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Egypt: between failed revolution and radical transformation

Chloé Berger, Middle East researcher, NATO Defense College.

(The views expressed in this article do not reflect NATO’s position or that of the NATO Defense College and are the sole responsibility of the author.)


Ten years after the uprising that led to the fall of President Mubarak and which has not been commemorated in any form by the current authorities, it is important to consider the achievements of a popular movement whose reach extended far beyond the borders of Egypt. If the events of 25 January 2011 appear in hindsight as a missed opportunity for the progressive revolutionary forces, they have? also opened the way to a reactionary movement that aims at an in-depth reform of Egypt. The record of President el-Sisi’s policy of ‘authoritarian reformism’ remains, however, ambiguous. The policy of embarking on major construction projects that the president initiated has placed a heavy burden on public finances and is struggling to generate the expected benefits. Despite the ambitious objectives outlined in the strategic document entitled ‘Egypt’s Vision 2030’ and the many international funding and aid packages that the country has benefitted from since 2011, Egyptians’ living conditions have not ceased deteriorating, on both socio-economic and personal liberty levels. The coming challenges are shaping up to be formidable and could in the longer term undermine the regime.

The blocking of the Suez Canal for almost a week by the container ship Ever Given is, according to the Suez Canal Authority, supposed to have cost Egypt no less than US$916 million in losses and damages[1]. Paralysing the world’s maritime traffic for nearly a week, the incident serves as a reminder of the crucial role Egypt plays in international trade between Europe, Africa and Asia. This strategic position is at the heart of Egypt’s Vision 2030[2], drawn up by the regime in February 2016 with the aim of promoting economic, social, and environmental development in Egypt. Conditioned to a large degree by the requirements of the IMF and other providers of international funding, the strategy of Egypt’s Vision 2030 prioritises territorial development and building (enhancement of?) on the country’s natural, tourist and heritage resources. At the start of April 2021, the removal in great pomp and ceremony of 22 mummies from the heart of the city to the brand-new National Museum of Egyptian Civilisation finally turned the page on the country’s period of European colonisation. The official opening of the country’s new administrative capital at the end of 2021, located 45 km (27 miles) east of Cairo, also represents “the proclamation of a new republic and the birth of a new country”[3]. With its aim of returning Egypt to its status as a regional power, the Vision 2030 strategy is also designed to end the period opened by the revolution of 25 January 2011 through a muscular (tough?) restoration of internal order and a diversification of Egypt’s foreign policy, one that is more and more turned towards Africa.

Changes in the deep state

The deteriorating security situation and the instability generated by the uprising of 25 January 2011 came as a shock for the Egyptian military establishment. The democratic election of an executive of Muslim Brotherhood denomination marked the point at which the security and military apparatus of the country decided to take the country in hand. The ‘reactionary’ politics that President Abdel Fattah el-Sisi has initiated since 2014 do not nevertheless mark a return to a pre-revolution status quo; rather they reflect a transformation in the balance of power within the regime – often called the ‘deep state’ – in favour of the presidency and the security forces.

The constitutional amendments ratified by the referendum of April 2019[4] led to a process of deinstitutionalisation and a concentration of power around the person of the Raʾīs, who is guaranteed to remain in power until 2024, or even until 2030. This movement has been accompanied by a legalisation of the growing hold the security services have over the economy and the public sphere, in particular the media, and by a drastic reduction in the independence of the civilian judiciary (by opposition to the military judiciary). The State Council has been deprived of any right to inspect contracts signed by state institutions. Constitutionally recognised as a guarantor of the State, by nature secular and democratic, the military institution is de facto authorised to intervene in any electoral process that potentially threatens the integrity of the state. The minister of defence’s nomination is now subject to approval by the Supreme Council of the Armed Forces. Enjoying complete autonomy in the management of its own affairs, the military is nonetheless strictly subordinated to the president as it was demonstrated by the arrest of the former Chief of the Defence Staff, Sami Anan, who had put forward his candidature for the presidential elections of 2018.

The military, which had provided the spine of the regime since the days of President Nasser , is suffering a relative drop in status in comparison to the security service. Even though the military security services had played a determining role in al-Sisi’s accession to power, notably through the Tamarod movement, since 2017-2018 it has been relegated to monitoring the officers’ corps and to operations in the Sinai and the west of the country. Since then, it has been the security services and the Ministry of the Interior who have been on the move to co-opt the political and media support necessary for the regime (electoral campaigns, referendum on the amendment of the Constitution etc.) and to strengthen control over civil society and the political opposition.

From a rentier state to predating on public revenues/incomes

This rebalancing has been reflected in the economic landscape[5] by the creation of new holdings, such as the Falcon, Eagle Capital or al-Qala’a groups, linked to the security services and guarantying  bonuses and lucrative redeployment opportunities to the officers of the Egyptian security services. The development of these ‘public-state partnerships’ allows the state’s new bourgeoisie, composed of former senior members of the security services, to capture public funds and control the most active sectors of the Egyptian economy (energy, tourism, telecommunications, building and infrastructure projects). The arrival of these new actors in sectors that were traditionally run by organisations linked to the Armed Forces (National Service Projects Organisation, Arab Organisation for Industrialisation, Army Engineering Authority, etc.) has pushed the Army to invest in new markets[6]: media, exploration and production in mining, steel production, religious tourism, etc. The policy of large building projects initiated by President el-Sisi illustrates the need to diversify opportunities as the number of different actors increases, as much as it underlines the limits of a policy of economic predation that fuels competition between the different elements of the security services on the one hand and the Armed Forces on the other. These developments have tended to fragment the regime’s base and they put in doubt the resilience of a military-security apparatus in case of  emerging dissident tendencies, or even in face of an attempted coup that foreign elements might try to use to their own advantage.

The hold that the military-security apparatus has on the economy is such that it currently largely dictates the regime’s investment policy, without any consideration of its impact on public finances, the productivity of the Egyptian economy or the development of private enterprise. In a few years Egypt has become the principal destination for direct foreign investment in Africa, in particular in energy; an attraction that lies for a large part in the financial benefits accruing to companies linked to the security apparatus and the Armed Forces. Finally, on average the government has spent no less than US$3.8 billion a year since 2014 in modernising and training its security forces and its military and was the third largest importer of military equipment and technology in the region between 2015 and 2019[7].

Significant socio-economic challenges

The policy of large construction works, such as the building of a second channel for the Suez Canal or the construction of the new administrative capital, is struggling for the moment to generate the hoped-for financial spin-offs, while the national debt is in the region of 90% of GDP and servicing the interest of the national debt accounts for nearly a third of the state’s budget. Structurally dependant on imports for supplies of manufactured goods and foodstuffs, the Egyptian economy is therefore particularly vulnerable to external shocks. Growth is essentially supported by remittances from migrant workers, the export of hydrocarbons, the Suez Canal and finally the tourism sector: none of these areas have been spared by the Covid-19 crisis[8].

The structural adjustments recommended by the IMF have allowed for a partial cleaning up of state finances, but the situation is still very fragile[9]. The floating of the Egyptian pound (LE), the restructuring of subsidies, pension reform, along with the general application of VAT have succeeded in halting the inflationary spiral[10]. Unemployment is going down but remains particularly high amongst the young (at around 30%) while the informal sector still accounts for 50% of the Egyptian economy. The impoverishment of the middle and working classes has accelerated and the growing demographic has largely constrained the real impact of the Takaful and Karama programme, aimed at supporting the most disadvantaged[11]: 0.05% of the population hold most of the country’s wealth, whereas 70% of Egyptians live on less than US$6 a day; this does not include the more than 250,000 refugees and asylum seekers[12] left out of the count.

The emergency assistance granted by the IMF in 2020/2021[13]and a partial lockdown allowed positive growth to be maintained in 2020 (3.6 % of GDP[14]) despite the health crisis. Fiscally constrained, the government has paid for the increased expenses occasioned by the crisis through deductions from civil servants’ salaries and pensions and the sale of some of the country’s vaccines[15]. Nonetheless, questions have to be asked about the government’s ability to handle the consequences of the crisis in the medium term. The rising population (around 2% per year) is exerting significant pressure on natural resources and the country’s infrastructure particularly as a reduction in the productivity of arable ground[16], due as much to global warming as it is to increasing urbanisation, is encouraging the exodus of farm workers to the country’s great urban centres. The share of the Nile’s water[17] therefore constitutes a crucial issue for the country’s economic development and its food self-sufficiency.

The mirage of the strong state

The implementation since 2016 of a part of the reforms conditional on the provision of aid from the IMF and the World Bank has allowed the regime to consolidate its credibility with the international community and international fund providers[18] despite the general deterioration in living conditions in Egypt, whether socio-economically or in the area of civil liberties[19]. Questions about the role of the state, redistribution of wealth and the reform of the social contract remain highly problematic, as illustrated by the reappearance of protest movements against the high cost of living, and the corruption and nepotism of the ruling classes. The government has chosen to reply by force and has engaged in a systematic repression of any form of opposition or dissidence, even moderate, which is dangerously isolating it. The systematic elimination of Islamic organisations or platforms has deprived the regime of any means of dialogue with this part/component of the population, and that repression is contributing to its radicalisation or is forcing it to go underground.

The situation is all the more preoccupying when one observes a resurgence in attacks from the group Wilayat al Sinai (affiliated to Daesh) in the north-east of Sinai (around Bir al-Abed) since the spring of 2020[20]. Despite the presence of the 2nd and 3rd armies in the area, the energy infrastructure and construction projects managed by the Army constitute attractive targets. In consequence, security coordination with Israel in the area, and along the Gaza Strip, has continued to increase[21] whereas negotiations between Israel and the Palestinians have been deadlocked for several years. The recent visit by an Israeli delegation to Sharm el-Sheikh suggests a move towards more friendly relations[22], stimulated in particular by the exploitation of the eastern Mediterranean’s rich energy resources.

Turkey’s growing military activities in Libya, its manoeuvring in the Mediterranean and also in the Horn of Africa, have riled the Egyptian regime, as witnessed by the formation of an international coalition against Turkey in May 2020 (France, the Emirates, Greece and Cyprus). In response to the deployment of Turkish troops and advisors in support of the Sarraj government in Libya, Egypt has carried out large scale exercises (ground, air, and naval forces) in the border zone (Qadir 2020) and reorganised its forces in the area. The security situation in Libya continues to encourage human trafficking and illegal migration in the Mediterranean, potentially threatening the safety of oil producing activities in the area and of Mediterranean resorts. A preoccupation that the Italian authorities seem to share, with their creation of the Eastern Gas Forum[23] that includes Egypt, and which hopes to become a major player in the provision of liquefied natural gas (LNG) to Europe[24], a market that is equally coveted by Turkey. The Italian company ENI produces 40% of Egyptian oil and in spite of the pressures linked to the Regeni affair[25], the Egyptian navy will soon take delivery of two Italian FREMM frigates[26]. Italy is in the process of becoming one of Egypt’s main suppliers of military hardware, alongside the United States, Russia and France.

The departure of President Mubarak marked a turning point in US – Egyptian relations, hitherto considered a pillar of the American presence in the region. The removal of President Morsi and the continued deterioration of human rights that followed have continued to poison relations between the two countries. Yet, despite threats of a freeze, American aid has continued. As such, since 2016 Egypt has received more than US$1 billion of help a year to allow it to acquire American military equipment[27]; in reality, the rescheduling of payments has only affected development aid.

Faced with an American administration becoming ever more particular about human rights and clearly signalling its intention to maintain Israel’s technological superiority, Russia offers interesting alternatives in arms systems technology as proven by the numerous military[28] but also civil contracts[29], signed with Russia since 2014. This rapprochement with the Kremlin is also explained by the closeness of both countries’ views on a number of regional issues, first and foremost on Syria and Libya.

After the tensions linked with the future of Bashar al-Assad, support for Marshal Haftar’s forces opened the way for a growing political and military cooperation between Saudi Arabia, the Emirates and Egypt. This alignment is justified by common opposition to the Muslim Brotherhood[30] as well as the generous financial aid packages coming from the Gulf neighbours (between US$30 and 40 billion since 2014). In return, Egypt has taken part in the coalition in Yemen and agreed to ceding the islands of Tiran and Sanafir to Saudi Arabia. The rapid expansion of military cooperation between the three countries[31] has been accompanied by the development of economic activities in the Red Sea and the Mediterranean (NEOM projects, Red Sea Initiative, a maritime agreement with Greece) through which most of the Gulf’s hydrocarbons transit.

Egypt’s new African strategy 

In order to realise its objectives of sustainable development as announced in Vision 2030, Cairo aims to emphasise its position as a stepping-stone towards the African market; a strategy that benefits from both Russian and Chinese support. In this context, the strong-arm tactics employed with Ethiopia constitute a serious threat to the country’s resources, but at the same time provide the regime with the chance to renew relations with its African neighbours and above all with the African Union.

Despite the threats of Egyptian military intervention, since 2011 Ethiopia has continued with the construction of its Grand Ethiopian Renaissance Dam (GERD). Cairo has gradually abandoned the military option in favour of diplomacy, in order to win support not just on the continent but also amongst the great powers, particularly the United States and China. The latter occupies a crucial place in Egypt’s economic development; Egypt offering, beyond the opportunities linked to a domestic market of more than 100 million inhabitants,  a strategic springboard to the rest of the African continent. Despite a recent rapprochement with Addis-Ababa, Egypt remains Beijing’s preferred option to take front of stage in the development of interconnecting networks in East Africa (electricity, telecommunications and transport)[32]. The considerable investments made by Egypt in electricity production over the last few years have allowed it to provide a surplus as such that it can now envisage supplying Iraq and Saudi Arabia in addition to its traditional clients (Libya, Jordan, and Sudan). This position as an ‘energy hub’, is one to which Ethiopia also aspires.

Cairo’s African strategy is based on the strengthening of regional integration and the development of free trade areas (Common Market for Eastern and Southern Africa, African Continental Free Trade Area) in order to facilitate its exports to the rest of the continent. Important works to develop Egyptian port installations on the Red Sea and in the Mediterranean (Alexandria, El Dakhlia, Ain Sokhna, Safaga, even Damietta), the development of the Egyptian merchant fleet and the modernisation of its naval forces[33] should allow Egypt to consolidate its place in international maritime traffic. These investments should finally allow the valuation of the enlargement of the Suez Canal, all the more so as the stabilisation of the Sinai opens up interesting economic opportunities.[34].

The transformation of the port infrastructures of Safaga and Hamrawin should also permit  the energising of economic activity in Upper Egypt through the export of Egypt’s Golden Triangle’s natural resources to Asia and the Gulf, while at the same time developing tourism. The Egyptian authorities fear the influence that local Salafist movements could have on the young in this region. The construction of a railway line linking Sudan and a route towards Tchad should also allow for the supply of Egyptian products to its African neighbours  deprived of access to the sea (Central Africa, South-Sudan, Uganda, Ethiopia and Tchad).

The temptation of military adventure

These developments are nevertheless extremely dependent on regional stability and Cairo’s ability to find a modus vivendi with its African neighbours. In this context, the failure of the African Union’s mediation at the start of April 2021 in Kinshasa between Ethiopia and its northern neighbours does not augur well. All the more so in that Exercise Nile Eagles 2, conducted by Sudanese and Egyptian air forces at the end of March 2021, appear to indicate both Cairo and Khartoum’s determination not to accept Addis-Ababa’s policy of fait accompli. The question of the sharing of the Nile’s waters is highly symbolic for the Egyptian regime and would be a huge test for the credibility of an omnipotent military security apparatus. Hugely restricted internally by the socio-economic consequences of the Covid-19 crisis and widely criticised for its repressive policies, the regime could be tempted into a risky military adventure. The manner in which Egyptian forces got bogged down in Yemen during the 1960s nevertheless demonstrated the risks of an adventurism led by the eulogist/figurehead of an Arab nationalism that was losing momentum.

Despite international pressure, Ethiopia is clearly set on proceeding to the second phase of filling the Renaissance dam during the next rainy season. Although the threat of direct Sudanese-Egyptian military intervention against Ethiopian interests remains unlikely, given the limited capacity for military projection of the two states, indirect support to the insurrection the Ethiopian regime is facing cannot be excluded. The announcement that the Egyptian armed forces have taken delivery of 30 Rafale fighter jets gives rise to considerations that Cairo could be studying the possibility of launching strikes against its Ethiopian neighbour. Regional destabilisation would ruin Egypt’s prospects of economic development, vital if it is to confront the considerable socio-economic issues that await the Egyptian regime over the next few years (state indebtedness, poverty, inequality and a demographic explosion).

* * *

Since his arrival in power, President el-Sisi has skilfully demonstrated to the great powers and international financial institutions his ability to preserve the country from the region’s disorder in the medium term. Presented as a ‘pillar of stability’, endowed with a key position in controlling the flow (maritime, energy and communication) between Europe and Asia, this country that is ‘too large to fail’ enjoys a special status. Nevertheless, the regime’s drift towards authoritarianism and the significant deterioration of human rights in the country, the reorientation of power around the person of the president and the capturing of public funds and dynamic sectors of the economy by the military security apparatus, are all factors that weaken the survival of the regime in the longer term. Without necessarily talking of regime collapse, the risk of persistent political and social instability does exist and could lead some, even amongst the regime’s most fervent supporters, to diversify their investments and look for other alternatives. The rapprochement between Israel and some of its Arab neighbours allows a glimpse of new prospects in the areas of security, the economy and industry that Egypt should not underestimate.