Vulnerable State

Vulnerable State

Failed states in the world today are two kinds: vulnerable countries and the most failed states, as per the mainstream classification of countries in accordance with their level of performance and ability to achieve their tasks.
One of the most important of these tasks is drafting general appropriate policies, law enforcement, protecting the poor, ensuring public health and education, environmental conservation, encouraging individual and collective initiatives, managing major projects and providing a fair social insurance.

If we look at the performance of the government in Egypt and the extent of their fulfillment of these duties, it is easy to conclude that it is not successful.

We do not need a thorough study to reach this conclusion.

Although Egypt has not been so far classified in international reports among the worst failed states, it is considered a vulnerable state. However, the decline in the performance of the Egyptian state could categorize the country as one of the most failed states, taking into consideration that one of the major reports in this area, namely the report issued by the US Foreign Policy magazine, has already put Egypt among this type of states.

The weakness of the performance of the state was incomparably demonstrated twice in recent weeks: in the confusion that marred the decision to change the administrative division and the establishment of two new provinces without sufficient consideration. The second was the decision to impose new taxes to finance the salary increment of the state employees, leading to hikes in prices.

These two decisions have detected a growing imbalance in the making of general policies, namely the core of the role of the state. The second decision has showed a growing tendency to lean towards the rich, contrary to one of the most important elements of the success of the state, the protection of the poor and providing fair social insurance.

To issue a decision to re-divide some provinces and transfer the administrative responsibility for a region from one province to another there should be a road linking this region to its new parent province. This road should be suitable for traffic.

The makers of the administrative re-division decision, however, decided to transfer the administrative responsibility for Wahat region from Giza Province to Minya, without a paved road linking them. The state has discovered this grave mistake after issuing the decision, therefore it was forced to modify one day later.

This mistake can be trivialized if compared with the serious consequences of the insistence of the Egyptian government to place the greatest part of the social burdens on the poor. A successful state obtains the necessary funding to cover such financial burdens from the rich by imposing taxes on capital gains.

The government’s mistake is twofold. It decided to grant its employees a 30 percent social allowance without being financially ready to cover such an increase. It has obtained the cash for this purpose from the pockets of the poor, the majority of which has not benefited from such raise.

An indicator of the failure of the government performance is that it is still running the country the same way it had pursued since the 60s of last century. It has forgotten that wage earners are now more underpaid than those who have private businesses, and perhaps less than the unemployed.

Moreover, it is uncertain whether those wage earners will obtain the social allowance, as it is difficult to make the private sector abide by this increase.

As for the workers in the so-called informal sector, which has largely expanded in recent years, they are outside the jurisdiction of the state.

This means that the state has awarded the increment to only a segment of the society, and then imposed exorbitant taxes on everyone, including the poor, who will not receive this increase.

But the most serious implications of this decision, which affirms that Egypt has already become a state in grave danger, is that the ruling elite is biased towards the higher classes at the expense of lower and middle classes. It was easy to finance the social allowance from the imposition of capital gains tax on projects that are still exempt from taxes, according to the law of the free zones, although they generate astronomical profits. The profits of stock markets and private and foreign banks are also still not subject to any taxes, although they are increasing.

If the state is biased toward the holders of these profits, it had another way to provide the necessary resources by achieving a minimum of justice. The biggest part of the targeted amount to be collected by raising the prices of fuel, for example, can be obtained from the wealthiest people by imposing a progressive “fuel tax” on the car license according to the number and model of cars owned by the individual, instead of imposing sales tax on everyone.

It is unfair to apply the new rise in fuel prices to those who only own a small car and those who have five or six luxury cars without discrimination. But the decision makers do not feel yet that they govern a state in danger, and therefore they think playing with fire is safe.

Dr Waheed Abdel Meguid is an expert at Al Ahram Center for Political and Strategic Studies.