Egypt Trip Report: Part IV

Before 11
February, before the fall of Mubarak, before the crowds in central Cairo
torched the headquarters of the ruling party (watching it burn for for three
glorious days as they protested in the square below), the state in Egypt stood
on five pillars: the presidency, the military, the ruling party, industry, and
the security services of the interior ministry.

Today, only
three of those pillars remain, and one of them -- the security services of the interior ministry -- will likely emerge from these events very much reformed.

One of the more
striking things about the situation in Egypt today is how opaque the role of
the military remains going forward. On the one hand, having worked on
Afghanistan for the past two years, it felt great to be back in Egypt: I could
walk around and travel on my own, I could speak to pretty much everyone I
wanted to speak with, and my Arabic still works to the degree that I could have
frank and light-hearted conversations with everyone from military
policemen standing on the corner to the guy in the coffee shop smoking shisha
with nothing better to do on a Saturday afternoon than ask the opinion of a
Westerner sitting next to him tapping away on an iPad -- who turned his
questions around on him.

On the other
hand, I took two trips to Saudi Arabia last year, and one of the things that
struck me about both trips was that no matter which "senior" figures
and haut fonctionnaires I spoke with, it was clear that the real power was
centralized to a high degree in just a few people. What those people -- the
king and his advisers -- were thinking about Iran, Israel, and the future of
the U.S. dollar? Anyone's guess. And I get the same feeling about Egypt. No one
I speak with feels they have a firm handle on the thinking of the high council
leading the military -- and thus leading Egypt. When I left, in fact,
journalists were still looking through pictures published in the Egyptian
newspapers trying to find out who, exactly, was even on the council.

Another question
concerns tensions between the military and the young "reformers"
surrounding Gamal Mubarak. On the one hand, the military has been widely reported
as having been against the idea of hereditary succession as a matter of
principle, which is all fine and good, and that may have contributed to
tensions between the military and Mubarak the Younger's supporters prior to the
fall of Hosni Mubarak. But the military might also have been threatened by the
"liberalization" of large sections of the Egyptian economy. (I put
the words "reformers" and "liberalization" in scare quotes
because the transition from a command economy to crony capitalism is hardly the
kind of economic model that folks from Shubra and Imbaba, never mind Upper
Egypt, can get behind.) To what degree did the liberalization policies of Gamal
Mubarak and his technocrat buddies clash with the economic interests of the
Egyptian military?

On the surface,
Egypt doesn't have too bad an economy. Egypt's economy grew by over 7% in both
2007 and 2008, outpacing both the world economy as well as the great MENA
region.* Egypt weathered the financial crisis comparitively well. Egypt has a positive current account balance, and both public debt and interest on that debt is projected to decline. But income disparity is a huge problem. Egypt looks different in tony Maadi or Zamalek than it does in Suez or the aforementioned Imbaba. And the folks at the low end of the income spectrum are the ones to be hardest hit by rising prices. (Consumer prices jumped over 10% last year -- higher than any other country in the Arabic-speaking world -- and continue to rise.) 

Egypt's salvation in large part depends on the development of a strong private sector, which even under the best circumstances would take time for all the reasons outlined in this recent article as well as this article from this morning's Post.

One question we should be asking, though, is the degree to which the Egyptian military will resist that development.

*All of my statistics derive from the Economist Intelligence Unit's May 2010 country report. (Yes, this is the same country survey which argued, "There is little threat of the regime being destabilised by a public uprising, despite a pervasive feeling of disaffection among the population.")