Ozymandias

Summary: Egyptian President Abdel Fattah el-Sisi like the ancient pharaoh made infamous in Shelley’s poem, has pretensions to greatness that are driving his country down a ruinous road.

We thank Maged Mandour for today’s article. He is a political analyst who writes Open Democracy’s “Chronicles of the Arab Revolt” column, covering the affairs of the Arab world with a special focus on social change in the post-Arab Spring Middle East. He is also a Sada writer for the Carnegie Endowment for International Peace and a contributor to Middle East Eye.

On the 9th of March, during a speech given at the “Educational Seminar for the Armed Forces” President Sisi stated that the opening of the New Administrative Capital signals the birth of a new Egyptian Republic and State. This statement reflects the depth and breadth of changes that the regime has embarked on since it came to power in 2013, with a single purpose, to consolidate social and political power in the hands of the state and the military elites and to ensure that the prospect of democratic transition is stalled for decades. The regime has been extremely successful in these goals, however, at a cost that is bound to create a deep social and political crisis in the medium to long term. In reality, the creation of substantial structural barriers to a peaceful democratic transition of power makes the prospect of violent mass social upheaval a more likely possibility.

Israel Prime Minister Naftali Bennett & President Abdel Fattah el-Sisi
Israel’s Prime Minister Naftali Bennett met President Abdel Fattah el-Sisi last week for talks on the Israeli-Palestinian conflict and bilateral ties in the first official trip by an Israeli leader to Egypt in a decade. [photo credit: @AmichaiStein1]
The Achilles heel for Sisi is, arguably, the economic model of debt-driven growth of military capitalism that he chose to follow. The regime embarked on a borrowing spree, with foreign debt reaching a historic high of US$ 134 billion by the end of the third quarter of FY 2020/21. The total level of debt reached 90% of GDP as of 2020. The issue with the debt is two fold. First, it places a heavy burden on the state, consuming one third of government expenditures, based on the 2021/22 budget. Second,  the regime spending priorities, which favour  debt- fuelled investment in mega-infrastructure projects and transportation hubs, is being executed or managed by the military establishment, enriching the military elites.  It is a model that has damaged private sector performance resulting in sluggish growth. For example, in the first eight months of 2021, the non-oil private sector shrunk. This is not an isolated trend: a cursory look at the non-oil private sector performance over the past 5 years, shows that it has shown negative growth for most of that period. The weakness of the performance of the private sector does not only mean that Egyptian economy is not competitive, but it also means that the tax base of the regime is weak, making it more difficult to raise tax revenue to service the debt obligation. This is partly reflected in the weakness of the tax revenues, which reached 16.7% of GDP, compared to an OECD average of 34%. A  highly regressive taxation system, which shifts the tax burden onto the poor and the middle class, compounds the problem which is further exacerbated by a plethora of tax exemptions for economic activities run by the military and for larger corporations.

In order to attract investment in Egyptian debt instruments, the regime is bound to offer extremely high interest rates, which S&P ranked as one of the highest in the world. The burden of servicing the debt, combined with the weakness of the private sector and the national tax base means that the regime has no choice but to cut social spending in order to meet its debt obligation, which will only increase poverty and social deprivation. The latest example of this is Sisi’s intention to increase the price of subsidised bread, which is expected to raise poverty rates by 4 to 5 percent.

The other notable weakness of the regime is its overcentralisation of power in the hands of the security apparatus in a manner that reduces the regime’s room for manoeuvre and the managing of discontent. The most notable feature of this is the lack of a civilian ruling party, which the president could use as a façade to absorb popular anger. Instead, his regime relies on a number of pro-Sisi parties to populate the parliament, even creating a unified list in the Parliamentary election of 2020, with a number of opposition parties. These parties do not play a prominent political role, hence their impact on policy is severely limited. They act only to execute the dictates of the military and the security apparatus. Meanwhile the repression of legal opposition parties with arrests and imprisonment continues. The most notable example is the arrest of Abdel Muonium Abou El Fotouh, the head of the Strong Egypt Party, in February 2018, after he criticised Sisi. He remains in pre-trail detention. This silencing of legitimate opposition voices closes another avenue for managing discontent, by co-opting the opposition into the political system, leaving repression as the only method of dealing with discontent and protest, which can lead to a cycle of escalating violence, due to the complete closure of the public space.

Ironically, the weaknesses of the regime are also the most formidable barriers to a democratic transition, ensuring its survival in the medium term, in spite of the growing social crisis. This is most notable in the debt driven economic model of military capitalism, which ensures the military is deeply entrenched in the national economy.  Not only do the generals have direct control of commercial enterprises, they have the ability to dictate economic policy through a myriad of laws and regulations and through overt control of the state apparatus. This control not only gives the military access to economic resources, and a vast patronage network, it also entrenches it in the fabric of social life in a manner that is difficult to dislodge. Hence, the process of transition out of dictatorship would not only involve ending the political control of the military, but also its economic dominance.

Finally, power has been heavily centralised in the hands of the executive in a manner that has hollowed out the state apparatus and made the concept of separation of power meaningless. This is most notable with the judiciary, which from the coup of 2013, acted as a direct accomplice in the regime campaign of repression, presiding over mass trials that lacked any semblance of a due process and issuing mass executions.  The constitutional amendments of 2019 not only extend Sisi’s term in office, it gave the Presidency the power to appoint the heads of the judicial institutions, heavily curtailing judicial independence. It also placed the military as the guardian of the secular nature of the state, paving the way for future legalized military coups. Hence, the process of democratic transition would necessarily entail the gargantuan task of dismantling parts of the state apparatus, and rebuilding it on a democratic footing, a process that is bound to stir fierce opposition, not only from the security apparatus, but from within the state itself, from those that have benefited from the current system.

Thus, the dominance of the regime will most likely continue in the foreseeable future, in spite of the social crises that its rule is likely to precipitate. The most likely scenario is the slow corrosion of not only what remains of civil society, but also of the state apparatus, followed by  large-scale social upheaval, which is bound to be extremely destructive. The consequences of this scenario are unknown, but possibilities of bloody civil strife, and state collapse loom on the horizon.

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