Introduction

Stiftung Wissenschaft und Politik German Institute for International and Security Affairs Co m ments

Fragile Alliances in ’s Post- Revolutionary Order WP S The Military and Its Partners Chérine Chams El-Dine

The election of Abdel Fattah al-Sisi in May 2014 as Egypt’s President has ushered in a new order. The tacit alliance forged during the rule of Sisi’s predecessor, Mohammed Morsi, between the Muslim Brotherhood and the military had gradually eroded by the end of 2012. Currently, the military and the business elites constitute the core of an emerging tactical alliance, with the Salafist Nour party and secular political forces oc- cupying a secondary position. In the mid-term, the consolidation of the post-July 2013 order will depend first and foremost on the alliance’s capacity to ensure economic re- covery. Secular and Islamist forces have each been forging electoral coalitions to try to win seats in the coming parliamentary elections, which are supposed to take place before the end of 2014.

The ouster of President on The Military’s Increased Autonomy July 3, 2013, and the subsequent crackdown The 2014 constitution has made the mili- on the Muslim Brotherhood and its mem- tary an increasingly closed fiefdom, pro- bers marked the official demise of an im- tecting its interests regardless of who fills plicit alliance between the military and the the executive branch. According to it, the Brotherhood, which had characterized budget for the Armed Forces is exclusively the beginning of Morsi’s presidency. Since discussed by the predominantly military then, a new order has been taking shape in National Defense Council (article 203). Egypt, in which the military institution is Similarly, the Armed Forces were particu- occupying a central place. Sisi – who won larly keen on keeping the upper hand in the May 2014 elections with a landslide vic- military affairs and on being consulted on tory against the only rival, the leftist poli- all national security matters. According tician – has granted the to the constitution, the National Defense military the status of ultimate arbiter of Council must be consulted by the President the system and supervisor of Egypt’s new before declaring war or sending troops ab- development projects, in addition to its road, and it must also be consulted for draft classic role of national security custodian. laws related to the Armed Forces (articles

In 2014 Dr. Chérine Chams El-Dine is a fellow in the project “Elite change and new social mobilization in the Arab world” realized by the SWP Comments 46 Stiftung Wissenschaft und Politik (SWP). The project is funded by the German Foreign Office in the framework of the transformation October 2014 partnerships with the Arab World and the Robert Bosch Stiftung. It cooperates with the Friedrich Ebert Stiftung and the PhD grant programs of the Heinrich Böll Stiftung and the Hanns-Seidel-Stiftung.

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152 and 203 respectively). The military also mental projects such as wastewater treat- managed to impose article 204 to extend ment and renewable energy. Thus, the pri- the scope of military trials of civilians in vate sector and what is often called the an unprecedented way. Moreover, a transi- military’s economic empire have coexisted tional provision (article 234) stipulates that for the last 30 years. Nonetheless, a clear the appointment of the Defense Minister division of labor has been respected by both must be approved by the Supreme Com- parties, as some economic sectors were con- mand of the Armed Forces over the next sidered the bastions of big business, namely two presidential terms. This strips the chief heavy industries (such as steel and iron), executive (i.e., the President) of his full au- tourism, and telecommunications. thority over the military – as the Supreme Following Morsi’s ouster, the successive Commander of the Armed Forces – and en- (interim) governments awarded the Minis- hances the institution’s autonomy. try of Defense several contracts to carry out infrastructure projects through direct or- der, i.e., without public tenders. These pro- The Military and Egypt’s jects are to be implemented by the AFEA Mega Projects and range from building highways, bridges, With a high budget deficit, reaching 12.6 and low-income housing to renovating pub- percent of Egypt’s GDP (as of 2013–2014 lic hospitals. They also include the pre-actual budget), soaring public debt, and Canal Area Development mega project. growing unemployment, ensuring econom- State officials justify their preference for ic recovery – in terms of higher growth, in- the AFEA over private companies on the vestment, and thus employment rates – is basis of the army engineering corps’ rapidi- imperative for Egypt’s new ruler. Since the ty in implementing projects for the lowest January 2011 revolution, large business cost and with the highest quality. Accord- companies have been reluctant to invest ing to a member of Sisi’s electoral campaign, their money in the country, as the political the military would not crowd out the pri- situation has remained unstable. Thus, fol- vate sector. This is partially true, as most of lowing the demise of Morsi’s rule, the Egyp- these projects are carried out by subcon- tian government and its Gulf allies – Saudi tractors belonging to the private sector. The Arabia, the (UAE), and latter’s involvement is essential, as the im- – have tried to improve economic plementation of these projects goes beyond development by investing large amounts in the AFEA’s own capabilities. However, this extensive infrastructure projects that could arrangement grants the military a create jobs and boost the economy. In this supervisory role in these projects, and, a context, the Armed Forces Engineering Au- fortiori, over its private sector partners. thority (AFEA) has been Egyptian officials’ Among Sisi’s foreign backers, the UAE most trusted entity for implementing such has also been placing its trust in the AFEA. projects. In October 2013, it signed a grant agree- Actually, the army’s involvement in civil- ment with the Egyptian government to ian infrastructure projects is far from a new finance a number of development projects practice. The Armed Forces started their ci- in Egypt. The agreement stipulates that the vilian economic activities in the late 1970s UAE entrusts the Egyptian AFEA with super- with agrarian projects, land reclamation, vising and/or implementing a number of and civilian public works contracts. They these projects. This is in addition to two then gradually expanded and diversified other projects signed by the Egyptian Minis- their fields of activity through a multitude try of Defense and UAE-based companies of income-generating enterprises, including (Emaar Properties and Arabtec Holding) construction, maritime transport, produc- aimed at building a retail development tion of petrochemicals, as well as environ- and a low-income housing project.

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Business Elites: July 2014, Sisi invited 50 businessmen to Indispensable Partners a meeting in which he managed to collect Yet, the intervention of the government more than five billion EGP (US$ 700 mil- and the Gulf sponsors to stimulate the lion) from a number of business tycoons. economy provides only an ad hoc solution Still, businesspeople have abstained from to a chronic issue. Economic recovery will donating substantial sums to the fund – basically depend on the regime’s ability to contributions have remained far below ensure political stability and attract foreign Sisi’s original target of 100 billion EGP and local investment. Thus, the current (US$ 14 billion). The businessmen invited approach favored by Sisi – i.e., the imple- to attend this meeting include independent mentation of development projects under or opposition-linked businessmen (such as military supervision, only involving the Naguib Sawiris), former members of Mu- private sector as subcontractors – is not sus- barak’s National Democratic Party (such as tainable. Mohamed Farid Khamis), and former mem- As a matter of fact, the relationship be- bers of the Brotherhood-linked Egyptian tween Sisi and the business tycoons has not Business Development Association (such as been that smooth, as the latter have been Safwan Thabet). This is a clear indicator losing some of the privileges they enjoyed that Egypt’s new regime is willing to co- under Mubarak. During his first month in operate with all businessmen, regardless office, Sisi made a number of harsh eco- of their political backgrounds, except for nomic decisions. For the first time since ’s business cronies (such as 2007, fuel prices were raised during the steel-magnate Ahmed ‘Ezz), as Sisi does not current fiscal year in order to reduce ener- want to be associated with the Mubarak re- gy subsidies by 40 billion EGP (US$ 5.6 bil- gime’s corrupt practices. lion). Without doubt, energy-intensive Sooner or later, Sisi will have to define industries (such as cement, fertilizers, iron, new rules of the game governing access to and steel) run by the private sector were assets and to economic opportunities. He the first affected by the reduction in energy needs the private sector’s involvement in subsidies. In addition, Sisi issued a law the economy (through local investment and amending the tax code to apply a ten per- tax payments) in order to ensure the long- cent tax on stock market proceeds as well term economic recovery he is yearning for, as a five percent tax on incomes that exceed and thus to consolidate his own legitimacy. one million EGP (US$ 140,000) a year (over the next three years). Though private businesses have not Islamist Forces: Quest for Survival voiced opposition to these recent tax hikes The ouster of then President Morsi signaled and the reduction in energy subsidies, they the beginning of a state crackdown on the will be more likely to resist the implemen- Muslim Brotherhood. By the end of Septem- tation of progressive taxes (as stipulated by ber 2013, the organization was banned by article 38 of the 2014 constitution and cur- court ruling, its main figures arrested, its rently under discussion) and the setting of assets confiscated, and those of its leaders minimum and maximum wages in the pri- frozen. The organization was also declared vate sector – a measure that already entered a “terrorist” organization by the Egyptian into force in July 2014 for civil servants. government in December 2013. In August A sign of the disenchantment from big 2014, almost one year after the Brother- business is the business elites’ slow response hood’s ban, its political wing, the Freedom to Sisi’s call to make donations to a newly and , was dissolved by another established public fund called “Tahiyya court ruling. Misr” () in order to finance Ahead of the protests starting at the end the national development projects. In mid- of June 2013, calling for Morsi’s resigna-

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tion, Brotherhood leaders – along with candidate, to the extent of organizing nine leaders of other Islamist parties and move- public meetings to call their followers to ments – formed the National Alliance to vote for him in the last presidential elec- Support Legitimacy, later also known as the tions. For the moment, although al-Nour is Anti-Coup Alliance. Today, this alliance has still a necessary ally for legitimizing Sisi’s been weakened following the withdrawal regime, the party has lost some of its cre- of some of its key members, namely the al- dentials among its core Islamist supporters Wasat and al-Watan parties. This has left for what is seen as betraying its fellow Is- the Brotherhood – as well as the other lamists. Likewise, its organizational weak- members of the Anti-Coup Alliance – in a ness – following its internal divisions, which dire situation. The release of two moderate led to the splitting off and formation of Muslim Brotherhood figures (Helmi al-Gaz- the Salafist al-Watan party in January 2013 zar and Mohamed al-Omda) in September – and its limited financial resources cast 2014 revived the discussion about a possi- doubt on its capacity to replace the Brother- ble reconciliation between the new leader- hood as the main Islamist political force or ship and Brotherhood members who are to win the “Islamist vote” in the parliamen- willing to undertake an “ideological revi- tary elections, which are officially supposed sion.” It is clear that any reintegration into to take place before the end of 2014. Against the political system would be on the re- this background, al-Nour leaders have gime’s terms and would mean respecting started talks with the al-Wasat and al-Watan the military’s red lines on national security parties about forming an Islamist electoral and Egyptian national identity. At the same coalition, or at least to convince figures time, any reconciliation would deal a fatal of both parties to run for elections on al- blow to the Brotherhood’s organizational Nour’s list. unity and its leaders’ credibility in view of the brutal crackdown that has left hun- dreds of its supporters dead and many Secular Political Forces: more arrested. Yearning for Influence The Salafist Nour party can be consid- The participation of secular political forces ered as the one benefiting from the Brother- in the June 2013 demonstrations under the hood’s demise. Its leaders supported Morsi’s banner of the National Salvation Front – ouster, adopted the military-led transitional an opposition alliance formed at the end roadmap, and participated in the drafting of November 2012 – and their approval of of the 2014 constitution. Their contribution the military-backed transitional roadmap, has been seen as providing “Islamic legiti- certainly legitimized the political process. macy” to the new political order. Al-Nour’s However, this front collapsed after the oust- leaders justified their pragmatic stance as er of President Morsi, and longstanding an effort to preserve national unity, to keep divisions among Egypt’s civilian politicians Islamists represented in the government, reemerged. In the same vein, prior to the and to escape the Brotherhood’s fate. The May 2014 presidential elections, an internal leaders’ main concern has been to avoid a split occurred within the ranks of return to the pre-2011 situation, when they Tamarrod (rebellion), a campaign launched were being persecuted by State Security ser- by young activists in April 2013 calling for vices. They also worry about article 74 of Morsi’s resignation. At least two of its lead- the 2014 constitution, which states that “no ing figures supported Hamdeen Sabahi, political party can be based on religion.” whereas a large number of its members If used against them by the current regime, constituted the backbone of Sisi’s electoral this article may transform al-Nour into an campaign and have since strongly support- illegal entity. Such a haunting fear explains ed the new government’s policies. why al-Nour endorsed Sisi as a presidential Tamarrod is currently being transformed

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into a political party called the Arab running for elections or forging political Popular Movement, which could field alliances that go beyond electoral strate- candidates in the parliamentary elections. gies. The involvement of secular political In an attempt to coordinate the efforts forces in politics remains important for the of national secular political forces, Amr current regime’s image as being pluralist. Moussa – one of the presidential candidates However, their fragmentation and compe- in 2012 and head of the 50-member com- tition over leadership does not make them mittee that wrote the 2014 constitution – serious contenders for the current ruling conducted negotiations with right- and left- coalition. wing parties to form a coalition. Yet, in In addition to the fragmentation of the early August 2014, Moussa’s negotiations secular political spectrum, the new election with the political forces reached a deadlock law issued in June 2014 will hinder the due to some parties’ self-interested calcu- proper representation of political parties in lations and the unwillingness of others to the coming parliament. It provides for a include former members of Mubarak’s mixed system when electing the parlia- defunct National Democratic Party in any ment’s members. In addition to the 27 electoral coalition. At the same time, his members appointed by the President, the initiative inspired others, which has led to law gives a greater share for the majority three rather homogenous electoral coali- vote system (420 members, or 74.1 percent tions among the secular forces. The first of the seats) and a minority of seats (120 and most organized one is the liberal- members, or 21.2 percent of the seats) to centrist Egyptian Wafd alliance. It mainly be elected through a closed-list majority includes the Wafd party, led by business- system. On the one hand, this law clearly man al-Sayed al-Badawi; the Egyptian Social favors well-connected, wealthy individuals Democratic Party, led by Mohamed Abul- and old, well-rooted and well-financed par- Ghar; and the Reform and Development ties. On the other hand, it voids the list party, led by Mohamed Anwar al-Sadat. The system of meaning, as it does not allow for second coalition is the left-centrist Demo- any proper proportional representation. cratic Alliance for Civil Forces. The major According to the closed-list majority sys- participating parties include the Popular tem, the list receiving the majority of votes Current, led by former presidential candi- (50%+1) is awarded all seats. Moreover, the date Hamdeen Sabahi; the Dostour party, law establishes conditions for the lists’ led by Hala Shukrallah; and the Socialist composition, as each has to include a set Popular Alliance, led by Abdel Ghaffar number of specific groups (such as Chris- Shukr. The third one is the , tians, women, disabled persons, workers/ led by remnants of Mubarak’s regime. The farmers, etc.). latter sneaked into the public/political Thus, this law forces political parties to arena and have been smoothly rehabilitat- form electoral coalitions in order to run for ed since Morsi’s ouster. It mainly comprises the upcoming parliamentary elections. This the Misr Baladi party, led by Ahmed Gamal- poses the danger of leading to a weak par- eddin, Interior Minister under Morsi; and liament composed of fragile alliances, dom- the National Movement, led by Mubarak’s inated by well-connected businessmen, last Prime Minister and 2012 presidential running as individual candidates, and con- candidate, Ahmed Shafiq. As for the Free trolled by the executive. Party, founded by business ty- coon Naguib Sawiris, it is still undecided whether it will join one of the first two Outlook coalitions or run for elections on its own. The consolidation of the post-July 2013 The success of these coalitions is quite order will depend on the leadership’s uncertain, whether it is with regard to capacity to ensure political stability and

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economic recovery. This is supposed to be achieved in the short-term through direct state intervention to establish major infra- structure and development projects. However, the partnership between the military and the business elites is faced with a number of challenges. Egyptian busi- ness tycoons will not accept being reduced to subcontractors working under the mili- tary’s supervision. Thus, a potential re- evaluation of the military’s role in the eco- nomy will be required in the medium and long-term. Sisi will have to persuade his core supporters in the military to make

© Stiftung Wissenschaft und concessions to private businesses. He will Politik, 2014 also have to establish the new rules of the All rights reserved game defining access to assets, markets, These Comments reflect and business opportunities, while at the solely the author’s views. same time improving the lot of the most SWP deprived, as he has promised. For the mo- Stiftung Wissenschaft und ment, the new President’s popularity en- Politik German Institute for ables him to adopt harsh economic mea- International and sures. However, the absence of an efficient Security Affairs social welfare program (e.g., access to basic Ludwigkirchplatz 3­4 health services, to unemployment allow- 10719 Berlin ance, etc.) with a capacity to alleviate the Telephone +49 30 880 07-0 Fax +49 30 880 07-100 effects of austerity measures, which espe- www.swp-berlin.org cially hurt the most vulnerable sections of [email protected] the population, is likely to undermine the ISSN 1861-1761 new regime’s legitimacy and put an end to the état de grâce it is currently enjoying. Germany and its European partners retain very limited influence on the Egyp- Further reading: tian political order, especially as today the latter mainly depends on Gulf financial Stephan Roll Al-Sisi’s Development Visions. assistance. Also, the application of political Projects and Power in Egypt conditionality by European authorities has SWP Comments 26/2014, shown its limits. Still, while Sisi’s willing- coalition against the so-called Islamic State is bolstering his international legitimacy, European governments should not ignore the Egyptian regime’s drift toward authori- tarianism in return for fighting terrorism.

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