Economic empire of Egyptian Army under renewed scrutiny

With Egypt implementing hundreds of infrastructure projects, including new roads, tens of thousands of new flats and new cities, the army’s economic role is taking centre stage.
Saturday 21/09/2019
A 2018 file picture shows Egyptian soldiers walking in front of a newly constructed combined-cycle power station on the outskirts of Cairo. (AFP)
Omnipresent. A 2018 file picture shows Egyptian soldiers walking in front of a newly constructed combined-cycle power station on the outskirts of Cairo. (AFP)

CAIRO - Rare anti-government protests broke out in Egypt demanding President Abdel Fattah al-Sisi step down, a demonstration reminiscent of the “Arab spring” uprisings.

Protesters gathered September 20 had responded to a call by a self-exiled contractor who claimed corruption by the military and government. Videos posted on social media by Mohamed Ali, a relatively unknown actor and film producer, put the role of the military establishment in Egypt’s economy in the spotlight.

Ali’s videos purportedly recounted his work with the Engineering Authority, the army department responsible for implementing and supervising major development and construction projects. He claims he was defrauded by the army and fled to Spain for fear of reprisal from the military establishment after he demanded his money back.

Ali’s videos have been used by Sisi’s to allege the Egyptian leader and his administration are corrupt. The Muslim Brotherhood is also using the videos to attack Sisi’s administration.

The allegations came at a time economic reforms and austerity have squeezed Egypt’s lower- and middle-classes.

In a speech September 17, Sisi dismissed the allegations as “sheer lies.” He portrayed Ali’s videos as an attempt to weaken Egypt and undermine the public’s trust in the military.

He said he would continue building presidential residences for the good of Egypt. “I am building a new country,” he said. The president also warned Egyptians against protesting or repeating the 2011 uprising.

In Egypt, the videos fuelled debate that the involvement of the military establishment would negatively affect the economy.

“The domination of the military establishment over economic projects will scare investors away from putting their money in Egypt,” said Hazem Hosni, a professor emeritus of economics at Cairo University. “Serious foreign investors cannot accept to compete with the military establishment or even work under its mandate.”

The army has been part of the economy for decades, owning non-military facilities that produce a large number of goods, but the military’s involvement in the economy has grown dramatically since Sisi became president in 2014, observers said.

Army factories produce goods from kitchen utensils to vehicles. Some factories operate under partnerships with international companies in the United States, Europe or Asia. The army operates food production projects, including newly established greenhouses and fish farms that produce tonnes of foodstuffs every year.

With Egypt implementing hundreds of infrastructure projects, including thousands of kilometres of new roads, tens of thousands of new flats and new cities, the army’s economic role is taking centre stage.

Ali talks in the videos about construction projects either directly implemented by the army or overseen by it through local contracting companies, such as Amlak Misr, which he used to own.

The army does not release figures about its economic empire but, in March, Sisi said the military controls 2-3% of Egypt’s economy. On September 2, spokesman Colonel Tamer al-Rifae said the army oversees 2,300 projects that employ approximately 5 million civilians.

The army’s production facilities, observers said, get preferential treatment when it comes to taxes and energy supplies. The army allegedly uses poorly paid conscripts in some projects, which does other produces gross injustice, they claim.

“This will cause the civilian sector to shrink,” Hosni said.

The army’s economic empire has been Egypt’s lifeboat since the 2011 uprising that ended the autocracy of Hosni Mubarak. The uprising halted Egypt’s economy, led to the closure of thousands of factories and caused the flight of foreign investors. Egypt’s civilian sector produced very little for years after the uprising.

Egyptians realised the importance of having an army with a high degree of self-sufficiency, at least when it comes to food. Army trucks were seen on the streets across Egypt selling food at prices far below market prices. The army continues to do this.

The army’s supporters point out that the military provided buses when public transport drivers staged strikes seeking a salary rise. They also say the army used its gasoline stocks to fill the tanks of civilians’ cars when petrol stations across Egypt suffered a fuel shortage.

“Armies the world over play a role in the economy in the light of the needs of their peoples,” said retired army General Gamal Eddine Mazloum. “Claims that the army dominates the economy are only aimed at smearing it and doing away with public trust in the military establishment.”

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