The Pharaoh and the Commanding Heights

by on February 14, 2011 at 7:30 am in Current Affairs, Data Source, Economics | Permalink

The Egyptian military is, for now, looking like a force for democratization. It should not be forgotten, however, that the military is an oligarchy which controls huge swaths of the Egyptian economy.  Chariotguy

SFChronicle: It owns companies that sell everything from fire extinguishers and medical equipment to laptops, televisions, sewing machines, refrigerators, pots and pans, butane gas bottles, bottled water and olive oil.

Its holdings include vast tracts of land, including the Sharm el-Sheikh resort, where ex-President Hosni Mubarak now resides in one of his seaside palaces. Bread from its bakeries has helped head off food riots.

Time notes:

Another source of the military's untold wealth is its hold on one of this densely populated country's most precious commodities: public land, which is increasingly being converted into gated communities and resorts. The military has other advantages: it does not pay taxes and does not have to deal with the bureaucratic red tape that strangles the private sector. 

…The revenue streams from its various holdings help the military maintain the lifestyle its officers have grown accustomed to, including an extensive network of luxurious social clubs as well as comfortable retirements – all of which helps ensure officer loyalty.

Not surprisingly, the military has opposed privatization and economic liberalization. The Egyptian military currently commands a great deal of respect in Egypt but what happens when a nascent democracy tries to reform an entrenched oligarchy?

1 John February 14, 2011 at 4:01 am

I suppose the next question needs to be: "What are the benefits to the military rank and file?"

2 Tomasz Wegrzanowski February 14, 2011 at 4:55 am

What david says worked in transition of Poland from Communism.

A lot of state property was stolen by former communist officials, especially secret police types.

There was a lot of bitterness at first, but it faded away with time.

3 Daniel Klein February 14, 2011 at 5:58 am

Informative post, thanks.

4 Roberta February 14, 2011 at 6:49 am

Let's see how the events in Egypt evolve. The Military now in power have promised to pass the government to the new authorities in six months.

5 Chris Durnell February 14, 2011 at 9:20 am

The army throw Mubarak under the bus because 1) it didn't want to forfeit the great respect it has with the Egyptian people, 2) the ordinary rank and file simply wouldn't fire on the crowds, and 3) the protestors made false dichotomy between Mubarak and the army, allowing the generals to get rid of him and still keep their privileges. It's not because the army and the people are one.

I see a Chile after Pinochet type of scenario where some nominal democracy takes place, but the government doesn't go after the army for a decade or more, giving it time to consolidate the rule of law and civil rights. Some of the most egregious corruption may end, but only if the military knows it will continue to receive lots of benefits. Then in 10-12 years it will cashier lots of older officers and begin prosecution of some of them.

That's the best case scenario. But it will only work if 1) people allow the military to still consume far more of the Egyptian economic resources than it should, and 2) the generals allow some sort of reform to end the most blatant corruption.

If not, we will eventually see a government vs military scenario, more like Turkey, Bangladesh, or Thailand. Hard to tell how that would turn out. Lots of political instability unless there is a broad based popular party able to wield power effectively like the AKP in Turkey.

Despite the influence of US support, I think the Egyptian army is still like most Arab armies as opposed to a european one. It is not a meritorcracy, but divided by class that discourages NCO initiative. I could be wrong, but I doubt it's possible for some poor private to ever move up to the officer ranks, much less the high ranks based on merit alone. The Egyptian Army has not been tested in battle in over 30 years, and probably has a lot of rot hidden by the gleam of all those US supplied equipment. I question how competent it truly is.

6 ohwilleke February 14, 2011 at 1:11 pm

It certainly isn't beyond the realm of possibility that military involvement in ordinary economic affairs is one of the main reasons that it was willing to buck Mubarak and usher in democracy. A more loyal, more professional, more purely military affairs oriented force might well have seen its job to be the more narrow task of employment physical force to enhance the regime's political power. Only with its own power base and involvement in day to day economic life could it resist higher authority and be aware of the merits of the masses cries for reform.

The Egyptian military looks very much like that of China, which suggests that if we do see China democratize, it may be via the same route.

7 Randy Addison February 14, 2011 at 4:05 pm

It was really interesting to note that the military holds the supreme council thus giving them the ultimate power over the citizenry. It takes a great deal of respect from the people to trust the military for the nation’s welfare.

8 anonymous February 21, 2011 at 1:59 pm

Another key difference in 1989: the whole thing got started when the Iron Curtain sprang a leak. Hungary opened its border with Austria in the summer of 1989. Well before the Berlin Wall fell in November, East Germans started trickling out.

That was what made the status quo untenable. The problem wasn't the protesters in the street, it was the people silently voting with their feet (the very reason the Berlin Wall had been built in the first place). That made the issue of cracking down on the street protests moot because doing so simply wouldn't solve anything. The protesters weren't stopped, in part because no one in power had real incentive to even try. The tougher the clampdown, the bigger the brain drain of the best and brightest.

That factor (another thing that made 1989 unique) isn't present in the 2011 revolutions. The chances of an 1848-style make-concessions-then-clamp-down-again-later scenario, or a "here comes the new boss, same as the old boss" outcome are accordingly considerably higher.

Comments on this entry are closed.

Previous post:

Next post: