Egypt revolts: What now for its co-ops?

Posted on October 2, 2011 · Posted in Co-operative News

I still wear, as Tony Blair might have put it, ‘the scars on my back’ from my involvement in the co-operative sector. To phrase it more literally, I remember vividly arguments about whether co-operation is part of the way in which society can be changed for the better, or whether in practice it is an instrument of economic repression imposed by dictatorial governments. The explanation for the conflicting view lies in the difference in international understanding of what a co-operative is and what it stands for.

In Britain and Ireland, co-operatives are recognised as independent organisations, which stand outside both the mainstream capitalist system of business structure and the Stalinist method of a centrally planned economy. The term has different connotations, though, in some other countries.

In the former East Germany, for example, they were seen as instruments of central government that were far from independent. Rather, they could be viewed as a means of providing bribes to leaders of the Communist Party that avoided going through the official government machine. They were also de facto tools of the often corrupt system of rationing – and many of the stores were very dowdy, as well. When the Berlin wall fell, the population celebrated also the collapse of the structure of many, state-sponsored, co-operative businesses.

It will be interesting to see if there is a similar response as the revolution in the Arab world continues. In several Middle East countries, co-operatives have the blessing and support of dictatorial leaders. For those presidents and prime ministers, we can assume, co-operatives are not seen as independent bodies that are representative of the ideals of freedom.

This is true in Egypt for example. The co-operative sector in Egypt is embedded in the history of the country’s liberation struggle, from the early 1900s onward, and which flourished when first Muhammad Naguib became president and then Gamal Abdel Nasser followed him soon after. As Arab nationalists and socialists, they were motivated (at least initially) by their unhappiness about the unfair distribution of resources and the scale of poverty in the country. Just over 5% of the population owned 65% of the land – and many of the peasant workers operated, literally, on starvation wages. To address this essentially murderous situation, Naguib and Nasser introduced a comprehensive system of land reform, which involved creating large numbers of agricultural co-operatives.

There are today 6,682 agricultural co-operatives in Egypt, with over 100,000 members, and another 92 fishing co-ops, with a million members, producing 97% of the country’s total fish production. In addition, there are 3,426 consumer co-operatives with four million members, while the Producer Co-operative Union represents 482 co-ops, employing four million workers. And, to complete a picture of a commercial environment in which co-ops play a key role, there are 2,370 housing co-ops, with 2.5 million tenant members.

The Arab Co-operative Union is based in Egypt, but is apparently a body heavily influenced by government. And the same level of government influence holds true in other countries in the region, including Kuwait.

Co-ops have thrived in many Arab states with the assistance of subsidies from government. Consequently it seems likely that if there is a liberal democracy arising in Egypt and other Middle Eastern countries as a result of the revolutions, the structure of subsidised production and trade is likely to be replaced with a free market, in which many co-ops are either privatised or allowed to fail. This could not only reduce the size of the co-op sector, but also undermine the welfare of many vulnerable citizens. While the international co-operative movement is keen to support the co-ops in Egypt and elsewhere in the Middle East to transform themselves into genuinely democratic organisations controlled by their members without government influence, time may be against them in achieving this.

It is clear that many Egyptian co-operatives are having a difficult time at present – possibly in part because of their association with the now collapsed corrupt government. Some co-ops report serious damage to their property, while technology is also failing them. It remains difficult for outsiders to phone into co-ops in Egypt.

Despite the difficulties, there is also the promise of a better future for co-ops in the region. Stirling Smith, international programmes manager at the Co-operative College, reports “there are countries [in the Middle East] where there is a thriving co-operative sector”. He explains: “Egypt, which is currently the epicentre of protests, has a large state-sponsored and controlled co-operative movement. It is part of the structure established in the 1950s by Nasser to ensure control of the country. In this system consumer co-operatives receive subsidised commodities from the government. Naturally, these co-operatives are very careful to avoid any conflict with the state. We know that Kuwait has a similar system. It’s hard to imagine that these co-operatives have any real membership control or in the current situation that they are very popular.”

Smith continues: “In Iran, around 7% of GNP is accounted for by co-operatives – and the government has declared its intention to double this figure. In Morocco, a women’s co-operative plays a key role in preserving the rare argan tree – UNESCO has declared the forest where is grows a world biosphere reserve – by making oil from its fruit. Saudi Arabia has 160 co-operatives, mostly workplace-based, that offer services to members including savings and credit. In Palestine, co-operatives have around 55,000 members and one of their products – Fairtrade olive oil – is now sold in co-operative stores in the UK. A modern law is awaiting final approval.

“There does appear to be rising tide of interest. In April last year, we were invited to Bahrain and, following discussions, the Ministry of Social Development there signed a contract with the College to undertake a three-year programme to support co‑operative development. Saudi Arabia also invited College to participate in an annual co-operative conference in Jeddah and to give a keynote speech. The College was the only organisation present from outside the Arab world. The College has also been invited to speak at a conference in Iran later this year; we have been asked to look at the feasibility of setting up a college in Palestine. The Ministry for Co-operatives in Morocco has also recently asked to collaborate with the College.”

But in several of the most interested countries – Bahrain, Morocco and even Iran – the governments have in the past days faced serious street challenges to their authority. Negotiations with state authorities to expand the co-op sector in those countries may ultimately come to nothing. Awareness of growing social unrest below the surface may even have been a factor for some governments in their increased interest in co-operatives. There are other examples where long-standing, remote, authoritarian governments have recently shown more concern about the situation of their poorest people. Even in Saudi Arabia, the rulers have become more wary about the problems of deep-seated youth unemployment.

Anyone who has visited Arab countries in the last 20 years, and taken the opportunity while there to discuss politics with people living in countries dominated by ruling elites, will not be surprised by the groundswell of anger that is rising up across the Middle East. There is a long-standing grievance by many people that they have been betrayed by leaders who have stolen national wealth for personal gain, have repressed their populations in the way they have used armies and police and also, a common cause for unhappiness, have not applied Islamic principles.

The revolutionary tide is likely to wash across much of the Middle East in the coming weeks and months. We should watch closely to observe whether what emerges is a new society in which democratic co-operatives are central to the new economies, or whether they are swept away as part of the detritus of the old and discredited regimes.