Egypt's army in control of vast business empire

By Magdi Abdelhadi
Middle East analyst

An Egyptian soldier looks out over Cairo during presidential election - 24 May 2012
Image caption,
The army controls a huge business empire, covering anything from consumer goods to mining

Out in the desert to the east of the capital, Cairo, the Egyptian military has just finished building a massive new sports centre.

The resort is complete with a hotel and other facilities, including an impressive five-lane motorway, a flyover and a tunnel to ease potential traffic congestion on the way to a vast new suburb called "New Cairo", where the rich and powerful, including members of the ruling military council (Scaf), have luxurious villas.

The centrepiece is a stadium called "30 June", the date Scaf is supposed to hand over power to a civilian head of state.

The road leading up to the compound is decked with banners reading "the army and the people are one hand".

Once a popular slogan at the height of the uprising that toppled Mubarak last year, it has since been replaced with "down, down with military rule" in Tahrir Square.

The resort was built in just under two years, testimony to the army's ability to get things done quickly and effectively.

Business ventures 'classified'

Image caption,
Protesters in Tahrir Square have been calling for the end of military rule

That is something widely acknowledged in Egypt.

Everyone says the army makes good projects for the country.

The military may be unpopular in Tahrir Square, but its approval ratings in wider society remain high - thanks in part to such infrastructure projects, but also to decades of state propaganda.

But no-one knows how the decision to turn what was once military barracks into an investment venture was taken, how much it cost to build, and who will pocket the revenues.

All that is regarded as classified - information that Egypt's top brass are determined to keep away from public scrutiny under any future government.

This is typical of the many projects built and run by the army's vast business empire, which includes manufacturing of consumer goods, food, mineral water, construction, mining, land reclamation, even tourism.

State within a state

As the debate over the role of the military in post-Mubarak Egypt intensified, General Mahmoud Nasr, the assistant defence minister, told a press conference in Cairo last year that the army would never hand over control of these projects to any other authority, adding that these were not state assets but were "revenues from the sweat of the ministry of defences and its own projects".

At around the same period it was announced that the army had come to the rescue of the ministry of finance by lending the state a substantial amount of money to shore up its rapidly-depleting coffers.

This sums up how the Egyptian military operates like a state within the state.

Estimates vary as to the size of their industries - they account for around 8%-40% of Egypt's gross national product.

But since all the military's accounts are kept secret no one knows for sure.

Moreover, the military's influence extends far beyond its own institutions.

21st Century 'left behind'

Image caption,
More than a year since President Hosni Mubarak was toppled, the military still holds great power

The majority of Egypt's regional governors are retired army officers.

Many of the big civilian institutions and public sector corporations are run by former generals.

The country's three main land-developing authorities (agricultural, urban and tourism) are headed by former military officers who, in addition to their pensions, receive lucrative salaries and perks associated with their civilian jobs.

The generals clearly like their privileges. But there's another rationale to them being in business, one that goes beyond their individual choices.

An academic who recently visited one of the military industrial complexes (which incidentally produces mainly civilian goods) made a very pertinent observation.

"Upon arrival," she writes, "we felt as if we had suddenly left behind the Cairo of the 21st Century, crowded with all the billboards and shops of globalisation, and walked back to the Cairo of the Nasser era during the middle of the past century."

That is the time when Egypt looked up to Soviet-style socialism, where the public sector was supposed to be in charge of the big infrastructural projects and was leading the modernisation and industrialisation effort of the state.

This kind of "socialism" ("state capitalism" is a more adequate term) is still popular in Egypt, especially among nationalists and Nasserists (followers of late president Nasser), whose candidate came third in the presidential election.

Any attempt to open up, let alone privatise, the military's business empire will face stiff resistance, not just from the generals but also from powerful allies within the state bureaucracy; people who, besides benefiting personally from the status quo, are often by their very nature hostile to change.