Egypt Unwrapped
We wish to wholeheartedly thank the sponsors of this report, whose kind
support made it possible: Diamond Technology Partners, C-N-A,
Deutsche Bank, and Pfizer.
Introduction
Egypt is the Nile. The vast majority of its growing population lives in a fertile,
narrow stretch along this life-sustaining river. The rest of the country is essentially
uninhabitable desert. This particular fate of geography has shaped Egyptian life for
more than five thousand years, and its legacy lives on today.
The need to control the Nile has forever promoted the existence of a
dominant Egyptian state. The reason is simple: if a state could control this single
critical resource, it could control the population narrowly confined to its banks. Thus,
the state has always played a central role in Egyptian society, from the time of the
pharaohs down to the present day.
This central state, and its strong instinct for self-preservation, is therefore the
crucial variable for understanding the political and economic future of Egypt. Faced
with a large and growing population which strains existing resources, every move taken
by the Egyptian government is intended to preserve or strengthen its own control.
Politically, this means domination of domestic politics, brutal suppression of Islamist
opposition, and control of the media. Economically, this means advancing economic
reforms, but only those which do not threaten political stability or undermine the
1
power of the regime. Socially, this means an attempt to co-opt the world’s most
important seat of Sunni Islam – al Azhar University. And externally, this means
support of the Middle East peace process, but more importantly, a policy which
allows its citizens to blame Israel for many of Egypt’s own economic and political
shortcomings. (Denial isn’t just a river in Egypt, it seems).
This crucial variable of the state, and its relationship with economics, religion,
and foreign policy forms the basis of our report and resulting conclusions. It also
provides the paper with a natural structure. We begin with a look at Cairo’s current
modern-day pharaoh, President Hosni Mubarak, and his one-party government.
I.
The State
The prominent Cairo journalist, Max Rodenbeck, has called Egypt the “in
name only” state1. It is a democracy, in name only. It has an independent parliament, in
name only. Opposition parties exist, in name only. In reality, the only name that
matters in Egypt is Mubarak. The president, along with a small group of mostly
military elite, firmly controls the country through domination of Egypt’s political
process and brutal suppression of any and all opposition. Most policies exist to
strengthen or maintain the power of this ruling elite, where the instinct for selfpreservation trumps all other concerns.
A. The Presidency
On October 6th, 1981, Egypt’s Vice President Hosni Mubarak was
standing near President Anwar Sadat when the Islamic group Al-Jihad opened fire.
Sadat was murdered, and eight days later, the 53--year old Mubarak was sworn in as
president.
1
Max Rodenbeck, “Cairo, The City Victorious.”
2
Over these past 18 years, Mubarak has ruled Egypt with a cautious mix of
economic liberalization and domestic authoritarianism – taking great care to emphasize
domestic social stability, no matter the cost. He has continued the economic
liberalization policies launched by his predecessor, though these efforts have slowed
in recent years as privatization of domestic industry threatens to exacerbate
unemployment and social unrest. Externally, Mubarak has strongly supported the
Middle East peace process, and has been broadly successful at rebuilding Egypt's
ties to the Arab world.2
Egypt’s 1971 Constitution grants broad powers to the President – a legacy
of the Gamal Abdel-Nasser era. The president has the ability to veto all legislation,
appoint prime ministers, provincial governors, armed forces and security heads, major
religious figures, and High Court judges. He is also supreme commander of the
armed forces. Moreover, the president has the power to rule by decree, and for all
but eight of the past 61 years Egypt has lived under an official state of emergency
whereby laws are created by the mere utterance of the president.3 In addition, all
elections are “forged” to maintain the regime’s power base. 4 The result of this
government structure (and its robust system of political patronage) is near total
domination of the Egyptian state by one individual.
This concentration of power raises serious questions about stability in the
event of the sudden departure of Mubarak (not an idle worry following three known
assassination attempts against the president).5 In particular, the absence of an
obvious successor to Mubarak is of some concern. The president has steadfastly
2
Egypt finally rejoined the Arab League in May 1989, after its 1977 Camp David Accord with Israel left
the country a political pariah throughout the Arab world.
3
In recent years this official state of emergency has been a response to domestic terror attacks by radical
Islamists. Since this threat has receded a bit, more cynical observers point to this year’s three year
extension of the emergency laws as evidence of the regime’s continued opposition to political pluralism in
general. This official state of emergency also legitimizes the state’s control of the media. Article 48 of the
Egyptian constitution reads: “In a state of emergency or in time of war a limited censorship may be
imposed on the newspapers, publications and mass media in matters related to public safety or purposes of
national security in accordance with the law.”
4
From interviews with Professor Gehad Auda, Political Science Department, Helwan University, Cairo.
5
Most experts believe that if Mubarak departs suddenly, constitutional procedures of succession (Article
84) would likely be enacted; namely, the Speaker of the People’s Assembly, Fathi Sorour, would assume
power until the military’s National Defense Council put forth a candidate for the assured approval by the
People’s Assembly. In short, a few weeks of nervousness would be followed by a return to state-controlled
stability.
3
refused to name a vice president. The reason, not surprisingly, goes back to
Mubarak’s prime goal of stability. If there is no alternative to the president, there is
almost no chance of a rival power rising from within the government to challenge him.6
B. The Military
Another critical component to state power in Egypt is the military. It has
produced every leader since 1952 (including former Air Force Commander
Mubarak), and sees itself as the ultimate arbiter of power in the country.7
Egypt’s military is among the largest in the Middle East. Active armed forces
number some 450,000 -- with more than half in the army.8 Conscription is selective,
with service for three years. Aided in large part by an ongoing, U.S.-supplied
military modernization program, Egypt’s air force is formidable. Meanwhile, the wellarmed, British-trained navy, in the words of one retired Egyptian diplomat – is
“crackerjack.”9
Backed by this political and armament power, Egypt’s military plays a crucial
role in the administration of the state. It must be viewed as a significant player in all
domestic, foreign, and as will be demonstrated below, economic affairs of the country.
C. The Parliament
A third, though in many ways less important, component of the Egyptian state
is the Parliament. It consists of a 454-member People’s Assembly, and a 210 member
Several of our interview subjects quietly suggested that Mubarak, if he did not orchestrate Sadat’s
assassination, at least had some prior knowledge of it. Thus, the lack of an obvious successor suggests the
president does not want this bloody history to repeat itself. This conspiracy claim is, of course, impossible
for us to prove.
7
This is more than just custom. The military’s right (through the creation of a National Defense Council)
to ensure the “safety and security of the country” is enshrined in the Egyptian Constitution (Chapter VII,
Articles 180-83).
8
The International Institute for Strategic Studies, London.
9
From interview with retired Egyptian diplomat Taksim Bashir.
6
4
Advisory Council. Both bodies are dominated by the ruling National Democratic
Party, but do not be fooled by the name. The National Democratic Party (NDP),
which effectively controls local government, the mass media, organized labor, and
Egypt’s substantial public sector, is securely under Mubarak’s thumb. 10
The NDP (the successor of Nasser’s Arab Socialist Union) is protected
by elections that are conducted to ensure large ruling party majorities. The most
egregious example of this occurred during parliamentary elections in 1995, when after
severe violence (including the deaths of more than 70 people), and government
interference, more than 94% of the parliamentary seats went to the NDP – a margin
of victory that strains the credulity of even the most liberal interpretations of
Egyptian democracy.
Perhaps the most striking feature of Egypt’s parliamentary structure is the
lack of a viable opposition. In theory, fourteen opposition parties exist. In reality,
these parties have had to operate under numerous restrictions, and have been
“insulated from decision-making with an efficiency that can hardly be found elsewhere
in the world.”11 A democracy, in name only, indeed. (There is a serious and perhaps
self-defeating downside to this brutal suppression of political opposition: it drives
disenchanted Egyptian citizens into the arms of radical Islamic groups – a topic
explored below in greater detail).
D. The Bureaucracy
To most Egyptians, however, the State does not mean the president, the
military, or even their “elected” parliament. Rather, the day-to-day relationship with
the ubiquitous Egyptian government is experienced through an oppressive, highly
inefficient, and ever maddening bureaucracy.
According to our various interview subjects, significant legislative measures – such as the recent law
giving Egyptian women the right to divorce their husbands – only pass when the President demands it.
And if you do not support him, you do not remain in the parliament.
11
Eberhard Kienle, “More Than a Response to Islamism: The Political Deliberalization of Egypt in the
1990s” Middle East Journal, Spring 1998.
10
5
Nasser’s 1960s-era promise of a guaranteed government job for every
graduate has resulted in a 21st Century army of ridiculously under-worked, underpaid, low-skilled time-killers.12 They can be seen throughout the country, from army
officers loitering on nearly every street corner, to sleepy ticket tellers, to our group’s
personal favorite example of this over-bloated workforce – a man operating the
automatic teller machine at a Cairo bank. You hand him your card -- he punches in
the numbers and hands back your money and card.13
The symbol of this government waste is the Mogamma -- an imposing,
Kafkaesque monument to bureaucracy in Downtown Cairo where 18,000 civil
servants “work”. For those Egyptians unlucky enough to require a simple service
such as a new drivers’ license or passport, this often means several days of long lines,
endless delays, and countless trips back and forth to various teller windows. 14 The
inefficiencies of Mogamma are legendary throughout Egypt. In fact, it is the setting
of the popular Egyptian film Irhab and Kebab, where in a moment of maddening
frustration, the film’s protagonist takes several hostages in an attempt to win better
government service. He fails. So, too, may Egypt if this unsustainable situation is
allowed to continue indefinitely.
E. Strong State/Weak State
The resulting structure of the Egyptian state is, therefore, something of a
paradox. On one hand, it is brutally efficient at maintaining firm control on law and
order, particularly with regard to any potential threats to its power. In this regard, the
Egyptian government is strong, and has the potential to dominate the life of each and
every citizen.
12
The full employment for graduates policy was officially suspended in 1990, but Egypt still lives with its
effects.
13
Worker productivity is, not surprisingly, non-existent. According to several of our interview subjects,
recent studies of Egyptian state workers conclude the average Egyptian government employee spends seven
MINUTES a day actually performing work.
14
Interviews with NPR correspondent Dale Gavlack, and Cairo AFL-CIO executive Heba Shazli.
6
But in a more important sense, this almost desperate dependency on order,
stability, and dogged suppression of dissenting opinion hides the Egyptian state’s
inherent weakness. Its priorities are not building roads or schools, or collecting taxes,
or fostering business, or even enforcing basic traffic laws. The focus is on the
maintenance of elite power, whatever the broader societal costs.
It is this strong state/weak state paradox that colors Egypt’s dealings with
economic liberalization, its relationship with Islam, and its foreign policy. We move now
to perhaps the country’s most daunting challenge: reform of the economy.
II.
The Economy
The following section is an examination of another crucial variable for Egypt’s
short-term future: the government’s attempts to liberalize the country’s formerly
socialist economy. 15 In short, economic reform in Egypt gained momentum in the early
1990s, but has slowed dramatically in recent years as the privatization of industry, and
greater exposure to foreign competition risks higher unemployment and greater social
instability. Thus, in accordance with its primary goal of maintaining power, the
government has put a strong emphasis on gradualism.16
This section will briefly explore the two phases of economic liberalization that
have occurred in Egypt – macroeconomic and microeconomic reforms – and the
15
Centralized state planning and ownership, social welfare services, state-directed industrial policies, and
the nationalization of banks and other key economic sectors characterized the economy under President
Gamal Abdel-Nasser. Egypt has been moving toward a free market economic since Sadat declared an
Open Door policy in 1974.
16
There is a historical precedent for this government caution: severe rioting in 1977 followed government
proposals to withdraw food subsidies. The surest way to incite political unrest in Egypt has been to take
the food off the table. This helps explain Egypt’s continued subsidization of food, as well as other crucial
commodities like water, petrol, and natural gas.
7
resulting successes and failures. It will conclude with a brief summary of some of the
major challenges facing the government as it attempts further economic liberalization.
A. Liberalization Phase I (Macro Reforms)
In some respects, Egypt can be seen as the poster child of the developing
world. The country has, indeed, converted from the Nasser Era’s governmentdominated economy to “a very model of an modern emerging market: the IMF’s star
pupil fighting its way out of the central planning stranglehold.”17 There is no better
evidence of this transformation than Egypt’s macroeconomic indicators: an average
annual growth rate of about 4.5%, inflation below 4%, and foreign reserves of about
$15 billion. 18 (See Figure 1 for a more complete picture of Egypt’s recent
macroeconomic performance).19
This macroeconomic stabilization has been the most successful aspect of
Egypt’s liberalization program. It was, in many ways, the response to severe
economic difficulties that Egypt experienced during the 1980s – a crisis that forced
Nadine El Sherif, “Skin Deep: Economic Reform in Egypt,” Business Today, March 2000.
The Economist Intelligence Unit
19
Figure 1
17
18
91/92
41.8
92/93 93/94
47.2 52.9
GDP
($bn)
Population 54
56
(MM)
Real GDP 1.9
2.5
growth (%)
Trade
(6.17) (7.0)
balance
($bn)
94/95
60.2
95/96
67.7
96/97
75.6
97/98
82.5
98/99
85.5
57
58
59
60
62
65
3.9
4.7
5.0
5.3
5.7
6.0
(7.3)
(7.85)
(9.5)
(9.8)
(11.8)
(12.5)
Source: Central Bank of Egypt Annual Report, 98/99
8
the Egyptian government into action. Moreover, IMF and World Bank assistance,
periodic Paris Club debt rescheduling, and the creation of a European Union
sponsored Social Fund for Development which alleviated some of the pain of change
– all played a supportive role in the continuance of macroeconomic reform.20
But in addition to the obvious economic advantages, these macroeconomic
reforms were allowed to proceed because they did not threaten the Egyptian
government’s control. They did not result in sharply higher unemployment, riots, or
any other form of social or political instability.21 In short, they strengthened the
government’s legitimacy and were, therefore, actively encouraged by Cairo’s ruling
elite.22
B. Liberalization Phase II (Micro Reforms)
This has not been the case with Phase II of economic liberalization – the
microeconomic reforms witnessed largely through Egypt’s 10-year old privatization
program. The privatization of Egyptian state industry has slowed significantly in
recent years, due mainly to issues of government control. There are several layers to
this state unease over continued privatization, which touch upon various economic,
political, and social factors.
One crucial problem is the state’s concern about rising unemployment. The
government has already sold off its most profitable companies; thus, the most
inefficient and weakest remain. These companies are invariably overstaffed, and a
more efficient management of these remaining firms would require widespread layoffs
20
The Economist Intelligence Unit
This scenario is also supported by academic theories of collective action; in particular, the inherent
difficulties of large societal groups to oppose society-wide government policies such as monetary or fiscal
policies. For further reading see Joanne Gowa’s “Public Goods and Political Institutions: Trade and
Monetary Policy Processes in the United States,” International Organization, 42 (Winter 1988) and
Mancur Olson’s Logic of Collective Action, Harvard University Press.
22
From interviews with Gehad Auda, Professor at Helwan University, Cairo.
21
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– raising the prospects for social unrest.23 Hence, the government incentive for
further privatization is lessened.
Another hurdle to further privatization is the state’s unease with foreign
control of key industries – a situation hardly unique to Egypt. The most illustrative
example of this dilemma is being played out in Egypt’s cement industry. Several
cement companies have been privatized in the last decade and now make up 15% of
the capitalization of the Egyptian stock market. This success attracted strong
interest from several large foreign cement companies (Blue Circle, British Cement
Company and CEMEX to name a few). This interest provoked concern in Egypt
that a “sensitive” sector of the economy might fall under the control of foreigners.
The latest indications are that the government will now attempt to limit foreign
ownership in the sector.24
In both of those examples, government concerns about its own power –
manifest in a loss of control due to either social instability, or through foreign
ownership – lie at the heart of this privatization slowdown. These government
concerns will continue for the foreseeable future, and thus, privatization is likely to
proceed only at a slow, gradual pace.
C. Other Limitations
Somewhat ironically, privatization itself has exacerbated Egypt’s serious unemployment problem, as
many state firms raced to trim their bloated labor forces to make themselves more attractive to potential
investors.
24
A final obstacle to microeconomic reform has been more cultural in nature. The entry of British
grocery chain Sainsbury clearly illustrates this aspect. Most Egyptians frequently purchase small amounts
of groceries from small markets at which there are no fixed prices. Sainsbury realized that a larger grocery
store with fixed prices would be more efficient by reducing the time (and search costs) customers spent
shopping and by reducing the number of people required to sell the groceries. Naturally, the small market
owners realized the threat, and applied political pressure to prevent Sainsbury’s expansion. The
culmination of the ordeal was for Mubarak himself to intervene and promise that Sainsbury would be able
to continue operations. Clearly the private company will be able to offer better services at lower costs -- a
net economic gain. However, this illustrates the power politics often has over economics in Egypt.
23
10
Egypt’s economy also suffers from several other limitations -- many of which
result from the shortcomings of the country’s strong state/weak state structure.
Countless books, articles, and PHDs have been written about these various
problems, and rightly so. In the interest of time, a brief mention a few of the most
serious hurdles still facing the Egyptian economy follows.
i.
No effective economic institutions/rule of law
As this paper has attempted to demonstrate, the institutions that matter in
Egypt are the presidency, and the military. Government institutions to adequately
manage, regulate, tax, or police economic activity simply do not exist.25 In addition,
Egypt’s legal and regulatory systems remain ineffective. Simple lawsuits can drag on
for 1o or more years, while the government lacks the will or capacity to enforce many
basic rules (such as traffic regulations) -- to say nothing of more complex issues such
as intellectual property or copyright laws.26 In short, this centralization of presidential
and military power leads to great economic inefficiencies, and stifles economic growth .
ii.
State domination alters incentive structures, and fosters
corruption
The strong state/weak state paradox also breeds a more sinister element.
In order for many businesses to survive (to say nothing of prospering), managers must
develop relationships with the relevant state powers. This promotes an economic
incentive structure based not on higher profits and improved productivity, but rather,
25
Those economic institutions that do exist remain highly ineffectual. We learned that it takes several
years for Egyptians to earn a license to start a business (remember the Mogamma!). Thus, budding
businessmen must either fight the bureaucracy, or act illegally. In either case, the economy suffers.
26
Patent and copyright laws remain mere suggestions. For instance, we saw several products in the grocery
stores where a copyright was violated. Our favorite was seeing “copycat” Disney figures playing with
children at a popular Nile resort. This lack of enforcement could have severe economic consequences:
Without the proper protection of copyrights, companies will hesitate to invest in their brands and may not
enter the Egyptian market at all.
11
on these relationships.27 Taken to extremes, this structure also promotes corruption
through outright bribery and other illegal and inefficient means.
iii.
Lack of education/training
A final, though crucial, limitation of the Egyptian economy is the state’s inability
to operate an effective educational system. Egypt simply is not producing the kinds
of workers that a modern economy requires. This is not due to a lack of effort on the
state’s part. Government expenditure on education has steadily increased over the
past two decades, and now reaches nearly 5% of GDP.28 Moreover, the government
has made university education virtually free.
But the state’s education strategy has failed on at least two counts. First, the
notion of “free education” is something of a misnomer. Students entering university
must first pass an difficult entrance exam; thus, only those students with families that
can afford the high costs of private schools and personal tutors are admitted to
university. But even for those fortunate enough to win admission, the quality of
education in general is substandard. The educational system emphasizes
memorization techniques, rather than critical or analytical problem solving. Thus,
“their knowledge does not help the society to grow.”29 Moreover, there are no real
links between the educational system and Egypt’s business community – further
widening the divide between the needs of a modern economy, and what Egypt is
capable of providing.
We move now to the paper’s third crucial variable – the role of religion in
Egyptian society.
27
A Cairo journalist conveyed the best example of this warped incentive structure to us. His close friend is
the CEO of Egypt’s largest dairy producer. Every few months or so, a high-ranking general in the military
will stroll into his office, sit down, and say, “You know, my friend, the army needs a million gallons of
milk. We, of course, cannot pay you.” The CEO has no choice but to provide the milk. But the company
is allowed to survive, and even prosper, as a result of this relationship with the military.
28
From interviews with Heba Shazli, and Nadine Sherif’s “Skin Deep: Economic Reform in Egypt,”
Business Today, March 2000.
29
Mahmoud Ads El Fadil, Economic Department, Cairo University.
12
III. Role of Religion
Religion in Egypt is a way of life, as much a part of the culture as camels and the
desert, coffee shops and sheesha. The unmistakable call to prayer envelops Egypt
five times daily, as it does throughout the Arab world. The Islamic religion that brings
communities together and inspires pious living in the masses, however, also hides a
dark underbelly of radical fundamentalist groups. Rallying around common
frustrations and feelings of oppression, these groups operate according to specific
political and social agendas, usually targeted at the state. Although they represent a
minority of the population, these groups are powerful because they attract the most
frustrated, vulnerable, and growing segment of Egypt’s population – the unemployed
educated.30
We will explore two aspects of the state’s relationship with this crucial variable of
religion, beginning with its brutal relationship with radical Islamists. We will then
examine Cairo’s attempts to co-opt Al-Azhar University – the world’s oldest
university and the very center of Sunni Islam.
The Islamic Threat
In the wake of the November 1997 slaughter of 58 foreign tourists in Luxor by
the Gamaat Islamiya (Islamic Group), Egypt remains wary of all Islamic extremist
groups. In response to this incident and others, such as assassination attempts on
Mubarak by both Al-Jihad in 1993 and Gamaat Islamiya in 1995, the central
government has taken measures to weaken the power structures of these
organizations. This involves violent crackdowns on well-known Islamic factions, and
30
From interviews with former Egyptian diplomat Taksim Bashir.
13
heightened security in tense and highly populated areas, especially those most
frequented by tourists.
The government’s efforts to undermine the powers of extremist groups, however,
fall far short of ensuring that terrorist activity will not resume in the future. In fighting
Islamic violence, “Mubarak’s administration is tactically successful but strategically
unsuccessful.”31 While the government has acted swiftly and brutally in retaliation
against those groups directly responsible for past violence, its ability to foresee where
and when future strikes could occur remains handicapped. As such, the ongoing
threat of violence is real. Although the government can mandate the most coercive
punishment imaginable upon violent offenders, the damage is already done.
Despite the existence of violent factions, most Islamic groups are peaceful entities
existing primarily to promote their beliefs from an ideological standpoint, and from a
social standpoint, to provide basic services (especially those that the government
cannot or will not provide). After a 1992 earthquake that left the Cairo slums in
shambles, for example, Islamic rescue groups were on the scene days before any
government sponsored aid.
This poses a problem for the government in that it cannot distinguish peaceful
organizations from violent intentions. As a result, the government, operating in a state
of paranoia, must suspect any such organization as being potentially dangerous. The
best example of this situation occurred in the low-income Cairo neighborhood
Imbaba. After coping with years of poverty and neglect, the neighborhood
experienced a renewal under the authority of a local Islamic faction. Feeling
empowered by its progress, the community sealed itself off from the rest of the city
and declared itself “The Republic of Imbaba” (essentially thumbing its nose at the
society that neglected it). This obviously raised a red flag and the ensuing reaction
was a disaster – the government leveled the neighborhood and destroyed all that the
locals had done to improve their meager existence.
Other organized, non-violent Islamic groups, notably the Muslim Brotherhood,
continue to threaten the stability of the central regime by seeking change through
31
From interviews with former Egyptian diplomat Taksim Bashir.
14
legal, legislative means. Though they have never been held responsible for any violent
or illegal activities, members of the Muslim Brotherhood continue to be arrested and
imprisoned by government authorities, particularly during election times.
A. Al-Azhar University32
No relationship better demonstrates both 1) the reach of the Egyptian state’s
power, and 2) the lack of foresight with which it wields this power, than that between
the central government and Al-Azhar University, a Muslim institution of higher
learning that, not coincidentally, is the country’s official interpreter of Islam. Hence,
the state calls upon Al-Azhar to support government policies, thereby reinforcing
Cairo’s religious credibility and undermining more radical Islamist views. The state
has traditionally maintained this favor by transferring a steady stream of administrative
authority to the university. In recent years, however, the stream has increased to a
regular flow. So the state may find itself in an unsustainable situation in which its
former servant not so slowly becomes its master.
i. Some background
The state, in its ongoing battle with Islamic fundamentalist groups, originally
“recruited” Al-Azhar’s services by putting pressure on the ulama (scholars and
clergymen) to support its policies.33 The ensuing resistance led to the resignation of
university officials, allowing the state to appoint more sympathetic replacements.
Since entering office, however, Mubarak has gone to this well far too many times,
ceding more power to Al-Azhar, which is happily pursuing its own agenda. By relying
so strongly on this institution as a source of religious credibility, the government,
Steven Barraclough, “Al-Azhar: Between the Government and the Islamists”, Middle East Journal.
This is hardly a new technique in Egypt. Cairo’s rulers have used Al-Azhar in this capacities for
centuries, thus reinforcing the notion that nothing is new in the world’s oldest civilization.
32
33
15
realizing that it has no other means of establishing Islamic credentials, can no longer
afford to oppose it.
ii. Al-Azhar’s Agenda
Al-Azhar’s agenda is to establish itself as legislative decision making authority in
its own right by leveraging its position of power between the central government and
the Islamic right. It is meeting this goal with great success, as the government has no
choice but to comply. Should the government attempt to renege on the arrangement,
Al-Azhar simply comes out with a position that is not in accordance with that of the
government. As a result, Al-Azhar has managed to wield significant influence over
such national institutions as the Egyptian media and the legal system.34 The result
has been a gradual, though undeniable, rightward shift in Egyptian society.
There is currently no foreseeable resolution to the government’s power struggle
with Al-Azhar. If anything, Al-Azhar’s influence is gaining momentum as the
government has recently agreed to give the university control over a network of
50,000 private mosques known as ahli mosques, an institution in and of itself that is
vital in the recruitment and organization of Islamists. Additional dangers lurk as the
ideologies of Al-Ahzar and the Muslim Brotherhood threaten to converge just as
the former continues to gain power, and the aforementioned unemployed, educated
masses become increasingly frustrated and susceptible to the Islamic right. One is
left to wonder how much more power the government can afford to cede to Al-Azhar.
B. The Coptic Situation
34
Council of State ruling 58/163 provides Al-Azhar with the power to censor the electronic media.
Television scripts, for example, are, according to the magazine Ruz al-Yusif, “as a matter of routine sent to
Al-Azhar for its approval.” While the law contains a proviso that limits Al-Azhar’s rulings in such matters
to “Islamic issues”, it is left to Al-Azhar to decide what constitutes an “Islamic issue”. Additionally, a
Ministry of Health decree forbidding female circumcision was ruled against in 1997 based in part on AlAzhar’s strong support of the practice. The decision was later overturned due to international pressures.
16
Another important source of religious instability in Egypt arises from the Coptic
Christian community that “officially” comprises 10% of the country’s population35.
Blatantly discriminated against, this religious group, which is generally relegated to
the rural areas of Upper Egypt, demonstrated its frustrations during a violent
outbreak in January between the Muslims and Coptic Christians in the town of AlKosheh. While not insignificant, and most definitely indicative of repressed
prejudices on the part of the Muslims and frustrations on the part of the Copts, the
incident was primarily an isolated one, triggered by the hardships of life in an
economically impoverished land.36
More significant are the expatriate Coptic communities around the world that are
pushing their own governments to pressure Egypt to recognize the rights of the
Coptic population and curb existing discrimination.37 The Coptic situation – and
Cairo’s often-brutal repression of it -- harms Egypt’s international image and could
affect its foreign aid receipts. Aware of this threat, Mubarak has already enhanced
security in certain regions and hosted meetings aimed at religious reconciliation.
IV. Egyptian Foreign Policy
A final variable crucial to Egypt’s economic and political future involves its
foreign policy – in particular, Egypt’s relations with Israel, and Cairo’s role in the
Middle East peace process. In short, we argue that a further warming of relations
with its traditional enemy, and broader peace in the region, will have a modestly
35
According to several of our interview subjects, the Copts comprise a much higher percentage of the
population, perhaps as much as 20%.
36
Every one of our interview subjects shared this belief.
37
There was a recent bill - introduced by the Christian Coalition - before the US Congress, for example, to
deny USAID to countries that persecute Christians. Egypt was on the list along with China, Sudan, and
Pakistan.
17
beneficial impact on the Egyptian economy. However, the Egyptian government
derives some political advantages from maintaining an adversarial role with Israel.
A.
The Peace Process
i. Some (limited) economic benefits
Egyptian-Israeli relations reached a "cold peace" after the 1978 Camp David
Agreement – a vast improvement from the hostility that had dominated the region
since Israel's founding in 1948.38 The agreement has resulted in freer trade and
travel between the two countries. However, it has only amounted to limited economic
benefit for Egypt. Furthermore, the agreement has actually hurt Egypt's relations
with the rest of the Arab world. Improvements on either front will not be a critical
factor in Egypt's long-term economic success. However, normalization with Israel, or
a broader Middle East peace may marginally improve Egypt's economy.
Egypt's relations with Israel are best described as a situation of “tolerance.” 39
This has led to limited trade between the two neighbors. A further normalization of
relations would allow for a more open exchange of trade and investment. This could
give a slight boost to Egyptian exports (such as cotton, oil, oil products, and shoes),
as well as provide Egyptian workers with another potential market for their services.
Furthermore, it could create some additional small business and entrepreneurial
opportunities for Egyptians.
ii. The onus removed?
We hesitate to use this “cold peace” cliché, but since every single interview subject referred to it, it is
included in the spirit of authentic research.
39
From interview with CNN Jerusalem Bureau Chief Walter Rodgers.
38
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Warmer relations between Egypt and Israel have also strained Cairo’s
relations with the rest of the Arab world, as Sadat's peace with Israel was viewed by
many Arabs as a betrayal. In particular, Saudi Arabia and the UAE were so
enraged by Sadat's actions that they went as far as to cut off aid to Egypt, and
reduce the number of Egyptian workers allowed in the respective countries.
Today, twenty-two years after Camp David, Israel and Syria are in the midst
of peace negotiations. This creates an opportunity for Egypt to improve its regional
role and, perhaps, its economy. In short, Israel-Syrian peace could remove the onus
from Egypt's initial move to peace. After Israel makes peace with Syria (and reaches
some type of accommodation with the Palestinians), Egypt will no longer have any
stigma attached to it in the Arab world. It will no longer be the primary betrayer of
Arab principle. This may result in increased Gulf aid, increased Gulf work for
Egypt and its people, and greater trade opportunities throughout a more peaceful
region. Again, we must stress that these psychological effects of a broader peace,
though significant on some levels, will have only a marginal economic impact.
B. Israel as useful “enemy”
A more important and interesting aspect of Egypt’s foreign policies is
domestic in nature. Clearly there are benefits to peace between Egypt and Israel.
However, Israel also plays a useful "enemy" role for Egypt, and thus, the government
also has a stake in maintaining this status quo. In short, the Egyptian government
uses Israel to channel any anger of the people away from itself. It accomplishes this
task to great effect. When disaster occurs, or the economy weakens, the people
often direct the blame outward – and almost invariably at Israel. In fact, people tend
to go as far as to create conspiracy theories in order to explain Egyptian failures,
shortcomings, or tragedies. Moreover, the state-controlled Egyptian media further
drives outward blame or conspiracy theories. This strategy helps the government
19
control the population by directing blame and focusing attention away from the ruling
elite in Cairo and its problems. In short, an Israel-as-enemy domestic orientation is a
useful tool for the government’s primary goal of maintaining power.40
V. Conclusions
This paper has argued that for geographical, historical, social, and economic
reasons, a dominant central state has always been a crucial factor in Egypt. This
variable, therefore, is the key to understanding the country’s economic and political
future. In particular, the Egyptian government’s desire for stability and control has
resulted in a strong state/weak state paradox: it has absolute power to toss any
citizen in jail, yet it is nearly powerless to collect taxes, build a road, or provide much
beyond the basic social services that a modern nation requires. This structure then
plays out across all aspects of society – from economic policy, to religion, to foreign
policy.
With that in mind, we offer the following conclusions for Egypt’s short-term
political and economic future, as well as its prospects for stability.
40
A recent example of the use of conspiracy to drive blame outwards occurred when Egyptian
farmers became concerned with the low market price of potatoes. In order to increase the price of potatoes,
the farmers reduced the supply by hoarding a large amount of them in warehouses throughout Egypt. Once
market prices of potatoes increased, the farmers began releasing the excess supply for sale to the public.
The farmers had, however, used high (lethal) levels of preservatives to keep the potatoes edible while in
storage for so long. Therefore, once the public consumed the potatoes, people became ill and even died.
Instead of looking to the obvious source, the people looked to the useful "enemy." Over time, a conspiracy
theory arose. According to Egyptians, Israel had dug tunnels from Israel to the warehouses in Egypt where
they poisoned the potatoes! Israel became a far-fetched, but convenient excuse. This conspiracy theory
approach also applies to last year’s Egypt Air crash. In conversation with people on the street of Cairo we
heard statements such as, "over thirty bodies have been pulled from the ocean by the American divers, but
none of the recovered bodies have been Egyptians." Coupled with the fact that Egyptian Air Force officers
were aboard the doomed aircraft, the conspiracy holds that the crash was a joint effort of the CIA and
Mossad.
20
A. Political Outlook
i.
Expect no sudden or dramatic political changes
ii.
Ruling elite will continue to maintain their control, at any cost
iii.
Next president will come from the ranks of the military and continue these
cautious policies – with the instinct for self-preservation remaining strong
B. Economic Outlook
i.
Privatization will continue, only as long as it supports the legitimacy of the
state
ii.
Weak economic institutions, state domination of economy, a rising
population, and, crucially, substandard educational standards, will
constrain future economic growth
C. Prospects for Stability
i.
Immediate terrorism threat by Islamists has been brutally suppressed,
though a return to violence (however unlikely) remains a possibility
ii.
Islamists will continue to be the most viable option for opposition,
especially as the state fails to provide necessary social services and
provide a viable democratic outlet for grievances
iii.
Poverty, combined with religious tensions (both within Islam and between
Islamists and the Copts) has resulted in great tensions beneath the
surface of Egyptian society, especially in rural areas. Periodic riots are
likely, as is a brutal government suppression of any unrest
TEAM EGYPT
21
Tom Mucha
Mike Denk
Doug Kofoid
Laura Zhu
Fred Khoury
ADDITIONAL SOURCES/CONTACTS
Gehad Auda
Professor, Political Science
Helwan University, Cairo
Gauda@idsc.gov.eg
Taksim Bashir
Egyptian Diplomat (retired)
(Sadat Spokesman, Egypt’s Ambassador to Arab League, Egypt’s Ambassador
to Canada)
Daniel Brumberg
Professor
Georgetown University
Drew Dowell
Dow Jones Newswires, Business Monthly (Cairo)
202-338-1050
Dr. Mohammed Abu Elghar
22
Mohandiseen Clinic, Cairo
Dr. Ben Johnson
Director, The Chicago House (Luxor)
The University of Chicago Oriental Institute
(312) 702-9513
Dale Gavlack
Correspondent
National Public Radio (Cairo)
Dgavlack@zeus.starnet.com.eg
Amy Henderson
Reporter
The Jordan Times
Daniel Lefkovitz
Egypt Analyst
MZ+A (Chicago)
Lefkovitz@mza-inc.com
Susan Postlewatie
Bridge Financial News (Cairo)
202-340-9248
Max Rodenbeck
The Economist (Cairo)
202-340-6723 (home)
Walter Rodgers
CNN Jerusalem Bureau Chief
972-2-538-1847
Khalid Sewlam
23
Economist
The American Chamber of Commerce (Cairo)
Heba El-Shazli
Regional Representative Middle East
AFL-CIO
Hebatony@ie-eg.com
Andrew Tabler
Regional Editor
The Middle East Times
Editor@metimes.com
Ben Weideman
CNN Cairo Bureau Chief
202-578-0661
Patrick Werr
Business News (Cairo)
202-341-1292
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