Egypt’s Political Economy

Egypt’s Political Economy

Egypt”s political community is scratching its head over the next Egypt”s president: Gamal Mubarak or Omar Soliman? Is it the son of the president, or rather the powerful head of the Egyptian Intelligence ?

The question reveals to what extent the Egyptian community is aware of the dual facets of  today”s political power in Egypt: money and the army. Mubarak”s son epitomizes the business elite as he acquired a master”s in business and worked as a banker. As for General Omar Soliman, he personifies the strong physical force of  the army.
Egypt”s president Hosni Mubarak has been the first president to spend long years in power without choosing a successor. Both late presidents Nasser and Sadat appointed vice presidents. Nasser selected Sadat and Sadat chose Mubarak. The chosen vice presidents in both cases managed to become the new presidents.

The very fact of leaving the seat of vice presidency vacant is much telling of the difficulty of finding a candidate who can best represent the different factions of the ruling collation. Quite the contrary, for Nasser and Sadat, the task was simpler because the backbone of the regime at that time was only the bureaucratic  military institution.

Today, the regime has two backbones : the military/police and big business. That is why– for the first time since the 1952 military coup–the political community is asking about the possibility of having a civilian president.

Business Creeping the State 

Taking over political power in 1952, the Free Officers put on the shelf the old political elite, confiscated the wealth of big landowners and big capitalists ,and created a wide public sector. At that time, the bureaucracy became both the ruling and the owning class.
But with the demise of the so-called “Arab Socialism” in late 1960s and early 1970s, Sadat decided in 1974 to convert public policies from Socialism to economic liberalisation opening the space for a new private sector.

 The change was certainly dramatic, but the state at that time enjoyed a flow of rentier revenues of foreign aid, oil revenues and Suez canal dividends that stabilized the country. The state maintained about 60 percent of the Gross Domestic Products (GDP) –not counting the informal sector of economy. The rentier flow persisted till  the first years of Mubarak”s rule.

However, starting from mid 1980s, this flow has declined due to the relatively small size of the Egyptian economy and increasing population.

While the state economy has been on the decline, the private economy has been on the rise. Egypt”s businessmen hold increasing amounts of financial assets and economic resources. As political economist Karl Marx put it before, the owning class tries to become the ruling class or at least its main element.

To give just two indicators, businessmen”s presence in the parliament went from 12 percent of the seats in 1995 to 17 percent in 2000 to 22 percent in 2005. For the first time since the 1952 coup, three ministers of Nazif”s Egyptian cabinet are businessmen , like  Finance Minister Youssef Boutros Ghali, who are known to be liberal technocrats sticking to the fundamentals of  market economy and staying very close to the business community.

Shifting Dynamics of Power

The presidency is no doubt the center piece of Egypt”s political system as all presidents of the July regime have had their mark on the Egyptian economy and politics . However, it would be misleading if one to assume that the presidency is the most powerful. Today ,The most powerful groups are the bureaucracy ,especially its military branch and the rising business groups ,and whoever will be the next president should please both groups.

 Whether the new president will be from the military ,the business community, or from any other background is not the fundamental issue. The crux of the matter is that the political power today is laying at the hands of a ruling coalition between   military/police and the business elite. Actually, the next president can not ignore the interests of both groups.

 Similar to the  most of Latin American countries during the eighties, it seems that Egypt”s political formula in the near future will be an authoritarian rule on the political level and some kind of a” liberal” on the economic one.

Egypt”s ruling  coalition is having internal tension between the military/police and big business, yet  this tension should not be overestimated. Since the eighties, the military has heavily participated in civil economy, building numerous construction projects. So, there is an organic relationship linking the army to big businesses, and the bureaucracy cannot do without the cooperation of the business community.

 The regime depends on the private sector for services that the government can no longer provide, like creating jobs for the public. And,  the business elite  can not continue working without the regime”s authoritarian rule backed by the military/police In reality, Egypt”s businessmen are known to endorse all kinds of political systems except democracy, because it will certainly give a space for demands and aspirations of laborers and the lower classes.
Marginalized Social Groups

Both the middle and worker classes  are not happy to be politically marginalized and excluded from the ruling military/business coalition. Egypt”s  middle class” weakness lies at its inability to provide alternative economic project to that adopted by the government.

In addition, Their weakness lies nevertheless in the fact that they are deeply divided over the issue of the relationship between the state and religion. Let us recall that about 20 percent [1 ] of the new middle classes are Christians anxious about the Islamisation of the state and the public sphere.

And although the majority of the Muslim middle classes are highly sympathetic with the Islamic lifestyle, like the spread of the veil, t some are not endorsing the only real Islamic political organization which is the Muslim Brothers. New middle class politics in Egypt are deeply polarized over the secular/Islamic divide.
In addition, the middle class in reality does not have an alternative project to economic liberalism adopted by the regime. This is why their critique to the regime is focused on the issue of corruption.

Regarding the working class, for the first time since the seventies, the last two years witnessed an unprecedented wave of working-class protests over social injustices and uneven distribution of wealth, The working class is indeed making pressures and demands on both the bureaucracy and the business community.

These pressures, nevertheless, does not come to fruition, because  the working class lacks strong trade unions and political parties representing their aspirations. Political maturity among middle and working class is needed in order to reach democracy and establish a broad ruling coalition representing Egypt” s all social and political groups.


Dr. Samer Soliman is an assistant professor of political economy  at the American University in Cairo. 

[1] The number of Christians is debatable. But it is evident that the ratio of Christian in the new middle class is higher than percentage in the population. There is no statistics on the issue. But two evidences can be provided. The first is logical: minorities in general tend to invest more in the education of their children. The second is an observation: the Christian presence in professional syndicates like the doctors one is higher than their percentage in the population. According to Hamdy el-Sayyed (in the conference on National unity held in al-Tagamu in July, the ratio of Christian in his syndicate is no less than 25%).