Sawiris’ remarks embarrass the Egyptian Army

“Our army sells cookies and shrimps, while Turkey manufactures drones.” This may well be the strongest public criticism to emerge from within Egypt, in response to the expanding economic empire of the military under President Abdel Fattah El-Sisi.

Egyptian billionaire and prominent businessman Naguib Sawiris renewed his criticism of the military establishment during an interview at the Middle East Initiative at Harvard University this month. He called for the military to withdraw from commercial activity and return to its barracks. (Video link: https://2u.pw/ARccH)

Breaking taboos in Egypt rarely goes unpunished. Sawiris was immediately targeted by a fierce media campaign led by pro-government commentators who accused him of insulting the armed forces and demanded he be tried before a military court.

Lack of competition

Sawiris’ remarks were not the first of their kind, but they gained unique significance as they came within a broader international context, in front of a Western and American audience, and through widely followed global media platforms.

Back in November 2021, Sawiris had warned of unfair competition in Egypt’s economy. In an interview with AFP, he said: “State-owned or military-affiliated companies do not pay taxes or customs, unlike private companies, which makes the playing field uneven.”

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More than three years later, Sawiris reignited the debate, presenting a simple example to his audience: “Imagine a foreign investor wants to open a bottled water factory in Egypt, only to discover that the military already owns one that doesn’t pay taxes or customs and benefits from cheap labour. How could he compete?”

The Egyptian military uses conscripts, whose mandatory service lasts from one to three years depending on education level, paying them a monthly wage of just 330 EGP (approximately $7).

It is common to see a conscript, dressed in civilian clothes, selling dairy products, oils, meats, and groceries in central Cairo under the sign of a military-owned supermarket labelled “Ministry of Defence” or affiliated with the military’s “Future of Egypt” project.

Thousands of conscripts are employed in agricultural, industrial, hospitality, and entertainment projects run by the military, which controls a vast economic network. Its activities span steel and construction materials, meat, fish, eggs, produce, sweets, household appliances, fuel stations, water services, roads, schools, hospitals, hotels, clubs, wedding halls, as well as residential, pharmaceutical, chemical, mining, and tourism projects—an empire too sprawling to fully catalogue.

Military projects are not subject to any form of financial oversight or parliamentary accountability by Egypt’s House of Representatives or Senate. All army-owned factories and companies receive full exemptions from fees, taxes, and customs duties, according to the Malcolm H. Kerr–Carnegie Middle East Centre.

Expanding Activity

In September 2019, Egypt’s former military spokesperson, Colonel Tamer El-Refai, stated during a televised interview on “Al-Hekaya” show on MBC Masr that “the armed forces are involved in 2,300 projects.” (Video link: https://2u.pw/Nxsnb)

The figure sparked widespread controversy. Opponents cited it as undeniable proof of the military’s economic empire and the transformation of generals into businessmen after stepping out of the barracks and into politics—especially since the military-led coup of 3 July, 2013.

On 24 December, 2016, President El-Sisi insisted that military economic activities constituted only 1.5 per cent to 2 per cent of GDP, whereas unofficial estimates suggest the military controls up to 60 per cent of the national economy, according to The Washington Post.

In 2019 alone, the military’s economic entities reportedly earned between $6 and $7 billion in profit, according to Yezid Sayigh, researcher at the Malcolm H. Kerr–Carnegie Middle East Centre.

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Economists note that these profits have grown rapidly, fuelled by the direct awarding of mega-projects to the military’s National Service Projects Organization (NSPO). These include the construction of Egypt’s new administrative capital, 24 new cities, and approximately 1,000 bridges and tunnels, based on government figures.

In this context, Sawiris, like many Egyptian businessmen, suffer the consequences of what he describes as the military’s authoritarian encroachment on investment. If the military has already nationalised political life, it has also done so in the economic domain—particularly as many businessmen have been imprisoned following disputes with powerful state entities, according to political analyst Mohamed Gomaa.

Sawiris had expressed this clearly, saying that the military’s presence in the marketplace deters investors. A similar concern was raised by a Western commercial attaché in Cairo in 2018, who told Reuters: “Foreign investors felt that if a dispute arose with a military entity, arbitration would be pointless. It was better to leave the country altogether.”

Exit Strategies

Under the title  “Egypt’s Military as Spearhead of State Capitalism”  , Yezid Sayigh argues that El-Sisi’s model of state capitalism is a shell game that shifts capital from the private sector to the state, and from both to institutions the state establishes or favours—particularly the Tahya Misr Fund, the Sovereign Fund of Egypt, and the military.

The army’s expanding commercial reach at the expense of the private sector has contributed to capital flight, a dollar shortage, weakening of the Egyptian pound, and soaring inflation. These problems forced the country to seek an IMF bailout, which requires curtailing the military’s role in the economy.

The Egyptian government thus committed to fully divesting from 79 sectors and partially from another 45 sectors within three years, aiming to raise private-sector participation in public investment from 30 per cent to 65 per cent.

To date, the divestment plan has seen sluggish progress—perhaps due to military objections. This likely explains the resurgence of Sawiris’ criticisms, who remains shielded by his diverse investments across Europe and the Gulf, according to economist Amer El-Masry.

As of early this year, only small military-affiliated companies had been put up for partial sale, such as Wataniya fuel stations and Safi bottled water company.

Key obstacles hinder efforts to privatise military-owned firms. These include opaque financials, secret accounts, lack of transparency, unclear legal and accounting frameworks, unknown capital and expenditures, and high ranking military-led boards that are not subject to civilian law.

Red Lines

Sawiris’ remarks continue to echo as they once again cast a spotlight on Egypt’s military economic empire and challenge the red lines surrounding the institution’s financial operations.

More than 13 years ago, on 26 March 2012, then Assistant Defence Minister and Financial Affairs Director Major General Mahmoud Nasr declared at a public forum titled “A Vision for Economic Reform” that the military’s economy was off-limits: “We will fight for our projects. This is a battle we will not abandon. We’ve worked for 30 years, and we won’t let anyone destroy it. No one, whoever they are, will be allowed near military projects.”

Human rights advocate Bahey El-Din Hassan posed a question in a post on his personal Facebook page, asking: “Why do some journalists abandon their profession in favour of acting as informants, filing security complaints against Naguib Sawiris, instead of fulfilling their journalistic duty by holding a public debate to enlighten society about the military’s role in the economy since 1952? Has it benefited Egypt, or has it impoverished the country and discredited its army; and when will it return to its barracks?”

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.