Egypt in the Aftermath of the Arab Spring

Egypt is one of the most populous countries in the Arab world and has played a central role in Middle Eastern politics for centuries. In the last several decades, decisions and policies made in Cairo have significantly impacted regional and international systems. In the 1950s and 1960s, President Gamal Abdel Nasser pioneered Arab nationalism and championed the non-aligned movement. His successor, President Anwar Al-Sadat, was the first Arab leader to recognise and make peace with Israel. The impacts of toppling President Hosni Mubarak, the rise and fall of the Muslim Brotherhood and the ascendancy of President Abdel Fatah Al-Sisi are yet to be assessed.

Whilst providing stability and a measure of economic progress, Mubarak’s rule was repressive, as illustrated by the continued implementation of emergency law since 1967.¹ Security forces became renowned for brutality, and corruption was widespread. Encouraged by the protests that overthrew the long-term leader of Tunisia in early January 2011, mounting popular anger resulted in huge anti-government demonstrations later that month which eventually ended President Mubarak’s long rule. However, the protesters’ hope for transition to democracy proved elusive. Post-revolutionary politics became polarised between the newly ascendant Islamist president and any other changes.

Following a year of interim military rule, the first presidential elections in half a century were won by Muslim Brotherhood candidate Mohamed Morsi in 2012.² But a year on, growing dismay at the government’s actions among many Egyptians – primarily secularists, liberals and Coptic Christians – resulted in another wave of protests. Siding with the demonstrators, the military ousted President Morsi and violently suppressed the protest sit-ins held by the Muslim Brotherhood in response.

The new authorities outlawed the Muslim Brotherhood, started drafting a new constitution and curbed media freedom. Army chief Abdel Fattah Al-Sisi won the presidency in the May 2014 elections. His rise has left some fearing an effective return to military rule. Indeed, one can argue that the military opposed former president Mubarak’s plan to have his son Gamal, a businessman with no military background, succeed him. This opposition opened the door for the Muslim Brotherhood to ascend to power. After successfully ending Gamal’s aspiration to succeed his father, the military returned to power and ousted the Muslim Brotherhood. In other words, one can argue, since the ousting of Morsi, the new political/military elites have sought to reconstruct the old political order.

The main objective of the Al-Sisi government is regime survival and avoiding a replay of the uprising that toppled Mubarak. In pursuing this objective, the Egyptian government has shown little tolerance for dissent and, indeed, has been more brutal than most of its predecessors. This brutality has galvanised and mobilised opposition forces. These forces include the Muslim Brotherhood, other Islamists and liberals, among others. Little effort has been made to reach out to these groups and initiate a political dialogue.

This article highlights some of the main security, economic and foreign policy challenges facing the Al-Sisi government. The analysis suggests that there is significant continuity of the Mubarak regime. In addition, the rising threat from the Islamic State (IS), Al-Qaeda and other Islamist militant groups is played at the hands of the Egyptian government. For decades, Egyptian military leaders have argued that if Western powers do not support their authoritarian regimes, the alternative is Islamic fundamentalism and religious extremism. Thus, the rise and fear of militant Islam has eroded Western pressure on the Egyptian government to reform and accommodate political opposition.

Security Challenges

Under Al-Sisi, Egypt faces complicated security threats. Externally, Cairo has few enemies. On the eastern front, Egypt has been at peace with Israel since the late 1970s. In the west, since the overthrow of Muammar Gaddafi in 2011, Libya has become a failed state. Sudan in the south periodically has some territorial disputes with Egypt, but these disputes are not likely to lead to military confrontation. Indeed, top officials from the two countries regularly visit each other’s capital cities and work together to deepen economic and political cooperation. In short, the Egyptian army is not likely to engage in a traditional war with any of its neighbours.

This absence of external threats does not mean that the Al-Sisi regime is secure. Internally, the authority faces tremendous challenges, mainly – but not exclusively – from different Islamist groups. Under Al-Sisi, the Egyptian government has shown little, if any, tolerance for political opposition. The Muslim Brotherhood was designated as a terrorist organisation and most of its leaders and followers have been arrested. This lack of political accommodation has forced the Islamists and other political forces to go underground. The state repression has weakened but not eliminated the opposition. The Muslim Brotherhood is down but not out. Repression can buy the regime some time but, in the long term, Islamists, liberals and others should be accommodated and represented in the political system. The Egyptian government has been fighting its opponents – mainly Islamists – in Cairo, Alexandria and other big cities, as well as in Sinai and in the western Sahara on the border with Libya. Indeed, concerned about the rise of Islamist militias in neighbouring Libya, Egypt, in cooperation with the United Arab Emirates (UAE), has launched several air strikes inside Libya.

To sum up, in 2015 domestic security in Egypt is relatively better than it was a few years ago. A genuine economic and political reform is likely to weaken the appeal of extremist ideologies and violence. The lack of such reform would further destabilise Egypt.

Economic Challenges

Egypt has significant economic resources. It has an excellent geostrategic location for trade, being at the crossroads of Europe, the Middle East and Africa, with important ports as well as the Suez Canal. Having made significant gas discoveries over the past decade, it holds the third-largest proven natural gas reserves in Africa (after Nigeria and Algeria) and the fifth- largest oil reserves (after Libya, Nigeria, Angola and Algeria). Despite these large reserves, the country is a net importer of oil and natural gas, and has suffered from a consistent electricity shortage.

In Africa, Egypt has the third-largest population (after Nigeria and Ethiopia), and the second-highest gross national income (after Nigeria), according to the World Bank. Egypt’s economy suffered during and after the 2011 revolution as the country experienced a sharp decline in tourism revenues and foreign direct investment, according to the International Monetary Fund (IMF). Annual gross domestic product (GDP) growth in Egypt dropped from 5.1% in 2010 to 1.8% in 2011 and still remains below the pre-revolution level, averaging 2.1% in 2013.⁴ Egypt’s economy has not fully recovered since the 2011 revolution. The government continues to fund energy subsidies, which cost US$26 billion in 2012,⁵ and this has contributed to the country’s high budget deficit and the inability of the Egyptian General Petroleum Corporation (EGPC), the country’s national oil company, to pay off its debt to foreign operators. EGPC owes foreign oil and gas operators billions of dollars, which has led foreign operators to delay their investments in existing and new oil and natural gas projects. EGPC accumulated US$6.3 billion in outstanding arrears to foreign oil and gas companies, of which US$1.5 billion was paid back in December 2013. The debt has since increased back to US$7.5 billion as of June 2014, and continues to grow.⁶

Oil shipments through the Suez Canal fell in 2009 to their lowest level in recent years. The decrease in oil flows shortly before the 2011 revolution reflected the collapse in the world oil market demand that began in the fourth quarter of 2008, followed by Organization of the Petroleum Exporting Countries (OPEC) production cuts (primarily from the Persian Gulf), which caused a sharp fall in the regional oil trade, starting in early 2009. Political and security upheavals since 2011 have not had a noticeable effect on oil transit flows through the Suez Canal. Over the past few years, oil flows through the Canal have increased, recovering from previous lower levels during the global economic downturn.

The country has struggled to distribute the benefits of growth among the large and expanding population, nearly half of which lives on less than US$2 per day. Growth has not translated into adequate jobs for the growing number of young people of working age. Unemployment is particularly high among young people with college degrees, who depend heavily on jobs in the public sector and the government. Moreover, the country’s infrastructure, housing and social services have not kept pace with the rapid rise in the population. Egypt has also faced external shocks that are not directly related to domestic instability, notably persistently high world food prices and the return of more than a million workers from Libya. It also had to contend with slow growth in European export markets and reduced employment opportunities for Egyptians in Europe. Finally, political and security uncertainties have dealt a heavy blow to tourism – a major national industry. According to Hisham Zazou, Minister of Tourism, 2013 was the worst year on record for Egypt’s tourism industry.

Given these gloomy economic conditions, in opposition to the Muslim Brotherhood and to prevent the economic and political collapse of the Al-Sisi government, Saudi Arabia, the UAE and Kuwait have given billions of dollars to Egypt. These funds have proven critical in maintaining the survival of the Egyptian government. However, it is doubtful that the Gulf’s financial assistance will generate economic development and prosperity. Indeed, with the collapse of oil prices and revenues, Gulf financial assistance is likely to be unsustainable. The bottom line is that serious reform strategies and commitments are needed.

The latest evaluation of the Egyptian economy by the IMF leaves room for optimism. The Fund recognises that during the prolonged political transition, growth fell and unemployment and poverty increased to high levels. Budget deficits grew and external pressures led to a fall in foreign exchange reserves. Meanwhile, the government recognises these challenges and is seeking to reduce the budget deficit to 8–8.5% of GDP and the budget sector debt to 80–85% of GDP by 2018/19, while at the same time increasing spending on health, education, research and development.⁷ In short, there is growing national consensus on the need for economic reform.

Foreign Policy Challenges

These key economic changes have taken place within rapidly evolving regional and global dynamics. The Arab world and the broader Middle East are fundamentally different from a few years ago. Equally important, Cairo’s relations with the United States (US) and other global powers have had to readjust to the emerging threats and opportunities.

In 2011, Ethiopia announced its plan to construct the first hydroelectric dam – the Grand Ethiopian Renaissance Dam (GERD) on the Blue Nile. The GERD is set to become the largest hydroelectric power plant in Africa, and is expected to be completed by 2015. It will not only break Egypt’s millennia-long monopoly over the Nile waters, but will also threaten its water supply. The Nile is Egypt’s only major source of fresh water and has served as the lifeline of the nation since the dawn of its civilization.⁸ The Egyptians firmly believe that their country is ‘a gift from the Nile’.

The utilisation of the Nile water is governed by three treaties: the 1902 treaty between Britain and Ethiopia, and the 1929 and 1959 treaties between Egypt and Sudan. These treaties have never been accepted by all nine countries that share the basin (Egypt, Sudan, Ethiopia, Kenya, Uganda, Rwanda, Democratic Republic of the Congo, Burundi and Tanzania). In 2010, Ethiopia, Kenya, Uganda, Rwanda and Tanzania signed a Cooperative Framework Agreement (CFA), which sought to replace previous colonial-era treaties based on the principle of equitable use. Egypt (and Sudan) oppose the CFA and claim that it infringes upon their historical rights.⁹ After unsuccessful efforts to convince or pressure Ethiopia not to build the dam, Egypt, Ethiopia and Sudan organised a group of experts to review and assess the potential effects of the dam. Eventually, Egypt had no other option but to work with Ethiopia. Cairo has limited – if any – leverage. It cannot reverse the process of building the dam through military or diplomatic means. This is perceived as a serious threat to the matter of national survival.

Remarkably, Egyptian-Israeli relations have witnessed little changes despite the major security and political upheavals in Cairo. Under the Mubarak regime, there was a great deal of pragmatic cooperation. For example, Egypt exported natural gas to Israel. The pipeline carrying Egyptian gas to Israel (and Jordan) was frequently attacked in 2011, and eventually Egypt stopped its gas exports to Israel.

This limited cooperation, mostly between the two governments, was largely resented by the Egyptian public. It is important to point out that this Egyptian-Israeli partnership benefited both countries strategically and financially. The two countries have been the largest recipients of US foreign aid, and the Mubarak regime was viewed favourably because it was a ‘reliable peace partner’. This close relation with Israel weakened Cairo’s claim of leadership in the Arab world and the Middle East.¹⁰ Rhetoric aside, the Morsi government maintained the working relationship with Israel while expressing more sympathy towards the Palestinians. The Al-Sisi regime has distanced itself from the Hamas administration in Gaza and maintained cooperative relations with Israel. And in late January 2015, Egyptian authorities designated Hamas as a terrorist organisation.

Finally, under Al-Sadat (1970–81), Egypt made a significant strategic shift from the Soviet camp to the American one. The signing of a peace treaty with Israel in 1979 has since consolidated this alliance with the US and Western powers. Concerns over abuse of human rights and lack of transparency had been regularly raised, but Washington, DC and Cairo maintained their close strategic cooperation. After brief hesitation, the US Obama administration supported the 2011 revolution that toppled Mubarak. Washington, DC accepted Morsi and kept pushing for political and economic reform. Officially, the Obama administration refused to call the transformation of power from Morsi to Al-Sisi a military coup.

Meanwhile, Egyptian authorities accused the US of intervening in Egypt’s domestic affairs and supporting the Muslim Brotherhood. Al-Sisi has distanced himself from Washington, DC and visited Moscow and Beijing. Despite this cooling down of the close relationship between Cairo and Washington, DC, the two sides share significant strategic interests in countering terrorism and regional instability. Washington, DC perceives Cairo as a key regional power and Egypt needs US political and economic backing.

To conclude, in the short term, it appears that the Al-Sisi regime has strengthened its grasp on power in Cairo. Domestic repression, economic assistance from Gulf states and lack of global pressure have all helped Al-Sisi to consolidate his regime. He has taken full advantage of the fear of Islamists. This combination of domestic, regional and global forces is likely to keep the regime in power for some time. In the long term, regime survival will depend on meeting the social, economic and political demands of the Egyptian people. The experience in Egyptian history and broader African history suggests that the military does not do a good job in policy. This does not leave much room for optimism.

Endnotes

1. Emergency law gives the government the right to detain suspects for a prolonged period of time without trial, and to try them before a military court instead of a civilian one.
2. The Muslim Brotherhood is one of the oldest and most popular Islamist movements in the Arab world. It was created in 1928 and has survived repression by several Egyptian governments. It generally advocates a bottom-up approach to Islamise society and rejects violence.
3. British Petroleum (2014) BP Statistical Review of World Energy. London: British Petroleum, pp. 6 and 20.
4. International Monetary Fund (2014) ‘IMF Staff Concludes 2014 Article IV Mission to Egypt’, Available at: <http://www.IMF.org/external/np/sec/pr/2014/pr14538.htm> [Accessed 1 February 2015].
5. Energy Information Administration (2014) ‘Country Analysis Brief: Egypt’, Available at: <http://www.eia.gov/countries/analysisbriefs/Egypt/egypt.pdf> [Accessed 14 August 2014].
6. Ibid.
7. International Monetary Fund (2014) op. cit.
8. Gebreluel, Goitom (2014) Ethiopia’s Grand Renaissance Dam: Ending Africa’s Oldest Geopolitical Rivalry? Washington Quarterly, 37 (2), pp. 25–37.
9. Egyptian State Information Service (2011) ‘The Situation After Signing the Framework Agreement’, Available at: <http://www.sis.gov.eg/en/templates/articles/tmparticles.aspx?artid=53981> [Accessed 24 December 2014].
10. Mabrouk, Mirette F. (2011) ‘Middle East Memo: Recalibrating a Relationship’, Available at: <http://www.brookings.edu/research/reports/2011/11/israel-egypt-mabrouk> [Accessed 24 December 2014].