Military business expands in Sisi's Egypt

Military business expands in Sisi's Egypt
The 2013 counter-revolution has allowed the army to consolidate its grip on the economy. It is estimated it now controls up to half of Egypt's economic activity.
3 min read
23 January, 2015
The Egyptian military controls large areas of the economy [Getty]

Egypt's ruling military class has expanded its economic interests since the former army chief, Abdel Fattah al-Sisi, became president.

The military has had a growing economic presence since the peace treaty with Israel in 1979, when it turned to manufacturing weapons and equipment to justify its size. Over time, it expanded its factories and farms to become a "quasi-commercial enterprise" - a term coined by US ambassador Margaret Scobey.

Egypt's military brass has become the country's economic elite, "the deep state", a key component of the old regime, with an extensive network of businesses managed by retired senior officers. 

Jason Ditz, of the website, said that the Egyptian army produces goods including bottled water, olive oil, pipes, cables, chemicals and cement, and is involved in construction, tourism, real estate and energy.

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It comes as little surprise, then, that the 2013 counter-revolution gave the army the opportunity to consolidate its economic interests.

In an article titled Seeking wealth, taking power, Samer Atallah, an assistant professor at the American University in Cairo, said the army had taken "direct control of the state, and its involvement in the economy has since expanded through civil projects".

"The army made clear that its economic empire was not to be subject to debate in any new political order," he said.

Atallah said Mahmud Nasr, the deputy defence minister for financial affairs, declared the army would "fight for its projects", saying military sweat had secured them.

     It is estimated the army controls between a quarter and a half of the economy, and conservative estimates suggest assets worth more than $40bn.

Since then, senior military officials have reportedly pressed for the two constitutions drafted since 2011 to include explicit clauses protecting the secrecy of the military's financial accounts.

The military is also understood to be expanding infrastructure projects and its state housing and telecoms interests, without any competitive bidding process.

In 2014, the army was directly appointed to carry out state infrastructure projects in partnership with local and regional companies, particularly from the UAE and Saudi Arabia. 

The first involved the reclamation of about 500,000 acres of non-arable land in the Paris and Farafra districts of New Valley, using conscripts and peasant families as labourers. The project is UAE-funded to the tune of $1.3bn.

The army also has a 78 percent stake in building the Rawd al-Faraj highway and linking the Desert Highway to the Oases Highway. The $1.2bn project is being overseen by the engineering authority of the Egyptian armed forces, according to officials in Giza.

The army's engineering authority was also awarded a project to develop housing in 42 districts of Cairo and Giza governorates, at a total cost of $46m, through direct order.

Meanwhile, the ministry of communications awarded the defence ministry a majority stake in the agency controlling Egypt's communications infrastructure, which has investments worth about $8.2bn.

Enforcing inequality

In total, it is estimated the army controls between a quarter and a half of Egypt's economy, and conservative estimates suggest it holds assets worth more than $40bn.

Meanwhile, for ordinary workers, the Egyptian state is seeking to bring in tough measures against collective action, particularly in the labour movement, as workers demand better wages and living standards.

Egypt was in the world's three most unequal societies in 2013. The top one percent controls almost half of its wealth, according to Credit Suisse's 2014 Global Wealth Report. The top 10 percent controls almost three-quarters, and wealth is concentrating in the upper levels of society more and more each and every year.

There are eight Egyptians whose fortunes exceed $1bn, and whose total wealth amounts to $22.3bn. Meanwhile, more than 40 percent of the population lives on less than $2 a day, according to World Bank figures.