Home
Loading...
You are here:  Home  >  In Focus  >  Current Article

Egypt’s military economy: Money is power, power is money

  /   8 Comments   /   10158 Views

Egypt’s military controls not only the political levers of power, but also the economic ones, and its involvement is getting even deeper

In this photo released by the office of the Egyptian presidency, Egyptian troops demonstrate their skills at a graduation ceremony in Cairo in July 2012.  (Photo courtesy of the Egyptian Presidency)

In this photo released by the office of the Egyptian presidency, Egyptian troops demonstrate their skills at a graduation ceremony in Cairo in July 2012.
(Photo courtesy of the Egyptian Presidency)

 

By Joseph Hammond and James Wan, originally published in Think Africa Press

Momentum is continuing to build towards Egypt’s 26 May elections, which are widely expected to see Abdel Fattah Al-Sisi stroll into the presidential office. After a long period of speculation, the recently promoted Field Marshall finally announced last month that he would be taking off his military slacks and stepping into civilian shoes to run for top office.

In a poll in March, 39% of Egyptians said they were planning to vote for him, while fewer than 1% of respondents said they were planning to vote for any of the other candidates. Anything but an Al-Sisi victory seems highly unlikely, and come May, the military’s hold on power will have become even further entrenched. It was only in January 2011 that Hosni Mubarak − a military man too, like all his predecessors since 1952 − was overthrown, but now it seems the Egyptian military is not only back in the seat of power, but perhaps stronger than ever. A look behind the political curtains at the backstage that is the Egyptian economy seems to bear this out.

Flexing muscle

With around 2 million personnel, including 500,000 in the army, the Egyptian military is the biggest in Africa, and one of the largest in the world. Arguably far more striking than the extent of its physical muscle, however, is the size of economic muscle. Its spokespeople consistently try to play down its role in Egypt’s economy, claiming the military is responsible for just 1% of the country’s GDP, but analysts tend to believe the military controls between 5 and 40% of the economy, with most leaning towards the higher end of that spectrum.

Exact figures are hard to come by. The military’s budget is kept confidential and its business dealings are typically untaxed and unaudited on apparent grounds of national security. It is known, however, that military is involved in countless different businesses in countless different industries. Military-owned companies engage in ventures from cement to shipbuilding, from fertiliser to fridges, and from tourism to televisions. The Egyptian army owns hospitals and child-care centres, it is a huge player in the country’s agricultural sector, and it has various contracts with foreign investors worth hundreds of millions of dollars. The military also owns vast tracts of land. In 1997, a presidential decree awarded the army the right to manage all of Egypt’s unused land. According to some estimates, that essentially gives the military de facto control of 87% of the entire country’s land mass.

Suez Canal Bridge

Suez Canal Bridge

When Mohamed Morsi came to power in June 2012, it was the first time for half a century that the reins of power were not in the hands of a military man. The army was forced to take a step back politically, but economically little changed. In fact, the Muslim Brotherhood-led government quickly recognised that taking on the military’s entrenched economic interests would be difficult and dangerous, and therefore decided to develop parallel institutions instead.

Despite taking care not to step on the military’s very large toes, however, some believe Morsi’s plans to develop the hugely lucrative Suez Canal with help from Qatar alarmed the army, which was not involved in the deal, and arguably contributed to Morsi’s army-backed overthrow in July 2013.

Mega-military

Since the military’s return to the top political table in July 2013, it seems to have accelerated its economic activities and intensified its hold on the country. 19 of the 25 provincial governors appointed after Morsi’s removal were generals, several figures who were supportive of the military under Hosni Mubarak were returned to important economic positions, and although Al-Sisi was only officially the first deputy prime minister, he was widely understood to be the real power behind the throne.

With this newfound authority, Egypt’s generals have been making up for lost time. They are moulding the economy to develop along lines of their choosing and have taken the opportunity not just to entrench their business activities even further, but upscale and expand them.

One area of particular interest has been huge infrastructure projects. Since Morsi’s overthrow, the military has been awarded contracts for the construction of tens of thousands of housing units and apartments, dozens of roads, railways, bridges and tunnels, and scores of health centres, schools and other buildings. These projects are believed to be worth billions of dollars.

In February, meanwhile, the defence ministry signed a deal which will see them develop an exclusive, high-end complex in Uptown Cairo, which will be filled with expensive housing, international luxury stores and a golf course.

Egypt's former army chief Abdel Fattah Al-Sisi met with Arabtec Construction CEO Hasan Abdullah Ismaik on March 9 in Cairo (Photo courtesy of the Egyptian Cabinet)

Egypt’s former army chief Abdel Fattah Al-Sisi met with Arabtec Construction CEO Hasan Abdullah Ismaik on March 9 in Cairo
(Photo courtesy of the Egyptian Cabinet)

And last month, it was announced that the UAE firm Arabtec Holding had agreed a project with the Egyptian army to build one million low-income housing units across 13 sites in the country. This deal is reportedly worth an enormous $40bn. It has not been revealed where the financing for the construction will come from, but it is understood that the land − which, as in many of the other mega-projects, is owned by the military − will be given for free.

This tranche of new military mega-deals has not only been allowed by the Egyptian government, but actively facilitated. Under Egyptian law, contracts are meant to be awarded competitively through bids and auctions, but in November 2013, Adly Mansour, Egypt’s acting president, issued a decree allowing ministries to skip the bidding process in “cases of emergency.” This has effectively allowed several state contracts to be awarded to the military with little transparency, oversight or competition.

Furthermore, through the new Egyptian constitution, passed in a referendum this January, the military’s long held legal exceptionalism is again closely protected. In fact, the new constitution even goes further in some ways, such as the amendment that allows civilians to be tried in military courts. Yesterday, the journalist Islam Al Humasy became the first to be sentenced under this new law when a military tribunal handed him a one-year prison term for posting leaked videos of Al-Sisi.

Changing his stripes?

When Al-Sisi announced last month that he would be “answering the demand of a wide range of Egyptians” in running for the presidency, he emphasised the symbolic and emotional significance of his transformation from a military man to a civilian.

Al Sisi presidential campaign official banner (Photo from the Campaign’s Google+ page)

Al Sisi presidential campaign official banner
(Photo from the Campaign’s Google+ page)

“The first time I wore military uniform was in 1970 as a 15-year-old cadet at the Air Force High School, almost 45 years ago, and I take pride in wearing this uniform to defend my country”, he said. “Today, I am taking off this uniform to defend this homeland as well.” This conjured up solemn images of the field marshal taking off his stripes and laying down his arms, of him leaving a world of tanks and fighter jets for a world of summits and meetings, and of him broadening his scope from mere security to politics and economics.

He painted a picture of a great transformation in the trajectory of his life. However, in many ways, Al-Sisi − like many of his erstwhile colleagues in Egypt’s vast and expansive army − may find he feels far more comfortable in a business suit than he realises.

 

Joseph Hammond is a former Cairo correspondent for Radio Free Europe and an energy market analyst. His career has ranged widely from boxing writer to the United Nations Refugee Works Association in Jordan. Joseph is also an alumnus of the Atlantic Council’s Young Atlanticist program. In 2010, Hammond won the Cato Institute’s Friedman Prize Essay contest.

James Wan is the Senior Editor for Think Africa Press. He is a British-born Mauritian and has particular interests in China-Africa relations, human rights and social theory. In 2013, he was shortlisted for The Guardian’s International Development Journalism Competition. You can contact him at [email protected] and follow him on Twitter at @jamesjwan.


You might also like...

Muslim Brotherhood members and supporters have been forces into exile since the ouster of Brotherhood president Mohamed Morsi

(AFP File Photo)

Mixed scenarios play out for runaway Brotherhood members

Read More →