Al-Sisi’s “Second Republic”: A military state

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Abdel Fattah Al-Sisi insists that his project represents “the declaration of a new republic.” Skeptics consider it an “egoistic” project a country with more pressing priorities cannot afford.

With this contradiction, the new administrative capital project can be described, which the authorities in Egypt are building, 45 kilometers from Cairo, in an attempt to transfer ministries and government headquarters there.

Al-Sisi’s speech last March about the capital was bold, according to Western media. He said that the opening of a “new administrative capital” covering a patch of desert equal to the size of Singapore would represent “the birth of a new country.” However, the coming days will reveal the credibility of his words and whether he will transfer 55,000 employees to more than 30 ministries by the end of the year.

The project, which was expected to cost $45 billion when it was launched six years ago, embodies Sisi’s vision for development and how Egypt should do it: “The army is unabashedly in the front and the center on a pharaonic scale.” The new capital, located east of Cairo, is the pioneering infrastructure project among thousands of projects the army has been implementing since the former army chief seized power in a 2013 coup.

As a result, construction and real estate, and energy projects were among the main factors in reviving the moribund economy. These sectors enabled Egypt to boast the highest GDP growth rates in the Middle East, recording more than 5% annually in the two years preceding the Corona pandemic. But just as the administrative capital elicits contradictory reactions, some Egyptians also question whether the economic successes saluted by Sisi’s supporters are more of a mirage than a reality. “The [Egyptian] economy looks healthy from the outside, but if you look around, you will find that it is built on quicksand,” says Egyptian academic Said Abdel Razzaq.

At the heart of the fears is the army’s role expanding in the state and the economy, which leads to crowding out the private sector and scaring off foreign investors. He adds, “The real fear people feel is that you are going to establish a project, and then the army will repeat the same project next to you and undermine you.” However, Al-Sisi and his supporters make no apologies for his military deployment (Egypt’s most powerful institution and the only entity the president trusts) in all aspects of the economy. Some Egyptians understand why Al-Sisi turned to the army after taking power.

After three years of turmoil following the 2011 revolution, which ended Hosni Mubarak’s 30-year rule, Al-Sisi inherited an economy shattered by political turmoil, civil strife, and terrorist attacks that frightened domestic and foreign investors. However, eight years after Al-Sisi seized power, there are growing fears that the military’s overbearing economic expansion will prove irreversible.

Economists point out that the activities of the Egyptian army do not create job opportunities or confront rampant unemployment among young people and poverty among a population of 100 million people. The employment rate declined from 44.2 percent in 2010 to 35 percent in the quarter of last year, even with the entry into the labor market annually of about 800,000 graduates annually.

Even some of Al-Sisi’s supporters are whispering among themselves, expressing doubts about forcing private sector owners to be satisfied or compete with the army. The military investments depend on conscripts and are exempt from income or real estate tax and own most of the Egyptian land and its sole reference is the president. The army has always been the basis of the regime in Egypt since the coup against the monarchy in 1952. Still, its commercial interests expanded after the signing of the Camp David peace agreement with Israel in 1979, in which its role was redefined.

Analysts say that during the era of Al-Sisi, Egypt transformed from a police state to a state controlled by the army. They point out that Mubarak surrounded himself with military advisors before starting to get close to the business sector and liberalizing the economy. Al-Sisi did not do that.

The claws of the army reached all sectors of Egyptian life, including fishing, food and beverages, steel, energy, and cement. Even media suffers under the heavy hand of the army’s intelligence organs. A senior fellow at the Carnegie Center, Yazid Sayegh, estimates that the army-related entities generated $6-7 billion in revenue in 2019, stressing that the army will defend the continuation of these financial revenues, whatever the cost.