Egypt - Return of the deep state

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Re: Egypt - Return of the deep state

Postby American Dream » Mon Mar 31, 2014 11:39 am

http://www.jadaliyya.com/pages/index/17 ... -nasserism

The Problematic Continuity of Nasserism

Mar 31 2014
by Amr Adly عمرو عادلي


Since the beginning of the twenty-first century, the political scene in Egypt has always incorporated images of Gamal Abdel Nasser, as well as Nasserist vocabulary, politicians, and intellectuals. All of these elements were present in protests supporting the 2000 Palestinian Intifada as well as protests opposing the 2003 invasion of Iraq by the United States. These Nasserist elements then became part of the “Kefaya” movement and the accompanying spread of political and social protests in the final years of Mubarak’s rule. Reinforcing the rise of opposition to the rule of the Muslim Brotherhood during the short-lived Mohamed Morsi presidency—and particularly the popular uprisings of June and July 2013—was the recalling of the memory of Nasser, the discourse of his political system, his policies, and his era in general.

How, one might ask, did such recollections of the past aid these protests? The memories of Nasser and his time in office carry a heavy political weight that helped build a group identity for the people demonstrating against Morsi’s presidency and Brotherhood rule. Photos of Nasser were held high alongside those of Anwar al-Sadat and Egyptian flags, all of which carry a patriotic symbolism that unifies Egyptians. This was in stark contrast to the pan-Islamism that the Brotherhood was said to be promoting. For many of the Brotherhood’s opponents, pan-Islamism as an ideology stands in tension with the notion of national belonging.

Image
[Egyptian Premier Gamal Abdel Nasser waves to a crowd of people as he stands in an open car moving through the streets of Cairo, Egypt on 19 June 1956. Nasser announced at a rally in Republican Square that martial law in Egypt is ended, that the revolution council which has ruled Egypt since King Farouk was deposed is dissolved, that Egypt's new constitution will be ratified and that a new president will be elected.]


This, however, was not the only symbolism present. Recalling Nasser and Nasserism brings to mind words like dignity and pride that emerged from the 1950s and 1960s era of national liberation and anti-colonialism, which Sherif Younis aptly described in his great work The Call of the People (Nidaa Al-Shaab). Dignity, of course, in the present era refers to the independence of the national will in seeing the army remove Morsi with popular support, in defiance of what is seen and portrayed as Western, and especially American, support for the Muslim Brotherhood.

Nasser and Nasserism provide further context for this most recent period of Egyptian history. One proof of this is the renewed salience of the images and symbols of the “Nasserist” social contract, which arose in the mid-1950s following national independence. This contract was based on a wide social alliance that the state built with mainly public sector workers, university students, state employees, army soldiers, and other members of the national workforce. There is no doubt that the popularly-imagined view of social justice that sparked the first socioeconomic-based wave of protests against Mubarak in 2004 was exceptionally Nasserist. These protests were against the constant and huge losses suffered by the aforementioned groups stemming from the beginning of the infitah (or open door) policy.

In addition to these three examples, recalling the memory of Nasser and the terminology of Nasserism in anti-Brotherhood demonstrations served a fourth purpose, namely as a symbol of modernity standing against the anti-modernist forces of Islamism. This kind of modernity, especially the claim that it can be reconciled with tradition, was one of the cornerstones of the ideology of the Nasserist system and is in keeping with many other postcolonial political systems that offer their people hopes of quick modernization, industrialization, social justice, public education, and women’s emancipation.

The presence of Nasser’s image and Nasserist terminology was not new or surprising. As previously mentioned, Nasserist intellectuals, journalists, and unionists never ceased to play a crucial role in forming the opposition’s political language in Mubarak’s final years. This brings to mind the writings of Abdul Halim Qandil, an example of a Nasserist journalist both in terms of his ideology and his party affiliation. Qandil was the first to dare to criticize Mubarak and his family openly in a number of his newspaper articles, some of which were later published as essays in a series of books. Qandil’s attacks against the Mubarak regime were based on its being an extension of the Sadat regime and a departure from Nasserism, especially with regard to foreign and economic policy.

Qandil was not alone in seeing the later days of the Mubarak regime in a light similar to that of the monarchy before the July 1952 revolution/coup: a corrupt king/president, surrounded by a corrupt family, accompanied by a severe deterioration in Egypt’s regional and international standing (Palestine war/invasion of Iraq) and a compounding of social crises in the form of worker strikes and anti-regime demonstrations. It was not hard to glean Qandil’s understanding of the solution to this dilemma—namely, another move by the army to destroy Mubarak’s “inheritance project,” which was meant to extend the lifetime of his corrupt regime by handing over power to his son, Gamal. There is no doubt that Qandil’s view demonstrates farsightedness and deep understanding of the interactions of the state and society in Egypt. The country truly was at the cusp of a revolution, and its success would have been impossible had the army not abandoned Mubarak. This is why it is possible to say that Qandil had predicted that “the people and the army [would be] one hand” against Mubarak and his regime many years before this slogan was set in the present tense in Tahrir Square. Other Nasserists, such as Mustafa Bakri, reflected this view through their interpretation of the January 25 Revolution as both a military coup and a popular revolution simultaneously, in spite of the contradictions surrounding this view and the resulting potential for historical inaccuracy.

In the run-up to the events of June and July 2013, Nasserist intellectuals played a crucial role in forming the anti-Brotherhood political rhetoric, aiding in the formation of a nationalist Egyptian rhetoric opposed to the language of political Islam and pan-Islamism. They also played a crucial role in phrasing the country’s political struggle as yet another struggle for national independence (from the United States and the West chiefly, with snippets of Sadat-inspired anti-Palestinian—as represented by Hamas and the Gaza Strip—rhetoric). They also played a significant role in the media, talking about the army’s removal of Morsi on 3 July 2013 as being a move in support of a popular revolution, or what may be considered a corrective coup to put the revolution back on track after power was lost to the Muslim Brotherhood. This new Nasserism shone through, so to speak, in a number of statements that created the political framework for removing the Brotherhood from power through army intervention supported by the mass revolutionary uprisings that filled the country’s various squares. These statements included saving the modern/civil state in Egypt from the Brotherhood and their supporters and saving the country from civil conflict and strife. With the rising political conflict both before and after the clearing of the Rabea al-Adaweya sit-in, the Nasserists, along with others, pushed the image of then-General Abdel Fattah al-Sisi as a representative of the Egyptian army on the one hand and of the popular, army-backed (or the other way around) movement on the other.

Naturally, accompanying the above was the prominent presence of Nasserist politicians and unionists in the political scene. These included Hossam Eissa (as Minister of Higher Education) and famous unionist Kamal Abu-Eita (as Minister of Labor), both of whom deployed the organizational and cultural capital that they had acquired during Mubarak’s rule (and the transitional period that ensued) in support of the transition roadmap laid out by the army. They also stood up to what many saw as the Brotherhood’s efforts to push the country to the brink of chaos with its constant striving to “overturn the coup” and “return to legitimacy.” Here, early on, Nasserist terminology was used alongside that of a “war on terror” and standing up to chaos to justify the state taking back vast areas of the public sphere that had been freed up after the fall of Mubarak’s security state following the January 2011 revolution. Abu-Eita spoke of the necessity of abstaining from strikes until stability ensues, reminding workers of their national duty. This brought to light the stark contradiction that was there all along between his being a Nasserist (rising from an experience that undermined independent union action in favor of promoting economic profits for public sector workers) and—ironically—his being a unionist (as a champion of the independent unions movement that rose against the very Nasserist structures that Mubarak inherited, such as the government-sponsored General Federation of Trade Unions of Egypt). This scene was repeated no less dramatically with Eissa, who found himself standing against the independence of the very same universities and student movements (some of which are supportive of the Brotherhood) for whom he had been a champion since the end of the Mubarak era.

The use of the Nasserist experience as a storehouse of recyclable ideas in the Egyptian political struggle did not stop with the formation of anti-Brotherhood rhetoric before and after 30 June. It then moved to supporting the army’s efforts, along with those of the 30 June alliance, in forming a new political authority. This was most clear in the insistence on drawing parallels between Sisi and Nasser and the role of the army in 1952 (when the July regime was formed) and its role in 2013 (when the post-Mubarak and post-Brotherhood regime was formed). Undoubtedly, these efforts by Nasserist and Nasserist-minded groups mixed with the efforts of other factions in the ruling alliance that bet on the return of the security state and the re-confiscation of the public sphere in light of the “war on terror” and the containment of the Brotherhood’s efforts to destabilize and hinder the post-Morsi transitional path.

It is also undoubtable that there is a certain contradiction between the two political projects (if either of them can be classified as such). Securing control of the public sphere may be a common factor between the Nasserists and the security and intelligence bodies of the Egyptian state—itself a child of the Nasserist regime since 1954—in terms of confiscating the public sphere and putting it under state censorship and management. However, there remains a tremendous difference between resurrecting the July regime in a new Nasserist formula (with all the wide-scale social and economic reforms that would justify the confiscation of the public sphere once again), and resurrecting the Mubarak regime (with its social and economic biases and its foreign policy). This may be a real source of tension among those Nasserists who can make peace with the return of the security state and the development of a political scene constrained by military/judicial oversight under the new constitution in return for reforms that would achieve at least some of the economic and social demands that would guarantee the resurrection of the old Nasserist alliance and the creation of a social system with greater legitimacy and public support. The legislation for minimum and maximum wages may be interpreted in this light. At the crux of the matter, however, remains the army’s stance on wide-scale economic and social reforms that would, without a doubt, lead to a conflict between the military institution and the strong interests that developed inside the state apparatus and the economy during the reign of Mubarak (and, perhaps to a lesser extent, Sadat).

In 1968, Anouar Abdel-Malek published his famous book Egypt: Military Society, which provides a Marxist analysis of the July 1952 coup/revolution. The basis of his analysis is that the army moved to save the general framework of Egypt’s social system, leading to what may be called a “top-down” or “conservative” revolution. Naturally, the term revolution here does not mean much beyond indicating the real and wide-ranging reforms that newly-founded military political leadership carried out. These changes included agrarian reform, the extension of free education, the achievement of national independence, and the “Egyptianization” and later on the nationalization of major national projects. All of these reforms were in demand since the end of the 1940s among the working and middle classes both in the cities and in the countryside, as al-Wafd Party failed to deliver these measures. In the wake of these reforms, the military institution (or the political authority that arose from its intervention) confiscated the political sphere and destroyed al-Wafd and political party life before going on to crush the far right (the Muslim Brotherhood) and the far left (communists). As Sherif Younis put it, the army removed the King only to take his throne and to address the contradictions plaguing the political system between 1923 and 1952 by disbanding al-Wafd, shutting down politics, forcing out the British, and forming a political system based on an extended bureaucracy operating in a one-party system.

The critical question facing both projects is whether or not the tools needed to re-confiscate the public sphere are in fact available. It may seem that the reemergence of the Mubarak regime is inevitable. Yet the matter seems less certain because it is that same regime’s mode of organization that provides the impetus for continued political and economic protests. The three years following the January 25 Revolution, moreover, have proven that suppression alone is insufficient, as it can only yield a political system with negligible stability. Therefore, there is no recourse but to provide social concessions to guarantee the rise of a socio-political alliance for the post-Mubarak regime. The matter hangs, however, on the possibility of creating an achievement-based air of legitimacy that matches that of Nasser and his regime in the 1950s and 1960s. Such legitimacy will be necessary to justify the confiscation of the public sphere à la Nasser. Another necessary factor pertains to whether or not there is a vision and sufficient commitment within the military to carry out a wide range of social and economic reforms in light of the violent current political divide, which is expected to persistent. This divide is reflected in the polarization between a nationalist camp, which brings together a diverse set of actors who have little in common beyond a fear of the Brotherhood (or a desire to eradicate it from political life), and an Islamist camp, which views its own struggle as existential.

Nasser based his legitimacy on the Suez Canal Agreement of 1954, which led to the evacuation of British troops, the nationalization of the Suez Canal, and the political victory he scored in the aftermath of the 1956 Tripartite Aggression. His legitimacy was also grounded in the four waves of agrarian reform, which created a large class of small and medium landowners who were supportive of the political regime and loyal to its ideologies and policies. Also central to this legitimacy were the creation of a public industrial sector along with the Aswan High Dam, and the extension of free university education and guaranteed employment for college graduates. Nasser’s regime and its social alliance, or at least the social contract upon which it rested, exemplified a kind of populist authoritarianism (per Robert Bianchi’s classification in the 1980s). The system was based on an understanding that traded political rights for economic gains. Can any party today create economic gains in the medium (not short) term in a way that would result in a strong social alliance such as the one that emerged in post-colonial Egypt? The answer is a resounding “no,” because the international context today would not allow for the rise of such social alliances or the economic and political arrangements that can support them. It is these same international conditions that ultimately led to the demise of the regimes of Sadat and Mubarak by forcing the two leaders to adopt liberal economic policies. These measures undermined the regime’s legitimacy, setting it on a path of slow disintegration and leading it to a standoff with a growing protest movement, which eventually destroyed the regime in January 2011.

All this, however, does not allow us to ignore an obvious reality in Egypt, namely that the prevalent notion of social justice remains purely Nasserist. Nasserism may not be as coherent and consistent of an ideology as political Islam or Marxism, and it may not enjoy the organizational force of a party or union force. Yet it is without any doubt a foundational element of the political culture and the political imagination of the urban and rural working and middle classes of Egypt. Moreover, the quick failure of the Muslim Brotherhood was due to the fact that its Islamic identity project was more divisive than unifying, leading to violent social divisions during the group’s short-lived reign. The framework of Egyptian nationalism (with its Nasserist and Sadatist manifestations), on the other hand, is more inclusive and accommodating of diversity among Egyptians. The Egyptian nationalist framework, therefore, presents a stronger ideological basis for a new authoritarian alliance. It is for this reason that the army and the 30 June alliance today are relying on a nationalist framework in their efforts to counter the Brotherhood and to redesign the political sphere by excluding the group from it.

From here, it seems that the source of the problematic that Egypt faces today is that the only social contract present in the imagination of many Egyptians is purely Nasserist, one that dates back to the postcolonial context. Meanwhile, recreating the Nasserist alliance is impossible in light of the changed international context, which demands that Egypt integrate into a unified, broad international system. This is required not only economically—due to dependence on the flow of goods and capital from abroad—but also culturally and politically, because there is no longer room for the previous postcolonial formulas of nations, the traditional nationalist left, or a nationalized economy.

This, of course, does not mean that there is no room for economic and social transformation in Egypt. The current situation is negotiable and subject to rearrangement in order to create a social system (and not just a political-procedural system) that is more popular and legitimate in the eyes of the majority of Egyptians, which is the only way to guarantee its longevity and stability. The basic conditions for this negotiation, however, make the old Nasserist formula (or its new manifestation) effectively impossible despite major efforts to promote it.

Does this mean that Nasserism is dead and that we stand with no framework to rebuild the social system in Egypt? The answer, again, is “no.” Nasserism may remain as a reference of sorts for the state and political powers, but it can be only a short-term reference pending movement toward a post-Nasserist phase. Its purpose as a short-term reference would be to formulate a social alliance that guarantees a larger role for the state in the distribution of income and wealth and to enable more citizens to participate in production and to receive benefits from economic growth (as opposed to the state of affairs during the last years of the Mubarak era). The role of the state here would not mean taking the place of the private sector through nationalization or expansion of the public sector, and it definitely would not mean replacing the political field with bureaucracy by circumscribing union, student, and party freedoms. It would mean, however, preparing for social justice by defining the role of the state in a pluralistic economy and political sphere, thus pushing Nasserism in this case closer to the “new left” that rejects neoliberal capitalism but does not move too far towards the realm of socialism or state capitalism.

This article neither seeks to lay down a particular formula for post-Nasserism nor does it intend to suggest a singular way to read the Nasserist experience in the post-Mubarak and “post-post-Mubarak” eras. It aims, rather, to start a public dialogue about this issue and then to embark on an open discussion of the economic, social, and political grounds necessary to create a more legitimate and stable social system in the coming years.


[This article was first published in Arabic on Jadaliyya. It was translated to English by Amir Beshay in partnership with The Tahrir Institute for Middle East Policy. A version of the article appeared in the print edition of Mominoun without Borders.]
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Re: Egypt - Return of the deep state

Postby AlicetheKurious » Wed Apr 02, 2014 3:01 am

American Dream, could you please provide your rationale for insisting on posting articles in both this and the "mother" thread about Egypt? This article is perfectly relevant there, and maintaining two threads is, in my opinion, confusing and inefficient. It fragments and de-contextualizes what are bits of the same conversation/discussion. Please explain.
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Re: Egypt - Return of the deep state

Postby American Dream » Wed Apr 02, 2014 2:59 pm

I am guided in my choices of whether to post here by whether the contents fit with deep state analysis, as rooted in Peter Dale Scott's definition of deep politics:

My notion of deep politics… posits that in every culture and society there are facts which tend to be suppressed collectively, because of the social and psychological costs of not doing so".


I'm hearing your comments as a request that we collectively scrap this thread, which I will consider seriously.
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Re: Egypt - Return of the deep state

Postby American Dream » Sun Jul 06, 2014 7:53 am

Cross-posting:

CONTINUING BUSINESS BY OTHER MEANS: EGYPT'S MILITARY ECONOMY

By L.S., 30 May 2014


Image
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 ARMY CENTRE STAGE AGAIN



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 MILITARY ECONOMY FROM NASSERIST STATISM TO NEOLIBERAL MUBARAKISM



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 ARMY ENCOUNTERS EXPANDING GULF CAPITAL



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, http://tinyurl.com/l8y5hbj] 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).


Continues at: http://www.metamute.org/editorial/artic ... y-economy/
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Re: Egypt - Return of the deep state

Postby semper occultus » Fri Apr 01, 2016 7:50 am

Opening the black box of Egypt's slush funds

Investigators chase $9.4 billion siphoned into secret accounts – police accused of stealing records disclosing own corrupt funds, Finance Ministry uses accounting trick to bury the bodies

BY NIZAR MANEK AND JEREMY HODGE

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One sunny day last March, Egyptian government auditors walked past the concrete barricades surrounding the Ministry of Interior (MOI), which oversees the country's non-military security services. There, they sought to ferret out irregularities from the Ministry's financial records, among them allegations that seven unnamed senior officials at the MOI used state funds to distribute nearly $12 million in bonuses to themselves. Before the auditors could inspect the records, they were thrown off the premises. Eight months later, the audit chief complained to Egypt's new President and Prime Minister that MOI staff burgled a room his auditors used to investigate the Ministry, stealing investigative records and notebooks. In a memo, the audit chief told them the Ministry justified the break-in with Egypt's 'war on terror', claiming that how it spends state cash must be kept a state secret.

What the auditors were looking for turns out to have been the tip of an iceberg. According to previously undisclosed official records uncovered by The Angaza File in months of investigations, at least US$9.4 billion of state funds had been stashed in nearly 6,700 unaudited accounts in the Central Bank of Egypt and, illegally, in a number of state-owned commercial banks, and spent by the end of the 2012/2013 fiscal year. This was one year before Egypt's popular military putsch brought with it an outpouring of Gulf aid into the country, some, it has become apparent in recent months, deposited in army-operated accounts at the Central Bank. Insiders say these accounts are used to stash stolen state funds that are never relayed into Egypt's treasury or national budget, but instead serve as the private piggy banks of generals and other senior officials at state organs across the bureaucracy. This enables them to collect bonuses off-the-books away from the eyes of regulators and their subordinates. Known as 'special funds', President Abdel Fatah el-Sisi asked regulators to investigate soon after he was elected to the nation's high office as the country was suffering from a massive budget deficit. In December, Prime Minister Ibrahim Mehleb followed, announcing a 'new anti-corruption strategy', preparing the way for El-Sisi to fly to the Davos World Economic Forum to court foreign investors.

One fissure which now appears to undermine that 'strategy' involves the Finance Ministry playing an accounting trick (see Box, $5.6 billion accounting trick). By August, Egypt's Minister of Finance Hany Kadry Dimian claimed the total size of the network of slush funds did not exceed $3.8 bn., but failed to explain the apparent $5.6 bn. discrepancy. Interviewed in his office in Cairo, Hisham Genena, who chairs Egypt's Central Auditing Organization (CAO), calls the gargantuan network of funds the 'backdoor to corruption, squandering state funds in the worst way'. These funds stretch from the MOI to the Ministry of Defence (MOD), which El-Sisi headed before rising to the high office, said the audit chief, who had his auditors show up at MOI HQ that day a year ago, but has since given the military a clean bill of health. The MOI has since undergone a change of face at the top: Interior Minister General Mohamed Ibrahim was sacked in March, replaced with retired Major General Magdi Abdel-Ghaffar who headed the infamous Department of Homeland Security. Despite this shake-up, Genena still claims he is being hounded by the MOI. The audit chief appeared on Egyptian television in April, claiming he had been verbally threatened by General Khaled Tharwat, another ex-head of the Department of Homeland Security, or Al-Amn Al-Watani, a security service whose responsibilities include counter-intelligence, surveillance, and border security.

Part of the money allegedly stolen by MOI top brass is said by insiders to have come from a series of secret bank accounts used to stash opaquely administered funds collected directly by the Ministry in exchange for services, from traffic fines to the sale of license plates, and various forms of extortion police mete out to Egyptian citizens. Officially, these funds are used to pay for Ministry expenses, including the purchase of uniforms, food, and equipment. According to insiders, the seven senior MOI officials even stole from police pension funds which officers pay into for themselves through monthly contributions from their meagre salaries of around a hundred dollars a month. One of those MOI staffers told The Angaza File that these accounts are usually managed internally by 'inexperienced, trustworthy people promoted to these positions through favouritism who will bury certain numbers'.

Soon after the president flew back to Egypt from Switzerland in January, El-Sisi himself was drawn into scandal when an audio recording was leaked from his time as Defence Minister in early 2014. The recording seems to provide evidence that he was conspiring to divert billions of dollars in Gulf aid that came into the country in the weeks and months following the 2013 putsch by transferring such aid into special 'army accounts' held overseas (#Sisileaks). This means the aid could be entangled in the web of 'special' funds, potentially increasing their size exponentially. In a series of highly-publicised tweets, Saudi Prince Saud Bin Seif Al-Nasr, asked why officials he accused of wasting Saudi funds were not being held responsible? 'No one knows the nature of this aid – a gift, a loan, or anything else,' the prince said. A study of two of these secret recordings uploaded to YouTube ('Sisi loots the Gulf; we have taken from the Gulf more than 200 billion (Egyptian) pounds' – duration 4:43; and 'Sisi despises the Gulf – new leak from Sisi's office' – duration 2:11) by British forensic speech and acoustics experts JP French Associates concludes: 'Our opinion is that the evidence provides moderately strong support for the view that the questioned speaker is Abdel Fatah El-Sisi.' 'All the indications are that the speaker in each of the questioned conversations is the same man,' says the 26-page report signed on March 20 2015 by Prof Peter French and Dr Sam Hellmuth, and prepared on instructions of Mursi's London-based lawyers ITN Solicitors. The report, reviewed by The Angaza File, finds features common in El-Sisi's colloquial Cairene Egyptian Arabic.

Shortly afterwards, El-Sisi travelled to Riyadh to meet with the new Saudi monarch Salman bin Abdulaziz Al-Saud ahead of Egypt's much-publicised investment summit in mid-March on the shores of the Red Sea. There, Saudi Arabia, the United Arab Emirates, Kuwait, and Omanpromised Egypt another $12.5 bn. in aid and investment. The UAE said it would make a $2 bn. deposit to the Central Bank. In tears and amid rapturous applause at the conclusion of the summit, Mehleb said agreements worth over $36 bn. had been signed – including with corporate titans General Electric, Siemens, and British Petroleum – in addition to more than $18 bn. for financed projects and some $5 bn. in loans. Out of all projects, top priority was given to the foreign currency-generating, army-affiliated Suez Canal Development Project, which officials expect to represent a third of future investments coming into the country. The World Bank and International Monetary Fund attended alongside two-dozen regional and international organisations, more than 2,000 investors, and two-dozen heads of state, and dignitaries including United States Secretary of State John Kerry, telecoms magnate Naguib Sawiris, Britain's Foreign Secretary Philip Hammond and the IMF's Christine Lagarde. Before posing for selfies with young organisers, El-Sisi made a speech saying Egypt needs $200-$300 bn. to develop. Mehleb closed: 'We need to fight corruption, negligence, and all that stands in our way'.

This story is the first systematic journalistic investigation into 'special funds'. According to our findings, some of these are intertwined with ministries and state enterprises including the Suez Canal Authority that presented investment opportunities at the summit. This investigation is based on dozens of previously undisclosed memos from Egypt's Central Bank, Finance Ministry, and CAO, bank statements, and corroborative interviews with dozens of current and former officials and people close to the regulatory process over several months. Our analysis further reveals that the $9.4 bn. figure we uncovered, an official estimate by the CAO based on financial information from the Central Bank and Finance Ministry for the end of the 2012/2013 fiscal year, appeared to drop $4.7 bn., from $14.1 bn. during 2010/2011 fiscal year, according to the previously undisclosed Central Bank records, which bear the official seal of the Central Bank.

....continued at...

http://www.africa-confidential.com/angaza-file
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