‎”… Yet the crowds were not placated, and they spent the next hour in the courtyard repeating the classic songs of the uprising, “thowra thowra huta nasr” (revolution, revolution until victory).” –Al Jazeera (4/25/2011)

The revolution which overthrew Hosni Mubarak is in danger. While Western media outlets have given primacy in their coverage of events to speculative discussions about the historic, current, and future role of the Muslim Brotherhood as well as the pivotal role of the Egyptian military, it is the organizations representing the rights of factory workers and allied leftist youth that actually did the heavy lifting from an organizational perspective before and during the revolution (see for example the April 6th Youth Movement). Thus, it is these same groups (whose demands include nationalizing textile factories, improving safety conditions, increasing wages for workers, and a maximum wage for the owners of capital) which will need to be addressed alongside more established political organizations if enduring stability is to be achieved.

But the demands of the workers are scarcely likely to be met given the severe economic challenges which lie ahead for Egypt and the broader global economic context in which this revolution is unfolding. The government has already turned to the IMF for $10-12 billion in financial assistance and $2.2 billion from the World Bank, citing a dramatic decline in revenue from the vital but perennially endangered tourism industry and a wave of worker strikes in recent months. Given the neo-liberal economic ideology and decisionist (Schmittian) political outlook toward developing countries that is prevalent among the Western governments that dominate the Executive Boards of the Bretton Woods institutions, as well as with military leaders and comprador economic elites in deveoping countries, the Egyptian state will undoubtedly face external pressure to repress worker demands. In fact, foreign pressure will most likely be used as a welcome opportunity by comprador elites to pursue preferred policies while placing the blame for repression on an external bogeyman.

As with many other developing countries, Egypt has a complex and politicized history of relations with the IMF (not to mention an even longer and more sordid history of sovereign debt to Western creditors prior to WWII). At times the historical narrative about Egypt-IMF relations has focused almost exclusively on the 1977 food riots that followed an attempt at structural adjustment during the Sadat regime. This narrative has usually been oversimplified by left leaning academics who have all too willingly bought into the military regime’s account of the structural adjustment program as a moral lesson in the political shortsightedness of the mandarins at the Fund and the inhumanity of a ruthless and disembedded neoliberal economic ideology. (In point of fact and as we now know, it was the military regime which proposed cutting food subsidies when the Fund had recommended slashing the unsustainable military budget). An overemphasis on that moment risks ignoring all of the efforts since then to implement neoliberal strategies of privatization, liberalization, and integration — half-hearted, illusory, and lackluster though they may have been.

If we look beyond the kabuki theater of the state’s relations with the Fund and neoliberalism more broadly, we can see that prospects for meeting the workers’ demands and reviving the textile industry, which constitutes about a quarter of both industrial employment and industrial production, are unlikely to emerge through neoliberal strategies. The current challenge to Egypt’s textile industry goes back to the phase out of the GATT/WTO textile quota regime in 2004 and the beginning of genuine global competition. Egypt’s textile industry which is characterized by low productivity simply could not compete against Chinese textile firms. Egypt was able to gain some breathing room by signing on to a tri-lateral preferential trade agreement (the QIZ) with Israel and the US, but the political climate in Gaza and the West Bank has hardly made this a robust alternative for Egypt.

If Egypt hopes to compete against China, it will need to study China’s reform of its own textile sector in the nineties which laid the ground work for its return to profitability in 2000.  The short version of the story is that China cut 2.7 million employees out of 7 million, closed 600 state-owned firms (1/5th of the total), suffered billions in losses while it restructured and updated equipment (Lardy 2002, 23). The real question is what enabled the state and society to endure this restructuring? The answer is far more complex than can be covered here, but at the very least it seems apparent that a set of economic strategies designed to winnow the state is the wrong path to take. To the contrary, the East Asian “model” generally points to the importance of strengthening state capacity in order to compete in the global marketplace. However, while such strategies are often anchored by nationalist ideology, they are rarely kind to the interests and radicalized demands of workers.