In the courtyard of a Cairo mortuary, the Arab springtime seemed very distant

Jeremy Bowen reports from Egypt.

The morning after Hosni Mubarak was forced to resign as president of Egypt in February 2011, millions of people in this fractious, overheated, argumentative nation were seized by a rare sense of unity. Everything was going to change for the better. To be alive in that dawn was blissful.
 
In Tahrir Square, some of the tens of thousands who had occupied it for 18 days set to with brushes and buckets to clean it up. A shingle beach of rocks and broken paving slabs that had been hurled at the police and at supporters of Mubarak was shovelled up and carted away. Big granite cobblestones were salvaged and returned to their original positions near the Egyptian Museum. Middleaged, middle-class men who looked as if they had never touched a brush in their lives puffed and panted importantly as they filled dustbin bags. Some western liberals fooled themselves that Egypt might transform itself into an oriental version of a European democracy. Egyptians were caught up in the euphoria, too. It was a time of schemes and dreams.
 

A shoddy business, death

 
As I stood this month in the courtyard of Cairo’s central mortuary, that Arab springtime seemed very distant. So many people have been killed here in the past weeks and so many bodies have not yet been claimed or identified that the mortuary is overflowing.
 
Four refrigerated lorries have been parked outside the morgue for the bodies that cannot be accommodated inside. The corpses are crammed into the back of the trucks. Thick clouds of flies buzz around them. Clumps of incense sticks, disinfectant and some Febrezelike sprays fight a losing battle against the stench of rotting bodies.
 
The trucks do not stay very cold, because men are constantly climbing in and out of them, gagging on the smell, unwrapping shrouds and shining torches on to the remains of the faces to try to find missing friends and relatives. Some families sit exhausted around the empty coffins they have brought, wondering if they will ever be able to find and bury their dead. The courtyard is squalid, covered in litter and reeking of death and desperation.
 
When they find the body, the nightmare does not end. Egyptian law demands that a death certificate be issued before a funeral can take place. I have heard complaints that families are being told they can get a death certificate only if they accept the cause of death mandated by the official behind the wire-mesh window at the morgue, even if it is not correct.
 
Many think there is a conspiracy to disguise the way that demonstrators have died. One man at the mortuary waved a certificate, a flimsy piece of paper torn out of a book of preprinted forms, a receipt for a life, and yelled that the cause of death was asphyxia, even though the body was burned. He claimed they were told to take what they were given or the corpse would be dumped in the desert.
 

Just like old times

 
Many Egyptians feel that the governing style of the dictator is coming back. It feels like that for a reporter on the streets. The official media are full of incitement against what they claim are the biased international media, blaming us for Egypt’s problems. It’s like old times.
 
The Cairo mortuary stands opposite the Old War Horse Memorial Hospital, a place set up in the 1930s by an English lady who was horrified to see cavalry horses being used and abused as beasts of burden. Just beyond this small memory of a very different Cairo, a group of local men was loitering, looking for suspicious visitors, especially foreigners with cameras. They had chased away some of my BBC colleagues a few days earlier. We had to film covertly, with a small camera that looked like a mobile phone. It is open season on the messenger here right now.
 

Cheers for leaders

 
Quite a lot of Egyptians are happy that the firmness of the Mubarak days seems to be coming back. They are fed up with the collapse of law and order that followed the 2011 revolution, chaotic streets and a collapsing economy. They hated having the Muslim Brotherhood telling them what to do while the country went, in their view, from bad to worse. I have lost count of the times I’ve been told it was better under Mubarak.
 
Since the armed forces overthrew President Mohammed Morsi of the Muslim Brotherhood in July, the revolutionaries of Tahrir Square have been quiet. They no longer appear to be an important factor. Before the end of 2011, it was clear that their energy was not being channelled into the kind of political organisation that was their only chance of rivalling the two existing power centres in Egypt – the military and the Muslim Brotherhood. Some liberals have turned into cheerleaders for the military, their attachment to Egypt’s democratic experiment overwhelmed by their relief that the Brotherhood, which they could not beat at the polls, is under attack.
 
It is clear that the military wants to decapitate the Muslim Brotherhood, to remove it as a political force from Egypt. The Brotherhood is being driven on by shock and rage that the power it worked towards since its foundation in 1928 has been taken away after only a year. It was disastrously incompetent at government but it is skilled and experienced at operating as a banned organisation. Its enemies celebrate a premature victory at their peril.
 
Jeremy Bowen is the BBC’s Middle East editor. An updated paperback edition of his book “The Arab Uprisings” is newly published by Simon & Schuster (£8.99) 
An Egyptian man walks between lines of bodies wrapped in shrouds at a makeshift morgue in Cairo. Photo: Getty

This article first appeared in the 26 August 2013 issue of the New Statesman, How the dream died

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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