The Egyptian Armed Forces are the largest in Africa and the Middle East. In 2014, they were ranked the 13th most powerful in the world, consisting of the army, navy, air force and the air defence command. Large paramilitary forces also exist, such as the Central Security Forces (under the control of the ministry of the interior); Border Guard Forces and the National Guard (under the control of the ministry of defence). The Supreme Council of the Armed Forces (SCAF) is the governing body, made up of 21 officers; it sits in times of war or insurgencies such as during the course of the January 25 Revolution, when the toppled President Mubarak reassigned power to SCAF, which then governed Egypt in the interim period until the 2012 elections.
The Egyptian Armed Forces receive military assistance from the US; most of the $1.5 billion given to Egypt every year is military aid. These funds were frozen following the military coup against the first democratically-elected civilian president in July 2013 and its violent aftermath; they were resumed by the US Congress following the recent Egyptian elections, which saw the coup leader, Abdel Fatah Al-Sisi, gain a landslide victory in what elections deemed widely to be farcical and illegitimate, reminiscent of Mubarak decades. Much of the military aid Egypt receives is in the form of equipment, such as tanks and jet fighters, which are surplus to Egyptian needs and are kept in storage.
The military’s power
The armed forces enjoy considerable power, prestige and independence within the Egyptian State. They form the single most powerful institution in the autocratic state that has been the entire history of the Republic of Egypt. From the military coup by the Free Officers’ Movement (a group of army officers led by Muhammad Naguib and Gamal Abdel Nasser) that toppled King Farouk in 1952, to the 2011 revolution, all of the presidents of Egypt (Gamal Abdel Nasser, Anwar Sadat and Hosni Mubarak) were military officers. This succession was interrupted by the revolution which led to the election of the first democratically-elected civilian President of Egypt, Dr Mohamed Morsi, in an interruption to autocratic rule.
President Morsi did not have full constitutional powers and did not have full authority over state institutions such as the armed forces. The military were protected from legal and parliamentary oversight, even under a civilian president.
The armed forces have their own hospitals, villages, complexes, social clubs, education institutions, petrol stations, factories and companies. They own restaurants and football grounds. They also have a stronghold in business, engaging in road and housing construction, consumer goods, resort management and extensive tracts of real estate. They have a vast economic stronghold in Egypt, but the precise amount is not known; the military’s budget is secret and its industries are unaudited and untaxed. The names of the general officers and even the military’s exact size (ranks are estimated at 300,000 to 400,000) are all considered to be a state secret.
The military’s “grey economy”
Khaled Fahmy, head of history at the American University in Cairo, calls this a “grey economy, in the sense that we know very little of them, they are not subject to any parliamentary scrutiny, the Egyptian government auditing office has no control or knowledge of them.”
According to journalist Joshua Hammer, the Egyptian military controls “as much as 40 per cent of the Egyptian economy”; since the revolution of 2011, claims German newspaper Die Welt, this proportion has increased to 45 per cent. Some economic experts put the estimate of the military’s holdings at up to 60 per cent.
With the harsh political crackdown following the July 2013 coup, the military is positioning itself to become Egypt’s uncontested economic power, ensuring its allies have key economic posts; it has expanded its authority over government development deals, including the lucrative Suez Canal Project, a key component of the economic “renaissance project” championed by deposed President Mohamed Morsi, which stands to bring Egypt billions of dollars in annual revenue. The massive project presents a strategic shipping link through which 8 per cent of world trade passes. It will include port and terminal expansion, the construction of a new airport and a new industrial zone, at an estimated cost of $8.6 billion over the next two decades.
Since President Morsi’s ouster, the military-led government has assumed complete control of the project. The military is acting as the primary contractor for economic development in the project, as it is in numerous other projects across the nation. Whilst the Egyptian armed forces claim to have no financial stake in the canal’s development, many of the 14 Egyptian-foreign joint ventures bidding on the master plan of the project have very close connections with the military. For example, one of the companies on this venture is the state-owned Arab Contractors, which is headed by Prime Minister Ibrahim Mahlab from the former National Democratic Party. Mahlab was appointed by the military following the coup, and was reappointed in June 2014 following Al-Sisi’s presidential “victory”.
Another company bidding on the Suez Canal project, the Maritime Research and Consultation Centre, has a board of directors consisting almost entirely of military officers and is chaired by the minister of transportation. Almost all of the other companies on the venture have previous contracts with the military’s Gulf allies, Saudi Arabia and the United Arab Emirates, which have pumped billions of dollars into post-coup Egypt.
Between September and December of last year, shortly after the coup, at least six major infrastructure contracts for roads, bridges, tunnels and apartment blocks, worth more than $1.5 billion, went to the military.
Egyptian state is a “Military Inc.”
Following the July 2013 coup, it has become the norm to find a military officer in charge of each government authority. The Egyptian economy is becoming increasingly shaped by the ruling generals, and military businesses and control appear to be expanding, permeating every aspect of the bureaucracy. A report in Haaretz on the economic advantages enjoyed by the Egyptian military went as far as to state that Al-Sisi’s phrase about his “desire to serve the people”, which supposedly drove him to stand for president, was the flipside to his desire for the army not to lose its economic hold on the country. The reporter went on to say that Al-Sisi must demonstrate his economic leadership, particularly given that the military accounts for the largest share of the economy.
“We’re dealing with a brand-new economy that’s now run by ‘Military Inc.’, ” claims Joshua Stacher, an Egypt expert at Kent State University, who has studied the military economy.
According to Middle East expert Stephan Roll, writing in a policy paper for the German Institute for International and Security Affairs last September, “Egypt cannot achieve social peace if the one-sided growth policy of the late Mubarak era is simply continued.”
Economists say the military’s expanding businesses and industries create unfair competition for their non-military rivals. The military uses poorly-paid conscript labour (who make $17-28 a month) and do not pay taxes, thus allowing it to price projects far below the prices of private-sector firms, and even state-run enterprises.
Moreover, the armed forces have de facto control over all undeveloped non-agricultural land in Egypt, or about 87 per cent of the country. This transforms into massive plots of land, some in lucrative locations, monitored by watchtowers, with signs forbidding photography identifying them as military zones. On one of these massive tracts of land in Cairo, a 4.5 million square metre, UAE-based, residential and commercial project overlooking the Greater Cairo area – Emaar’s exclusive 18 billion pound Uptown Cairo complex – has started construction following an agreement during an economic ministerial committee meeting in February this year.
This project is the latest and biggest of the military-secured developments, and will have a private road linking it with Cairo’s public network. A private road to a private city, owned by the country’s army. The chants of Tahrir square in 2011 for “bread, freedom, social justice” will not be heard in this luxurious, exclusive, gated community in the heart of the capital, nor will it be heard in any other military-owned development.
The very same institutions and people which dealt with the Uptown Cairo project, including the governor of the Central Bank of Egypt and the Ministers of Finance, Investment, Planning, Supply, Electricity, Petroleum, Housing and Agriculture, are the same that are failing to solve Egypt’s mounting urban problems. Many of these are caused directly by the lack of accountability and the incompetence of these very institutions.
The ministry of defence receives billions of dollars in economic projects which come nowhere near the state treasury; instead, the state budget pours into the armed forces 70 billion Egyptian pounds a year at the expense of the poor, long-suffering citizens.
Austerity for the people
One of the motivations for the outbreak of the 2011 revolution was the growing unhappiness among Egyptians of the widespread deep-rooted corruption and gross inequality in their society. Many analysts say that the stronger military stronghold on the Egyptian economy is deepening the corruption and may push the tide to another upsurge of popular anger.
The lavishness of the military stands in stark contrast to Al-Sisi telling Egyptians that they have to sacrifice from their health and wealth for the sake of Egypt. Al-Sisi’s famous speech in which he told the people that “there isn’t anything, there isn’t anything!” regarding the financial situation of the country, and that a generation or two may have to suffer in order that future generations can prosper, still rings in the ears of his people.
This week alone saw the announcement of an increase in the price of petrol by 78 per cent, and along with the increase in the price of electricity, food prices are expected to increase by 200 per cent. This comes at a time when Egyptians, 40 per cent of whom live below the poverty line, are already suffering the challenges of feeding their families with the existing price increases following the coup last summer.
With the increased pressure on the Egyptian people to endure a harsh life of austerity and rationalised personal spending, it would be interesting to know how much the military coup leader, now president, pays himself and his military staff. The military budget remains secret under the pretence of being a national security threat, but with the military demanding from the people a life of austerity, it’s only fair that its officers are transparent about their own finances.
The military has seen three salary rises since the January 25 Revolution, including a 50 per cent pay rise last August for all staff and ranks. There are no confirmed figures for the salaries of senior military leaders, but a source claimed that the Manager of Security receives EGP 900,000 ($150,000) monthly, so it is mind-boggling what senior officers may receive. Some officers within the security or administrative establishments have spoken of a range between 100,000 and 500,000 EGP monthly ($16,700 – $83,000) as being common. The highest wage annually is thought to be between 12 and 100 million pounds ($1m and $16.67m). In Egypt, the poor sacrifice in order that those who made them poor are able to live lavishly.
The republic of retired generals
Egypt has become a republic of retired generals with the military having a policy whereby every senior officer is given a high-rank civilian position upon retirement. Such generals are found in two types of employment: upper bureaucratic positions and economic enterprises owned by the military. In Egypt, 18 out of the 27 provincial governors are retired army generals. The state-owned oil sector is also highly militarised with oil and gas companies run by retired generals.
The head of the Suez Canal is a former military chief of staff and the heads of the Red Sea ports are retired generals, as is the manager of the maritime and land transport company. The health minister’s assistant for financial and administrative affairs is a retired general, and so are many others in the bureaucratic offices of the ministry. Many retired generals are also in the ministry of environment. The current head of the Supreme Constitutional Court was originally an army officer who served previously as a judge in military courts.
The Egyptian military has sucked the wealth out of the country like a dangerous parasite. With its deep permeation in every aspect of Egyptian society, and a stranglehold on the Egyptian economy, indeed most of what constitutes the Republic of Egypt, the questions is: will the Egyptian State ever be demilitarised?
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.