Continuing Business By Other Means: Egypt's Military Economy

By L.S., 30 May 2014
Image: Character mask of capital? Egypt's new president el-Sisi embodies the identity of capital and army

While much analysis has emphasised the flexible, precarious and improvisatory subjectivities of neoliberal ‘post-fordist’ society, the post-crunch period demonstrates that militarism, graft, and un-free labour are just as crucial for contemporary accumulation. In a detailed analysis of the role of the army in the Egyptian economy, L.S. reveals a state with a vast military-industrial complex based as much on private-public partnerships and a flexibly industrial army of capital as on a growing reserve army of labour




The enormous protests of 30 June 2013 (June30) demanding the resignation of Muslim Brotherhood president Mohamed Morsi were the result of a year of intense economic and political crisis in Egypt. Political gridlock, collapsing investments, fuel shortages, a currency crisis, rising inflation and unemployment were followed by an unprecedented crime wave and attendant vigilantism. A sense of chaos prevailed. The deeply unpopular incumbent increasingly resorted to making appeals to his Islamist base, and so was accused of being divisive as well as incompetent. In early July 2013 the Supreme Council of the Armed Forces (SCAF) intervened to oust Morsi to widespread acclaim, and proceeded to crack down on the Muslim Brotherhood, later slaughtering thousands at its Rabaa protest site and elsewhere. The SCAF at least temporarily stabilised the economic situation by securing massive aid transfers from Gulf allies, and the political situation by fulfilling the street’s demand to oust Morsi, tabling new elections, and importantly making a promise to roll out a new national minimum wage law. SCAF's main platform however, is indeed security and stability, and thus it has also attacked the legacy of the 25 January 2011 (Jan25) uprising, passing a new law curtailing protest, jailing key activists, and reorganising and relegitimising the police and security forces. Draconian new terrorism laws are written. An atmosphere of threat and paranoia prevails in the pro-SCAF media and on the streets, with members of revolutionary groups denounced as foreign spies and threatened by members of the public. The police again kill with impunity, especially at the many campus based protests that have occurred since Rabaa. Tahrir is empty but for army choreographed pageants where children and old men are photographed with army jackboots strapped to their heads, as air force jets trace kitsch hearts in the skies above. The army intervenes in strikes and some striking workers have been jailed. Egypt finds itself well and truly in a period of reaction.


These events have solicited much analysis and commentary about the relationship between the army and the state in Egypt, as well as fascinated speculation about the size and scope of the army’s economic sector. Despite wildly divergent estimates of its control of the economy, numerous press articles attest to the wide variety of the army’s enterprises. Denunciations of secrecy and corruption accompany lists of undertakings that may include major projects in agriculture and construction as well as a ragbag of ventures and products it is involved in, from restaurants and social clubs to bottled water and macaroni!


Some look at the jumble of uninspiring product lines and conclude that the army economic sector is generally fairly shabby and small fry, or that its military industries are marked by failure.[1] For Hazem Kandil, it is compensation for the gradual loss of prestige and influence the army has endured, especially since the ’70s, and also an imposed self-sufficiency as defence budgets decline.[2] Some note its substantial stake in the economy, but also a similar detachment: the army content to accumulate wealth behind the scenes and leave day-to-day government to a separate executive, hoping to protect its sector from liberalisation, and its budgets from scrutiny. Yezid Sayigh sees the pre-uprising army substantially integrated into the Mubarak presidential system and searching for individual economic benefits, Egypt as an ‘officer’s republic’ with men in uniform everywhere on the make. By this account the army was implicated in the previous regime but the top brass lacked a separate corporate identity or any strong intent to steer the ship of state, as was the historical case in Turkey.[3] However, since the 2011 uprising, Sayigh has also argued, the army has attempted to consolidate a system of ‘custodianship’ more comparable with the Turkish model. Yet the army is not institutionally prepared for the job, and perhaps in 2012 had still hoped to make deals with rising political forces to enshrine its prerequisites and right to intervene in times of crisis, while wanting to return to its moneymaking activities.[4] On the other hand, Robert Springborg sees Egypt essentially as a military state and has long traced its acquisition of substantial assets and the fostering by the brass of important economic projects.[5]


Much received opinion in the press and beyond however assumes a dyed-in-the-wool protectionism inherited from the army’s roots in Nasserism. Indignation at ‘huge profits’ is matched with claims of graft, inefficiency and waste in an unrestructured state sector.[6] The military is simply functionally unfit to run industries the line goes, and officers are incompetent managers, they should return to barracks. However much descriptive truth there is in these analyses, what needs to be stressed is the more recent dynamism and outwardness in the army’s economic strategy, and, indeed, the institutional advantages that are turning the army into a dominant force in a transforming economy. Advantages that are enabling it to act as a leading fraction of the capitalist class, rather than narrowly as a class of rentiers, or as a stagnant holdover of postwar statism, or as a particular, delimited state institution which has overgrown its proper functional boundaries.




The army was at the core of the Nasserist developmental-planner state set up by the Free Officers after the coup of 1952. They saw the British occupation, the corrupt and weak monarchy, and the control of the economy by the old elites as inimical to the army’s fundamental operational requirements. For instance, an ignominious defeat by the nascent Israeli state in the war of 1948 was blamed on courtiers’ corrupt purchase of defective European weapons supplied to the army. A new model of development based around state control of large parts of the economy and a programme of Import Substitution Industrialisation (ISI) would secure the growth of an industrial base and thus the army’s project of gaining some self-sufficiency. Uniforms, ammunition and certain armaments would be produced domestically, and popular mobilisation toward a project of national renewal and war preparedness against Israel was ensured. In the developing cold war world, the military-led regime would also be able to broker access to a ‘security rent’ from one of the contending superpowers, which a little later in the decade would become the Soviet Union.


A good starting point for a consideration of the army’s current role in the Egyptian economy however is the Sadat era. This period saw the gradual move away from the Nasserist planner state towards the liberalisation of the economy in the programme of ‘Infitah’, or opening. Sadat steered his foreign policy away from alignment with the Warsaw Pact in the Corrective Revolution of 1971, consolidating his position by bringing the army and security services to heel politically and expelling pro-Soviet elements. After the Yom Kippur war in 1973 Sadat sought peace with Israel under US tutelage, and thus also the possibility to reorient the economy away from its focus on the military and war preparedness. The army saw its position within the elite and its control of large parts of the productive apparatus challenged by the rise of a new commercial bourgeoisie, enjoying the opportunities of privatisation programmes and liberalised external trade. Following Hazem Kandil we should also stress that this was not a simple break with the past, but in a sense the resolution of a Nasser-era struggle between the top brass and the executive branch of the state over economic management and the army’s privileges.[7]


However, the army was still very well placed to take advantage of the Infitah programme of state divestment, and thus began to build its economic empire under Sadat, just as it was being marginalised politically. Furthermore, a new project of military industrialisation was inaugurated with the foundation of the Arab Organisation for Industrialisation in 1975. The AOI was an early attempt to reorient the army’s defence industries towards regional exports in partnership with the Gulf states, flush with massive petrodollar reserves following the first oil shock. The foundation of the AOI also marked the break with Russian patronage and military aid, which, beyond all wider geopolitical considerations, was seen by the army and state technocrats as limiting for being poor in technology transfers and co-production agreements. These would now hopefully be leveraged via Gulf state funds in contracts with mainly European manufacturers in which Egypt would provide the industrial capacity and labour power. Whilst Egypt and other developing countries were then learning of the impossibility of ‘buying a mode of production’ via ISI, the aim of shrinking the technology gap and developing more advanced industrial capacity would be pursued via focused arms production projects in partnership with petrodollar rich Gulf states, in the context of the Infitah. In the deal Egypt was also presenting itself as possibly meeting the security requirements of the region as whole, and the Gulf states in particular, with Israel then posited as the main enemy.


Despite a reportedly fairly successful start, the early AOI experiment was halted by the ’79 peace treaty with Israel, as the Gulf states, in a supposed display of Arab solidarity, consented to the expulsion of Egypt from the Arab League for ending the state of war with the Zionist enemy. An epochal shift in the regional power balance was the likely real reason: the peace itself diminishing Egypt’s importance as a frontline state, the Iranian revolution refocusing the security question to the Gulf and evincing need for a stronger Western security umbrella (the Gulf Cooperation Council [GCC] would be formed only 2 years later), and most importantly, the 2nd oil shock underlining the ascendency of Saudi Arabia and the GCC as regional leaders, and making it particularly easy for them to buy better quality weaponry directly from the west.


The peace and the end of the first configuration of the AOI produced a troubling resurgence of the political question of the army, with the Egyptian state now faced with the problem of what to do with a million men under arms, and an officer class indignant at demobilisation and fretful about its declining status. The size of the standing army was gradually reduced, and career structures transformed to encourage officer quiescence in anticipation of the opportunities for personal enrichment that would come with seniority and retirement. Beyond that, the Dayton peace pay-off for Egypt was large yearly US aid transfers to the military, and within that the development of co-production contracts for the assembly of US weapons systems in a transformed AOI, which would help ensure the loyalty of the officer class, and the continuing employment of industrial capacity. These aims would also be pursued by the National Services Projects Organisation (NSPO), a new agency tasked with developing new economic outlets for the army. It was during the Mubarak presidency which immediately followed that under its auspices the army would build its many and varied civilian sector industries. The army would also return to the heart of the state in the ’80s, following relative marginalisation and ‘de-politicisation’ in the Sadat era. However, by the 1990s,  it would do so not as a contending power centre to the immediately ruling group, but integrated into Mubarak’s patronage system as beneficiaries of the accelerating liberalisation and privatisation programme.[8]




The programme of economic liberalisation unfolding in the late Mubarak era under the tutelage of International Financial Institutions (IFIs), peaking with the Ahmed Nazif cabinet of 2004-11 – and matched by similar policies in the rest of the region – coincided with the rapid internationalisation of Gulf capital, especially as the long oil boom of the 2000s progressed. Then as up to the post-crunch period large portions of this capital has been invested in the MENA region. Adam Hanieh’s recent work has shown that the Middle East operates increasingly at the regional scale, via the penetration of these Gulf investment flows. In a break with the past however the new inflows do not primarily take the form of state to state transfers but are extended by private firms. These now make up the largest part of foreign direct investment (FDI) in the Middle East region: ‘the value of projects announced by Gulf Arab investors in the region exceeded those from any other country or region in the world for the entire 2003-2009 period.’[9] In the key sectors of finance, retail, real estate, and telecommunications, Gulf firms have displaced or merged with domestic capital. Hanieh challenges both rentier theory’s insistence on state ‘autonomy’ from society, and relatedly the conventional interpretation of the Arab Spring as merely a revolt against economically and politically illiberal statism, by insisting on capitalist class formation alongside state formation in the Gulf oil states, the internalisation by particular states of transnational capital and its exigencies, and the predominance of neoliberal economic policy in the period leading up to the revolts. The Egyptian state’s carapace may have been inherited from the Nasser era, but by the Jan25 uprising, the socio-economic situation was already transformed.


Within this new configuration of the relationship to Gulf capital, the army, the supreme nationalist institution, with its historically leading and indeed enduring role in the construction of Egypt’s national identity, also became a very willing and apt partner in the opening of the economy, as an agent in Egypt’s insertion into regional (and global) cycles of valorisation, and acting as their state/para-state guarantor and force of discipline.


Thus, ‘contrary to the army’s reputation as a pillar of protectionism’ as Marshall and Stacher note, the army has also been adept at elaborating projects which are ‘collaborative, bringing in Gulf conglomerates, as well as Western and Asian multinationals as partners.’[10] One important joint partnership, as they go on to detail, was signed in 2001 with the large Kuwaiti Kharafi group, which involves ventures in computer manufacturing, pipemaking for the region’s hydrocarbons industry, and an ‘operation called Maxalto, which relies on technology from German firm Schlumberger to manufacture smart cards’, which the army no doubt intends to develop as part of the mooted reform of Egypt’s subsidy system.[11]


Joint ventures with Gulf conglomerates forged from the privatisations of the Ahmed Nazif era have been funded by large public sector banks and loans from IFIs. Indeed, many of the contracts take the form of public-private partnerships (PPP), in numerous bridging arrangements pairing state institutions with the private sector. [For an introduction to PPP see Rob Ray’s ‘The Three P’s’ in Mute, 2007,] During the Mubarak period for instance, the Alexandria shipyards were ‘privatised’ by being turned over to the Ministry of Defence, where it now produces warships as well as large merchant vessels and operates a repairs service for private shipping companies.[12] The army’s use of PPP, or other ‘mixed’ forms of enterprise is fully consistent with practice during the neoliberal era, which does not necessarily see a straightforward retreat of the state in favor of the private sector ­– the reduction of the state to a ‘skeleton service’ of security and the maintenance of basic infrastructure – but also such endogenous transformations as the applications of commercial principles to a sometimes enlarged public sector, the marshaling of the state’s financial depth to secure deals with private capital, and in the developing world especially, the transformation of planning initiatives away from ISI and towards export oriented sectors and the attraction of FDI. Thus any evidence of the army’s defence of its public sector-rooted enterprises and separate budget need not imply the corralling of a laggardly statist sector from processes of marketisation and globalisation.


This persperctive is pertinent when considering the intra-elite struggles of the late Mubarak period, when the activity of the ultra-liberal Gamal Mubarak clan threatened to impinge on the army’s sector and privileges. The clash is often given as one of the reason for the army’ support of Jan25, and sited as evidence of the army’s retrograde protectionist tendencies. A possible IMF directed reform of the army sector, including the bringing of transparency to its budgets and the imposition of taxation on its enterprises, might also have been on the cards had Mubarak fils ascended to the presidency as planned. However, the army was never opposed to privatisation as such, but to the threat posed by particular Mubarak-era magnates to its strategically important sectors. Thus the army saw steel magnate Ahmed Ezz as a rival, and the Gamal clan as angling for full privatisation of some of its key assets and projects. It also sought to prevent the disruption of its particular advantages as an army within the process of opening to large inward investments.[13]


Accordingly, in the expansion of its economic role, the army has been able to convert its custodianship of substantial portions of Egypt’s physical patrimony, which comprises huge tracts of land and important infrastructure such as the Suez Canal – long justified for reasons of national security and military preparedness – into economic assets which form the basis of investment deals with large capitalist holdings from the GCC, the west and beyond. Well before the 2011 uprising the army had diversified into real estate and resort development, heavy equipment leasing, agriculture, maritime and air transport, hydrocarbons, and renewable energy projects.[14] Many of these ventures demanding large capital outlays inviting cooperative deals with foreign capital, and in which the army’s command of land, fixed capital assets, and access to cheap, and in some cases free, labour form the bedrock. The army brass has thus been able to transform the pre-’79 permanent war footing with Israel, which was itself coextensive with a particular mode of state-led national development heavily centred on military industrialisation, into a strategic advantage as a rising capitalist fraction within the restructuring economy, and its opening to transnational, and particularly GCC, capital flows.


Particularly salient here is the Suez Canal Development Project, a long-planned modernisation scheme involving the expansion of port capacity to accommodate increased trade volume, the construction of a vast industrial zone, and a new airport. The army has always been in a good position to profit from the project. The Suez Canal is a designated military zone and its important agencies have long been managed by army officers. Here, as at Egypt’s other important ports and beyond, a ‘landlord model’ applies: the army takes control of prize assets whilst posing as custodian of strategic sectors, supervises the privatisation process whilst inserting officers in both the profit-oriented, but still state-owned, holding co, and sometimes on the boards of new private subcontractors, in which it also owns minority shares.[15] The project promises to expand revenues from Egypt’s most important economic asset, and underline its importance as a pivotal integrated production and circulation hub inserted within regional, and global, capital flows. Chinese companies have already built petrochemical, automotive and textile factories along the Canal, and GCC capital, now led by the UAE and Kuwait, is heavily involved in the project.


Revealingly, whilst in power the Muslim Brotherhood had been touting its own plans for the Canal, which would have bypassed the SCAF to make an investment deal directly with Qatar. This would have broken the army’s grip on the crown jewel of its economic expansion project, and entailed a substantial shift in economic power towards the Brotherhood, perhaps giving it the ability to get out of the bind of political deal-making with the army, (Suez income being a primary source of patronage for Egyptian state power holders).[16] Soon after the project was mooted, the anti-Morsi media was in full patriotic outcry at the selling of this glory of the nation to the Qatari sheiks. No doubt this episode substantially contributed to the SCAF’s enthusiasm in removing Morsi from power, and its decision to subsequently crush the organisation entirely as a troublesome rival. Following Morsi’s ouster, the army substantially increased its presence along the canal, has taken complete control of the bidding process for the various construction and expansion projects, and was recently deploying its soldiers in strike breaking activity at a port labour dispute.[17]


As decried by many activists, there was indeed a partly overt, partly covert political pact between the Muslim Brotherhood and the SCAF in the post-Mubarak period, made necessary because of the former’s real weakness and dependence on SCAF superintendence, but also because of their very real unity against the continuation of protests and strikes. Nevertheless, perhaps especially with this issue but also in others, the relationship also took the form of a strong factional struggle over control of the economy in a post-revolutionary situation that was both full of opportunities (with the disorganisation if not destruction of the National Democratic Party machine and the sidelining of the Gamal Mubarak clan), and constraints (endemic crisis encouraging ruling groups to pull apart in the expectation of collapse and loss of legitimacy for incumbents).




The army has also sought to refocus its already existing military industries, and to diversify from the sort of co-production deals it has developed under the US military aid programme. The aid is designated to be spent on US weaponry, thus it functions essentially as a large subsidy to the domestic US arms industry. Egypt fulfills its procurement needs in the bargain, and the further perk of co-production for the army typically involves assembling top tier US weapons systems in its Helwan factory complex outside Cairo from parts shipped by US manufacturers. Thus beyond filling its arsenals to overflowing, the army keeps its factories open and its officer class busy, and acquires limited technology and production knowhow. It also transfers this knowhow to its other industries, for example developing the production of civilian vehicles by modifying military production lines. However, the army also intends to promote weapons production as a profitable export-oriented industry, and is frustrated by the lack of external markets for its bulging inventories, hampered by selective US restrictions on exports, a reputation for poor quality, and limited local markets for its heavy weaponry (orders from its main regional customer Iraq, declined with the end of the Iran-Iraq war).


Technology transfers are the real prize of military industrialisation strategies for the regions’ security-conscious states. The large inflows of military aid that come with participation in the western security umbrella have made possible access to advanced technologies in transfer clauses attached to procurement contracts with the patron state’s defence firms. The security context promotes a mode of development centred around the army, and the need for strategic advantage promotes access to cutting edge technology. One could say that it has been possible for some states in the region to leverage a geo-strategic ‘security rent’ in order to develop advanced production capacity via the defence sector. These have become lucrative, adaptable industrial hubs oriented towards exports and thus embedded in the contemporary configuration of global capital, involving the concomitant growth of information technology, education, and R&D sectors. Israel, followed by Turkey, are the clear regional leaders here, and Egypt looks longingly across at its neighbor and peace-partner. More recently, the UAE and Jordan, (possibly soon followed by other Gulf monarchies) have also striven to develop such sectors, in the context of the globalisation of the west’s arms industry, which operates increasingly independently from the foreign policy of the home countries. In the case of the UAE especially it is petrodollar surpluses which makes it possible for the new player to access advanced technologies and nurture cutting edge R&D via ‘offset’ contracts, in which firms sign up to technology transfer agreements and other sweeteners in exchange for weapons purchases with inflated prices that the procuring country is willing and able to pay.[18]


Within this context, and backed by Gulf capital (notably the aforementioned Kharafi group), the Egyptian army hopes to secure contracts with relatively smaller defence firms for mid-range manufacturing projects it hopes are more sustainable and export-worthy, such as small arms production, and the upgrading and modification of military vehicles. Recently it has signed a co-production deal with China to build jet trainers, amongst other aviation related projects. Although disrupted by the recent suspension of military aid, the brass is still keen on its agreement assembling prestige US weapons systems like the M1A1 tank, so that the full range of its productive capacity in Helwan is kept open and humming in the context of a fast globalising defence industry supply chain in which it hope to secure a place.[19] Meanwhile of course, by possibly linking up with the burgeoning Gulf defence industry, and in looking for partnerships from a range of global players, Egypt is angling for more and better technology transfer deals than those offered within the US aid system. Overall, the Egyptian state and ruling class has since the 70s looked to reorient its substantial fixed capital assets, developed in the cold war era and after, towards partnership with the petrodollar rich states, in order to get past longstanding economic blockages.




In all this, the army is also adept at ‘selling’ access, services, and its institutional privileges to actual and potential partners: as a security force, as a concentrated and highly disciplined institution that can bypass the cumbersome and slow Egyptian bureaucracy and ‘get things done’, and as a giant conglomerate that operates like a special economic zone, with exemptions from various national laws and regulations. The army is exempt from taxation, and, crucially, can deploy free conscript labour as a workforce and does so on some of its projects (especially in agriculture), whilst the thousands of civilians toiling in its industries are barred from unionization. (As with other figures relating to the army’s economic sector, it is difficult to get hard employment numbers, but the AOI alone claims 17,000 workers).[20] All these are obviously major advantages against domestic competitors, and points of attraction for transnational capital. The military ensured these privileges would be enshrined in the constitution drafted during the Morsi-era in backroom negotiations denounced by the more astute activists.


Furthermore, it offers itself as a security force to its business partners, using soldiers to guard production sites and transportation undertakings, presenting itself as a ready solution to the surrounding chaos of protest, terrorism (in Sinai), and general regional instability.[21] Soldiers are also deployed to intervene in particular labour disputes, either to pose as mediators, or, as has already been mentioned, to break strikes. More generally, the military ‘markets’ its discipline and efficacy, with its spokesmen defending for instance the takeover of individual state tenders by pointing to an apparently greater ability to deliver projects on schedule, and trumpeting this to potential Gulf partners. Indeed, another major recent event in the army’s post-Morsi ascendency has been the effective takeover of state tendering as a whole. In late 2013 interim president Adly Mansour issued a decree allowing the state to directly issue contracts ‘in case of emergency’, thus bypassing all rules of government procurement. With a permanent State of Emergency in place and the SCAF in charge, it is of course the army that wins all the contracts.[22]


This does not mean that the army is any less corrupt, indeed recent press reports attest to the fact that corruption is up and that officers are insinuating themselves ‘everywhere’, looking to cash in after the July 2013 SCAF takeover. The business class moans, but also welcomes the coup and the better climate for investments. A corrupt payment can also buy preferential treatment by bypassing the slow official state, be a ‘ticket’ to more effective army services for investors, representing the selling of access to competent insider networks. In a recent lecture Heide Gerstenberger has argued that state power holders are increasingly engaged, via licit and illicit means, in selling portions of sovereignty to a mobile international capital that can express its ‘demand’ for ‘sovereign products’ through the ‘plurality of the state system’ constituted by globalisation.[23] Thus on the one hand offshore centres such as export processing zones, ‘in which states create a legal space in which its laws are not valid’, but on the other, the processes which Jean-François Bayart and others have called the ‘criminalisation of the state’, in which the state/para-state power nexus becomes a site for the elaboration of extensive criminal markets (in drugs, hazardous waste dumping etc).[24] Bayart relatedly refers to the ‘extraversion’ of the state, a doubling of the state structure into exterior-oriented façade and interior-operating, informal network of influence where deals are struck and coercive power is exercised.[25] The official state is the recognised sovereign in the system of states, signs the deals with IFIs, whilst power holders straddling state and civil society sell access to circumvent the ineffective bureaucracy and the Structural Adjustment Programme-mandated conditionalities intended to reform it, to the very market actors that benefit from liberalisation. In both cases the sovereign is simultaneously reaffirmed in the deals that seem to undermine it, as Bayart quotes Olivier Roy quipping ‘the smuggler has need of borders.’


Thus the army’s semi-autonomy, underlined in law as constitutional principle, presented as a prerequisite to the rest of the political class in any negotiations – with its attendant cronyism and corruption – commodifies sovereignty by licitly and illicitly selling access and exemption. It is thus no mere protectionist holdover but rather constituted through the economic opening, a particularisation of the broader movement, a cordoned-off sales point for state/para-state services and capacities of force within the chaotic liberalisation of the economy in the context of globalisation. As such the state, from this perspective, is not an advancing or retreating bulwark against the spreading, but ultimately exterior, global space of capital, as in leftist imaginings, but an inward-facing articulation of the domination of capital reproduced at the global level.


Likewise the army’s independent and secret budget, which it defends against calls for reform made by a variety of political actors. More than simply a means of hiding crony arrangements and waste, and together with the banks it controls, it likely gives it the leverage and maneuverability it needs in the pursuit of an integrated strategy in order to develop its sector and attract transnational capitalist firms, whilst distancing this dynamic from day to day politics, the street, and the demands and entanglements of a large bureaucracy which has paradoxically only expanded as neoliberalism has deepened, (and more so since 2011). However, the army has also been able to consolidate its role as custodian of the state by itself providing funds to temporarily cauterise the chronic fiscal crisis, in lieu of more IMF aid. It also uses its budgets to fund wage rises for its officer class, something that has proved especially necessary since the uprising began.




Crisis, nevertheless, persists. The revolutionary upheaval has been an opportunity as the army has been able to sideline competitors, but it is also a burden in that it is forced to take on the responsibilities of the state as a whole, and thus the aspirations of the protesting masses. The Morsi year, with its acute fiscal problems and succeeding waves of protest, proved indirect rule would not be possible. The conditionalities attached to new IMF funding would have only increased instability, and may also have been unacceptable to the army. As a result the army has sought a grand reactionary bargain with the Gulf monarchies in order to forestall state collapse, at least temporarily skirt round an impossible settlement with the IFIs, and respond selectively to the demands of the June30 mobilisation. The relationship with Gulf capital and the regional integration that Hanieh traces is thus both further precipitated by uprisings and crisis and, especially after June30, becomes explicitly politicised. The Gulf monarchies’ state budgets are directly mobilised to shore up Egypt’s fiscal position – the UAE, Kuwait and Saudi Arabia pledged a combined US$12 billion immediately after Morsi fell, and more followed – whilst simultaneously underlining an investment strategy of expanded scope for its corporations in the context of the consolidation of army power.[26] The grand bargain concomitantly also enacts political reaction at the regional level: it is a bid for the restoration of order under GCC domination with the crushing of political forces that would disrupt economic stability and challenge the legitimacy of the Gulf monarchs. This implies repressing both Political Islam and secular, democratic activists in the most politically central Arab state, whilst dampening down the expectations of labour and (still fairly tentatively) cracking down on militant pockets of workers. For the trio of benefactors, it also a way of sidelining regional upstart Qatar, which has been willing selectively to deal with democratic and Islamist forces to further its interests in the region. Juan Cole sees further the possibility of a security alliance taking shape between Egypt and the Gulf, one which we saw first mooted via the early AOI in the ’70s.[27] Recent press reports describe joint Egypt-UAE training exercises taking place in March of this year.[28]


June30 2013 – Coup or revolution? A coup following certainly huge protests, probably in the millions nationwide, and in which the army sought legitimacy for its takeover. Military officers and pro-coup businessmen were the source for the massively inflated numbers of protesters repeated by news outlets worldwide, and the army posed itself as container, protector, and mediator to the movement. Whatever its ultimate scale, June30, socially heterogeneous as it was, encompassed both the demands of 2011 and reactionary sentiments, such as exasperation with revolutionary disruption, and support for the military and security services. The mobilisation relayed on the Jan25 outcry against endemic poverty and deprivation, and was relatedly an immediate reaction to the rapidly worsening economic situation. It also of course articulated multi-faceted anger at Morsi’s record and represented a rejection of Political Islam more generally. The search for macro-economic stability offering respite from inflation and shortages has therefore been accompanied with a response to the Jan25 demand for social justice with the promised roll out of a national minimal wage. Thus the ‘grand reactionary bargain’ seems to moot an army-enforced corporatist deal between capital and labour, in the manner of previous fascist-military states. The candidacy of SCAF head Abdel Fattah el-Sisi, with its attendant cult of personality taking hold among the crisis-sick ‘party of order’, and tinged with Nasserist rhetoric and nostalgia, promises national renewal and a new deal for Egyptians, while trailing new mega-projects fashioned from the already customary partnerships with Gulf capital, with the UAE now at the forefront. Another huge contract was recently announced between the army and UAE’s Arabtec Holding in a $40 billion agreement to build a million ‘affordable’ housing units, to be supposedly financed by Egyptian and foreign banks and built on tracts of donated military land, though the details remain sketchy, and the sharper Egypt watchers claim the sums don’t add up.[29] Nevertheless, the scheme was trumpeted just as Sisi announced his candidacy, and is a clear bid for the support of the poor and the young given the acute housing crisis in the country.


However, Sisi’s campaign has been distinctly lacklustre. Appearing haughty and cut from the same old cloth of paternalistic authoritarianism rejected in 2011, his appeal has declined amongst the youth, the largest and most important political constituency. Many beyond the Brotherhood were appalled at the Rabaa crackdown, and the repression of civil society is now worse than under Mubarak. Egyptians have seen the SCAF cancel corruption probes into Mubarak-era bigwigs, welcoming them home to participate in the new Gulf-funded opportunities fostered under the wing of the army. The SCAF failed to roll out the minimum wage as promised, offering it only to parts of the civil service in a bid to buy political loyalty. This injustice became the lightning rod for a series of strikes in early 2014, which also vented workers’ various other longstanding grievances. The strikes hit textiles, transport, ports, hospitals and other sectors.[30] It was indeed only the announcement of the Sisi candidacy in late March which dampened down the strike wave, making it possible for labour leaders to exhort strikers to ‘wait and see’ what the new order would offer. After a hasty government reshuffle, the newly installed labour minister tabled a strike ban, whilst Sisi’s response to the workers was to say that the kitty was empty and everyone will have to work much harder to regenerate Egypt. This seems to have been his main campaigning line, contrived on the one hand to reassure textile workers and others that their factories will not be sold off, suggest to the mass unemployed and informally employed that jobs are on the way, whilst also dampening expectations for broader social justice, and warning of coming austerity. The housing project may flesh this out in the form of an ambitious ‘PPP works programme’, perhaps accompanied by the labour conditions that operate in the rest of the army sector. General labour impressment is perhaps on the cards, but the army has had a taste of the sort of resistance it might face to this, when already under Morsi it stepped in to try to put an end to a railway strike by forcefully conscripting striking workers into the army, and was forced to back down after strong resistance.[31] Despite exhuming grandiose Mubarak-era projects to build new cities in the sand, and the histrionic support of the pro-coup media, Sisi has not been able to articulate a coherent platform with believable plans for the grand regeneration of Egypt he promises.


A true corporatist settlement based around full employment and reindustrialisation seems unlikely. The SCAF will endeavor to continue developing its longstanding industrial strategy, nurturing choice portions of the economy in an expanding, networked, zoned sector oriented to international players within a global capitalist space. The revolution has effectively meant that it has no choice but to straddle both sides of the bifurcated state system which it works to its advantage, superintending the state to defend its para-state sector. But again, though presenting opportunities, this state configuration is also a bind for the army: risking state collapse or the ascendency of rivals if it sits back, scrutiny and direct responsibility if it takes over.


It remains to be seen if any new Gulf mega-projects can make a difference to employment levels and overall economic prospects, and if the new regime can stabilise the economic situation enough to restart the moribund tourist industry and attract new investments from further afield. Meanwhile though, the regional articulation of capital and dissent is increasingly making itself felt in the GCC’s internal political space. The UAE and other benefactors have recently signaled a more wary, interventionist stance to come with the massive pledges of aid – the costs of the Arab Spring are piling up for the Gulf states.[32] Beyond renewed commitments to propping up the politically pivotal state in the region, aid has has since 2011 been granted to the two monarchies outside the GCC affected by protests – Morocco and Jordan. Saudi Arabia has increased social spending and state wages to forestall protests within its own borders. Bahrain doles out murderous state violence to keep the lid on an enduring uprising, and all eyes are now on Kuwait where opposition groups increasingly boldly challenge the prerogatives of the Emir over its more activist parliament. The aid to Egypt is one of the primary issues of contention there. Meanwhile, outspoken Saudi video protests against the aid transfers to the murderous SCAF regime went viral, as a succession crisis looms. Thus, as expected by commentators who warned of the hidden strings attached to the aid, restructuring is expected in Egypt via Gulf state financing, likely sparing the army, but undoing its ability to mediate the aspirations of the street. Sisi’s resounding victory against makeweight candidate Hamdeen Sabahi in the election was accompanied with panicky extensions of voting due to the low turnout (which only reached 47 percent after three days of voting). Regime construction may be running out of steam just as the ruling group wants to tamper with the subsidy system, perhaps awaits another big strike wave, and loses the enthusiasm of the youth.[33]



L.S. can be contacted here: lstrackhead AT gmail DOT com

L.S.’s article on the material conditions of the Arab Spring, ‘Hanging by a Thread: Class, Corruption and Precarity in Tunisia’:




[1] Farah Halime ‘Why Egypt’s Army Are Bad at Doing Business’, Rebel Economy Blog, 20 Nov 2013,


[2] Hazem Kandil, Soldiers, Spies and Statesmen: Egypt’s Road to Revolt, London, Verso, 2012.


[3] Yezid Sayigh ‘Above the State: The Officers’ Republic in Egypt’ Carnegie Endowment Paper, 1 August 2012.


[4] Yezid Sayigh, Marina Ottaway ‘Egypt’s Military Custodianship’, Carnegie Middle East Center Video Discussion, 18 January 2012,


[5] Robert Springborg ‘The President and the Field Marshal: Civil-Military Relations in Egypt Today’, Middle East Report, No. 147, July-August 1987.


[6] Zeinab Abul-Magd ‘The Army and the Economy in Egypt’ Jadaliyya, 23 December 2011,


[7] Hazem Kandil Soldiers, Spies and Statesmen: Egypt’s Road to Revolt, London, Verso 2012.


[8] A power struggle would also simmer between President Mubarak and the ambitious Field Marshal Abd al-Halim Abu Ghazala in the 1980s.


[9] Adam Hanieh, Lineages of Revolt, Chicago, Haymarket Books, 2013, p.137.


[10] Shana Marshall, Joshua Stacher, ‘Egypt’s Generals and Transnational Capital’, Middle East Report, No. 262, Spring 2012,


[11] Ibid.


[12] Ibid.


[13] Sara Salem ‘The Egyptian Military and the 2011 revolution’, Jadaliyya, 6 September 2013,


[14] Shana Marshall, Joshua Stacher, op. cit.


[15] Ibid. Again, see the invaluable research presented here for more on the army’s interests in Egypt’s various port authorities.


[16] Abigail Hauslohner, ‘Egypt’s Military Expands its Control of the Country’s Economy’, Washington Post, 16 March 2014,


[17] Mada Masr, ‘Labor Groups Condemn Crackdown on Strikes in Port Said and Ain Sokhna, Mada Masr Morning Digest, 29 April 2014,


[18] Again, Shana Marshall’s path breaking research is crucial here and throughout this section of the article: ‘The Globalization of Defense-Industrial Manufacturing and the New Middle East Military Complex’, Georgetown CCAS Conference Video, March 2014,


[19] Shana Marshall ‘Egypt’s Other Revolution: Modernizing the Military-Industrial Complex’, Jadaliyya, 10 February 2012,


[20] Shana Marshall ‘Why the U.S. Won’t Cut Military Aid to Egypt’, Foreign Policy, 29 February 2012, [paywall]


[21] ‘In general, foreign investors, including large global corporations, prefer partnerships with the military to those with the private sector, for investors are aware that the military gets preferential treatment and can easily avoid (most likely ignore) bureaucratic red tape. Military-owned enterprises are often exempted from paying taxes. Further, the military has the means to protect jointly-owned property. For example, Al-Kharafi Company announced that Egyptian armored vehicles accompanied the transportation of the gas turbines for a new power plant in Dumyat.’ Dr Nimrod Raphaeli, ‘Egyptian Army’s Pervasive Role in National Economy’, MEMRI, 29 July 2013,


[22] Mohamed El Dahshan ‘The Egyptain Army Collects Billions in Government Contracts’, Blog Article, 3 January, 2014


[23] Heide Gerstenberger ‘State, Capital, Crisis’, International Conference of Critical Geography, Frankfurt, Aug 2011,


[24] Jean-François Bayart, Stephen Ellis & Beatrice Hibou, The Criminalization of the State in Africa, African Issues, Oxford James Currey / Indiana University Press, 1999.


[25] Jean-François Bayart ‘L’Afrique Dans le Monde: Une Histoire d’Extraversion’, Critique International, Vol 5, Issue 5, 1999,


[26] However these Gulf bailouts go further back, see Samer Soliman, The Autumn of Dictatorship, California, Stanford 2011.


[27] Juan Cole, ‘Egypt: Al-Sisi’s Run for President: Bonapartism and Gulf Oil Money’ Informed Comment, 27 March 2014,


[28] Joel Gulhane, ‘Egypt and UAE Armed Forces Joint Training Exercies’, Daily News Egypt, 2 March 2014,


[29] Bel Trew, ‘Multi-Billion Dollar Project Will Not Solve Egypt’s Housing Crisis’, Al-Monitor, 25 March 2014,


[30] Mada Masr, ‘Workers Unite Against New Government’, Mada Masr Morning Digest, 2 March 2014,


[31] Jano Charbel, ‘State Backs Down on Forcing Striking Train Drivers Into Army’, Egypt Independent, 11 April 2013,


[32] Simeon Kerr & Heba Saleh, ‘UAE Aims to Ensure its Billions are Spent Wisely in Post-Morsi Egypt’, Financial Times, 26 February, 2014,


[33] Madr Masr, ‘Government Makes 3 Major Economic Decisions During Election’, Mada Masr Morning Digest, 29 May 2014,


Aesthetic Education Expanded:

Aesthetic Education Expanded is a series of 12 articles commissioned and edited by Benedict Seymour for Mute Magazine.

Published in collaboration with, Kontrapunkt, Multimedia Institute, and Berliner Gazette, it is funded by the European Commission. A central site with all contributions to the project can be found here: 

The series looks at the contemporary afterlife of the project of ‘aesthetic education’ initiated in the 19th century, from the violent imperatives of training and ‘lifelong learning’ imposed by capitalism in crisis to informal projects of resistance against neoliberal pedagogy and authoritarian repression.

Expanding the scope of the aesthetic in the tradition of Karl Marx to include everything from anti-austerity riots and poetry to alternative and self-instituted knowledge dissemination, the series encompasses artistic, theoretical and empirical investigations into the current state of mankind’s bad education.

Aesthetic Education Expanded attempts to open up an understanding of what is being done within and against capital’s massive assault on thought and action, whether in reading groups or on the streets of a world torn between self-cannibalisation and revolt.