London School of Economics A Political Economy of Egyptian Foreign Policy: State, Ideology, and Modernisation since 1970 Yasser Mohamed Elwy MOHAMED MAHMOUD A thesis submitted to the Department of International Relations of the London School of Economics in fulfilment of the requirements of the degree of Doctor of Philosophy, April 2009. UMI Number: U615702 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI U615702 Published by ProQuest LLC 2014. Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code. ProQuest LLC 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 F iz-vssvv A Political Economy o f Egyptian Foreien Policy: State. Ideology and Modernisation since 1970 Yasser M. Elwv Declaration I certify that this thesis, presented for examination for the PhD degree of the London School of Economics and Political Science, is solely my own work. The copyright of this thesis rests with the author. Quotation from it is permitted, provided that full acknowledgement is made. This thesis may not be reproduced without the prior written consent of the author. I warrant that this authorization does not, to the best of my belief, infringe the rights of any third party. A Political Economy of Egyptian Foreien Policy: State. Ideology and Modernisation since 1970 Yasser M. Elwv 3 Abstract This Study aims at exploring the relation between economic liberalisation and Egyptian foreign policy orientation. It argues that the roots of the restructuring of Egyptian foreign policy since 1970 could be traced in the process of transforming the populist statist model of managing the Egyptian political economy. The study of Egyptian foreign policy has been hitherto dominated by the psychological- perceptual analysis of the Egyptian presidents’ belief systems. Implicit in such analyses is the assumption of a docile socio-economic set up and an omnipotent leader capable of making abrupt changes in the basic thrust and orientation of Egyptian foreign policy according to his preferences and perceptions. This study seeks to challenge this assumption. As opposed to the asocial conception of a transcendent leader deciding freely on foreign policy matters, major shifts in Egyptian attitudes and behaviour towards its regional and international environments, it will be argued, were deeply linked to, and largely dependent on, the transformation of the Egyptian political economy, as well as its pace. To this end, the thesis is divided into four chapters apart from the introduction and the conclusion. The first examines the foreign policy implications of the populist statist model that prevailed during the 1950s and 1960s as well as the origins of the restructuring process. The second, third and fourth discuss the first wave of restructuring during the 1970s, the hesitant decade of slow transformation (the 1980s), and the second wave of restructuring in the aftermath of the Gulf war respectively. The focus of analysis will remain throughout the study on the exploring patterns of interaction between transforming the political economy and reorienting foreign policy. * * * Word Count 92,436 words. A Political Economy of Egyptian Foreign Policy: State. Ideoloev and Modernisation since_________ 1970 Yasser M. Elwv 4 Acknowledgements This study was made possible through the support of several friends, comrades, current and former teachers. Professor Fred Halliday was helpful and patient, offering valuable comments and indispensable support through the long process of writing the thesis, particularly, given the peculiar circumstances in which this work was written in London, Cairo and Beirut. Professors Wadouda Badran and Mustapha Kamel El-Sayed of Cairo University, Bahgat Korany of the American University in Cairo, and particularly Gameel Matar and the late Abdel Wehab El-Messiri, were supportive and encouraging, and have endured long discussions especially on the methodological choices and theoretical aspects of this study. I am particularly grateful to the friends and comrades, Fawwaz Trabulsi of the Lebanese American University in Beirut, Mohamed El-Agati, Alaa Abdel Aziz, and Wael Gamal, who have read and commented on the earlier drafts of the different chapters. The friendship and support from my family, Sarnia Salama and Nehal Elwy, and from Hanadi El-Imam, Sahar El-Sherbini, Rasha Serry, Nahla Hassan, Fouad Mansour, Seifalla Kandeel and Ahmed Imam was indispensable. Naturally, I remain solely responsible for all errors and omissions in this study. A Political Economy o f Egyptian Foreign Policy: State. Ideology and Modernisation since_________ 1970 Yasser M. Elwv Table of Contents 1. Abstract 3 2. Acknowledgements 4 3. Introduction 6 4. The Political Economy of Egyptian Foreign Policy: 13 A Framework for Analysis 5. The Rise and Crisis of Etatisme in Egypt: 64 Political Economy and Foreign Policy 6. The First Wave of Restructuring 142 7. The Hesitant Decade: 1981-1990 215 8. The Second Wave of Restructuring 283 9. Conclusion 346 10. Bibliography 354 A Political Economy o f Egyptian Foreign Policy: State. Ideoloev and Modernisation since_________ 1970 Yasser M. Elwv 6 Introduction “There are no economic problems, there are only problems and they are complex” Gunnar Myrdal, Noble Prize Laureate in Economics “Historia non facit sabbatum ” (History is never discontinuous) Roman Proverb This study aims at exploring the relation between economic liberalisation and foreign policy restructuring in Egypt. Its central argument is that the roots of Egyptian foreign policy restructuring since 1970 could be traced in the process of transforming the populist-statist Egyptian political economy. It seeks to identify the different patterns of interaction of Egyptian political economy and foreign policy throughout this process. The 1970s witnessed a far-reaching transformation of the Egyptian political economy and foreign policy. In lieu of Nasser’setatisme, in which the state took charge of social and economic transformation and became the centre of gravity in Egyptian society, an open door policy (infitah) was introduced, and the populist-statist apparatus of the 1960s was gradually dismantled. Economic liberalisation has proceeded steadily, notwithstanding few and limited setbacks, ever since. Similarly, a radical reorientation of the Egyptian foreign policy took place over the same period. Once a forefront of nationalism, based on anti-colonialism, non-alignment, pan-Arabism and anti-Zionism under the leadership of Gamal Abdel Nasser, the years of Anwar Sadat were associated with accommodation to the west, especially the United States, and eventually to Israel (Korany 1991:197-200). Egypt’s international and regional priorities and policies were, therefore, fundamentally and perhaps irreversibly, altered. A Political Economy o f Egyptian Foreign Policy: State. Ideology and Modernisation since_________ 1970 Yasser M. Elwv 7 Mainstream analysis of this foreign policy transformation has thus far been dominated by the psychological-perceptual analysis of the Egyptian presidents’ belief systems1. Thus, the development of post-1952 Egyptian foreign policy is normally divided into three phases, corresponding to the reigns of the three Egyptian presidents: Gamal Abdel Nasser, Anwar Sadat and Hosni Mubarak. The typical argument is that whereas Sadat departed radically from Nasser’s flamboyant, ultra-nationalist, non-aligned and anti­ colonialist policies, opting instead for realignment with the United States and the west, discrediting pan-Arabism, and embarking on an individual peace agreement with Israel; Mubarak sought and, according to some analysts, achieved a balanced foreign policy by reintegrating Egypt into the Arab world whilst strengthening its alliance with the United States and confirming Egypt’s commitment to peace with Israel (Kramer 1987:387). Sadat’s foreign and economic policies were, accordingly, the antithesis of Nasser’s, and Mubarak’s formula was an attempt to reach some form of a synthesis between the approaches of his predecessors. Implicit in these prevailing analyses of Egyptian foreign policy is the assumption of a docile and ineffective socio-economic set up and an omnipotent leader capable of making abrupt changes in the basic thrust and orientation of Egyptian foreign policy according to his private preferences, perceptions, value-system, and strategic choices. The typical rationale given for such assumption is drawn from the prevailing theories of foreign policy making in developing countries2 which, it is argued, lack established foreign 1 The vast majority of studies on the topic have invoked this approach. See: Gum’a (1988); Zahran (1987); Selim (1982); Burrell and Kelidar (1977); Entelis (1974); Nasr (1983). 2 For a critical survey of these theories, see: Korany (1983; 1986). A Political Economy of Eevntian Foreien Policy: State. Ideoloev and Modernisation since _________1970 Yasser M. Elwv 8 policy bureaucracies and democratic traditions, thereby enabling political leaders to monopolise foreign policy decision making. This study seeks to challenge this assumption. As opposed to the asocial conception