The New Egypt

How much does Egypt’s military know about running an economy?

Marketplace Staff Feb 14, 2011
The New Egypt

How much does Egypt’s military know about running an economy?

Marketplace Staff Feb 14, 2011


Kai Ryssdal: The Egyptian military’s moving right along in trying to get that country past the last three weeks. Generals met with protesters today to talk about constitutional reforms. The Supreme Military Council said it wants an end to the strikes that have broken out since the revolution started. Once the political details get hashed out attention will turn to the economy and how to get it started again. That could turn out to be tricky for the army to do, since it’s doing just fine — economically — the way things are right now.

Michael Wahid Hanna is an analyst at the Century Foundation. Michael, good to talk to you.

Michael Wahid Hanna: Thanks for having me.

Ryssdal: So this seems to be a simple, but somehow apropos question: How much does the Egyptian Army know about running an economy?

Wahid Hanna: Well, they have vast economic holdings themselves, but obviously they are not in a position to decide macroeconomic decisions. And so one big question — and it surrounds this whole transition — is what role is the military going to play? Are they trying to consolidate an entrenched military power across the board of the government? Do they actually want to run the country? Or, as many Egyptians hope, are they in a position now to lead a transition to a civil-led government?

Ryssdal: You were in Cairo earlier this month, right?

Wahid Hanna: I just got back this weekend.

Ryssdal: So tell me how the army manifests itself in the economy. How do you know? What do you see?

Wahid Hanna: Well a lot of this is an open secret in Egypt. They have vast economic holdings. They own land. They’re in construction. They’re in consumer goods, automobiles, things that are far removed from any possible relation to military industry. And they employ many people. There are estimates that this could be as much as 10 percent of the official Egyptian economy. These aren’t things that are discussed widely in Egypt. This is something of a taboo topic. The exact parameters and dimensions and scope of the Egyptian military’s holdings is something that you have to read between the lines.

Ryssdal: I imagine — being as entrenched as the military is in the economy — they have certain structural benefits with tax rates and employment, and all that stuff?

Wahid Hanna: Sure. Their workers can’t strike. They don’t pay corporate taxes. They’re able to acquire property at vastly reduced sums. They’re able to employ their own soldiers at times as labor, and so they have all these institutional advantages that make their economic enterprises very lucrative.

Ryssdal: Is it a well-run bureaucracy or is creaky and old and not incredibly efficient?

Wahid Hanna: Well, much like the rest of the Egyptian economy, it has major inefficiencies. One big challenge is that much of the resentment among the Egyptian protesters has been against the crony capitalism that has taken place in recent years. And this was something that grew up around young businessmen that were associated with Gamal Mubarak.

Ryssdal: Hosni Mubarak’s son, we should say.

Wahid Hanna: Yes. Exactly. But there is a bad taste in many people’s mouths around the notion of economic liberalization. It’s gotten a bad rap. And now it’s become associated with corruption. So there isn’t a mood in the country, writ large, to try to liberalize the economy. In fact, many of the strikes going on now are by state workers demanding higher pay and better conditions.

Ryssdal: Do you have any sense that the military would be open to military reforms given that they are so deeply entrenched in the economy to their apparent benefit?

Wahid Hanna: Well I think the opposition in this transition period is probably not going to be focused on the military’s economic holdings. I think much more likely is a focus on the political side of the equation and recognizing that the military is in a very strengthened position to protect those interests. And so I think if you’re looking to carry the day with the military in terms of convincing them of the necessity of transitioning to a civilian-led, pluralistic, open political process with free and fair elections, the focus is going to have to be on the high-level politics, on rewriting the constitution, and putting in place a credible plan for transition. And I don’t think you are going to see much made at this point of the economic holdings of the military because you need their cooperation to make a move toward a credible political transition.

Ryssdal: Michael Wahid Hanna, he’s a fellow at the Century Foundation in New York City, just back from Cairo. Michael, thanks a lot.

Wahid Hanna: Thanks very much.

Ryssdal: One more thing about Egypt before we move on. This afternoon, the Egyptian army asked the U.S. government to freeze the assets of certain Egyptians, no explicit mention of Hosni Mubarak’s name. Curious.

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