One of the great lessons for the Egyptian military from Hosni Mubarak’s 30-year reign must have been that it cannot allow executive power to wander too far from its own control. The military coup against Mohamed Morsi was about more than just wresting power from an Islamist president. It was about regaining control of the country from civilian control. This was first threatened under Mubarak’s dynastic succession scheme and then after the uprising of January 25, 2011.
To accomplish this re-appropriation of power, the military engineered a coup through a coalition of forces, some civilian, with shared interests, to give it a veneer of respectability. Immediately after the coup, however, the military quickly began to concentrate all economic power under its control.
Contrary to the military’s hopes, it’s been nothing but bad news for the Egyptian government recently.
To start with, it has had to contend with a wheat crisis. The General Authority for Supply Commodities (GASC) held a tender for wheat and the prices presented well above market prices, so the GASC was eventually forced to seek suppliers outside the tender process.
Wheat crisis
The poor tender competitiveness was the result of supplier confusion over the accepted amount of ergot fungus in imported wheat. While the GASC claimed that the international standard of 0.05 percent was acceptable, the agriculture ministry turned away a shipment of French wheat for containing exactly that amount.
In an about-face, the ministries of supply and agriculture held a joint news conference to assure suppliers, but so far the market is not reassured. The ministries apparently refuse to put that commitment into writing and so traders are attempting to factor the risk into the price of the wheat. The French supplier whose shipment was turned away is now threatening legal action and Egypt remains without a supplier.
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Markets have been rattled and the memory of the government’s capricious behaviour will linger. |
Does this mean Egypt is heading towards a potentially explosive food crisis? No. The crisis will be averted, but not without significant financial and political cost to the Egyptian government. Markets have been rattled and the memory of the government’s capricious behaviour will linger.
In other news, GM, the company that manufactures 25 percent of Egypt’s cars, announced a temporary suspension of operations in Egypt due to the lack of dollars. Central Bank policies aimed at shoring up the perennially weakening Egyptian pound and shutting down black market speculation have resulted in chronic shortage of dollars.
This problem is also likely be resolved at some point in the not-too-distant future. Information has already been leaked that the government has factored in a devalued pound in next year’s budget.
While this will help to shore the country’s foreign reserves, it merely delays the fundamental problem in light of the ongoing trade deficit and plummeting productivity.
Cashflow problems
Egypt is heavily dependent on three sources of hard currency, none of which are performing particularly well: expatriates’ remittances, tourism and foreign direct investment. Transfers by Egyptian workers abroad have been hit hard by the plunge in oil prices.
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| An aerial view of part of the Red Sea coast, with hotels and resorts in Sharm el-Sheikh, Egypt [REUTERS] |
Tourism has shrunk in the wake of travel bans following terrorist attacks in Sharm, Hurghada and the Western desert. Foreign direct investment is facing a number of problems related to infrastructure, power generation and the staid Egyptian bureaucracy.
The government has been aggressively marketing Egypt’s economic potential, with Abdel Fattah el-Sisi personally meeting trade delegations and committing to various deals. But true to the pattern of unrelenting bad news, the body of an Italian graduate student, Giulio Regeni, turned up in the middle of a visit by an Italian trade delegation.
In response, the delegation cut short its visit and subsequent reports by Italian authorities indicated “inhuman” torture inflicted on him. That incident has cast a pall on Egypt’s relations with a number of partners, and momentum is gathering to hold the Egyptian government accountable not only for this death, but for similar disappearances, torture and deaths of hundreds of Egyptians.
On the domestic front, a number of developments are equally worrisome. The Ahly Ultras, members of a hardcore fan association for Egypt’s leading football team, seem to be on a path of increasingly likely confrontation with the state.
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| Al Ahly football club fans gather around photos depicting some of the victims killed in the Port Said match riots, on the fourth anniversary at the Al-Ahly football club in Cairo, Egypt [EPA] |
But hardcore football groups are not the only opposition forming against the regime. A disagreement between a doctor at a local Cairo hospital and a low-ranking policeman resulted in an assault by a gang of policemen on a group of doctors at Matariya hospital.
That incident has spiralled out of control, with the doctors at the hospital embarking on a strike and doctors nationwide voting on a general strike soon. The issue ostensibly is doctor safety.
Sisi’s extravagance
Sisi himself has not emerged unscathed from the missteps and miscalculations besetting the Egyptian regime in these past few weeks. Desperate to achieve more budgetary controls, he delivered a speech big on austerity in which he appealed to Egyptians to economise and tighten their belts. On his way to the speech, his motorcade drove over 4km of red carpet laid out for his reception. The president endured bitter criticism for the extravagance.
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| Egyptian President Abdel Fattah el-Sisi [AFP] |
But this was not the only example of the state marching out of sync with the demands being placed on the people. Ignoring austerity and budgetary constraints, the minister of justice recently ordered a 10 percent pay rise for judges – that’s on top of the 30 percent raise they received last summer.
Is all this a sign that the regime is crumbling? Hardly. But it may be a sign of something far more ominous.
At best, it signals a lack of co-ordination between the different organs that make up the state. The left hand not only knows not what the right hand does, it is busy slapping it away.
This lack of co-ordination has multiple root causes but may simply be due to the fact that Egypt is back under military government.
The military has proved itself incompetent at governing and this incompetence was on prominent display first in the 1950s and 1960s when Gamal Abdel Nasser appointed military officers in charge of almost every aspect of the state, and most recently in the 2011-2012 transition under SCAF.
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| Giulio Regeni [AP] |
Lack of co-ordination
But there is a more terrifying possibility. The lack of co-ordination may signal low-level resistance, infighting and the crumbling of the June 30 coalition. The most dangerous aspect of such resistance is that it does not seek to replace the current ruling arrangement, but it is rather only a fight for a greater slice of the pie.
The military may be discovering that force does not equal power and that authority is different from influence. Mini-crises such as the wheat fiasco, the suspension of GM operations, and the brutal murder of Giulio Regeni may signify little more than the different elements of the June 30 coalition attempting to assert that they too have influence and must be given consideration.
Why is this ominous? Because if the military buckles in to their demands, the country will continue to hurtle towards financial ruin and societal disintegration, as it has in an accelerated fashion for the past 15 years, and reconstitute the environment in which revolution becomes once again both necessary and possible.
If the military does not acquiesce, there are no signs that segments such as the oligarchs, the judges or the security services are willing to sacrifice their own self-interest.
Their resistance will continue, at huge cost to the country, and the military will find the job of governing impossible. Eventually, we will again have a situation where the forces arrayed against the regime are more, and stronger than those for it.
In any case, the struggle between those various former partners is unlikely to conclude before the country has incurred significant monetary, political and societal costs. If economic recovery and political stability seem elusive, both appear far less likely in the near future.
Wael Haddara is a Canadian-Egyptian physician who served as former senior adviser to former President Mohamed Morsi.
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