Seven weeks in, the Middle East continues to practice the art of neutrality over the war in Ukraine, unwilling to take sides openly in a conflict many do not consider to be their war.
Yet the war is still affecting countries in the region, particularly those reliant on relations with or imports from Russia. None more so than Egypt, the Middle East’s biggest country, which is facing a combined food security and economic crisis, exacerbated by the war.
Egypt has suffered two painful blows from the conflict. The country is the world’s largest importer of wheat, getting 80% of its supply from Russia and Ukraine, and is preparing for possible severe disruption. Alongside that uncertainty are prices; Egypt provides subsidized bread for about two-thirds of its population, or around 70 million people. That is an enormous expenditure.
At the same time, the country’s tourism, a major part of its economy and already hit by the global pandemic, is facing the possibility of losing visitors from Russia and Ukraine – its two largest tourism markets. By one estimate, tourists from the two countries represent 40% of all visitors to the country’s beaches.
Taken together, the possibility of both these stressors has pushed the Egyptian government to act, raising interest rates and devaluing the Egyptian pound – meaning that the tens of millions of Egyptians with savings in the country’s banks saw their money slashed by 15% overnight. In addition, Cairo is seeking aid and investments from Arab countries in the Persian Gulf region and the International Monetary Fund.
In the short term, Egypt, with considerable pain to ordinary Egyptians, will probably weather these economic trials. But the longer-term impact of the war in Ukraine will be to entrench the central role Egypt’s army plays in the national economy. A change a decade in the making will accelerate because of a war far from home.
The Egyptian military has always played a part in the economy, but under Hosni Mubarak – himself once a member of the air force – the role was relatively limited. After the military took power in 2013, that involvement has steadily expanded. Abdel Fattah el-Sisi, a former officer, inherited a weak state, one hollowed out by decades of one-person rule and the chaotic post-revolutionary period.
In response, he has leaned on the military of which he was part, using it to deliver services and manage projects that should have been handled by other parts of the government. The end result – after nearly a decade of this – has been to entrench the power of the military to unprecedented levels.
Now, the army controls an estimated 25% of all government spending, through a combination of managing public goods like housing, and services like food.
Military companies are involved in the manufacture of food and electronics, in the management of ports and industrial zones, and in the supply of pharmaceuticals; and act as gatekeepers for decisions on planning and telecommunications. There are few parts of the economy that the army does not now have a hand in.
This inflated role for the army weakens the state, its institutions and the private sector. Private companies, unable to compete with the army, are crowded out of running, for example, major infrastructure projects. Without that experience inside the country, they are unable to compete with their peers abroad.
Instead of developing government institutional knowledge of running industries, ministries play a supporting role to the secretive army, which further sidelines expertise that ought to properly exist within government.
The current crisis will only speed up this process. A rapid increase in food prices caused by the Ukraine war should make Egypt recognize it needs to prioritize its own food security. But it is how this is done that will entrench the army’s power.
Under Sisi, the Egyptian government has tended to see the army as the answer to every problem, and this latest crisis is no exception. The army is preparing, distributing and selling boxes of basic foods – rice, pasta, meat – around the country, for – by presidential decree – half the going rate. That means the Egyptian state is subsidizing millions of meals, in addition to subsidizing bread.
But that is a temporary measure; bigger changes will follow. One option would be to increase the amount of wheat grown domestically, something the cabinet said it would do at the beginning of March. The farms that plant these crops will almost certainly be run by the army.
Another option would be for the army to take on more of a role in allocation and distribution, another area where inefficiencies are expensive. Again, such an outsize role for the army only entrenches its privileges, and means other companies have no way of competing.
For the moment, creating an outsized role for the army works for both the institution and the presidency. But Egypt functions best when the various parts of the state and the private sector balance out each other’s power; tilting too much toward one group is dangerous in the long run.
In an unexpected way, Vladimir Putin’s war abroad is actually helping the Egyptian army thrive at home.
This article was provided by Syndication Bureau, which holds copyright.
Faisal Al Yafai is currently writing a book on the Middle East and is a frequent commentator on international TV news networks. He has worked for news outlets such as The Guardian and the BBC, and reported on the Middle East, Eastern Europe, Asia and Africa.