Social Welfare under Authoritarian Rule: Change and Path Dependence in the Social Welfare System in Mubarak's Egypt

Abstract

This thesis is an attempt to answer the following question: how and why was the social welfare system in Egypt altered under the government of Hosni Mubarak (1981-2011)?
Literatures on the determinants, objectives and structures of social welfare regimes predominantly assume democratic systems of government. They claim that the political influence of organised labour is the most important driving force for the expansion of social welfare systems. This driving force is effective only in open, democratic political arena. This thesis therefore argues that the case of Egypt requires us to consider social welfare regimes within the context of authoritarian resilience.
According to this corpus of work, institutional change under authoritarian regimes can best be explained as a product of government survival strategies, strategies which seek to maximise the interests of the ruling elite, especially their political leaders (rather than the political influence of organised labour which drives social welfare systems in democratic countries). Although the ruling elite under authoritarian rule use social welfare systems in their survival strategies, the strategies differ in their context or ideology. Egypt’s first President, Gamal Abdul Nasser, designed and introduced a social welfare system which supported his primary goal of industrialisation. The income-redistribution aspects of his social welfare system were designed to mobilise popular political support for his regime from the middle and low-income classes, especially urban workers. His successor, Anwar al Sadat, relied still further on the income-redistribution function of the social welfare system, as a means of partially compensating those elements of society which could be considered ‘losers’ from his policy of economic opening (infitah). Whereas his policies expanded the economic base of regime support from the working class and the public sector to the growing business elites, he fortunately obtained several external resources, such as economic aid (from the United States, in particular), fees from the Suez Canal and oil exports. By exploiting these resources as sources to expand the social welfare system, Sadat was able to compensate the ‘losers’ and to maintain political legitimacy with these lower classes through welfare re-distribution instruments. His strategy strengthened the populist feature of the social welfare system.
This thesis argues that change in the social welfare system during the Mubarak era was bounded by the logic of the ‘social contract’, which was reinforced by the expansion of populist welfare provision during the Sadat era. Sadat’s strategy led to fiscal deficit and prevented economic growth in the Mubarak era. Rationalisation of the programmes was indeed advocated by the international financial institutions and the Mubarak government did appear to initiate reforms. However, when looked at closely, the thesis reveals that these reforms did not result in significant reductions in government expenditures on social welfare as was supposedly intended. Despite a decline in external resources, the regime maintained expenditures, ‘thinning’ out the benefits of the welfare system where it could, but never fully engaging in deep structural reform.
Mubarak’s government was caught in an unresolvable dilemma. Economic liberalisation in general created a new alliance between the ruling elite and the growing class of businessmen. However, the authoritarian regime still relied on a legacy of claims to redistributive justice for its legitimacy. As a decline in external resources cut away the regime’s capacity to deliver this through structural aspects of the economy, the regime increasingly relied on social welfare programmes to alleviate poverty and assuage political grievances. Regime fear of direct political protests increasingly drove social welfare policy, with the regime compensating for the effects of liberalisation in one side of the economy by spending money it could ill afford in another. The strategy was itself a fundamental contradiction and inherently unsustainable. As a result, a decline in distributive resources revealed a failure in the social welfare system – enduring fiscal misallocation and neglecting social problems (such as poverty and unemployment).