Egypt has not seen much progress following the Arab spring, despite its judiciary trying to resist political intervention. It has the worst fiscal transparency in the world, and recent attempts at reducing the administrative burden and increasing regulatory quality have a long way to go to make some difference. Major actors above the law like the army have been converting their power advantage into an economic one, further distorting the market and governance. While popular demand for good governance exists to some extent, the repression of the media, civil society and the judiciary makes control of corruption very implausible.
The final title in the series The Anticorruption Report covers the most important findings of the five-year-long EU-sponsored ANTICORRP project on corruption and organized crime. How prone to corruption are EU funds? Who wins and who loses the anticorruption fight? And can we have better measurements than people’s perceptions to indicate if corruption changes? This issue introduces a new index of public integrity and a variety of other tools created in the project.
The Anticorruption Report Vol. 4: Beyond the Panama Papers looks at the performance of EU Good Governance Promotion in different countries in the European neighbourhood. Case studies focussing on Spain, Slovakia and Romania are considering the impact of EU structural funds and good governance promotion within the Union. Further chapters looking at Turkey, Egypt, Tunisia and Tanzania are analysing EU democracy and good governance support in third countries. The report, edited by Alina Mungiu-Pippidi and Jana Warkotsch offers a comprehensive and overarching look at the successes and pitfalls of the EU’s efforts to democracy promotion and introduces new ways to assess the state of good governance in different countries around the world.
The European Neighbourhood Policy has without a doubt emphasized the importance of good governance, which became a priority objective in the 2007-2013 EU-Egypt country strategy paper. Within this framework, the EU has conditioned its aid on Egypt’s commitment to reforms. However, in practice, the “softly softly” approach that has seen the EU be too flexible on tying its aid to reforms in the face of the Egyptian resistance to conditionality, has proven to be an extremely opaque and ineffective process. While corruption has been a major governance challenge for Egypt, the EU – only directly addressing the issue in a small-scale decentralized project – did not implement any specific anti-corruption mechanism for oversight or monitoring despite having over 60 per cent of its funds channelled to Egypt’s national treasury through sector budget support. The 2011 Egyptian revolution incontestably led the EU to reflect upon its policies and to pledge stronger commitment to the promotion of good governance and the fight against corruption. But in the highly volatile political environment that followed, the EU’s focus on refining its policy instruments has prevented it from acting in a timely fashion and, once again, the implementation of reforms has lagged far behind Brussels’ outstanding declarations. As the present paper suggests, the EU’s approach has been, in essence, heavily bureaucratic and far less strategic. One fair assumption regarding the EU’s lack of enthusiasm in genuinely addressing corruption – and good governance – would be that the issue has never truly impacted on the core of EU–Egypt relations, which have remained grounded on economic, stability and security concerns.
National Endowment for Democracy hosted Alina Mungiu-Pippidi for a talk in Washington, DC where she argued that the demand for good governance erupting in grassroots movements in Egypt, India, Ukraine, Turkey and Brazil should be seen as a second phase of transition to democracy as global constituencies are no longer satisfied with elections alone and demand more equality of treatment from governments everywhere.
Mungiu-Pippidi shared data from the research project ANTICORRP showing that favoritism of governments in relation to citizens is the number one cause of high perceptions of corruption and criticized the global corruption movement for neglecting this phenomenon. She also expressed skepticism towards top down anti-corruption reforms, arguing that in countries where corruption is widespread the spoliation of public resources could be described as a pyramid, with people on top spoiling the most. She furthermore encouraged those who care about promoting democracy to invest in structuring this growing demand for new government.
Mungiu-Pippidi concluded her presentation by describing three situations in which such countries may find themselves, and corresponding policy approaches:
- The first situation requires the presence of a strong and autonomous civil society. In this situation, those who lose from corruption are strong and organized enough to take action. They are the main drivers of change, and as an approach, anti-corruption strategies should be aimed at helping them achieve their goals.
- The second situation is where those who lose from corruption are not strong and organized enough to take action. Instead of directly pursuing anti-corruption strategies, the recommended approach is to develop civil society capacity to be autonomous in the future.
- The third situation is one in which there are no significant domestic losers meaning that no corresponding anti-corruption strategy is needed except in terms of aid distribution.
The new data is from an upcoming ANTICORRP report, an extensive quantitative analysis of causes of achievement and stagnation in the global fight against corruption. The report also argues that particularly in countries where corruption is the norm, top-down reforms are ineffective.
By: Isabel Bucknall and Alex Odlum
As demonstrated by the Muslim Brotherhood’s widespread boycott of this month’s constitutional referendum and the ensuing post-poll violence, it is clear that deep-seated political tensions are unlikely to recede swiftly in Egypt. The road to democracy will continue to be long and hard, and donor assistance efforts will have to endure through thick and thin if they are to have any impact. To date, the EU’s assistance strategy has been unable to handle Egypt’s tumultuous political realities. If the EU is to offer effective assistance to support Egypt’s democratic progress, it must significantly change its strategy.
EU aid to Egypt channeled through the European Neighbourhood Partnership (ENP) is manifestly ineffective in its current format. Tying EU assistance to Egyptian progress on governance standards has proven too rigid. Setting such conditions is incompatible with a turbulent political atmosphere. Substantial reform is urgently required to scrap conditionality as the overarching rationale of the ENP, replacing it with a more selective, trade-based approach that supports Egyptian development amidst and despite political chaos.
In 2007, the EU launched a €1 billion European Neighbourhood Partnership programme to support Egypt’s political and economic development. It has proven futile. A European Court of Auditors report published last year found that funds intended to back Egyptian government reform in democracy, human rights, good governance and justice were either ineffectively spent, or not disbursed at all. Of €17 million allocated to the Promotion and Protection of Human Rights and Civil Society between 2007-2010, for example, only 1.8 million was spent. As conditions remained unmet, funds failed to leave EU coffers and projects were perpetually grounded. The result? Negligible, if any, EU impact on Egyptian democratic progress.
Conditionality, even when based on partnership and negotiated standards, inevitably results in impassable deadlocks in unstable political environments. Devolving ownership by setting conditions that tie in with a country’s own development agenda are the key to making conditionality work. But when that development agenda, and indeed the government itself, are changing at a rapid rate – Egypt has had four different heads of state and 2 constitutional referenda since January 2011– previously set conditions are unlikely to be fulfilled by rival politicians.
Of course, such chaos may have been difficult to foresee before 2011. Yet, rather than brace for a long and divisive struggle for power, EU policy hastened to deepen its commitment to conditions that had been agreed with a government just toppled by sheer popular force. Thus far, EU calls of “more for more” have been drowned out by the retreat of democratic progress and descent into political instability.
Scrapping conditionality and reframing the ENP around selectivity must be the first step of reform. This approach would allow Egyptians to regain ownership, with the Government designing and implementing their own targets for good governance prior to receiving full aid funding. Seed-funding and technical assistance would be essential to kick-start the process and provide the Egyptian government with initial momentum. This model would allow Egypt to signal its own strong commitments to reform, stimulating more donor and private investment, in turn producing a further incentive for the government to push forward on social, political and economic reform.
A move from conditionality to selectivity drastically cuts EU funding outlays for governance support to Egypt. As little as €10 million over 2 years would be required, according to baseline figures of the Millennium Challenge Corporation (MCC), an independent US government aid agency who works using the selectivity model. It would be false, however, to equate a renewed emphasis on efficiency and effectiveness in development aid disbursements, with abandoning Egypt altogether. Selectivity can only succeed if it is matched by a parallel commitment to economic support through deeper cooperation on free trade.
Current bilateral trade arrangements between the EU and Egypt stem from 2004 ENP agreements limiting manufacturing and agricultural tariffs. To foster tangible impact through trade, the EU must substantially deepen its commitments to Egypt and the surrounding region. Talks that began in 2012 on a Deep and Comprehensive Free Trade Area encompassing Tunisia, Jordan, and Morocco need to be urgently revived.
A DCFTA trade package should comprehensively eliminate agricultural and manufacturing tariffs and all other barriers to trade. Technical assistance should also be lent to Egypt to align regulations with EU standards to the furthest extent possible without jeopardizing Egypt’s trade compatibility with other global partners. Finally, the DCFTA should relax rules of origin restrictions on goods assembled in Egypt and other Southern Mediterranean countries, allowing benefits to accrue in advance of final product transformations. Smooth flows of component trade between producers in Egypt and high-end assembly plants in Europe boast great potential for mutual benefit and should be encouraged, rather than inhibited by arbitrary origin rules.
Agreement on a DCFTA will profit both Egypt and the EU, not only economically, but also politically. Given that dire socio-economic malaise contributed to protestors demand for Mubarak’s overthrow in 2011, political tensions are likely to soften if economic growth can be boosted through trade and translated into visible improvement to livelihoods.
2014 holds a host of democratic opportunities and challenges for Egypt. Momentum for reform should rightly be driven from within. The EU must also strike the balance of being a responsible neighbor, and treating Egypt as an equal partner, listening to and accepting the realities of the Egyptians’ self-determined struggle for freedom and prosperity. Implementing an assistance approach that combines selectivity and free-trade is a legitimate response to the socio-economic and political demands of Egypt: “Bread, Freedom and Social Justice”.
Isabel Bucknall and Alex Odlum are Master’s of Public Policy candidates at the Hertie School of Governance in Berlin.
Earlier this month an Egyptian Court convicted 43 employees of non-profit organisations to up to five years imprisonment, under charges of membership in illegal organisations. The prosecution’s main argument was that those organisations were receiving foreign funds and promoting political activities without being registered by the government, thereby ultimately infringing on the sovereignty of the Egyptian state.The trial, which began in early 2012, also mandated the closure and seizure of offices and assets belonging to US-based International Republican Institute, the National Democratic Institute and Freedom House, and to Germany’s Konrad Adenauer Foundation.
This decision was the outcome of a crackdown on foreign non-profit groups that took place during the military rule that followed Hosni Mubarak’s ousting. In December 2011, the state security forces raided several offices of organisations that had been defending democracy and human rights in the country, accusing them of promoting anti-government protests and operating illegally. The organisations claimed that the government had stalled all registration procedures.
The current administration, under Mohammed Morsi, has also taken steps to further constrain civil society activities in Egypt. A law proposed to regulate the operation and funding of NGOs in the country requires that foreign NGOs be approved by a state committee and that each foreign donation received by national non-profit organisations also be submitted to time-consuming approval procedures. This poses a threat mainly to human rights groups that receive almost exclusively foreign funding.
Representatives of 40 Egyptian civil society organisations have presented a joint statement in reaction to the government’s attempts to further curb their activities in the country and suppress rights to association at large. They claim that the vague language of the provisions in the draft law allows the government much discretion to bar an organisation. Although the law is less restrictive in regulating the registration of local non-profit organisations, it creates much leeway for limiting the activities of foreign organisations.
These recent developments further contribute to existing concerns about the path that Egypt is taking in its democratic transition. These constraints to civil society activity may be severely detrimental to democratic consolidation in the country, as historical examples of democratic transitions show that civil society often plays a fundamental role in this process.
(The picture featured above is from al-monitor.com and is credited to Reuters/Mohamed Abd El Ghany.)
An article by Anna Nadgrodkiewicz discusses how many questions remain about what can be expected of Egypt’s democratic transition over a year after Hosni Mubarak was ousted. Among some of the issues that arise is the concern that the rupture with old corrupt practices in the public administration may not have been so radical as expected by protesters and the opposition to the previous regime.
Many citizens are pessimistice about real change taking place any time soon, as they continue to experience bribe requests when coming in contact with public services. According to Tarek Mahmoud, “it turned out that ousting Mubarak was easy but removing his corruption is mission impossible”. It is also feared that grand corruption will continue at the same level as before, unless substantial institutional reforms are implemented to improve the functioning of the political system.
Apparently, as shown during the recent electoral campaign, fighting corruption is not among the main policy issues on the political agenda. This is particularly worrisome in a context where corruption seems to have become so widespread and ingrained among citizens, who find no alternative other than pay bribes to public officials to obtain documents and licenses, among other things.
In fact, it is believed that weak law enforcement has led to an increase in petty corruption since the revolution, something that may also be associated with the high level of informality in Egypt, where 92% of urban property owners don’t have official titles and 82% of businesses are run informally.
According to the author, reforms to improve the foundations of democratic governance, such as accountability, rule of law and access to information, are needed together with others that help reduce incentives and opportunities to corruption, such as cutting red tape and promoting entrepreneurship.
For more details read the article “Anti-Corruption Views – Will corruption undermine Egypt’s transition?” on trust.org. The picture above is also featured in the article and is credited to Reuters/Amr Dalsh.