshore ‘investment funds’ and private bankers) by unelected  EU, IMF and ECB officials and  elected EU politicians. They insist that Greek and EU taxpayers should shield private sector risk-takers from the consequences of their risks, and guarantee compensation for losses incurred by financial speculation.

This economic order is the very antithesis of both democratic but also free market principles. However, it is at the heart of the neoclassical monetarist statutes of the European Union, the Eurozone and the ECB – and now the new EU Fiscal Compact.

The leaders of Europe must wake up to the threat these discredited ‘barbaric’ 19th century economic policies pose to the noble ambitions of Europe’s founding fathers: economic policies that are legally entrenched and enforced by the EU’s treaties.

These economic policies and statutes mimic the Gold Standard of the 1930s, and deny economic and democratic sovereignty to the people of Europe. This is the central purpose of neoliberal economics: to strip democratic states of sovereign economic power and transfer these powers to private markets.

The EU’s protection of private wealth from the discipline of the market has been made possible, by effective lobbying by financial elites; but also by the absence of fair international law governing relations between sovereign debtors and their creditors.

Above all, EU statutes deny European states the public goods obtained from an accountable central bank; and a sound monetary and debt management system.

Instead, the (Lisbon) Treaty on the Functioning of the EU, which lays down the ECB’s mandate, and in particular Articles 123 – 125, obliges EU states to rely on the private, globalised bond markets for finance. Britain, Japan and the United States – who all enjoy the services of nationalised central banks – do not share Greece’s or Europe’s full exposure and vulnerability to the predations and parasitic behaviour of private wealth.

Articles 123-5 achieve the goal of the Gold Standard of the 1920s and 30s: namely to capture economic sovereignty from democratic states; enforce their dependence on private wealth, and then use taxpayer resources to protect private financial elites from the wrath of market forces.

As a consequence of what can only be described as a blatant financial “coup d’etat”  financial vultures are not just circling and threatening Greece, Spain and Portugal. They now threaten Europe as a whole with the consequences of disintegration.

By the capture of European policy-making, governance and financial assets, private wealth is weakening the European peoples’ deeply-held commitment to, and yearning for European convergence, unity and peace. A commitment rooted in the huge costs of the economic failure of the 1920s and 1930s; and in the uncountable human costs of the Second World War.

That yearning is reflected in the poignant commitment of Greeks to the European ideal – and to EU membership. Sixty-six per cent of respondents in a recent poll said their country should keep the single currency but pursue an economic policy different from the one set out in the bailout deal, and entrenched in EU statutes and treaties.

Private wealth is unconcerned by such yearning. Where EU politicians and their peoples were aiming at convergence, financial vultures are forcing divergence. Where Europeans were painstakingly building inter-governmental collaboration based on democratic governance and moderation, private wealth’s parasitic behaviour is fuelling anti-democratic fanaticism and bigotry.

All the while Europe’s elite policy-makers and politicians – at the ECB, the EU and the IMF – stand aloof from EU taxpayers that fund their salaries and lifestyles. Instead they collude with financial predators in the growing divergence and disintegration of the European project, and in the economic degradation of the poorer, peripheral members of the European Community.

So when some financial firms simply refused to participate in the losses that the official sector and Greek private banks were forced to take in March this year, EU and IMF officials provided full compensation for the economic risks that private wealth had dodged.

The ‘Troika’ – officials and politicians from the EU, the ECB and the IMF –  administer an ‘escrow (arms-lenth) account’ – well beyond the reach of the democratic Greek state, or indeed Europeans as a whole.  Yet European taxpayer-backed funds are deposited into that account and used to compensate private speculators and bankers.

According to the New York Times, 90% of the €436 million in the account was

delivered to the coffers of Dart Management, a secretive investment fund based in the Cayman Islands, according to people with direct knowledge of the transaction.

Dart is one of the best known of the so-called vulture funds, which have a track record of buying the distressed bonds of nearly bankrupt countries — and if they do not get paid, suing the governments for the money. Dart and another big vulture fund, Elliott Associates, perfected that strategy during the various Latin American debt crises in years past.

By accumulating the bulk of these bonds at prices that traders estimate to be from 60 to 70 cents on the dollar, Dart stands to make a hefty profit, having received 100 cents on the dollar — an outcome likely to be especially galling to the Greek banks and other local institutions that were forced to take a 75 percent loss on their Greek bond holdings.

The big winning bet by Dart could presage a more aggressive tack by vulture funds, if Greece is forced to restructure its bonds a second time.

Robert Schuman’s founding Declaration for European unity began with a clear vision:

World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it. The contribution which an organized and living Europe can bring to civilization is indispensable to the maintenance of peaceful relations.

Today Europe’s politicians and officials are not proving ‘proportionate to the dangers which threaten’.

No surprise then, that Europeans have a profound distrust of politicians. This is in part because elected politicians prioritise the interests of private wealth and global bond markets over ‘the European project’.

First they removed regulation and constraints on capital mobility and credit creation.

Next politicians, lobbied by private financiers, hobbled the ECB’s powers to provide affordable finance to sovereign states.

Now, and in order to shore up taxpayer resources, politicians, led by Chancellor Merkel, demand fiscal consolidation so that savings can be accumulated with which to prepare for the next financial crisis, and to bail out and/or compensate “too-big-to-fail” banks.

‘Austerity’ policies are hurting the people, and mirror the economic and political incompetence of Germany’s Weimar Republic under Chancellor Heinrich Brüning. As  Peter Temin has  persuasively explained,  under Brüning “the move toward highly restrictive government budgets came at the beginning of 1930” following the dictates of the gold standard. …”With a series of austerity decrees…the “iron chancellor” exerted a constant downward pressure on the German economy” he writes on  page 30 of Lessons from the Great Depression (The Lionel Robbins Lectures for1989).

The Weimar Republic flattered global financial elites by maintaining capital mobility and borrowing excessively from international bond markets, simultaneously printing money and enforcing austerity on a war-weary and exhausted populace. The result was predictable: massive unemployment, bankruptcies and rampant inflation.

Tragically, officials at the ECB and Bundesbank have drawn the wrong lessons from the disaster that was the Weimar Republic’s economic strategy. Instead they should turn to, and draw on lessons learned by Britain and the US in the 1930s, the first countries to abandon the dictates of private wealth under the Gold Standard.

Under Keynes’s tutelage, Britain’s currency, Sterling, was in 1933 revived as a money managed by the Bank of England and protected from speculative and vested private financial interests. Then in 1934, President Roosevelt freed the dollar, and with it, the people of the United States, who then embarked on a period of sustained recovery. Sadly, Germany maintained the dictates of Gold Standard economic policies throughout the 1930s – and we all know the political consequences of that incompetence.

If Europe were now to abandon the Gold Standard-type policies that underpin the Euro, Europeans would feel the full force of private wealth’s anger, through allies in the media, academia and politics. But this will follow from fear – not reason.

So, European leaders, be as bold as Keynes and Roosevelt. You have nothing to lose but the ‘gold fetters’ that deny the people of Europe economic and democratic sovereignty, and that chain you to the interests of private wealth.

There is however, everything to gain from European convergence, prosperity, unity and peace.
–Ann Pettifor is a Director of PRIME Policy Research in Macroeconomics, whose work and writing has concentrated on the international financial architecture, the sovereign debts of the poorest countries, and the rise in sovereign, corporate and private debt in OECD economies.
http://www.opendemocracy.net/openeconomy/ann-pettifor/open-letter-to-leaders-of-europe-abandon-euros-gold-fetters

Observers have commented that Indian officials may benefit from the ‘opening up’ of Myanmar [AFP] 

Chang Mai, Thailand – When Indian foreign minister SM Krishna traveled to Myanmar in June 2011, he brought with him a gift of ten heavy-duty rice silos. It was a sweetener for the new Myanmar government, which had taken office only months before. Krishna became the first foreign dignitary to meet with newly elected ministers, and his visit symbolised India’s drive to court the quasi-military outfit now occupying Naypyidaw.
Dam threatens livelihood of Cambodia’s poor
 

The silos, delivered three years after the devastating Cyclone Nargis, were however something of a diversion, the more benign face of a relationship that took root in the early 1990s and sullied India’s image as a beacon of democracy in the region. After it had about-faced on support for Myanmar’s pro-democracy movement during the administration of PV Narasimha Rao, India became one of only eight countries to regularly supply weaponry to the Myanmar junta – when former junta chief Than Shwe trod the red carpet in New Delhi in 2010, Myanmar expatriates burned effigies in the streets.

India’s decision to overhaul a generally principled foreign policy in favour of a realpolitik agenda was driven largely by the rapid growth of regional markets, particularly the Asian Tigers – Rao had been able to exploit growing unease within the Indian cabinet at what it saw as an overtly idealistic approach to international relations that, despite winning plaudits from the west, had meant its economy was losing out as regional countries sped forth.

In Myanmar, India saw a gateway to East Asian markets and a goldmine of natural resource capability. As the “Look East” policy took shape in the early 1990s, officials began tentative approaches to the then ruling State Law and Order Restoration Council (SLORC). In 1993, Rao sent foreign minister JN Dixit to Yangon, a visit that both outraged Myanmar’s political opposition, and marked perhaps the strongest signal of shifting attitudes within the Indian cabinet.

Door creaking open

Over time, the policy evolved. India, despite persistent denial, was to sell weaponry – howitzers, munitions and, according to one leaked US cable from 2007, tanks – in a bid to befriend the regime and draw it out of China’s grasp. That it has struggled to do, however – Prime Minister Manmohan Singh, who becomes the first Indian leader to visit its neighbour in a quarter century, knows well the Myanmar government’s most adept diplomatic skill, that of playing its suitors off against one another for their own gain.

“Despite the historically close relationship between China and Myanmar, Beijing is yet to send its premier south across the border.”
 

India has sat and watched over the years as China nudged it out of contention on a slew of major energy projects: Beijing had the global clout that India lacked, and which Myanmar needed – a veto in the UN Security Council, the means to finance its overwhelming appetite for natural resources and a repressed domestic lobbying force.

But nine months after Myanmar suspended the massive China-backed Myitsone Dam project, a door is creaking open for India. Despite the historically close relationship between China and Myanmar, Beijing is yet to send its premier south across the border – Singh’s visit therefore carries extra pertinence against the backdrop of difficult times between the two traditional allies, and he will look to exploit Naypyidaw’s obvious unease at its subservience to China (although government sources told the Times of India this week that the trip was aimed at “peace and prosperity”, and not Indian expansionism).

At the same time, however, the Myitsone episode will act as a warning to New Delhi about the changing dynamics inside Myanmar, a country that, until last year, was seen as a source of unrestrained plunder – but which is now beginning to tighten the rules. That will worry Singh, who is often the target of frustration at India’s perennial energy shortfall – some estimates put the proportion of India’s population without regular access to electricity at 40 per cent, despite it being the world’s fourth highest energy consumer, while the US is currently pushing New Delhi to sever ties with Iran, a chief oil supplier.

Beyond its neighbour’s vast energy reserves, there is also the geostrategic factor that makes India’s quest to court Myanmar all the more imperative – its 1,640 kilometre shared border is the only overland route that India has to the burgeoning economies of south-east Asia – and several trade-oriented ventures, including a recently announced cross-border bus service, as well as the more ambitious Kaladan project to develop sea, river and land routes between the countries, are underway.

Weapon sales

It’s no easy feat, however: India’s northeastern states are plagued by insurgencies (the United Liberation Front of Assam is known to shelter inside Myanmar’s border, while Maoists are believed to have trained on Myanmar soil) – half a dozen anti-New Delhi groups operate there, acting as an impediment to any nascent border trade. Attempts have been made to develop the region, including building a major highway along the border and military infrastructure to better tackle the insurgencies, but the pace of progress has been slow.

“With Myanmar due to begin auctioning gas blocks in the near future, China and India will likely lock horns.”
 

Indian sales of weapons to Myanmar are ostensibly aimed at tackling the problem – shipments of heavy artillery were earmarked for Myanmar battalions based close to the India border, but it is unlikely that Naypyidaw kept to its side of the deal (indeed, India has on several occasions scolded the apparent nonchalance with which Myanmar, which is battling its own domestic armed opposition, approaches the issue). Instead, activists have decried Indian arms sales as providing support for the Myanmar military in their attacks on ethnic minorities and, quite likely, civilians during the September 2007 uprising.

But Singh has spoken of “exploring new initiatives” in bilateral ties, and takes with him an offer that he hopes will appease critics and curry greater favour with Myanmar’s new rulers, that of expertise in democracy building. It was supposedly for this reason that President Thein Sein traveled to New Delhi in October last year (a trip made notable by the fact that Myanmar had just held a political prisoner amnesty) and, as many countries appear wont to do, India will claim vindication of its policy in the wake of Thein Sein’s reforms.

As international business vies for space in the “next economic frontier”, Indian companies may have to take on an uncharacteristic aggression in their approaches to Myanmar – the recession-hit European economies will also be looking for new hunting grounds, adding to the competition that India faces in its reinvigorated push for influence in the country. Singh is flanked by a business delegation and will hope to sign various deals on defence and energy cooperation – with Myanmar due to begin auctioning gas blocks in the near future, China and India will likely lock horns, and the retrospective success of Singh’s trip may hinge on who is granted concessions.

But the timing of the visit makes sense – as the Hindustan Times notes: “China is both Myanmar’s most influential foreign neighbour and its most nervous. No country is as deeply entrenched in the economy of Myanmar while being so wary of the political reforms that began there last year.”

Singh will be able to use the evolution in Myanmar’s foreign relations, most notably an eagerness to diversify its clientele, to his advantage – New Delhi’s latterly self-centred regional policy has quietly sought to dilute China’s power, and Myanmar may now be ripe for realising this goal.

Francis Wade is a freelance journalist and analyst covering Burma and Southeast Asia.

Follow him on Twitter: @Francis_Wade

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.
 
 
Source: Al Jazeera 
 
http://www.aljazeera.com/indepth/opinion/2012/05/20125288919623356.html

The global economic crisis has been a boon for transnational criminals. Thanks to the weak economy, cash-rich criminal organizations can acquire financially distressed but potentially valuable companies at bargain prices. Fiscal austerity is forcing governments everywhere to cut the budgets of law enforcement agencies and court systems. Millions of people have been laid off and are thus more easily tempted to break the law. Large numbers of unemployed experts in finance, accounting, information technology, law, and logistics have boosted the supply of world-class talent available to criminal cartels. Meanwhile, philanthropists all over the world have curtailed their giving, creating funding shortfalls in the arts, education, health care, and other areas, which criminals are all too happy to fill in exchange for political access, social legitimacy, and popular support. International criminals could hardly ask for a more favorable business environment. Their activities are typically high margin and cash-based, which means they often enjoy a high degree of liquidity — not a bad position to be in during a global credit crunch.

But emboldened adversaries and dwindling resources are not the only problems confronting police departments, prosecutors, and judges. In recent years, a new threat has emerged: the mafia state. Across the globe, criminals have penetrated governments to an unprecedented degree. The reverse has also happened: rather than stamping out powerful gangs, some governments have instead taken over their illegal operations. In mafia states, government officials enrich themselves and their families and friends while exploiting the money, muscle, political influence, and global connections of criminal syndicates to cement and expand their own power. Indeed, top positions in some of the world’s most profitable illicit enterprises are no longer filled only by professional criminals; they now include senior government officials, legislators, spy chiefs, heads of police departments, military officers, and, in some extreme cases, even heads of state or their family members.

http://www.foreignaffairs.com/articles/137529/moises-naim/mafia-states

Not only did Egypt pull off its first democratic presidential election in the country’s history last week, but it managed to make it a relatively clean vote. Former U.S. President Jimmy Carter told journalists in Cairo over the weekend that international monitors working for the Carter Center had noted minor violations during the election, but nothing so serious as to impact the result. Enthusiasm seemed high: Egypt’s high electoral commission reported a relatively high turnout.

And yet, the results are not what anyone expected. Neither of the two initial front runners for the June 16 and June 17 runoff vote qualified for that round of voting. Instead, the two men who are now expected to come out on top are the two most polarizing candidates on the ballot: the Muslim Brotherhood’s Mohamed Morsy and ousted President Hosni Mubarak’s former Prime Minister Ahmed Shafik. “It’s a charade,” laughs Adel al-Sobki, who owns a Cairo supermarket, and says he voted for the Arab nationalist candidate Hamdeen Sabbahi. “We’re now stuck with either the old regime or the Muslim Brotherhood.”

To Egypt’s liberals and leftists, it’s a nightmare scenario. In a race that involved 13 candidates and five front runners — including three relative moderates like Sabbahi — the country has wound up with two extremes to choose their next leader from. It’s a reality that has left some Egyptians promising to boycott the June electoral finale and others simply wondering: Where did we go wrong?

Hassan Nafaa, a political scientist at Cairo University, has a couple of theories. He says the biggest factor in Egypt’s electoral outcome may be the failed strategies of the country’s losing moderates and their supporters. Hamdeen Sabbahi and Abdel Moneim Aboul Futouh, an independent Islamist, may have been too similar to each other for either one to win, he argues. The two are expected to sweep third and fourth place respectively, but only Shafik and Morsy will proceed to the runoff. Both Aboul Futouh and Sabbahi hold moderate political views and were active participants in last year’s uprising — factors that appeal to voters across the spectrum, from liberals to Islamists and socialists and thus probably dissipating their support across the same range.

Other Egyptians voted for the popular former Arab League chief Amr Moussa. But in the end, Egyptian moderates — perhaps a political force only as a combined mass — were too divided. “Had they coordinated and voted in one direction — either to support Aboul Futouh or Sabbahi — one of them would be in the runoff,” says Nafaa. “There was a lack of coordination between the so-called revolutionary forces.”

(MORE: Egypt: Could a Promilitary Candidate Become President Fair and Square?)

That lack of organization may have proven critical. When the high electoral commission announces the final results, Sabbahi and Aboul Futouh’s campaigns are expecting to see numbers that reveal a tight race. But Morsy and Shafik were the only two candidates who have solid voting constituencies — a reality that most political analysts underestimated going into the election. For Morsy, that was the Muslim Brotherhood, long the strongest opposition to Mubarak’s rule and in the aftermath of the uprising, Egypt’s most organized political machine. The Brotherhood may be a minority among the country’s 85 million people, but after competing in numerous parliamentary elections — including the sham votes under Mubarak — they know how to get voters to the polls. On election day, their supporters pushed undecided Egyptians to the polls and ran help tables to guide voters to their appropriate polling stations. Morsy’s candidacy also appealed to the ultraconservative Salafis, whose own candidate had been disqualified by the electoral commission ahead of the vote.

Analysts say Shafik, a former air force commander and Mubarak’s last Prime Minister, had automatic backers too: the Egyptians who never supported the revolution to begin with, as well as the country’s powerful armed forces. Egyptians currently serving the military and police force are technically banned from casting votes, but some of Shafik’s opposition allege that thousands of soldiers may have voted anyway or at least used their clout to convince voters one way or the other. “The whole state apparatus was behind Shafik,” says Nafaa. “Maybe there was no direct intervention, but all those who are enrolled in the army may have gotten directives to vote for him, and this is forbidden.”

But there is no doubt that Shafik also struck a chord with millions of Egyptians who say they’re fed up with a struggling economy and the plummeting public security since Mubarak’s downfall. For many of the country’s poor, Shafik’s unapologetic attitude about his ties to the old regime seemed to promise a military toughness that would return security to the streets. To Egypt’s Christian minority, and indeed many secularists fearful of an Islamist takeover, Shafik’s hard line on the Brotherhood also harkened back to Mubarak’s era, in which religious conservatives stayed in jail or under close watch by state security — never allowed to attain too much power or impose their will on the country’s legal system.
It’s that authoritarian image that has many moderate Egyptians in a dilemma two weeks ahead of the big decision. Will they use the country’s first democratic presidential race to elect a man so similar to the one they ousted, or will they risk an Islamist government that may strive to write Egypt’s soon-to-be drafted constitution in a far more conservative way and thus change their way of life?

The irony, many unhappy voters are quick to point out, is that the tough choice is unlikely to unite the moderates any more than the first round of voting did. Some say they’re so dismayed by the options that they won’t even bother to vote in the next round. Others simply disagree on which option is worse. “Shafik would be just like Mubarak, nothing more nothing less,” says Magdy Mohamed, a small-business owner. A Shafik win would wind back all of the democratic and judicial gains that Egyptians have accomplished in the past year and a half, he says. “They might even allow Mubarak to go free. Then the people will go to the streets, and we will demand our rights all over again,” he adds. But Amr Shalabi, a university student who says he voted for Amr Moussa, sees it the other way around. “I have no choice now but to choose Shafik,” he says. “We can’t allow the Brotherhood to take power.”

The next two weeks are likely to be tense as candidates square off in a fresh round of campaigning, and Egyptians debate the pros and cons of each. The Muslim Brotherhood has started holding talks with other political parties in an effort to rally a larger constituency that encompasses liberals, secularists and antimilitary activists to take on Shafik. The group and its candidate, Morsy, have promised throughout the campaign to embrace policies that promote justice and equality for all of Egypt’s religious and ethnic groups, even if those policies are founded on Islamic law. But Nafaa says that interparty talks may force them to make more concrete concessions on what their future government will look like and what kinds of articles wind up in the country’s constitution. No matter. Whoever becomes Egypt’s next President is sure to face plenty of opposition.

With reporting by Sharaf al-Hourani
http://www.time.com/time/printout/0,8816,2115908,00.html

At the NATO summit in Chicago, President Obama and leaders of America’s NATO allies agreed on an “irreversible” plan to withdraw from Afghanistan. But challenges remain.

Despite the deliberately unambiguous word choice used to describe the withdrawal, uncertainty about how the West will confront the obstacles ahead remains. Issues specifically related to Afghanistan are yet to be resolved, and plenty of others are tied to the volatile politics of the area.

 
The Afghan National Army is already taking the lead in regions with roughly 75% of the population, with U.S. and other NATO troops acting as support. However, this does not include the most contested areas in the south and east, where Afghan forces are slated to assume responsibility by next summer. Serious doubts persist about their readiness to do so.

Despite significant training efforts, the army’s level of competence remains in question. It lacks many of the support functions needed for war fighting. The army will remain dependent on international forces for these capabilities and on the international community for financial assistance, expected to cost at least $4 billion a year.

The strategic partnership agreement signed by the United States and Afghanistan in early May addressed both issues. Washington pledged a residual force of U.S. troops that will stay in Afghanistan and promised financial assistance. Still unclear, however, is how many soldiers will make up the residual force, how long they will stay, what their main objectives will be and where they will be based.

Complicating matters even more, the Afghan army is overwhelmingly non-Pashtun, which makes operating in the overwhelmingly Pashtun south and east, where the Taliban-led insurgency is strongest, all the more challenging. The army’s ethnic composition and that of the Karzai government are also among Pakistan’s chief concerns. Which brings us to the wider regional concerns.

During the 1990s, Pakistan’s rival India supported the non-Pashtun Northern Alliance against the Pakistan-sponsored Taliban. Today, Pakistan views the non-Pashtun army in Afghanistan as essentially the Northern Alliance on steroids: a 300,000-plus force equipped by the United States and, like the government in Kabul, partial to India.

If the Afghan army holds together, then Pakistan faces an unfriendly army loyal to an unfriendly government on its western border.

If the army splinters as a result of its unbalanced ethnic composition — Pashtuns represent the majority of the population but a small minority in the army — this probably would result in inter- and intra-ethnic violence that could rend the nation. A civil war in Afghanistan would have disastrous consequences for the region, particularly neighboring Pakistan.

Yet Pakistan’s fears have led it to pursue a myopic policy that could contribute to this very outcome. It supports the Taliban, the Haqqani network and other assorted proxies in Afghanistan both as a hedging strategy and with the aim of positioning itself as the ultimate arbiter of any resolution. This has encouraged hedging among other regional actors and led to Pakistan’s isolation.

Though the Pakistani security establishment supports an Afghan-led reconciliation with the Taliban, it seeks significant control over that process. This is unacceptable to Kabul, Washington and, ironically, the Taliban. They all want to minimize Pakistan’s role.

These thorny issues have been extant for quite some time, but no clear path to resolving them has been proposed, and it doesn’t appear any significant progress was made in Chicago.

The main focus on Pakistan during the NATO summit concerned its willingness to reopen NATO supply lines into Afghanistan that have been closed since November after a U.S. air raid accidentally killed 24 Pakistani soldiers. Since then, supplies have been shipped via the longer and more expensive Northern Distribution Network running through Russia and Central Asia.

Although reopening Pakistani supply lines is not essential for maintaining NATO forces on the ground, they constitute an important logistical link for any large-scale withdrawal.

When Pakistani President Asif Ali Zardari received a last-minute invite to Chicago, it was well understood that this was intended to ease Pakistan’s resistance to reopening these supply lines. But they remain closed, subject to a disagreement over the transit fee Pakistan will receive for each truck and Washington’s unwillingness to issue a formal apology for the air raid.

Most experts anticipate that the issue will be resolved sooner rather than later. More troubling, Pakistan’s presence in Chicago was tied mainly to its control of supply lines, not to the vital role it could play in tipping the balance in Afghanistan toward either a political resolution or a possible civil war.

Meanwhile, the Pakistan military appears to be increasing support for its own proxies in anticipation of the NATO drawdown, heightening the possibility of civil war in Afghanistan. That other regional powers, chiefly India and Iran, are readying their own proxies for this eventuality only risks making it more likely.

Questions remain about whether any residual American force will be sufficient to provide enough support to the Afghan army to avoid such an outcome. It’s also unknown whether this objective will take priority over strategically defeating al Qaeda or at least denying it the ability to reclaim its safe haven in Afghanistan.

The summit in Chicago was an important turning point. U.S. forces cannot remain in Afghanistan at present levels indefinitely, not least because there is no purely military solution to these problems. But it’s clear that a timeline for the transition to a new role for the U.S. and NATO allies in Afghanistan does not mean the war is over.

This article originally appeared on CNN.

http://www.carnegieendowment.org/2012/05/23/afghan-war-is-not-over-yet/aw74