The shadowy world of Egypt's NGOs

Funded by their governments, are these organisations funnelling money to protest movements?

Ever since the Egyptian authorities raided the offices of a number of Western "non-profit organisations" in December, there has been consternation in the Western press. The 43 people accused of failing to register with the government and of financing the 6 April protest movement with illicit funds have been referred to repeatedly in the Western press as 'NGO' workers. This has served successfully to deflect the media from examining whether in fact there was some basis to Egypt's claims that these people had been acting illegally.

As regards the accused organisations in Egypt, "NGO" might seem a strange term given that four of the five accused organisations receive the majority of their funding directly or indirectly from "their" governments. The Konrad Adenauer Stiftung is a German non-profit that receives 90 per cent of its funding from the German government. The International Republican Institute (IRI) and the National Democratic Institute (NDI) are two of the four core institutions of the grant-making institution the National Endowment for Democracy (NED).

NED was created as an act of Congress and receives more than 90 per cent of its budget from the US government. Freedom House, while not one of its core institutions, also regularly receives the majority of its funding from NED. Chaired by Richard Gephardt - former Democratic Representative, now CEO of his own corporate consultancy and lobbying firm - the NED's Board of Directors consists of a collection of corporate lobbyists, advisors and consultants, former U.S congressmen, senators, ambassadors and military staff, as well as senior fellows of highly political "think tanks".

NED and its affiliates (particularly IRI) have been implicated in funding groups involved in organising coups against democratically elected leaders such as Hugo Chavez of Venezuela (2002), Jean-Betrand Aristide of Haiti (2004) and Manuel Zelaya of Honduras (2009). NED massively funded the political opposition to democratically elected Nobel Peace Price winner President Oscar Arias of Costa Rica (1986-1988) and, during the 1980s, NED poured funding into the cause of 'defending democracy' in France against her elected government, under Francois Mitterrand, which it regarded as dangerously socialist. As Barbara Conry of the right leaning Cato Institute once wrote: "Through the Endowment, the American taxpayer has paid for special-interest groups to harass the duly elected governments of friendly countries, interfere in foreign elections, and foster the corruption of democratic movements."

On 14 April 2011, the New York Times published an article entitled "U.S. Groups Helped Nurture Arab Uprisings" in which it stated that: "A number of the groups and individuals directly involved in the revolts and reforms sweeping the region, including the April 6 Youth Movement in Egypt, the Bahrain Center for Human Rights and grass-roots activists like Entsar Qadhi, a youth leader in Yemen, received training and financing from groups like the IRI, the NDI and Freedom House".

One need only look at NED's official website to see that it is pushing a right-wing agenda in Egypt, with nearly half of the $2,497,457 allocated to Egypt in 2010 going to the Center for International Private Enterprise for actions such as strengthening civil society's "capacity to advocate for free market legislative reform" and other large grants awarded to youth organisations for training and mobilising activists in the use of new and social media.

But this is just the funding that is openly boasted of and the Egyptian authorities are finding it difficult, apparently, to trace the organisation's funding. Dawlat Eissa - a 27-year-old Egyptian-American and former IRI employee - claimed that that the IRI was using employee's private bank accounts to channel funding into IRI covertly from Washington.

A leaked Cairo US embassy cable from 2008, entitled "April 6 activist on his US visit and regime change in Egypt", revealed how the US were in dialogue with one April 6 youth activist about his attendance at the 2008 Alliance of Youth Movements Summit in Washington. The cable also detailed the youth movement's goal to remove Mubarak from power before 2011. The activist called Mubarak "the head of the snake" saying that it must be removed before democracy could take root.

While the Embassy, deemed this plan "highly unrealistic", the dialogue shows that from as early as December 2008 Washington was fully aware of the movement's aim to remove the Mubarak regime from power. Critics claim that the defendants in the 'NGO' trial are being charged with a law that is a "relic of the Mubarak era". But in what country does the law tolerate foreign governments funding and training opposition group activists aiming for regime change? The US?

The term 'NGO' is used deliberately to create an illusion of innocent philanthropic activity. In this case the Egyptian government is investigating the operations of US state funded organisations which have a proven history of covertly funding political parties, influencing elections and aiding coups. Yet one mention of the Egyptian government's raid on the offices of so-called 'pro-democracy NGOs' in Cairo was enough to spark an international outcry. There was an almost complete failure by the Western press to highlight at all the history of the organisations involved or the potential validity of the charges being brought against them.

Jenny O'Connor is a graduate of International Relations and Communications Volunteer at the European Anti-Poverty Network Ireland

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.