The Army’s Nation

Some of the least recognized voices in Egypt today belong to men and women trying to build and grow small and medium size businesses. While the hope for broad prosperity rests within their ranks, their concerns are often overlooked. Their voices today paint an unhappy picture. Among the plethora of comments, most offered privately, they can be summarized into two major points. The first is that, chief among the concerns of entrepreneurs in Egypt, is the role the Army plays in their economic sector. The second is a concern, prompted by the loss of nearly half of technology startups in Egypt since 2010, that soon all small and medium businesses will be Army subcontractors. Although many of these business leaders are supporters of President Abdel Fattah al-Sisi, they are torn between hope that he will lead an economic revival and fear that institutional loyalties and policy concerns will perpetuate and strengthen current trends, where the Army is assuming an ever larger role in the economy. The witticism that Egypt has to decide whether it is a country with an army or an army with a country remains ruefully relevant.

We should first note the positive role of the Army in Egypt. For two centuries it has been a patriotic institution, and one that is broadly representative of the country’s hopes and flaws. Half a dozen surrounding states have collapsed because their armies have devolved into instruments of one man or one sect. Egypt has been spared this grim fate, and it is because of this very reputation that twice within a few years, crowds have asked uniformed men to take over from those in suits—with the removal of both Hosni Mubarak and Mohamed Morsi from Egypt’s presidency. In turn, this is leading to a serious mission creep for the Army. It now sees itself as the guardian of the nation against foreign and Jihadi threats; but also as arbiter among its frivolous politicians and chief of an economic growth it is leading away from the hands of grasping businessmen. These views are difficult to change because they are not the result of personal greed but of firm institutional convictions. They are also not the road to broad prosperity and political stability, which require participation of all segments of the population in economic growth.

It makes no sense to repeat the mistakes of the 1960s, at a time when the country is under even greater stresses. During that decade, urged by Gamal Abdel Nasser’s ambitions for Egypt, the Army systematically managed many aspects of the country, creating and executing statist economic and social plans, and suffering the blame when the plans failed to launch Egypt into greatness. Yet social pressures from long-established habits, as well as the rhetoric of “social justice” activism may doom Egypt to a repeat performance.

The reality of Egypt is that of a fragile country squeezed between a growing population and diminishing resources. The only hope lies in growth based on an export economy, as well as internal consumption.  A country that can’t grow enough to feed itself must rely on either handouts or on a positive balance of payments through growth of exports. But Egypt has not found its sweet spot of competitiveness within the global economy, as countries such as China or India have done. This cannot be dictated or hoped for, but must be achieved empirically through countless trials and errors, led by those seeking survival not recognition. This discipline of the marketplace, while painful for some of the businesses, will ultimately improve the country’s competitive standing. Curiously, many, perhaps a majority, of the very nationalistic small businessmen see a critical role for outsiders in improving the economy. This is a realistic recognition of the fact that Egypt will be in play among various outside powers and that the best one can do is to create the appropriate incentives.  There is a tendency among countries that wish to assist Egyptian economic growth to focus on internal mega-projects. In fact, less glamorous steps of encouraging imports from Egypt and granting its businesses favorite status might have more favorable long-term impact.

The perceived success of the Economic Development Conference held in Sharm al-Sheikh in mid-March has not allayed many fears. With investments worth over $70 billion pledged at the two-day conference, many of the investors in large mega-projects will likely want a greater role for the Army as the only strong institution capable of guaranteeing the safety of their funds. Trickle down to small and medium size business will be very small under these conditions. Policy makers are often obsessed with grand concepts such as the size and nature of military aid, the future of political Islamism, or other such causes. Too little attention is paid to the small steps likely to fuel economic growth. The self-interest of outside powers and those of Egypt are not mutually exclusive, unless one sees the world in narrowly and dangerously nationalist terms. The vexing question is how outsiders can help strengthen the Egyptian state, while limiting its reach and power into the economic and cultural spheres.

The answer is found less in grand gestures and stirring declarations and more in the mundane details of tariffs, business incentives, trade agreements, and set-asides. It is both difficult and necessary to muster the delicate dance of drawing Egypt further into the global economic web while underplaying the grand strategic roles.  In some ways 2015 resembles 1875, a time when Egypt found itself bankrupt as it pursued megaprojects that drained the country’s coffers, and left Egypt indebted by the tens of millions to a handful of bankers. This time, however, we should seek not a few bankers but thousands of business partners. The best that can be done at the moment is to state the need for less aid and more engagement and hope that many may heed it. 

Maged Atiya is an Egyptian-American physicist and businessman.  He blogs at and at twitter @salamamoussa

Image: Photo: Army soldiers in military vehicles move to take up positions during the fourth anniversary of the 2011 uprising that toppled autocrat Hosni Mubarak in Cairo, January 25, 2015. (Reuters/Mohamed Abd El Ghany)