Last month, Egyptian demonstrators took to the streets chanting, ‘We want to eat!’ to protest the government’s policy of decreasing the number of subsidised bread loaves each family can buy. The bread riots reflect a broader issue of class conflict in Egyptian society under President al-Sisi. Egypt’s pre-existing class inequality was exacerbated when Sisi’s regime was granted a loan $12 billion from the International Monetary Fund (IMF). The loan was provided to Egypt on the condition that the government balanced its budget deficit by following IMF guidelines. This entailed major trade-offs for state subsidies and public spending.
It may appear on the surface that Egyptian politics have normalised under Sisi’s administration. The revolutionary sentiment following the Arab Spring seems to have tapered off, and President al-Sisi is widely recognised as the legitimate Egyptian head of state. Donald Trump has invited Sisi to the White House— a reversal of the Obama administration’s foreign policy that was critical of Sisi’s violent suppression of the Muslim Brotherhood and other political opponents.
In reality, the Sisi administration faces a wide range of domestic issues that will likely pose significant challenges to the state’s legitimacy. Despite efforts to enact austerity measures and spur foreign investment through economic reform programs, the gains of Egypt’s private sector came to a standstill last March. ‘The reform program raises questions, not only about who might benefit (or not) from these reforms, but regarding how Sisi’s chosen economic course might affect the government’s political legitimacy in the coming years.’
Unlike previous military governments throughout Egypt’s history, the Sisi administration has uniquely limited the number of options to form a sustainable social coalition and resolve its economic shortcomings. This is for three primary reasons. First, the current government has few financial resources to utilise given the current debt crisis. Second, current policies to try to balance the budget will end up negatively impacting the Egyptian middle class rather than co-opting them. Third, the main proponents of Sisi’s economic policies are the military establishment. This segment of the population may not be a sufficient enough of a social coalition to back Sisi’s regime.
President al-Sisi, who was formerly chief of staff of the Egyptian Armed Forces, was responsible for the 2013 military coup that overthrew Morsi’s Muslim Brotherhood regime. Sisi used to be a high-level army officer and consequently has allowed the military establishment to dominate Egyptian politics. This is not new for the Egypt’s government, considering Nasser set a precedent for leaders with a military background to rule the country.
President al-Sisi is exploiting the IMF agreement by only selectively following the conditions for the loan. For example, while the military establishment is willing to cut subsidies for the lower class it is simultaneously expanding its own economic sectors. Rather than assist private industries, which was the intent of the IMF guidelines, the Egyptian military has been undercutting their opportunities. The Egyptian military is cutting public spending for social welfare programs, but providing exemptions for itself in the realm of arms procurement. Last March, Egypt made a deal with France to purchase $2 billion worth of arms. The Egyptian state did not pay for this arrangement from its commercial revenues, but instead took out a loan from French banks.
The army now has two primary roles in Egypt: not only is it managing most sectors of the economy, it is also leading the country. ‘Generals in uniform manage monopolistic conglomerates of unaudited, untaxed enterprises, such as commercial farms, food packaging mills, construction companies, pharmaceutical plants, gas stations, fisheries, and cement and steel factories.’ Furthermore, many former army officials run central government positions that involve economic planning. They oversee roles such as head of agricultural development, the undersecretary of the housing minister, and the minister of foodstuff supply. An article in the new legislation preserved the law former President Mubarak had which granted him the power to appoint top government leaders. President al-Sisi made it a lot easier to place loyalists in key government positions, functionally legalising nepotism.
For the sake of domestic legitimacy, the Egyptian military has made a habit out of creating economic disasters while simultaneously branding itself as the hero of these crises. For example, last summer Egyptian mothers from lower-income backgrounds were protesting when the state failed to provide subsidised baby formulas. The military establishment acted as the saviour by importing cans of the formula and then selling them at double their usual price. Similarly, government-owned vendors started running out of sugar and the state was no longer able to afford sugar subsidies. The sugar shortage led to some violent disputes. Eventually the military seized sugar from private vendors and started selling it on its own to save face.
Sisi made a concerted effort to shrink the government bureaucracy, and overhaul the bloated budget in accordance with the IMF guidelines. He reduced the number of state bureaucracy positions and lowered the salaries of government employees. Additionally, he devalued the Egyptian pound, which functionally halved the salary of state bureaucracy workers. Following the policy to devalue the currency, Sisi’s regime also made drug prices 50 per cent more expensive and nearly doubled gas prices.
The bread riots that took place are reminiscent of similar protests that took place against President Anwar Sadat’s regime in 1977. When Sadat attempted to follow IMF guidelines and cut government spending on food subsidies, lower class Egyptians immediately mobilised to form riots against the IMF. Sadat promptly ended his policy and blamed the social distress on communists in order to maintain legitimacy.
President al-Sisi’s regime is facing a similar threat, although in this era he will have no communists to scapegoat. Furthermore, the IMF is harder to blame this time around considering it has learned from its historical mistakes and explicitly instructed the Egyptian state to reinforce ‘social security nets’ for any disadvantaged classes that would face the adverse impact of economic reform.
Sisi has taken measures in an effort to suppress Egyptian uprisings like the one that occurred during the 2011 Arab Spring. He quelled political opposition parties, co-opted trade unions into his regime, and detained political activists. The recent bread riots however show that Sisi and his military establishment cannot entirely silence the voice of the middle and lower classes that are facing food and medicine shortages from his economic policies. The apparent stability of Sisi’s military stranglehold on Egyptian politics may prove to be far from sustainable.
In addition to Sisi’s economic issues, ISIS recently claimed responsibility for a major terrorist attack in a Coptic church that killed 45 Egyptians. Much of Sisi’s justification for expanding the military was to fight against radical Islamists. However, last Sunday’s bombing may indicate to the public that ISIS has breached the Egyptian state and can now conduct terrorist attacks in Egypt’s territory. It has sent a signal to Egyptians that Sisi has failed to provide adequate internal security.
In order to maintain legitimacy in the long run, the Egyptian government will have to allow political actors outside of the military to play a role in political and economic policy-making. However, after the terrorist attacks on two Coptic churches, Sisi declared a three-month state of emergency. The state of emergency grants police officers the authority to make arrests and search houses without any warrants. Sisi appears determined to maintain the status quo Egyptian military state regardless of the consequent social unrest.