Introduction Stiftung Wissenschaft und Politik ments German Institute for International and Security Affairs m Co The Military and Egypt’s Trans- formation Process WP S Preservation of the Military’s Reserve Domains Chérine Chams El-Dine The military’s withdrawal from Egypt’s day-to-day politics after it had assumed power in the wake of Hosni Mubarak’s ouster did not put an end to its role in the political process. A tacit agreement seems to have been reached between the President – affili- ated with the Freedom and Justice Party (FJP), the political wing of the Muslim Brother- hood – and the military leadership. While the military institution keeps its reserve domains, it has also become a mainstay of Mohamed Morsi’s regime. This backdoor deal – confirmed by the new Egyptian constitution, signed into law by the President on 26 December 2012 – also poses a great challenge to Egypt’s transformation process, as it leaves the military unaccountable to elected civilian bodies. On 12 August 2012, Mohamed Hussein assumption of office by Morsi – who would Tantawi, then Minister of Defence and support his intended reshuffling of the Commander in Chief of the Armed Forces, army command. These senior officers were and his Chief of Staff, Sami Anan, as well as unsatisfied with what they considered other senior military officials, were sent to Tantawi’s mismanagement of the transi- retirement. This incident is quite signifi- tional period, which damaged the mili- cant in understanding the nature of civil- tary’s national image, institutional inter- military relations in the aftermath of the ests, and affected the army’s performance. election of President Mohamed Morsi, in Exploiting an attack by some militant office since 30 June 2012. What looked like groups on an Egyptian border post in a return of the military to its barracks Northern Sinai that killed 16 Egyptian appears more like a negotiated arrange- security personnel, Morsi dismissed the ment upon closer examination. As a start- most powerful generals across the security ing point, President Morsi had reached out sector, namely the head of the Presidential to high-ranked members of the Supreme Guard (Naguib Mohamed Abdel Salam), the Command of the Armed Forces (SCAF) – in head of the General Intelligence (Murad power between the overthrow of President Muwafi), and the head of the Military Police Hosni Mubarak in February 2011 and the (Hamdy Badin). By removing these central 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 6 Stiftung Wissenschaft und Politik (SWP). The project is funded by the German Foreign Office in the framework of the transformation February 2013 partnerships with the Arab World and the Robert Bosch Stiftung. It cooperates with the PhD grant program of the Heinrich-Böll-Stiftung and the Hanns-Seidel-Stiftung. 1 security figures, he intended to secure the known as the “military’s economy”, which Presidency against possible reactions from grants him decision-making power over a the “street” orchestrated by the removed substantial part of Egypt’s economy. This Minister of Defence or his close associates. military’s economy consists of five main All senior officers sent to retirement with elements, namely: the annual defence Tantawi (almost 200 in total, 5 of them budget (EGP 25.5 billion or US$ 4.3 billion, SCAF members) had not been informed and around 5.2% of the 2011/2012 budget); ahead of time of such reorganisation of the US military assistance (US$ 1.3 billion military command. This reshuffling within received annually by the Armed Forces, the army command, on the one hand, com- usually in-kind since the aftermath of plied with the military institution’s inter- Egypt’s peace treaty with Israel in 1979); nal rules, as promoting Abdel Fatah al-Sisi – arms deals (import and limited export of former head of the Military Intelligence – weapons and ammunition); the factories to the rank of Minister of Defence and run by the Arab Organization for Industri- Commander in Chief of the Armed Forces alization (AOI) under the supervision of the mandated sending to retirement all more Ministry of State for Military Production; senior officers within the army command. and the National Service Projects Organiza- On the other hand, it was used as an occa- tion (NSPO), directly overseen by the Minis- sion to get rid of Tantawi’s supporters try of Defence. and some of the most unpopular military The official rationale behind the mili- figures involved in the crackdown of tary’s economic activity has been budget protests during the transitional period. relief, based on the argument that the The reorganisation of the military com- military’s self-sufficiency allows Egypt to mand and the appointment of a new and maintain large military structures without younger military leadership could have placing pressure on state finances. Initially been considered a fresh start, one in which created by President Anwar al-Sadat in the military would have accepted to be sub- 1975, the AOI provided a base from which ject to a gradual increase in civilian over- arms manufacturing, as well as household sight, a sine qua non feature of any transition appliances production, flourished in the towards a democratic system. Achieving 1980s. The NSPO, also established by Sadat, more democratic civil-military relations in 1979, runs exclusively civilian projects. would entail addressing some problematic Its budget is managed by the Minister of issues between civil and military actors, Defence and its profits are transferred to namely the military’s economy, military an undisclosed bank account. Such civilian trials of civilians, and questions related activities made the army an integral part to transitional justice as well as Egypt’s of Egypt’s development efforts through the national security/ foreign policy formula- armed forces’ involvement in the recon- tion. However, in all these areas, little pro- struction of Egypt’s infrastructure – dam- gress has been made towards more trans- aged by the war against Israel – under the parency and civilian oversight since Pre- late 1970s’ slogan “one hand builds and sident Mohamed Morsi assumed power. another carries an arm”. At the same time, Moreover, the new Egyptian constitution, it was Sadat’s strategy to reduce the army’s approved by 63.8 per cent of the voters in involvement in politics while rewarding it a highly controversial referendum, has con- through the expansion of its role in domes- firmed the military’s exceptional status. tic economic production. Thus Sadat, and Hosni Mubarak after him, transformed the military from an active protagonist in the The military’s economy Egyptian political arena into a power oper- The Minister of Defence retains supervisory ating in cooperation with the President to control over a wide variety of activities advance their respective interests. SWP Comments 6 February 2013 2 The Armed Forces started their civilian tary assistance. The military institution re- economic activities with agrarian projects, sponded harshly to such demands, stressing land reclamation, and civilian public works that the army’s economic projects are off- contracts. They then gradually expanded limits and expressed its readiness to fight and diversified their fields of activities for them. through a multitude of income-generating This stance was in line with the obvious enterprises to include tourism/hotels, con- resolve to keep significant decision-making struction, maritime transport, production powers over military matters that the SCAF of petrochemicals, as well as environmental had made explicit on more than one occa- projects such as wastewater treatment and sion during the transitional period. This renewable energy. The military institution was expressed most clearly in November is keeping the aforementioned activities 2011, when an official committee headed completely secret, using “national security” by Ali al-Selmi, then Deputy Prime Minister as a pretext. For example, none of these for political affairs, issued a document that companies is listed on the Egyptian stock would have established a number of “supra- market. constitutional principles”. In essence, the However, the activities of the AOI and so-called Selmi document would have given NSPO are ubiquitous and permeate Egyp- the SCAF the sole responsibility for all mat- tians’ daily lives, namely army-produced ters concerning the Armed Forces, espe- brands such as “Queen” pasta and “Safi” cially with regards to their budget, which mineral water, or the services provided by was supposed to be incorporated only as a “Wataniyya” petrol stations and military- single figure in the annual budget, and managed wedding halls. The military insti- would not be subjected to discussion in tution has thus developed a “grey econo- Parliament. These “supra-constitutional my” that is not subject to any parliamen- principles” were quickly dropped after tary scrutiny or the Central Auditing Office. strong criticism; however, the new consti- Given this lack of transparency, experts tution retained some of these provisions, come to very different assessments of the in particular with regards to the military’s military economy’s share, ranging from economy. 5 to 15 per cent of Egypt’s gross domestic While during the constitution drafting product. While these enterprises enjoy process, representatives of the opposition lucrative subsidies as well as tax and licens- proposed to keep some items of the defence ing exemptions, the revenues they generate budget secret for “national security” rea- are returned to the military’s own account sons and to discuss others in closed sessions rather than incorporated into the state’s by specialised parliamentary committees budget. (namely the Committee of Defence and After Egypt’s 25 January Revolution, National Security), none of these proposi- many voices called for civilian oversight of tions materialised in the new constitution.