Abdel Moneim Abouel Fotouh, one of the leading contenders in the Egyptian presidential race, has been making his stance clear on the Army generals' business empire.
Part of Abouel Fotouh’s campaign calls for one state budget, which means that the military budget — which has always been separate and secret — would be included within the state budget.
“This doesn’t mean we want to infringe on the workings of the military,” he said. “Egyptians want a strong military and we must respond to that. It is a procedural matter to have a unified budget to help streamline performance. We have great confidence in the military; it is a professional and patriotic outfit, not an army of militias.”
However, he added, “We are against the military having any role outside its duty of securing the safety of the country. That doesn’t mean isolating the military from politics, which is what Mubarak did by not sounding them out on political matters. There’s a difference between the military having a political opinion and forcing this opinion.” Many analysts and observers speculate that the military, which has ruled the country since Mubarak stepped down last February, will attempt to maintain a strong political role after the transfer of power to a civilian president.
Abouel Fotouh also suggested that he is willing to take on the military’s economic power, which some estimate accounts for up to 40 percent of GDP. “No one’s against the military having economic activities, but to serve itself only, not to compete with the private and public sector. The military having institutions to serve its needs is something that exists all over the world,” he said.
Full article at http://www.egyptindependent.com/news/ab ... -specifics
The contender and the military budget
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Re: The contender and the military budget
Doing Business With The Generals.
Good luck to Fotouh it will be a dangerous task to rein in the military business interests when the military are the best-organized institution in Egypt and the basis of internal security.
Most information about the business interests of the Egyptian military and the Mukhabarat is a state secret - but it is commonly known that those interests are large. They are the key player in the economy.
The Global Post ‘The Money Behind the Egyptian Military’ Charles Sennott, 22 January 2012 also published in PBS ‘Frontline’ 23 January gives the following estimates of the economic interests of the armed forces:
Estimate 1; Amr Hamzawy, previously Carnegie Middle East Center, now Cairo University and Liberal MP estimates that the military may control up to 30% of Egypt’s total $180 billion economy, or $60 billion.
Estimate 2: Mohamed Kadry Said, retired major general and long-time military analyst for the Al Ahram Center for Political and Strategic Studies, puts the figure at 8% of GDP, or about $15 billion.
Estimate 3: Western diplomats in Cairo and Egyptian and experts interviewed by Global Post say somewhere in the middle, or about $35 billion, is a safe guess.
Estimate 4: The reality is that none knows the precise extent of the Egyptian military’s economic holdings because successive regimes have made sure it was secret. Neither the forces budget allocation nor any firms controlled or managed by them are subject to state audit (Egypt Independent 26 October 2011). Whether they are above, below or outside the law courts of Egypt is unclear. There has been sensationalist reporting and a lot of web based recycling of figures that can’t be confirmed – sometimes influence or control is confused with ownership (see Sayigh mentioned below).
Estimate 5: Paul Sullivan previously AUC, now Professor at National Defense University and Georgetown estimates as much as 15% of GDP.
Anthony Cordesman at the Center for Strategic and International Studies says it is proportionately smaller than that of the People's Liberation Army in China and that it has shrunk in recent years. I guess that’s a good thing.
Assets allegedly owned or ‘managed’ by the armed forces include; factories for the manufacture of a wide variety of military hardware, real estate and land development on a very large scale with an emphasis on tourism – but also the development of industrial parks, bakeries for domestic consumption, toll roads, airports, the New National Sports Stadium being built by the Air Force, the manufacture of toasters, the ownership of hospitals, the leasing of heavy equipment, pasta manufacturing businesses, olive oil and mineral water production, sugar processing, butane gas cylinder manufacture, the production of electronic smart cards, fishing and trucking businesses, ship repair enterprises, farms including chicken, fish and cattle (its estimated that in 1985 they produced 18% of the food in Egypt), the manufacture of plastic table covers, domestic cleaning service companies, the manufacture of cement (disputed by some commentators), abattoirs, stevedoring companies, road construction, motor vehicle manufacture, the port of Suez, the manufacture of washing machines, stainless steel pots and pans, fire extinguishers, scales, clothing (including military uniforms, cotton underwear and footwear), doors for the building industry, maritime insurance to complement its other substantial maritime interests, oil and gas exploration and development, stationary, fertilizer production, pharmaceuticals, kitchen cutlery, flat screen TV’s, agricultural and household chemicals, refrigerators, industrial machinery, railway cars, air conditioners, gas stoves, drilling rigs, microscopes and infant incubators, the ownership and operation of gas stations, hotels, shopping complexes and a chain of supermarkets.
They also have a 10% stake in the only local manufacturer of computers and a 10% share of the regions largest manufacturer of oil and gas pipes.
The International Medical Centre where Mubarak was held/treated is owned or operated by the military.
With an eye to the future they have stakes in wastewater treatment, renewable energy firms, kits for converting vehicles to natural gas and rice straw recycling. Getting loans from banks hasn’t been a problem given that 45% of the banks are state owned (Heritage Foundation).
Hilariously, they also manufacture election booths – clever diversification of risk.
The list of assets/activities is based entirely on the articles mentioned – lest some of you think I’m joking.
Some of the above businesses are based on assets seized without compensation from foreigners and Egyptian nationals by the Nasser regime whilst others maybe ‘transferred’ assets previously ‘owned’ by the ‘state’ – its difficult to tell.
Most commentators agree that Mubarak and particularly his son Gamal and the latter’s cronies have been competing with and threatened the business interests of the Armed forces (Wikileaks cables from US ambassadors Scobey and Ricciardone) and this was one reason why they abandoned him last year. The two groups both wanted to purchase major state assets – with the Army losing out in the case of steel. With the Mubarak’s gone and some of their ‘business’ mates in the courts the future should be looking better for the ‘uniforms’ - less competition. Cleverly, SCARF has promoted itself as anti-corruption by charging its business rivals and this has also diverted attention from their own identical practices. See Martini and Taylor ‘Commanding Democracy.’ Rand Commentary 2011.
How this portfolio of assets got to be so sprawling and remote from military purposes tells you a lot about the level of external control that the military has been used to in the past and how difficult it will be to now rein them in.
Now days the activities seem to be growing opportunistically as overseas investors in Egypt want a strong and reliable partner who can ‘help’ with any ‘difficulties’ in return for shares. For example, armed soldiers and tanks have recently provided their co-investors with secure deliveries. Al Aswany’s novels give graphic and detailed, albeit fictional, descriptions of the ‘protections’ on offer and what happens to those who refuse such ‘offers’ (TLS 5 October 2011).
It’s likely that such enterprises pay no or little tax and have the added advantage over competitors of not being subject to red tape. Whether they can be sued in the normal courts is doubtful. They also don’t seem to care much about the environment or ruining farmer’s livelihoods (Egypt Independent 21, December 2011).
There is evidence that they are not ‘model’ employers, treat civilian and conscript workers badly and use military courts to deal with strikers.
Worth reading is an article in Jadaliyya December 23, 2011 ‘The Army and the Economy in Egypt’ by Zeinab Abul-Magd from AUC. The previous governor of Luxor gets a ‘special’ mention in this. Also, New York Times 11 September 2010 Cambanis; Middle East Research and Information Project, MER 262 Marshall and Stacher; ‘The Egyptian Military Part Two’, Ahmed Hashim, Middle East Policy Council; ‘Time’ 9 February 2011 Stier and ‘The Role of the Egyptian Military..’ Gotowicki, National Defense University. A detailed description of activities, especially military and related manufacture and co production agreements with everyone from US to New Zealand companies is in Jadaliyya, February 10, 2012 ‘Egypt’s Other Revolution’ by Shana Marshall a US doctoral student. Samir Soliman’s book ‘The Autumn of Dictatorship’ describes the economic mismanagement that led Mubarak to give the forces carte blanch on business because he couldn’t fund them from the state budget. A less alarmist analysis is Yezid Sayigh at the Carnegie Institute in a January 18 Conference ‘Egypt’s Military Custodianship’ available as a download.
The businesses detract from their primary military role. For example, the long-standing practice of widespread use of forced conscript soldier labor in their commercial enterprises has negative effects on the discipline, morale and fighting skills of the conscripts and therefore on Egyptian security and defense capability.
This already shows up in military under-performance. Robert Springborg, a US expert on the Egyptian military, in an interview with the Egypt Independent on 26 October 2011 said:
“.. the military’s business interests distract them from their national security roles, of which the key but not only one is to defend the country. The Egyptian military lags behind others in the region in part because it is so preoccupied with generating revenues. Its abilities to carry out search and rescue, humanitarian assistance, disaster relief, anti-piracy, and to operate with other, friendly forces are weak. They have modern equipment, but much of it is not operable because they aren’t training personnel adequately to use nor to maintain it. One reason why they are not is that they employ conscripts in military-controlled businesses.“
If they have problems with the military work you wonder how competently their businesses are run, how they find time in their day to do both and which is their priority (Springborg and Henry, ‘The National Interest’ May/June 2011; Abul Magd Jadaliyya, Dec 23 2011).
Ever wondered where the profits go? The armed forces in the middle of January 2012 ‘loaned’ the Central Bank of Egypt a lazy $US1 billion to prop un the currency – Tantawi’s assistant, Nasr, said the total is $US2 billion (Reuters April 10, 2012). More likely the elite holds money tightly. One retired general is quoted as saying that 15% of the military have control of the wealth (Reuters 10 April).
If the financial power is held by the officer elite then this must create tensions in the broader military and the payment since early 2011 of new $US400 per month bonuses (Guardian, December 28 2011) to the middle ranks maybe an attempt to paper over tensions buy buying loyalty. This may not be working with Reuters (April 10 2012) reporting a 3 day ‘revolt’ in October 2011 of 500 officers at the Air Defence Institute and other published but anonymous views from within the military alleging pressure for more ‘trickle down’.
One commentator argues armed forces control of the economy is most oppressive in Upper Egypt away from Parliamentary scrutiny e.g. the sugar industry (‘The General’s Secrets,’ Zeinab Abul-Magd, Sada blog, Carnegie Endowment for International Peace, 9 Feb., 2012). These business practices cause resentment amongst farmers - but maybe Luxor residents know more about this.
The military is not going to give up this financial power without a fight and they have the guns as well as powerful friends and co-investors (Danish, Spanish, Canadian, French, the US, Great Britain, South African, Russian, German, Kuwaiti [government and private], Italian, Hong Kong and Chinese, the UAE and Dutch). Whoever is in government will have to deal with them, and their friends - or at the very least do business with them in a shop near you.
Good luck to Fotouh it will be a dangerous task to rein in the military business interests when the military are the best-organized institution in Egypt and the basis of internal security.
Most information about the business interests of the Egyptian military and the Mukhabarat is a state secret - but it is commonly known that those interests are large. They are the key player in the economy.
The Global Post ‘The Money Behind the Egyptian Military’ Charles Sennott, 22 January 2012 also published in PBS ‘Frontline’ 23 January gives the following estimates of the economic interests of the armed forces:
Estimate 1; Amr Hamzawy, previously Carnegie Middle East Center, now Cairo University and Liberal MP estimates that the military may control up to 30% of Egypt’s total $180 billion economy, or $60 billion.
Estimate 2: Mohamed Kadry Said, retired major general and long-time military analyst for the Al Ahram Center for Political and Strategic Studies, puts the figure at 8% of GDP, or about $15 billion.
Estimate 3: Western diplomats in Cairo and Egyptian and experts interviewed by Global Post say somewhere in the middle, or about $35 billion, is a safe guess.
Estimate 4: The reality is that none knows the precise extent of the Egyptian military’s economic holdings because successive regimes have made sure it was secret. Neither the forces budget allocation nor any firms controlled or managed by them are subject to state audit (Egypt Independent 26 October 2011). Whether they are above, below or outside the law courts of Egypt is unclear. There has been sensationalist reporting and a lot of web based recycling of figures that can’t be confirmed – sometimes influence or control is confused with ownership (see Sayigh mentioned below).
Estimate 5: Paul Sullivan previously AUC, now Professor at National Defense University and Georgetown estimates as much as 15% of GDP.
Anthony Cordesman at the Center for Strategic and International Studies says it is proportionately smaller than that of the People's Liberation Army in China and that it has shrunk in recent years. I guess that’s a good thing.
Assets allegedly owned or ‘managed’ by the armed forces include; factories for the manufacture of a wide variety of military hardware, real estate and land development on a very large scale with an emphasis on tourism – but also the development of industrial parks, bakeries for domestic consumption, toll roads, airports, the New National Sports Stadium being built by the Air Force, the manufacture of toasters, the ownership of hospitals, the leasing of heavy equipment, pasta manufacturing businesses, olive oil and mineral water production, sugar processing, butane gas cylinder manufacture, the production of electronic smart cards, fishing and trucking businesses, ship repair enterprises, farms including chicken, fish and cattle (its estimated that in 1985 they produced 18% of the food in Egypt), the manufacture of plastic table covers, domestic cleaning service companies, the manufacture of cement (disputed by some commentators), abattoirs, stevedoring companies, road construction, motor vehicle manufacture, the port of Suez, the manufacture of washing machines, stainless steel pots and pans, fire extinguishers, scales, clothing (including military uniforms, cotton underwear and footwear), doors for the building industry, maritime insurance to complement its other substantial maritime interests, oil and gas exploration and development, stationary, fertilizer production, pharmaceuticals, kitchen cutlery, flat screen TV’s, agricultural and household chemicals, refrigerators, industrial machinery, railway cars, air conditioners, gas stoves, drilling rigs, microscopes and infant incubators, the ownership and operation of gas stations, hotels, shopping complexes and a chain of supermarkets.
They also have a 10% stake in the only local manufacturer of computers and a 10% share of the regions largest manufacturer of oil and gas pipes.
The International Medical Centre where Mubarak was held/treated is owned or operated by the military.
With an eye to the future they have stakes in wastewater treatment, renewable energy firms, kits for converting vehicles to natural gas and rice straw recycling. Getting loans from banks hasn’t been a problem given that 45% of the banks are state owned (Heritage Foundation).
Hilariously, they also manufacture election booths – clever diversification of risk.
The list of assets/activities is based entirely on the articles mentioned – lest some of you think I’m joking.
Some of the above businesses are based on assets seized without compensation from foreigners and Egyptian nationals by the Nasser regime whilst others maybe ‘transferred’ assets previously ‘owned’ by the ‘state’ – its difficult to tell.
Most commentators agree that Mubarak and particularly his son Gamal and the latter’s cronies have been competing with and threatened the business interests of the Armed forces (Wikileaks cables from US ambassadors Scobey and Ricciardone) and this was one reason why they abandoned him last year. The two groups both wanted to purchase major state assets – with the Army losing out in the case of steel. With the Mubarak’s gone and some of their ‘business’ mates in the courts the future should be looking better for the ‘uniforms’ - less competition. Cleverly, SCARF has promoted itself as anti-corruption by charging its business rivals and this has also diverted attention from their own identical practices. See Martini and Taylor ‘Commanding Democracy.’ Rand Commentary 2011.
How this portfolio of assets got to be so sprawling and remote from military purposes tells you a lot about the level of external control that the military has been used to in the past and how difficult it will be to now rein them in.
Now days the activities seem to be growing opportunistically as overseas investors in Egypt want a strong and reliable partner who can ‘help’ with any ‘difficulties’ in return for shares. For example, armed soldiers and tanks have recently provided their co-investors with secure deliveries. Al Aswany’s novels give graphic and detailed, albeit fictional, descriptions of the ‘protections’ on offer and what happens to those who refuse such ‘offers’ (TLS 5 October 2011).
It’s likely that such enterprises pay no or little tax and have the added advantage over competitors of not being subject to red tape. Whether they can be sued in the normal courts is doubtful. They also don’t seem to care much about the environment or ruining farmer’s livelihoods (Egypt Independent 21, December 2011).
There is evidence that they are not ‘model’ employers, treat civilian and conscript workers badly and use military courts to deal with strikers.
Worth reading is an article in Jadaliyya December 23, 2011 ‘The Army and the Economy in Egypt’ by Zeinab Abul-Magd from AUC. The previous governor of Luxor gets a ‘special’ mention in this. Also, New York Times 11 September 2010 Cambanis; Middle East Research and Information Project, MER 262 Marshall and Stacher; ‘The Egyptian Military Part Two’, Ahmed Hashim, Middle East Policy Council; ‘Time’ 9 February 2011 Stier and ‘The Role of the Egyptian Military..’ Gotowicki, National Defense University. A detailed description of activities, especially military and related manufacture and co production agreements with everyone from US to New Zealand companies is in Jadaliyya, February 10, 2012 ‘Egypt’s Other Revolution’ by Shana Marshall a US doctoral student. Samir Soliman’s book ‘The Autumn of Dictatorship’ describes the economic mismanagement that led Mubarak to give the forces carte blanch on business because he couldn’t fund them from the state budget. A less alarmist analysis is Yezid Sayigh at the Carnegie Institute in a January 18 Conference ‘Egypt’s Military Custodianship’ available as a download.
The businesses detract from their primary military role. For example, the long-standing practice of widespread use of forced conscript soldier labor in their commercial enterprises has negative effects on the discipline, morale and fighting skills of the conscripts and therefore on Egyptian security and defense capability.
This already shows up in military under-performance. Robert Springborg, a US expert on the Egyptian military, in an interview with the Egypt Independent on 26 October 2011 said:
“.. the military’s business interests distract them from their national security roles, of which the key but not only one is to defend the country. The Egyptian military lags behind others in the region in part because it is so preoccupied with generating revenues. Its abilities to carry out search and rescue, humanitarian assistance, disaster relief, anti-piracy, and to operate with other, friendly forces are weak. They have modern equipment, but much of it is not operable because they aren’t training personnel adequately to use nor to maintain it. One reason why they are not is that they employ conscripts in military-controlled businesses.“
If they have problems with the military work you wonder how competently their businesses are run, how they find time in their day to do both and which is their priority (Springborg and Henry, ‘The National Interest’ May/June 2011; Abul Magd Jadaliyya, Dec 23 2011).
Ever wondered where the profits go? The armed forces in the middle of January 2012 ‘loaned’ the Central Bank of Egypt a lazy $US1 billion to prop un the currency – Tantawi’s assistant, Nasr, said the total is $US2 billion (Reuters April 10, 2012). More likely the elite holds money tightly. One retired general is quoted as saying that 15% of the military have control of the wealth (Reuters 10 April).
If the financial power is held by the officer elite then this must create tensions in the broader military and the payment since early 2011 of new $US400 per month bonuses (Guardian, December 28 2011) to the middle ranks maybe an attempt to paper over tensions buy buying loyalty. This may not be working with Reuters (April 10 2012) reporting a 3 day ‘revolt’ in October 2011 of 500 officers at the Air Defence Institute and other published but anonymous views from within the military alleging pressure for more ‘trickle down’.
One commentator argues armed forces control of the economy is most oppressive in Upper Egypt away from Parliamentary scrutiny e.g. the sugar industry (‘The General’s Secrets,’ Zeinab Abul-Magd, Sada blog, Carnegie Endowment for International Peace, 9 Feb., 2012). These business practices cause resentment amongst farmers - but maybe Luxor residents know more about this.
The military is not going to give up this financial power without a fight and they have the guns as well as powerful friends and co-investors (Danish, Spanish, Canadian, French, the US, Great Britain, South African, Russian, German, Kuwaiti [government and private], Italian, Hong Kong and Chinese, the UAE and Dutch). Whoever is in government will have to deal with them, and their friends - or at the very least do business with them in a shop near you.
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