Bretton Woods and economic colonization
The Bretton Woods institutions are named after the Bretton Woods Agreement, following a conference attended by representatives of 44 countries in 1944 in New Hampshire, USA. It aimed at setting plans for “stabilizing the global financial system” and encouraging the development of trade after World War II.
Under this agreement, two international organizations were established: the International Monetary Fund and the International Bank for Reconstruction and Development. The World Trade Organization was launched at a later stage. These institutions have been through significant developments over the past years.
Bretton Woods refers to a monetary management system that has established rules for trade and financial relations between the world’s major industrialized nations in the mid-twentieth century. This system stood as the first model of a fully negotiable monetary system aimed at regulating relations between independent states.
International financial institutions, notably the World Bank and the International Monetary Fund, are the largest source of development finance in the world, with a lending volume ranging between $40 billion and $50 billion dollars annually directed to low and middle-income countries. These institutions play various roles, including offering loans and grants to governments through the implementation of fiscal consolidation programs of the International Monetary Fund, and structural adjustment programs of the World Bank.
The World Bank’s structural adjustment programs include price liberalization, free trade, export-focused economy, and privatization of the public sector. Egypt was among the first nations to join the World Bank in 1945. In 1999 Egypt received loans through a World Bank’s lending window that serves low-income countries. However, Egypt is currently considered among the middle-income countries that can borrow huge amounts from the International Bank for Reconstruction and Development and is thus no longer eligible for interest-free loans or grants from the International Development Association. Globally, Egypt ranks second most borrowing country from the IMF with a total of $ 10.85 billion, behind Argentina whose owes the IMF $ 30.98 billion, while Ukraine comes third with a debt of $9 billion. Following series of borrowing, impoverishment and colonialism, countries such as Egypt, Tunisia, Morocco and Jordan went through the same scenario with in seeking funding from the IMF.
Social protection
Social protection is an inherent human right and should include all citizens at all stages of life. However, social protection programs in the region are fragile and weak based on targeting and therefore are unfair. This situation is exacerbated by the requirements of major financial institutions which pushed governments to reduce social spending in public budgets as an austerity measure in exchange for increasing the loan interest. This results in weakened maternal and child health services and increasing the spending of individuals on services. Moreover, the requirements and criteria for conditional financial assistance are themselves inappropriate and expose women to further discrimination.
There is no single definition of social protection amongst international organizations, especially development institutions and international financial institutions. Institutions vary in their perspectives with regards to the need of including social protection during the elaboration of reform plans and development finance. The International Labor Organization is considered as having the best and most comprehensive definition of social protection from a human rights perspective. It defined it as a set of policies and programs designed to reduce and prevent poverty and vulnerability throughout the life cycle. According to this definition, social protection includes measures benefiting children, families, motherhood, the unemployed, while covering work injuries, illness, old age, disability and survivors as well as health protection. Thus, social protection systems address all areas of policy, through a combination of socialist schemes (social insurance) and benefits financed by non-contributory taxes including social assistance.
While the IMF adopts a vague definition of social protection that often conflates it with social spending. The fund lacks the tools to measure social protection, as it only looks into it after completing the country programs and measures it conditions.
The Arab region lags behind in terms of social protection according to any of its broader or narrower definitions. According to ILO data, only 8.7% of the unemployed in the countries of the region receive unemployment benefits, while the global average is more than double that percentage. Only 13% of mothers and infants in the region are adequately covered by social protection programs, compared with the global average which is four times higher.
Social protection is at the heart of feminist economic justice. Women rely more than men on social protection, notably child-rearing benefits. The inability to afford basic commodities negatively affects women the most, as they are often the main buyers of household items and foodstuff for their households. Cuts in social spending that affect the provision of social welfare, such as child benefits, have direct gender-related consequences as they perpetuate structural violence by impoverishing women and their families, especially in times of crisis.
Austerity measures, such as cutting aid, replacing universal social protection systems with social safety nets, cutting public spending, and increasing indirect taxes, exacerbate structural inequality and ultimately have unequal effects on women. It is therefore important to establish or strengthen comprehensive social protection systems before phasing out aid.
Nevertheless, mitigation measures preferred by the international financial institutions include the expansion of “social safety nets” such as financial handouts, which target the “poor” rather than implementing a more universal program. This approach risk excluding large segments who are in dire need of social protection but who, for one reason or another, do not fall within the set criteria to eligibility. It is important to know that access to direct cash handouts can prove difficult for women. In Jordan, for example, only 1.27% of female-headed households receive assistance from the National Aid Fund (NAF), compared to 5.93% of male-headed households.
In Egypt, although 76% of Takaful and Karama cardholders are women – 2.7 million women in total – official statistics document the presence of about 12 million female breadwinners, 26.3% of whom are below the poverty line. This percentage in itself indicates the fragility of women in the job market their dire economic situation, leaving them depending on insufficient conditional cash transfers, which include criteria that may perpetuate violence and socially-based discrimination against women. Cash transfers replaced the integration of women into the formal contributory insurance system. From another perspective, the integration of women in small and micro enterprises has not achieved significantly improved their economic and social conditions, as their projects are often based on ill-considered competitiveness and individual solutions to poverty instead of implementing collective solutions and launching cooperatives as sustainable alternatives to promote social justice.
The multilayered impact of austerity policies on women conditions
Conditional cash transfers associated with school enrollment, for example, place a greater responsibility on women than men, and tensions arising from the harmful gender-related social norms can also be a cause of gender-based violence. The abolition of social spending, which remains gender-based comprehensive social protection, is therefore a detrimental conseauence, especially in the face of rising prices of daily basic products.
Regarding expenditure rates, the rate of spending on foodstuff in Egypt, for example, reached 50-60% of the total income of the poorest groups. Egypt also has one of the highest individual spending (direct out-of-pocket spending) on health at about 64%, which is close to double the global average due to the privatization of services. In addition, over the past 15 years, subsidies grants and social benefits shrunk in budgets from 2009 to 2023, from 36% of the total public expenditures to 17%, while the share of the debt interest payments rose from 15% to 33%, during the same period.
Current economic policies impact women in their daily lives and income as well as in their responsibilities in providing care, in addition to their ability to access vital services. The negative outcomes are manifested in reduced health spending and deteriorating social protection. From 2023 to 2024, inflation rates increased due to economic policies. The annual rate of core inflation in Egypt, according to data from the official statistics agency in February 2024, reached 31.9%, which requires a review of the current social protection systems, wherein beneficiaries are identified in a social register, which is based on the estimated household income and assets. The inaccuracy of this system has proven its inaccuracy, as the average exclusion in the process of identifying the poorest 10% of the population is about 70%, which has already resulted in the largest proportion of the poor in Egypt not being included in the Takaful program, unlike comprehensive social protection programs.
According to the same World Bank report, the special insurance coverage for the year 2021 amounted to about 2.4 million beneficiaries, only 0.4 million of whom were in the informal sector, that is 2.5% less than the estimated 60% of the people in informal labour, of whom women represent about half.
Are there alternative economic reforms?
In this context, a self-evident question imposes itself: Do all countries accept IMF conditions to improve their economic conditions and what are the other options? In Malaysia, Mahathir Mohamad rejected a plan by the World Bank and the International Monetary Fund to address the financial crisis that hit the countries of Southeast Asia in 2000-1999. Malaysia had starting from 1986 developed a national development strategy. In 2008, the Malaysian economy was ranked 29th largest economy globally with a GDP of $397.5 billion and an annual growth rate of 4.6%. GDP per capita was at $15,700, with an inflation rate of 5.8% and the population below the poverty line was at 3.5%. In Turkey, Prime Minister Recep Tayyip Erdogan stated that his government’s first goal was to strictly implement the economic program strictly until the end of 2004. Beyond this date, he said, Turkey will continue its own efforts without resorting to special agreements with the IMF. Turkey’s economy grew at an annual rate of 8.4 percent to a GDP of $724.2 billion in 2010 from $52 billion in 1998, becoming one of Europe’s largest emerging markets without prejudice to marginalized groups.
Mai Saleh is the director of women, labor and economic rights at the New Woman Foundation in Egypt and national coordinator of the Arab network of development NGOs in Lebanon. She is also director of a project aiming to promote the role of labor unions and local associations in implementing the sustainable development agenda from a gender perspective.
She has been active in the Egyptian civil society since 2005, with an interest in labor, social justice and feminist economy. She has contributions in averting the feminization of poverty under austerity measures and takes an interest in issues relating to rural women and agricultural workers in vulnerable and unfair conditions.
She is currently a researcher and trainer in the fields of women’s gender and economic and social right, while acting as a coordinator of a campaign to implement Convention 190 of the ILO concerning the elimination of violence and harassment in the workplace.