Tuesday,25 September, 2018
Current issue | Issue 1233, (12 - 18 February 2015)
Tuesday,25 September, 2018
Issue 1233, (12 - 18 February 2015)

Ahram Weekly

‘The costs will be high’

Ziad Bahaaeddin tells Dina Ezzat that a radical overhaul of state institutions is long overdue

‘The costs will be high’
‘The costs will be high’
Al-Ahram Weekly

Ziyad Bahaaeddin is no stranger to Egypt’s corridors of power. He is a former MP and cabinet member, a leading financial lawyer, commentator and member of the Egyptian Socialist Democratic Party.

He spoke to Al-Ahram Weekly on the eve of the fourth anniversary of Hosni Mubarak’s removal. Baheddine argues that “the collapse of the Mubarak regime was in many ways the result of the collapse of state institutions.”

Says Bahaaeddin, “It was really about the failure of a system. We failed to read what the 25 January demonstrations were really about. We decided they were about the Mubarak regime figures denounced by name in the slogans demonstrators chanted in Tahrir Square and elsewhere.”

Bahaaeddin acknowledges that many regime figures were the focus of public anger but says this “was a result of their performance as state officials and of the respective institutions they headed.”

He continues, “We should have depersonalised the public fury that was being expressed but instead we went along with it and overlooked the real demand for wholesale institutional reform.”

The result, says Bahaaeddin, is that the urgent task of reform, which includes education, health, the judiciary and security, has been ignored. “Yes, it was right to hold wrong-doers accountable, but more important than referring a few people to trial and seeing them sentenced for breaking the law is to fix the failing systems in such a way that the mistakes by officials that prompted such massive anger cannot be repeated.”

Bahaaeddin is among a small group of legal experts who believe that it is more important to prevent future corruption. “We wanted to establish a process that could combat corruption and bring about reform and we drafted a few laws and a working plan,” he said. But momentum behind the drive failed to pick up.

“The problem,” he says, “is that it remains easier to personalise what happened. Both the public, and those in charge, do not appear ready to embark on the difficult path of institutional reform.” As he says, “It will be no walk in a park.”

The only product of this early campaign to begin the slow process towards the statute book was a draft bill tackling conflict of interest cases involving government officials. Bahaaeddin promoted the bill when he was a member of cabinet, two years after Mubarak was ousted.

“It is a step in the right direction but it is a very small piece of the jigsaw,” he says. “A more holistic approach is desperately needed. It will not be enough to issue a law here, and prosecute an individual official there.”

Yet the necessary institutional reform is on the radar of neither the public nor the state. One reason why, Bahaaeddin told the Weekly, is that there is no consensus over what even constitutes such reform.

“Take the case of maximum salaries for [government and public sector] officials. The debate over the issue was immediately mired in stories of who was paid what. An issue that was in essence one of institutional reform became personality-led. This is no way to get to the bottom of the problem.”

While there were demands for institutional reform before the 25 January revolution, the uprising amplified them. Bahaaeddin singles out Ahmed Darwish, minister of administrative development in the Ahmed Nazif cabinet between 2004 and 2011, as someone who understood the urgent need for a comprehensive overhaul of state bodies.

“Darwish had an idea on how to enact the necessary reforms. You might agree with him over some parts and have reservations about others but he recognized that something had to be done.”

But why were Darwish’s plans ignored?

Bahaaeddin, who was head of the Stock Market Authority during Darwish’s ministerial tenure, says they were sidelined because of objections from the Ministry of Interior.

“The ministry argued the socio-economic costs the proposed reforms might entail would cause political instability and so the whole file was shelved with no further discussion. But in the end the lack of reforms compounded the institutional failure of the state, fanning public anger. The result was the 25 January revolution, when millions took to the streets to protest the state’s failure to provide the basic rights of citizens.”

Continued delay to enact reforms will be catastrophic, warns Bahaaeddin.

But where to begin?

Education and health, says Bahaaeddin, local authorities and the judiciary, and the Interior Ministry.

“Policing in Egypt has long been stuck in a 19th-century model,” he says, adding that reform of the police would be aided by improving the quality of education and the performance of the judiciary.

An overhaul of the “justice system” is essential to other institutional reform: “It is so simple,” he says. “When wrong-doing is detected promptly and prosecuted efficiently then the space for such wrongdoing to be repeated is immediately reduced.”

In devising strategies for reform, says Bahaaeddin, “there is a big role to be played by academics, public figures and technocrats.”

The costs will be high, and they are inevitable, for which reason “the government and public must agree what needs to be done.” There must be consensus over the strategy, and the process must be transparent.

“There can be no short-termism. This is not a process that can deliver results in a matter of months. Anyone who tells you they can fix Egypt’s education system in a few months is not serious. Reform is long overdue and will take time to bear fruit. I am talking about a minimum of four years for the first results to kick in,” says Bahaaeddin.

The administrative reform of state institutions is “like an iceberg. And if you decide only to look at the tip of the iceberg you will fail.”

Bahaaeddin cites attempts to increase tax revenues as an example of the problems that will be faced. The state can opt either to increase rates on existing taxpayers or expand the base of those who pay tax.

“The first is the easier option. The second will require a complete reform of the tax system.” The easier option, he says, will take less time, but it will compound what is already perceived by the public as being unfair. The second option, which involves addressing widespread tax avoidance, will be more difficult but fairer.

The concerns of the security establishment, warns Bahaaeddin, cannot be allowed to derail essential institutional reform.

“It is clear that the workforce of many state bodies needs to be reduced. The response of the security forces to any suggestion this must be done will be to warn that those who lose their jobs will go out and demonstrate and the state cannot afford this.”

But maintaining the status quo is no longer a viable option. The only answer, says Bahaaeddin, is to ensure “an efficient socio-economic support system is in place to help those who lose their jobs find new employment and ensure that in the meantime they can live with dignity.”

Maintaining an army of redundant employees is obviously “no answer to perfectly clear socio-economic problems.” And what goes for civil servants must apply to workers at all state institutions.

“You cannot enact reforms then say there will be exemptions. The redundant will have to go, as will the corrupt. There is no other way of doing it.”

Is such a course possible in a country facing serious security?

“Yes,” insists Bahaaeddin, “because if it is enacted properly reform sends a message to the public that corruption and the misuse of the workforce is finally being addressed.”

Bahaaeddin discounts the argument that democracy must be in place before such reforms can be considered. To wait for a regime in a state of transition to be fully democratic before it starts to reform will only set back the process of democratization, he says.

Political stability is of course an asset when difficult decisions have to be made. “We saw this in the early weeks of President Abdel-Fattah Al-Sisi’s rule, when he introduced some subsidy-related reforms without too much ado. He relied on his popularity and the public’s understanding that the changes were necessary to press through the reforms.”

Bahaaeddin believes the situation will improve once parliament is in place. “Even if it is not perfectly representative there will be a legislative body to serve as a partner in essential decision-making. No one expects Egypt to move to a Swedish political system overnight. We face an uphill struggle and we cannot wait for the perfect political system to arrive before we begin the climb.”

The most important thing is for reform to be transparent and an appeal process set in place. “You mustn’t do what Hesham Kandil [Mohamed Morsi’s prime minister] did and say economic reform can be achieved without inflationary pressure.” You need to be honest, and tweak the process where necessary.”

Again Bahaaeddin cites Al-Sisi’s subsidy reductions. “At that point it was clear to a good part of the public that the reforms were designed to serve the interests of the most disadvantaged.” The authorities will need to engage in, and win, a host of similar debates.

When Mubarak-era minister of finance Youssef Boutros Ghali proposed a real estate tax, to be levied on top-end properties, the failure to engage the public in debate and explain what was being planned resulted in the proposal being shelved. At the time, says Bahaaeddin, the media did little but echo the complaints of vested interest groups and, in doing so, agitated public opinion against the tax.

Which raises another problem: “The dilemma was not so much about the tawdry performance of much of the media, but of how, for large segments of society, the established media has become the sole source of information. This raises many issues over the performance of MPs, political parties and municipal authorities.”

Bahaaeddin argues that it is in the best interests of the regime to assemble a mixed body of officials and experts to oversee wide-ranging reform of administrative state institutions. The demonstration of serious political will and the creation of constitutional bodies to take on the necessary tasks are essential if the process is to succeed.

“If we are unclear about where we want to be, how to get there and who is best qualified to chart the route we will go astray,” he warns.

The unified investment law, which is now being considered, is an example, he says, of how things should not be done. On the pretext of helping investors cut through red tape it overloads the Investment Authority with too many responsibilities and will re-introduce the kinds of “tax exemptions” which were thoroughly discredited in the final years of Mubarak’s presidency.

Reform does not involve replacing one failing system with another that is destined to fail, he says. And what applies to the economy also applies to education, health, the justice system and security.

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