Underbelly of Egypt’s Neoliberal Agenda

Joel Beinin

April 5, 2008

(Joel Beinin is director of Middle East studies at the American University in Cairo and a contributing editor of Middle East Report.)

It was business as usual for Orascom, a gigantic Egyptian conglomerate with major interests in everything from Cairene highway construction to Red Sea luxury resorts to cell phones in Iraq.

On February 26 Orascom Construction Industries, one of the Orascom family of enterprises, proudly announced that it had acquired the International Company for Manufacturing Boilers and Steel Fabrication (IBSF) for $13.6 million. The corporate press release trumpeted the doubling of Orascom’s steel capacity, but mentioned nothing about the fate of the firm’s workers or its recent history. Those stories, as told by a group of skilled IBSF workers -- a lathe operator, a machinery fitter, a welder and a storeroom supervisor, each with at least 20 years’ experience in the factory -- are the underbelly of the advancing neoliberal agenda in Egypt. Fearing reprisals from the firm, they asked that their names not be used and spoke in the name of their trade union committee and its president, Husayn Abu Dahab.

A Study in Immiseration and Struggle

IBSF was established in 1962 as the Nasser Boiler and Pressure Vessels Company, a public-sector enterprise built on land acquired by the state during the regime of President Gamal Abdel Nasser. The firm was one of the many heavy industrial projects of the 1950s and 1960s. It designed and manufactured boilers, pressure vessels, condensers and heat exchangers, key components of electrical and nuclear power plants and many industrial processes. Nasser Boiler and Pressure Vessels was (and the workers say it remains) the only firm of its kind in the Arab world. It eventually employed over 1,800 workers, many of them highly skilled.

In 1994, following a 1991 agreement with the International Monetary Fund and the World Bank, Nasser Boiler and Pressure Vessels was privatized and sold to Babcock and Wilcox. In 2001 Muhammad Shatta, an Egyptian investor, acquired the firm and changed its name to IBSF. Shatta abandoned operations related to electrical and nuclear power plants and pressured workers to take early retirement with a payoff of 7,500 to 15,000 Egyptian pounds. The great majority refused this offer as insufficient. In retaliation, some were transferred to a livestock ranch and others to a factory owned by Shatta’s group in Sixth of October City, one of the “satellite cities” in the desert surrounding Cairo.

When Orascom acquired IBSF, its labor force, reduced by attrition to 750 or 800, worked nine-hour days for an average salary of 600-700 Egyptian pounds a month. (At current exchange rates, $1 equals 5.5 Egyptian pounds.) Between 230 and 330 workers are on permanent contracts and receive a standard package of fringe benefits. The others are evenly divided between those with yearly contracts, who receive benefits, and those with daily contracts who earn 30 to 60 pounds a day but receive no benefits. After the firm was privatized it did away with the four traditional holiday bonuses and reduced the number of annual vacation days. The workers say the firm is being managed without reference to any existing labor legislation.

Orascom plans to dismantle the existing factory and transfer its machinery to three of its existing industrial zones in Sixth of October City, Abu Rawwash, near the Pyramids, and ‘Ayn Sukhna on the Red Sea coast. An amusement park will be built on the current site of the factory. The law requires Orascom to offer the workers free transportation to these new premises, but it has not done so. Moreover, since they are located far from the existing facility in Manyal Shiha on the banks of the Nile River across from the southern Cairo suburb of Ma‘adi, few workers could sustain the commute of one to two-and-a-half hours each way.

Consequently, the trade union committee demanded severance pay of 100,000 Egyptian pounds in exchange for the workers taking early retirement and abandoning their claims on the firm. Orascom refused and began to relocate IBSF’s machinery to its other facilities. On a few occasions the workers have prevented the transfer of machinery. They have continued to work, and although they are reluctant to threaten a strike, they say they will die in the factory rather than see it close. The workers fear that Orascom will abandon production of the firm’s product lines, which they now manufacture with a high level of skill. As one of them said, “The most important thing is for this production to be continued for the sake of Egypt and its future. I want my son to be able to have a job here.”

Activated Working Class

The struggle of the IBSF workers is only one of hundreds in the wave of working-class collective action set off when the government of Prime Minister Ahmad Nazif, which took office in July 2004, began to accelerate the drive to privatize public-sector industrial and financial enterprises. According to the 2004 annual report of the Land Center for Human Rights, from 1998 to 2004 there were over 1,000 workers’ collective actions. More than one quarter occurred in 2004 alone, a 200 percent increase over 2003. There were 74 actions in the first half of 2004, but 191 following the installation of the Nazif government. Some 25 percent of the collective actions in 2004 were in the private sector, a larger proportion than ever before, reflecting the growth of private-sector industry.

And the number of actions has continued to grow. The liberal daily al-Misri al-Yawm reported a total of 222 strikes, demonstrations and protests in 2006 and 580 in 2007. Workers and Trade Union Watch, a labor-friendly website, enumerated 27 collective actions in the first week of January 2008 alone. Estimates of the number of workers involved in this movement range from 300,000 to 500,000. During 2007 strikes spread from their center of gravity in the textile and clothing industry to encompass building materials workers, transport workers, the Cairo subway workers, food processing workers, bakers, sanitation workers, oil workers in Suez and many others. Private-sector industrial workers comprised a more prominent component of the movement than ever before.

In the summer of 2007 the movement broadened to encompass white-collar employees, civil servants and professionals. The single largest collective action of the entire strike movement was the December 2007 strike of some 55,000 real estate tax collectors employed by local authorities. After months of public demonstrations, they struck briefly and won their demand for wage parity with their counterparts employed directly by the Ministry of Finance.

Waving Loaves of Bread

Of more lasting importance, the elected strike committee of the tax collectors effectively turned itself into an independent trade union. The same has happened at Misr Spinning and Weaving in Mahalla al-Kubra in the Nile Delta. The Mahalla textile workers are among the best organized and most politically conscious. In November 2007 they initiated regular meetings with representatives of other public- and private-sector firms seeking to raise consciousness and prepare the organizational infrastructure to establish a trade union independent of the General Federation of Egyptian Trade Unions, which is effectively an arm of the state.

The oppositional middle-class intelligentsia, which had difficulty relating to the strike movement until late 2007, has begun to demonstrate more consistent solidarity with the working class and its demands. Broad popular discontent over inflation and massive anger over the shortage of subsidized bread, the main source of calories for the poor, have become more visible in recent months and provided the context for making this still tenuous cross-class connection. Some of the mobilizations around these issues have been closely linked to the strike movement.

On February 17, over 10,000 Misr Spinning and Weaving workers, many of them waving loaves of bread, with support from their families and local merchants, demonstrated against soaring price increases and bread shortages. The latter have precipitated several violent disturbances, which left up to seven people dead and attracted international media attention. The restive lines outside bakeries in Cairo’s poorer neighborhoods are the most poignant indicator of how unequally the fruits of Egypt’s record economic growth are distributed.

But it is not just the price of bread that is stretching Egyptians’ meager budgets to the breaking point. An investigative report by al-Misri al-Yawm concluded that the price of basic foodstuffs rose at rates of at least 33 percent (for meat), and as much as 146 percent (for chicken), from 2005 to 2008. The official annual rate of inflation for January 2008 was over 11 percent and over 12 percent for February. The Mahalla workers have popularized the demand for a national minimum wage of 1,200 Egyptian pounds a month to cope with this inflation. This move has embarrassed the trade union federation into advocating increasing the minimum wage from 115 Egyptian pounds a month, which has been the rate since 1984, to 800 Egyptian pounds a month. A family of four would live just below the poverty line of $2 a day on 1,200 pounds a month.

The rising cost of living led university professors to stage a one-day strike in March. Doctors have also threatened to strike, and dentists have expressed dissatisfaction with their wages. The participation of these middle-class professionals in protests has lent broader legitimacy to the workers’ movement and further discredited the regime of President Husni Mubarak, which has bestirred itself of late to contain the discontent over shortages of staples, holding out the prospect of increased subsidies. The political prospects of the strike movement remain uncertain, however.

Gathering Dissent

The Muslim Brothers, the largest opposition force in Egypt, have played little role in the workers’ movement. At IBSF there is evidence that the Brothers (or perhaps other Islamists) have sown discord among the workers by claiming that Orascom, which is owned by the Christian Sawiris clan, is seeking to dispossess Muslim workers. In fact, there are both Muslim and Christian workers at the firm. The group of workers who related their stories insisted vociferously and repeatedly that they totally reject making any distinction between Muslims and Christians and that while they had brought their plight to the attention of one of their two parliamentary representatives who belongs to the ruling National Democratic Party, they did not approach the representative who is a Muslim Brother, fearing that he would promote a sectarian approach to their problem.

Left intellectuals seem to be finding ways to support the workers’ movement. The Sixth Cairo Conference and Social Forum, an annual event organized by a coalition of Trotskyists, Nasserists and Muslim Brothers convened from March 27-30. In 2008, as in 2007, workers addressed audiences comprised largely of Muslim Brothers and secular intellectuals, including foreigners. Some Egyptian leftists and progressives shy away from this event. They do not want to be associated with the Muslim Brothers. Others reject its rather simple-minded notion of “resistance” against Zionism and imperialism, one that embraces any and all forms of armed struggle and has a high tolerance for anti-Semitism. Still others regard the event as irrevocably tainted, since the first conference in December 2002 is said to have been funded by Saddam Hussein to rally opposition to the March 2003 invasion of Iraq.

At the same time (perhaps indicating either a certain lack of coordination or sectarian competition), on March 28 the New Woman Foundation organized a celebration in Cairo to honor women who have been prominent in the strike movement. Women strike leaders from the tax collectors’ movement, Misr Spinning and Weaving, and the Hinawi Tobacco Company in Damanhour were acknowledged, along with Na‘ma ‘Abduh, a resident of Wadi ‘Amar near Alexandria, who had organized her neighborhood to protest pollution from the cement dust from the Portland Cement Company, which was causing asthma and other illnesses.

After the festivities the women sat down with a number of their male colleagues and participated in a strategy session to discuss the call for a general strike on April 6, initiated by the Mahalla textile workers. The strike will occur two days before local elections, which will finally take place after a two-year delay to allow time for a sweeping crackdown on the Muslim Brothers. The local elections have been rigged in advance through the elimination of most candidates known to oppose the National Democratic Party and the arrest of 800 Muslim Brothers, many of whom were planning to run in the elections.

The general strike call is being widely supported by groups of workers, professionals and opposition political parties. This is potentially the broadest-based gathering of dissent the Mubarak regime has ever faced. The combination of repression, apathy and political demobilization that has sustained autocracy in Egypt for over half a century is being forcefully challenged, making it increasingly difficult for the Mubarak regime, if not its capitalist cronies, to conduct business as usual.