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1. Retain, Restructure, or Divest? Policy Options for Egypt’s Military Economy

Author:
Yezid Sayigh
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The Egyptian military has been on a dramatic expansionary trajectory since seizing power in July 2013. Having previously been an economic backwater, the Egyptian Armed Forces (EAF) and other military agencies have spearheaded the enormous state-led investment strategy that President Abdel Fattah el-Sisi has pursued since he came to office in 2014. The military controls a vast economic portfolio. It manages a significant share of the overall volume of publicly contracted infrastructure and housing. It builds industrial zones and produces capital goods, consumer durables, transport and heavy goods vehicles and parts, and information technology equipment. It undertakes associated retail, owns commercial media companies and hotels, and is rapidly increasing its stake in agriculture, fisheries, and mineral extraction. As of September 2021, the military even has a monopoly on the production of school meals. The Ministry of Defense (MOD) has formally controlled the use of state land by any civilian individual or entity, whether private or public, since 2001. The Ministry of Military Production (MOMP) is now one of two bodies that approves the import of foreign goods or services by government agencies. Military representatives sit on national boards, including for planning and sustainable development; feed into policy direction in several sectors, including the manufacturing industry, telecommunications, digital transformation, market development for electric vehicles, and rural development; and head major presidential initiatives, including the Long Live Egypt (Tahya Misr) development fund and the company responsible for constructing Egypt’s new administrative capital. Plans are underway to increase the capitalization of military companies by inviting private investment through the Egyptian sovereign wealth fund. What I have called an “officers’ republic”—comprising thousands of senior EAF retirees embedded in government ministries and agencies, regulatory and operational economic authorities, local government, and state-owned enterprises—complements the formal military economy. Military agencies and companies provide significant economic benefits. Military-managed public investment in transport infrastructure, for example, facilitates the movement of people and goods and expands access to external markets and investment opportunities. The construction of social housing for low-income groups addresses a serious shortage and assists government efforts to regenerate the informal settlements and slums where approximately one in seven Egyptians live. New industrial zones and extensive agricultural greenhouse projects attract investors, both domestic and foreign, contributing to economic growth and employment. And lower middle–class customers benefit from the expanding range of locally made consumer goods at affordable prices, alongside cheap meat and poultry imports, subsidized health services, and free food baskets for the poor. Why, then, should Egypt reconsider the military’s role in the economy?
Topic:
Armed Forces, Economy, Business, and Military
Political Geography:
Middle East, North Africa, and Egypt

2. Throwing Down the Gauntlet: What the IMF Can Do About Egypt’s Military Companies

Author:
Yezid Sayigh
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Until recently, both the International Monetary Fund (IMF) and the World Bank were wholly reticent to say anything about the involvement of the Egyptian Armed Forces (EAF) and other military agencies in Egypt’s civilian economy. This is a longstanding problem. By turning a blind eye to the diversion of resources to the military sector and to the increasingly significant impacts on the economy and public finances, these international financial institutions (IFIs) have undermined the effectiveness of their own programs and allowed their resources to be invested in support of suboptimal policies by the Egyptian government. There is a question of propriety when international assistance allows distorted policy incentives to continue or even intensify and disregards the fact that much of the hype about global growth in the Egyptian economy obscures the very real constraints imposed on private sector development. It is high time to throw down the gauntlet: IFIs and their governmental sponsors should tackle the reality of military involvement systematically in their programs and policy recommendations, and they should confront the issue head on in their dealings with Egypt’s authorities. Reticence persists but is starting to dissipate. A report released by the World Bank in December 2020 noted that military agencies account for an appreciable proportion of all state-owned enterprises producing capital goods; consumer durables and apparel; materials; food, beverages, and tobacco; automobiles and components; retailing; media and entertainment; semiconductors and intelligent transportation system equipment; and technology hardware and equipment.1 The IMF went further in a July 2021 review of its loan agreement with Egypt, in which it referred to the presence and role of Egyptian military companies for the first time ever.2 Significantly, it included them explicitly in its assessment of state-owned enterprises in general—many of which, the report noted, are “registering weak financial performance while some are benefiting from an uneven playing field”—and implied that military companies should come under the same broad reform policies that the IMF proposes for the public sector as a whole. Now that the IMF, in particular, has broken its former silence, it should refine its approach so as to tackle the Egyptian military’s economic role in a more targeted and consistent manner—hence making its approach more effective and sustainable. This requires a mix of measures. The first set involves bringing military agencies and companies within the scope of recommendations proposed by the IMF for Egypt’s civilian public sector and state-owned enterprises as a whole. These first measures therefore engage with IMF recommendations and Egyptian government policy initiatives relating to broad questions of ownership, regulation, and financing strategy. The second set of measures tackles the specific aspects of the legal, regulatory, and judicial frameworks that enable the military’s activities in the civilian domain. Unless they are revised, these enabling frameworks will impede wider reforms, but the Egyptian government and IMF have, for the most part, neither reviewed nor addressed them to date.
Topic:
Regulation, Economy, Business, IMF, Civil-Military Relations, and Military
Political Geography:
Middle East, North America, and Egypt

3. How Huawei’s Localization in North Africa Delivered Mixed Returns

Author:
Tin Hinane El Kadi
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
Topic:
Development, Science and Technology, Telecommunications, Huawei, and Digital Space
Political Geography:
China, Asia, Algeria, North Africa, and Egypt

4. Navigating the Democracy-Security Dilemma in U.S. Foreign Policy: Lessons from Egypt, India, and Turkey

Author:
Thomas Carothers and Benjamin Press
Publication Date:
11-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
As President Joe Biden and his team seek to put the defense of democracy and protection of human rights at the center of U.S. foreign policy, they confront the stubborn fact that the United States maintains cooperative security relations with a wide range of undemocratic or democratically backsliding governments. Powerful security interests, especially countering terrorist threats, maintaining stability in the Middle East, and managing competition with a rising China, underlie many of these partnerships. Such situations frequently give rise to a policy dilemma: confronting partner governments over their political shortcomings risks triggering hostility that would jeopardize the security benefits that such governments provide to Washington. Yet giving them a free pass on democracy and rights issues undercuts the credibility of U.S. appeals to values, bolstering the damaging perception that America only pushes for democracy against its adversaries or in strategically irrelevant countries. Already in the first year of Biden’s presidency, such tensions have emerged in relations with countries as diverse as Egypt, Hungary, India, the Philippines, Poland, Saudi Arabia, and Turkey. While the Biden administration has publicly and privately raised democracy and rights issues with various security partners, its cautious approach toward some of them has started to attract criticism from those who feel that near-term security interests have been too strongly prioritized compared to democracy and human rights concerns. This paper looks in depth at the democracy-security dilemma with a view to helping U.S. policymakers deal with it more systematically and effectively. Case studies of U.S. policy toward Egypt, India, and Turkey over the past twenty years highlight the complexity of the democracy-security dilemma. In Egypt, U.S. concerns with the country’s authoritarian politics have surfaced periodically over the years yet struggled to find a meaningful place in a relationship dominated by deeply rooted security cooperation, including extensive U.S. security assistance. In India, a strong U.S. push, warmly welcomed by Prime Minister Narendra Modi’s government, to further strengthen the U.S. -Indian security partnership has unfolded alongside a distinctly illiberal turn in Indian politics. By contrast, democratic decline in Turkey has coincided with—and contributed to—a major deterioration in Ankara’s relations with Washington, including significant divergence on a range of foreign policy issues.
Topic:
Security, Foreign Policy, and Democracy
Political Geography:
Turkey, India, Egypt, and United States of America

5. The Egypt-Sudan Border: A Story of Unfulfilled Promise

Author:
Sherif Mohyeldeen
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Along the Egypt-Sudan border, tensions have been rising for several decades despite limited efforts at cooperation. Both countries need to reexamine their border policies to prevent further escalation. Since Sudan’s independence in 1956, its border relations with Egypt have been characterized more by mutual suspicion than by peaceful exchange. This legacy has been exacerbated over the decades by myriad obstacles and conflicts, particularly over the disputed Halayeb triangle, even if both sides did try to improve relations after Egypt’s uprising in 2011. Border communities, suffering from this reality, have pushed for improved ties, but mistrust has prevailed to the detriment of both countries.
Topic:
Regional Cooperation, History, and Borders
Political Geography:
Sudan, Middle East, North Africa, and Egypt

6. Two Paths to Dominance: Military Businesses in Turkey and Egypt

Author:
Zeinab Abul-Magd, İsmet Akça, and Shana Marshall
Publication Date:
06-2020
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Egyptian and Turkish military businesses have used their institutional privileges to dominate their respective economies, but they have key differences. Turkey’s military businesses are centrally managed while Egypt’s use multiple complex conglomerates. In recent years, Turkish and Egyptian military institutions have followed divergent paths in their respective states. After many decades of full or partial control over the government, the Turkish military today is largely marginalized in politics. By contrast, after periods of exclusion from power, the Egyptian military is now in full control of the state. Despite these differences, both military institutions are powerful economic actors within their states. They have developed extensive civilian economic enterprises over the decades, dominating important sectors by capitalizing on their political influence, legal and regulatory privileges unique to their enterprises, and opportunities provided by market liberalization.
Topic:
Government, Economy, Business, and Liberalization
Political Geography:
Turkey, Middle East, and Egypt

7. Owners of the Republic: An Anatomy of Egypt’s Military Economy

Author:
Yezid Sayigh
Publication Date:
11-2019
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
The Egyptian military accounts for far less of the national economy than is commonly believed, but its takeover in 2013 and the subsequent rise of President Abdel Fattah el-Sisi have transformed its role in both scope and scale and turned it into an autonomous actor that can reshape markets and influence government policy setting and investment strategies. The military delivers massive infrastructure projects, produces consumer goods ranging from food to household appliances, manufactures industrial chemicals and transport equipment, and imports basic commodities for civilian markets. It has expanded into new sectors as diverse as gold prospecting, steel production, and managing religious endowments and pilgrimage. In parallel, thousands of retired senior officers benefit from the military’s powerful political influence to occupy senior positions throughout the state’s civilian apparatus and public sector companies, complementing the formal military economy while benefiting themselves. The military boasts of superior managerial skills and technological advances and claims to act as a developmental spearhead, but its role comes at a high cost. It has replicated the rentierism of Egypt’s political economy, benefiting like its civilian counterparts (in both the public and private business sectors) from an environment in which legal permissibility, bureaucratic complexity, and discretionary powers allow considerable space for predation and corruption. At best, the military makes good engineers, but bad economists: the massive surge of megaprojects in public infrastructure and housing it has managed since 2013 is generating significant amounts of dead capital and stranded assets, diverting investment and resources from other economic sectors. The military economy’s entrenchment is detrimental to Egypt’s democratic politics, however flawed. The military economy must be reversed in most sectors, rationalized in select remaining ones, and brought under unambiguous civilian control if Egypt is to resolve the chronic structural problems that impede its social and economic development, inhibit productivity and investment, subvert market dynamics, and distort private sector growth. Nor can any Egyptian government exercise efficient economic management until informal officer networks in the civilian bureaucracy, public sector companies, and local government are disabled. Rosy assessments of Egypt’s macroeconomic indicators issued by Egyptian officials and their counterparts in Western governments and international financial institutions disregard fundamental problems of low productivity and innovation, limited value added, and insufficient investment in most economic sectors. These officials may be hoping Sisi can somehow build a successful development dictatorship, which would explain why they gloss over the social consequences of his administration’s economic approach and its fierce repression of political and social freedoms and egregious human rights violations. A corollary is the faith that the military is as good an economic actor and manager as it claims to be, and that it will withdraw from the economy as the latter grows. Yet current trends suggest Sisi will remain hostage to key partners in the governing coalition, including the military leading its involvement in the economy to accelerate.
Topic:
Military Affairs, Economy, and Military Government
Political Geography:
Middle East, North Africa, and Egypt

8. Egypt’s Secular Political Parties: A Struggle for Identity and Independence

Author:
Michele Dunne and Amr Hamzawy
Publication Date:
03-2017
Content Type:
Research Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Secular political parties in Egypt have always been caught between an overbearing state and a largely Islamist opposition. The brief, chaotic political opening from 2011 to 2013 offered them unprecedented opportunities, but the violence and intense polarization that followed the military coup have put them under more pressure than ever. Formal politics in Egypt is now a tightly controlled game in which no real independence is allowed, but some secular parties might reemerge as contenders should there be another opportunity for free competition.
Topic:
Political Theory and Democracy
Political Geography:
Egypt

9. Legislating Authoritarianism: Egypt’s New Era of Repression

Author:
Amr Hamzawy
Publication Date:
03-2017
Content Type:
Research Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Egypt’s new authoritarian regime is rapidly closing the public space—cracking down on autonomous civil society and independent political parties, asphyxiating the practice of pluralist politics, and thwarting citizens’ peaceful and active engagement in public affairs. The government’s primary strategy is to institute wide-scale repression through lawmaking and justify its behavior through conspiratorial and populist narratives. With unprecedented resolve, it has passed new protest and terrorism laws, introduced legal amendments targeting nongovernmental organizations, and extended the military court’s jurisdiction. Essentially, the regime is adapting lawmaking for its own purposes. To fight against the tide, those challenging the system need to fully understand how.
Topic:
Governance, Authoritarianism, and Democracy
Political Geography:
Egypt

10. Too Big to Fail: Egypt’s Large Enterprises After the 2011 Uprising

Author:
Amr Adly
Publication Date:
03-2017
Content Type:
Research Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Large private enterprises are vital to Egypt’s economy and stability. After the 2011 uprising, they lost political sway due to their ties to the regime of former president Hosni Mubarak. However, Egypt’s economic crisis pushed successive regimes to reverse measures taken against these enterprises, affirming their role in economic revitalization. Though cut off from patronage networks after Egypt’s 2013 coup, enterprises are more autonomous from the state today. This may create advantageous openings if the state’s dependence on them grows.
Topic:
International Affairs, Global Markets, and Global Political Economy
Political Geography:
Egypt

11. In Uncharted Waters: Islamist Parties Beyond Egypt’s Muslim Brotherhood

Author:
Mark Lynch
Publication Date:
12-2016
Content Type:
Research Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Arab Islamist parties faced exceptional challenges and opportunities following the 2011 uprisings. After decades of facing authoritarian regimes, they suddenly had to navigate in radically new domestic, regional, and intra-Islamist contexts. Egypt’s Muslim Brotherhood had the most spectacular rise and fall, but its experience was atypical of other Islamist parties, which adapted more successfully. These changes overhauled the structure, ideology, and strategy of these parties in ways that unsettled long-standing expectations about their ideas and behavior.
Topic:
Political Violence and Popular Revolt
Political Geography:
Egypt

12. Missed Opportunity: The Politics of Police Reform in Egypt and Tunisia

Author:
Yezid Sayigh
Publication Date:
03-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Police forces and security agencies genuinely accountable to democratically elected civilian authorities have not emerged in either Egypt or Tunisia four years after popular uprisings forced the countries' longtime leaders from power. Ministries of interior remain black boxes with opaque decisionmaking processes, governed by officer networks that have resisted meaningful reform, financial transparency, and political oversight. Until governments reform their security sectors, rather than appease them, the culture of police impunity will deepen and democratic transition will remain impossible in Egypt and at risk in Tunisia.
Political Geography:
Egypt and Tunisia

13. Egypt's Salafists at a Crossroads

Author:
Ashraf El-Sherif
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Salafism has been one of the most dynamic movements in Egypt since 2011. Dealt a difficult hand when Hosni Mubarak was ousted from the presidency, Egyptian Salafists have skillfully navigated the transition. Their entry into the political marketplace marked a historic shift toward a new political Salafism and sheds light on whether an Islamist movement can integrate into pluralistic modern politics. The ouster of Mohamed Morsi by a popularly backed military coup in 2013, however, dealt a debilitating blow to the Islamist project—and left deep cleavages within the Salafist movement.
Political Geography:
Egypt

14. The Egyptian Armed Forces and the Remaking of an Economic Empire

Author:
Shana Marshall
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The Egyptian military has gained unprecedented power since overseeing the ouster of two Egyptian presidents, Hosni Mubarak in 2011 and Mohamed Morsi in 2013. With its major political rivals sidelined, more than $20 billion in Gulf aid, and widespread domestic support for General-Turned-President Abdel Fattah el-Sisi, the Egyptian Armed Forces (EAF) has restarted its defunct industrial operations, secured control over massive infrastructure projects, and inserted generals at virtually all levels of government. But political overreach and internal rivalries may prove obstacles to long-term EAF control.
Topic:
Government
Political Geography:
Egypt

15. Egypt's Nationalists Dominate in a Politics-Free Zone

Author:
Ashraf El-Sherif
Publication Date:
04-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Salafism has been one of the most dynamic movements in Egypt since 2011. Dealt a difficult hand when Hosni Mubarak was ousted from the presidency, Egyptian Salafists have skillfully navigated the transition. Their entry into the political marketplace marked a historic shift toward a new political Salafism and sheds light on whether an Islamist movement can integrate into pluralistic modern politics. The ouster of Mohamed Morsi by a popularly backed military coup in 2013, however, dealt a debilitating blow to the Islamist project—and left deep cleavages within the Salafist movement.
Topic:
Islam and Politics
Political Geography:
Egypt

16. Low-Cost Authoritarianism: The Egyptian Regime and Labor Movement Since 2013

Author:
Fatima Ramadan and Amr Adly
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Authoritarianism under military auspices has been reimposed in Egypt since mid-2013. The state has outlawed protests, strikes, and sit-ins in the public sphere and has subjected public spaces and private media to tight surveillance. It also has mounted repression of the independent labor movement. When taken together, these factors suggest that the labor movement is likely to wane in the near future. Whether this will last over the long term remains uncertain.
Topic:
Human Rights, Labor Issues, Governance, Authoritarianism, and Political Activism
Political Geography:
North Africa and Egypt

17. Unprecedented Pressures, Uncharted Course for Egypt’s Muslim Brotherhood

Author:
Nathan Brown and Michele Dunne
Publication Date:
07-2015
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The Muslim Brotherhood, Egypt’s largest opposition movement and one of its oldest, is squeezed between an unprecedented crackdown from the security state and a young generation pushing for more assertive action against the regime of Abdel Fattah el-Sisi. As a movement that has long espoused evolutionary change morphs into one that advocates revolutionary change—and struggles with whether that means adopting a strategy of violence against the state—the implications for Egypt and the entire region are massive.
Topic:
Security, Islam, Armed Struggle, Insurgency, and Political Activism
Political Geography:
Arab Countries, North Africa, and Egypt

18. Egypt's Post-Mubarak Predicament

Author:
Ashraf El-Sherif
Publication Date:
01-2014
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Three years after the uprising that ousted Hosni Mubarak from power, Egypt continues to grapple with an authoritarian state. Throughout the rise and fall of the Muslim Brotherhood, authoritarian forces remained the key political players. Democratic alternatives have not capitalized on cracks in the system. Prospects for the Brotherhood's political reintegration and a democratization of political Islam are bleak. As long as credible alternatives fail to gain traction, the old state will persist and Egypt's central challenges will remain unresolved.
Topic:
Conflict Resolution, Democratization, Political Economy, Regime Change, and Governance
Political Geography:
North Africa and Egypt

19. The Muslim Brotherhood and the Future of Political Islam in Egypt

Author:
Ashraf El-Sherif
Publication Date:
10-2014
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
The current turmoil in Egypt—including social strife, polarization, and violence—has cast shadows on the potential for Islamist integration as well as the regime's ability to achieve political stability. Shifting external and internal dynamics of Islamist organizations indicate five possible scenarios for the future of the Muslim Brotherhood. Its path will have far-reaching implications for political Islam and democratization in Egypt.
Topic:
Political Violence, Democratization, and Islam
Political Geography:
Arabia, North Africa, and Egypt

20. The Future of Big Business in the New Egypt

Author:
Amr Adly
Publication Date:
11-2014
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Egypt's big business community provided strong, early support for the military- backed government that came to power in June 2014. But despite that endorsement, the regime of President Abdel Fattah el-Sisi has made changes that are putting pressure on the private sector. Still, there are signs that some of those shifts are only temporary and that they have been taken out of necessity as the new political leadership attempts to repair a struggling economy. While elements of state-business relations may be reconfigured, big business remains essential to Egypt's long-term recovery.
Topic:
Economics and Political Economy
Political Geography:
Egypt