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Sisi’s Egypt: A desert mirage?

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Sisi’s Egypt: A desert mirage?

Popular frustrations with Egypt’s President Abdel Fattah el-Sisi have mounted in recent years. While the cause of the recent crash of an EgyptAir jet flying from Paris to Cairo that killed all 66 people aboard had not been determined while going to press, Egypt’s civil aviation minister has stated that terrorism is a more likely explanation than equipment failure or some other catastrophic event.

Rising levels of violence in Egypt are one measure of popular discontent with the regime. Islamic militants based in the Sinai peninsula who pledge allegiance to the Islamic State terrorist organisation have been waging a violent campaign against Cairo since the fall of Hosni Mubarak in 2011. But they have stepped up their efforts since the coup which overthrew the Islamist administration of Sisi’s predecessor, Mohamed Morsi.

The militants of Sinai Province (Wilayat Sinai) claimed responsibility for the downing of a Russian Metrojet airliner with a bomb last year. One of the factors driving Sinai’s militancy, and indeed the fall of both of Egypt’s last two leaders, is the failure of the government’s economic initiatives to raise living standards.

However, while Egypt’s economy has remained moribund, President Sisi has been able to rely on popular exhaustion with social upheaval and generous funding from overseas patrons, primarily Saudi Arabia, to prop up his counter-revolution. Now after three years in office, both Egyptians’ tolerance and the foreign funding that has acted as an emergency budgetary stop-gap for Cairo might be running out.

Saudi Arabia’s economic and foreign policy have been making global headlines recently after the Kingdom’s announcement that it intends to part-privatise the Kingdom’s national oil company Saudi Aramco, with its ambitious attempt to generate $100bn in non-oil revenue by 2020, and through the rapid depletion of its reserves as it simultaneously supports a generous welfare state and an expensive air war on neighbouring Yemen.

With his most generous foreign backer looking to cut costs and entering into an economic restructuring whose results are uncertain, Sisi’s domestic management of Egypt’s economy will assume greater importance than ever, without there being a foreign patron so ready to bail him out.

Yet his presidential record is not encouraging. While Saudi Arabia, the UAE and other nations have given Cairo billions of dollars in economic aid since 2013, the World Bank says Egyptian growth has dipped again recently after hitting a respectable 4.2% in 2014/15.

Mohamed Abdelmeguid, a member of the Economist Intelligence Unit, comments: “The return of security and the end of chronic power outages, both… helped improve business sentiment in Egypt during President Sisi’s first year in office. Nevertheless, he has delivered little in the way of fiscal sustainability and streamlining the crippling bureaucracy. These two are prerequisites for bringing back investors into the country. All in all, President Sisi’s reform agenda fell short of investors’ expectations and has largely plateaued after his first few months in office.”

So far the Gulf lifeline continues; the Central Bank of Egypt announced another $2bn in funding from the United Arab Emirates in April to boost its foreign reserves according to the Egyptian Daily News. Meanwhile, Bloomberg Media reported that Saudi Arabia agreed to provide Egypt with more than $3bn in loans and grants to help its dollar-starved economy in January.

But a report from Focus Economics, a leading provider of economic consensus forecasts, still shows a ballooning fiscal deficit at a time when Egypt’s population has risen from 80.4 million in 2011 to 88.4 million in 2015. The firm’s analysts also said they expected the Egyptian economy to grow by 3.6% in 2016, not nearly enough to absorb the 12.8% of Egyptians it estimates are unemployed.

Sisi’s government has defended its record to foreign governments and institutions as it seeks to raise foreign funds for new investments, such as an upgrade to the Suez Canal or its land reclamation proposals. Agriculture is a major component of the Egyptian economy, contributing up to 14.5 per cent of GDP and 28 per cent of all jobs according to USAID.

Speaking at the 33rd session of the Food and Agriculture Organisation (FAO) Regional Conference for the Near East (NERC) in Rome, Egyptian Agriculture Minister Essam Fayed told the audience that the Egyptian government was working on creating an attractive atmosphere for investment and sustainable development.

Citing the example of land reclamation as an example of the kind of reform initiative offered by President Sisi, Fayed said: “Egypt [has] taken positive steps towards the attainment of a sustainable agricultural development through increasing productivity and taking advantage of new technological applications.”

But Cairo has wasted time and political capital cracking down on the independent trade union movement which helped to bring down the old regime and has been agitating for better terms and conditions for Egyptian workers.

News site Al-Monitor reported that on 1 March the Egyptian government declared that the stamps of independent trade unions would no longer be valid on official documents, effectively nullifying the state’s recognition of their right to exist. This decision means the Egyptian state still only recognises the government-controlled Egyptian Trade Union Federation (ETUF).

As the government attempts to force workers back into the toothless official structures of the ETUF, the International Trade Union Confederation says it has documented numerous extralegal violations of workers’ rights in retaliation for participating in trade union activities or organisation, regardless of the paper rights of Egyptian workers.

Senior Wikistrat analyst Prof. Robert Springborg, a published author on the topic of Egyptian politics who is currently teaching at the Department of War Studies, King’s College, London, says that although the oligarchy which benefited from the Mubarak era model of corrupt crony capitalism has staged “a political comeback”, its members have yet to translate this into real economic gains and are becoming disillusioned with Sisi.

The regular business barometers reflect the slide of confidence in the economy by these businessmen. With the World Bank putting Egypt’s inflation rate at 10.4% in 2015, and with unemployment and inflation both persistently high, confidence in Sisi’s abilities is fading among the ordinary populace as well.

This is causing concern in the army, the organisation which brought Sisi to power by deposing then-president Morsi. The military is a powerful economic as well as political actor in Egypt and wishes to preserve its privileges in both domains – and could make Sisi a scapegoat if he starts to look too unpopular.

Prof. Springborg comments: “Sisi’s vulnerability… is noticeably increasing week by week. Speculation is now rife on his ‘expiry date’, ranging from very soon to the 2018 presidential election, at which time the military would ‘nominate’ another candidate, having not ousted him between now and then.”

Signs of this presidential vulnerability include increasing criticism in Egypt’s tame national media, the push back against ceding sovereignty over the handing over of the Tiran and Sanafir islands to Saudi Arabia, and the increasingly critical line taken by professional associations, including those for journalists and doctors, institutions which reflect the popular will more than any other in Egyptian politics.

The New York Times reports that Sisi is already using what scarce resources he has mainly to help the Egyptian poor – plus the seven million people on his government’s payroll – by propping up the value of Egypt’s currency.

Bahey eldin Hassan, Director of the Cairo Institute for Human Rights Studies (CIHRS), says that President Sisi’s popularity has severely diminished over the past two years, although he still remains relatively popular amongst some segments of Egyptian society.

“He mainly relies on the security establishment, especially the military, for power. For the first time since [the coup] he had to ask the army to take care of the 25 April protests against giving the islands of Sanafir and Tiran to Saudi Arabia,” he told New African magazine. “The minister of defence in Egypt had to make two public statements in a few days expressing full support for all the political decisions made by the President of Egypt.”

Hassan says that the regime has been very harsh in handling the protests, with 152 protesters sentenced to prison terms between two and five years. He remarked that the storming in May of the press syndicate in Cairo, where two journalists critical of the government were arrested, was an indication that no-one was considered off limits and dissent, at all levels, would not be tolerated.

When asked what this meant for Egypt’s future, Hassan said that he did not think Egypt would witness another revolution soon, but described the current situation as “unsustainable”. Instead he referred New African to the so-called “Bread Uprising” of 1977, when President Sadat, a previous military-backed incumbent, announced the end of state subsidies on staples like rice and flour, and found his government rocked by two days of spontaneous rioting in urban areas.

Hassan explains: “If this happens, there are no guarantees as to how relevant and influential state institutions might react.”

Egyptians have overthrown two presidents in five years.

In this uncertain economic situation, expect to hear more stories of police brutality and government repression as Cairo reassures friend and foe that the regime remains viable and in control of events.

Neil Thompson

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Written by New African Magazine

For over 45 years New African provides unparalleled insights and analysis on African politics and economics, via an African perspective, always. With in-depth monthly reports, New African brings Africa closer to the world and is ideal for those looking to gain a better understanding of the most important issues affecting Africa.

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