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EBRD hiding head in the sand on Egypt democracy

By Kuba Gogolewski Individual rights, gender equality, freedom of religion, freedom of thought and opinion, freedom of press, the right to go on strike — all these and other rights and freedoms are enshrined in the new constitution that Egyptians voted overwhelmingly in favour of. But do these words turn Egypt overnight into a democracy? …

Kuba Gogolewski
Kuba Gogolewski

By Kuba Gogolewski

Individual rights, gender equality, freedom of religion, freedom of thought and opinion, freedom of press, the right to go on strike — all these and other rights and freedoms are enshrined in the new constitution that Egyptians voted overwhelmingly in favour of.

But do these words turn Egypt overnight into a democracy? Egypt has always grappled with law-enforcement issues and there is a good likelihood that such provisions, as those quoted above, might not be implemented at all in real life. Essentially, every right and freedom stipulated in the constitution continues to be up for grabs. Military trials for civilians are still in force. And Shari’a Law is still defined as “the main source of legislation”.

The context in which the constitution was voted too is relevant for the likelihood that these articles will be implemented. The vote for the constitution has been from the start framed as a vote that would confirm Commander-in-Chief Abdel Fattah Al-Sisi’s legitimacy to rule the country. And run in the next presidential elections. In the last weeks, Al-Sisi’s posters were plastered all over Cairo. Opponents of the draft constitution have endured a severe crackdown, while aggressive “yes to the constitution” campaigns have been implemented all over the country.

Watching from Europe, we can see these things. But some of our institutions are pretending not to notice.

Soon after the Arab Spring, among the pledges of support to the region made by the EU and the US was the expansion of the European Bank for Reconstruction and Development (EBRD, originally created to promote democracy and market economy in post-Socialist countries). By now, EBRD is already financing projects in Egypt, Jordan, Morocco and Tunisia.

One of its most recent loans in Egypt is pledged to IPR Transoil Corporation, IPR Energy Red Sea, Inc. and IPR Energy Suez, Inc. for field development and upgrades at their oil and gas operations. In the near future, the bank will consider approving loans to giant food producer Nestle for expanding production capacities and another to the Egyptian government itself to then pass on to the state energy company for the modernisation of two power plants.

The EBRD actually approved the loan to the three oil and gas companies in the same period (second half of December) that the offices of NGO ECESR (Egyptian Center for Economic and Social Rights) were being raided by Egyptian police forces.

What is wrong with this scenario?

When the US and the EU pledged support to Arab Spring countries, they spoke about democracy and even recognised social justice as one of the main concerns of the revolutionaries. But among the mechanisms they proposed to help meet the goals of the revolution was this bank, the EBRD, which does not exactly fit the ticket.


The EBRD’s mandates writes (in Article 1): ”The purpose of the bank shall be to foster the transition towards open market-oriented economies and to promote private and entrepreneurial initiative in countries committed to and applying the principles of multiparty democracy, pluralism and market economics.” This was a mandate written for post-Socialist countries of 1989. It’s now being implemented in countries from North Africa and the Middle East who have an entirely different baggage.

One of the core ideological assumptions of the EBRD is that fostering market economies and the private sector would bring about democratisation. Again, citizens of post-Socialist countries in 1989 may have believed that but probably not many Egyptians today do.

Moreover, EBRD assumes that by merely being active in a country that has democracy or human rights issues, by working its private sector magic, it could contribute to democratisation.

But tell the Egyptians who are jailed today for speaking their minds about politics in their country that EBRD loans to Nestle and the oil and gas sector contribute to democratisation – what would they say? Would they laugh, would they be terribly offended and angered?

This week (Monday, 27 January), Egyptian and international NGOs are sending a letter to EBRD president Suma Chakrabarti, in which they write that, by lending in Egypt despite the human rights abuses committed, “the EBRD sends a very clear message that it is acceptable to implement loans while ignoring preconditions to democracy in revolutionary times within a deeply troubled and divided country”. The NGOs also ask the bank to “draw a benchmark beyond which it shall no longer engage nor expand in a country of operation.”

By maintaining its operations in Egypt, EBRD sends a clear message: it is acceptable to conduct business in a country where brutal crackdown on civil society happens daily, where prisoners are regularly raped and tortured in jails and police stations, where young women face random acid attacks in broad day light on the busy streets of Cairo, and where social justice is almost inexistent.

Although EBRD calls itself a development bank, the current EBRD actions in the country do little to profit the development of this society where a majority of Egyptians live with $200 per month.

It is imperative that EBRD and its shareholders (among them, the US and EU countries) have an honest debate over the current situation in Egypt and the role EBRD may fulfill there. For sure, giving loans to Nestle while the police are arresting people who speak their minds is not the answer.

If things continue in the same way, pretending to help Egypt via EBRD loans is nothing more than hypocrisy.


Kuba Gogolewski is coordinating campaigns in the MENA region for CEE Bankwatch Network. Bankwatch is an NGO monitoring international financial institutions including the EBRD.




Dear President Chakrabarti and EBRD directors,


This letter is in response to the bank’s comments on the letter sent to Sir Suma Chakrabarti’s letter pertaining to the political developments in Egypt and the country’s adherence to the Article 1 principles of EBRD’s AOE. Namely, developments pertaining to the oppression of civil society, but also in comment of the deterioration of the 14 principles against which the bank indicated it will gauge Egypt’s progress towards meeting the standards of an advanced democracy, which are prerequisites to EBRD’s support as a public and transitional bank.

The below undersigned organisations are highly concerned that, despite the bank having “significant concerns about [the state’s] conformity with these principles [of democracy]”, the bank is nonetheless moving towards “making Egypt a full country of operations”. This casts doubts on the object, the purpose, and the effectiveness of the democratic principles of the bank, as it decides to not only remain engaged, but also expand lending in the country.

If the recent human rights and freedom of expression violations, anti-democratic practices and absence of representative democracy, separation of powers, freedom of civil society and multiparty democracy in Egypt do not constitute a breach of the bank’s political mandate, then we question: what does? We believe that the bank ought to draw a benchmark beyond which it will no longer engage nor expand in a country of operation. We have growing concern that the bank’s uninterrupted public but also private loans that affect the public life in Egypt (e.g. energy and infrastructure projects), without any measurable and tangible reconsideration despite the recent crackdown and increased repression, casts doubts on the political mandate of the bank and the value added of its participation in the region, especially regarding its identity as a development and a transitional bank.

Moreover, ignoring preconditions to democracy in revolutionary times would very dangerously identify the bank’s operations as opposed to public interests.  Egyptian and international civil society has previously expressed growing concern over the negative effects that IFI and MDB policy choices are having on democratic transition in the region, by providing legitimacy to state practices identified as a reproduction of the Mubarak regime. Such concerns were voiced through the “Save Our Spring” CSO campaign and petition.  Since the last correspondence with the bank in late 2013 until today, the crackdowns on social movements and violations of civil and political rights have escalated.

On 22 December 2013 the Abdeen Court issued a verdict against Ahmed Maher, the previous coordinator of the 6 April Youth Movement; Mohamed Adel, the Media Representative of the same movement, and volunteer in the media unit (ECESR); and Ahmed Douma, an activist for political and civil rights, and previous member of the High Council for Culture. The three were sentenced to three years in prison and fined EGP 50,000, each for organising a protest against the newly administered law regulating the rights to protest (Law 107/2013), which is highly criticised and was issued then by the interim president in the absence of a legislator.

In a similar situation on 2 January, a court in Alexandria sentenced eight protesters to two years in jail and a EGP 50,000 fine for gathering and holding a protest before the court trial of Khaled Said’s murderers. Khaled Said was the 2010 victim of police torture who many hold as an icon of the 25 January Revolution.


Arbitrary arrest and detention is not only limited to banning the right to protest, but is also used against members of opposition political parties. Members of Masr Al-Qawia were arrested for opposing the newly-proposed constitution.  Captured while hanging  “No to the constitution” posters, the Egyptian state practices cast major doubts on the status of  freedom of expression and the legitimacy of the new constitution voted upon in mid-January 2014, but also raises serious concern over the future of multiparty democracy in Egypt, a major precondition to EBRD support to countries of operation. Following the low turnout in the referendum that passed the constitutional amendments, the state continues to arbitrarily arrest and detain the youth of the political and social movements in Egypt. During the 3rd anniversary of the 25 January Revolution, Nazli Hussein of the “No Miliary Trials for Civilians” campaign and other peaceful protestors were arrested and face trumped up charges. The crackdown saw about 1,000 detainees arrested in three days.

Based on these concerns, and those raised in previous correspondences, we ask the EBRD administration to take more active steps to adhere to the bank’s Article 1 principles, and to adhere to the wider obligations of not supporting, helping legitimise, or contributing to the endorsement of practices of oppression and dictatorship. We also call upon EBRD to undertake a more frequent assessment of the countries in which the human conditions are deteriorating. A yearly assessment is simply too slow and too late to reflect the dynamic changes taking place in countries such as Egypt. This provides a perfect alibi for authoritarian regimes to engage in “society engineering” exercises at the expense of long-term progress towards human development, economic and democracy.

These frequent assessments have to be done in close cooperation with CSOs, who are relevant representatives of a society and whose expertise has to be integrated to the EBRD decision making processes.




Arab NGO Network for Development (ANND)

Both Ends

CEE Bankwatch Network


Habitat International Coalition – HIC Egypt

Egyptian Association for Collective Rights

Egyptian Center for Civil and Legislative Reform

Egyptian Center for Economic and Social Rights (ECESR)

Estonian Green Movements-FoEE (Friends of the Earth Estonia)

ODG (Observatori del Deute en la GlobalitzaciĂł)

Platform London

Urgewald (Germany)

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