From an economic point of view what do the Egyptian contractor’s videos mean?

September 10, 2019

As a big stone in stagnant water, the echoes of controversial videos broadcast by Egyptian actor and contractor, Mohamed Ali, have not ceased over his experience of dealing with the engineering body of the Egyptian army in a number of major projects.

Despite the obvious political dimensions and corruption scandals in these videos, if its information is true, there are three very important economic dimensions in these videos.

The videos raised many questions on social media platforms, because of the accusations levelled against President Abdel Fattah al-Sisi and senior army generals of corruption and wasting billions of Egyptian pounds.

Mohamed Ali did not provide any documents to prove the truth of his words, and said that he was not able to talk about all these things while he was in Egypt because he would have been either imprisoned or killed.

But despite the lack of evidence and documents a large number of Egyptians have shared his videos, and confirmed the information, especially as he talked about specific facts, projects and dates, and the names of officers responsible for those projects.

Ali’s videos have sparked controversy and a divide between the certainty of truth or lies.

Even among Egyptian opponents who assert the sincerity of these passages, there has been considerable division. Some see him as a courageous man who exposed the cover of corruption that no one dared to talk about before, while others consider him a participant in corruption and in search of fame. 

But far from the political dimensions, these videos, if true, have serious economic implications.

1. Inevitable loss

The videos clearly mean that businessmen under the current regime will certainly lose, and there will be no guarantor for their dealings and investments because they simply have no alternative to deal with in their projects as the armed forces have expanded significantly into the economic fields.

When businessmen deal with the military, they have no guarantor, because in practice the armed forces are not monitored by any authorities and usually give orders to operate without any written guarantees.

For example, working in the field of contracting, tourism, or any field related to import or export, investment in oil and exploration, food industry, or the media, means directly dealing with the security services, the military or intelligence.

 2. The army’s economic empire and expansion

Muhammad Ali’s videos reveal the army’s economic empire has expanded considerably, as the engineering body (for example) has shifted from building roads and bridges to building cities and schools, then building tourist hotels and presidential palaces.

Details of the Egyptian army’s budget, which is not subject to debate in parliament, are not known. Authorities say the army’s budget is a national security issue.

The Egyptian military has a prominent role in the economy, undertaking a variety of projects including roads and infrastructure, as well as residential buildings, hotels, ballrooms and even gas stations and food industries. But the size of its involvement in the Egyptian economic sector remains unknown.

Colonel Tamer al-Rifai, spokesman for the Egyptian armed forces, said in previous press statements that the army is overseeing the implementation of about 2,300 projects, employing nearly five million civilians. He added that the armed forces supervise the implementation of these projects “to observe the accuracy of the standards and then hand them over to the civilian authorities that run them.” 

But he did not say how much of Egypt’s total economic activity these projects account for.

3. Wasting public money 

The videos also raise the problem of wasting public money on a large scale. While al-Sisi has repeatedly told Egyptians that the state is very poor and there is no money, he spent EGP 2 billion on building a 7-star hotel in a non-tourist area, which is an economically futile project.

The video also refers to the construction of a presidential palace worth hundreds of millions of pounds without any need for it, where it was used by al-Sisi when he visited Alexandria at Eid just once.

Ali claims that the armed forces are spending a lot of money on facilities that do not benefit the average Egyptian citizen, such as building hotels and homes for President al-Sisi and his family in operations that lack transparency, control, and monitoring. 

For 15 years, he says, he worked as a construction contractor on military-funded projects. He added that he had to leave the country and reside in Spain because the army did not pay him dues of more than $10 million, he said.

4. Discard fishy

Despite the gravity of these claims, the Egyptian regime did not deal with it in a way that put an end to investors’ concern and reassured the Egyptian people; instead they began a smear campaign against Ali.

As soon as Ali’s first video appeared, an Egyptian channel hosted his father, who denied and disowned his son and apologised to al-Sisi, stressing that all his family’s wealth came through his company’s dealings with the army for years.

The father added that his son may have been subjected to “brainwashing,” referring to his son’s relations with journalists working for channels outside Egypt affiliated with the Muslim Brotherhood.

A lawyer also filed a lawsuit accusing Ali of defaming the Egyptian state and committing a crime amounting to high treason. So far, the Egyptian army has made no comment on Ali’s allegations.