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A crippling economic crisis will cast a shadow on Egypt’s 2024 presidential elections, and time is running out for the regime to take meaningful steps.
The National Human Rights Strategy was developed in September 2021, and 2022 was recognised as the Year of Civil Society in Egypt. President Abdel Fattah al-Sisi called for political dialogue in April 2022 to discuss the country’s national priorities. This call was accompanied by the reinstatement of the Presidential Pardon Committee for political detainees.
In October 2022, the Egyptian Economic Conference was held to discuss public spending priorities and review economic policies implemented over the past eight years. A call for dialogue on the State Ownership Policy Document preceded the conference. This document redefines the state’s role in the economy, aiming to expand the private sector’s share in public investments to 65 per cent in three years.
The initiatives were well received by different stakeholders in Egypt, including politicians, businesspeople and commentators. They created a sense of a breakthrough in the political and human rights field and presented a change in the governance system of the past eight years to give voice to stakeholders in the formation of public policies through dialogue. It was also a chance to review the economic policies that led to high inflation, increased debt and the expansion of the military role in the economy. However, the results of these initiatives have hardly met minimum expectations.
This article discusses the motivations and contexts behind all these initiatives and why they ended up where they did. It also addresses whether or not they are still suitable to serve the strategies the regime may follow to ensure its success in the upcoming 2024 presidential elections.
What all these initiatives have in common is that they are the result of brewing problems that had accumulated internally and externally for the regime over time. I believe three primary problems pushed the regime to introduce these initiatives.
Firstly, there was external pressure to confront human rights violations. This pressure materialised in several ways, such as the US Congress withholding $130 million of Egypt’s $1.3 billion military aid. There were also several official statements – especially from the European parliament – and unofficial statements from local and international human rights organisations.
The launch of the National Human Rights Strategy and the announcement of the national dialogue initiative improved the regime’s international image. This was also done early enough in preparation for the climate change conference (COP27) in Sharm el-Sheikh in November 2022.
Over the past eight years, the regime has adopted a strategy inspired by the Egyptian film Laugh, So The Picture Looks Beautiful. The central focus of this strategy is on carefully crafting an image to achieve its purpose. In this case, this was done through a two-pronged approach.
The first was the first-ever meeting with US President Joe Biden at the Security and Development Summit in Saudi Arabia in July 2022. This provided international recognition of Sisi. Interestingly, warming up to Arab autocrats was not part of Biden’s election campaign promises.
This was followed by considerable international activity. Sisi met directly with German Chancellor Olaf Scholz and French President Emmanuel Macron. He also visited Serbia, and the Russian Foreign Minister visited Cairo. Throughout this all, the “crafting the shot” strategy was launched to combat criticism of human rights — as was demonstrated in Sisi’s press conference with the German chancellor.
The second prong aimed to satisfy the IMF’s requirements to achieve a level of stability to ensure economic growth and the flow of foreign investments.
The second problem was dealing with the repercussions of the economic crisis. The State Ownership Policy document was one of the IMF’s basic requirements in November 2022. The economic conference was used, as later became clear, to pass the agreement with the IMF. It was held about a month before the agreement was finalised and during the negotiations.
The third factor entails managing the “dialogue” and competition between the security and military agencies, referred to as “sovereign” institutions in Egypt. The presence of various voices representing these institutions is evident through multiple media platforms.
The institutions often have conflicting views on the benefits of engaging in dialogue, involving Islamists – particularly the Muslim Brotherhood – and pardoning political detainees. It appears that those leaning towards a hardliner stance prevailed, even if temporarily, when the Muslim Brotherhood were excluded from participation even when Diaa Rashwan, the dialogue’s coordinator, indicated some of their affiliates would attend.
Political detainees were also released in limited numbers, which prompted Kamal Abu Eita, a member of the Presidential Pardon Committee, to suspend his membership and openly declare that some state institutions were hindering their release during an interview with the al-Manassa website.
The rivalry between state agencies is not limited to the aforementioned issues but extends to the sale of state assets and the position of the military establishment in the economy. The agreement with the IMF mandated a fair competition framework for private and military-owned businesses. It also required the military to relinquish its position in the economy in favour of the private sector.
While this was being agreed upon, Sisi issued a presidential decree allocating lands on both sides of highways to the military. He also inaugurated a large food production factory owned by them. He also announced that a military-owned company had bought a five-star hotel in Sharm el-Sheikh from the private sector for $23 million.
Through all these initiatives, the government succeeded only in completing the agreement with the IMF, which resulted in limited financial support of $3 billion over four years, with the option to borrow from international markets at a high interest rate of 11.6 per cent.
The flotation of the Egyptian pound and adoption of a flexible exchange rate led to an over 30 per cent inflation rate, putting a burden on most Egyptians.
In January 2023, the State Ownership Policy Document was released, and the sale of 32 state-owned companies was announced. However, mystery enshrouds the sale of these companies. It is unclear whether they will be sold through the stock exchange or to an investor, if the sales will be in Egyptian pounds or US dollars, what percentage of each company will be sold, and when the sales will take place.
As a result, there have been many problems in completing the deals until now. For example, the Saudi sovereign wealth fund’s bid to buy the United Bank of Egypt stalled due to a disagreement over the valuation. Also, the percentage of Vodafone Egypt sold is in dispute between the Qatari sovereign wealth fund and the state-owned company that owns a stake of about 45% of Vodafone Egypt.
The National Dialogue has not yet begun, despite being announced almost a year ago. Apparently, the disagreement between Egyptian state agencies over the release of a number of detainees, which would allow the participation of some of the opposition civil factions, is what has postponed this National Dialogue, as one of its secretaries told me.
Last but not least, according to the estimates of several human rights organisations, data on new and released defendants at the State Security Prosecution shows that new cases were opened against 495 defendants in matters of state security between 1 January and 1 March 2023. On the other hand, only 124 defendants were released during the same period. This means that, since the beginning of 2023, the number of detained political prisoners pending criminal charges has increased by 371.
A comprehensive assessment of the human rights situation one year after the launch of the National Dialogue strategy can be found here.
Why Did The Initiatives Fail?
In my opinion, there are three factors responsible for the limited results. I will briefly reflect on the first two and elaborate on the third.
The first is stalling under pressure, and it has achieved its desired outcome. The National Dialogue and human rights strategy have covered many of the regime’s abuses. This is especially true since Egypt restored some of its strategic value to the US, through, for example, mediating in Gaza and its leadership of the multinational military task force for Red Sea security, Joint Task Force 153.
The second factor is that the “dialogue” between the state security apparatus and military has not yet been decisive towards a specific direction, whether in the sale of state-owned economic assets, releasing political prisoners to start the dialogue, or creating some political openness.
The third limiting factor involves the opposition, which is weak, fragmented, divided and polarised. It has failed to modernise its political discourse to keep up with the qualitative leaps Sisi’s regime has made during the years of his rule.
The opposition also lacks public trust and conviction that it can be a partner in governance, let alone a viable alternative.
The weakness of the opposition, the decline of political life and the weakening of civil society institutions will not only be paid for by the Sisi regime. The regime has eliminated the possibility of creating a strong political opposition with a strong popular base that would help stabilise its authoritarian rule in the face of social unrest.
This highlights the depth of the historical dilemma facing the regime and the Egyptian state now. The legitimacy of the current regime, from one perspective, is based on preventing a repetition of the 2011 uprising — which Sisi claims posed a threat to the Egyptian state.
However, the possibility of its repetition now has become more likely than ever before in light of an economic crisis that is difficult to solve. The danger is that, unlike in 2011, the unrest could be more explosive and less peaceful, and the possible result could be the collapse of the infrastructure of the most populous state in the region.
The 2024 Elections and the Future of the Regime
For the regime to regain some of its eroded legitimacy among Egyptians, it must follow up on its early initiatives with the seriousness they deserve and stop stalling. This represents a major challenge in the days to come. But without that, the regime’s predicament will worsen sharply, putting the upcoming elections in direct comparison to the 2010 People’s Assembly elections, which were one of the main preludes to the January revolution.
In the 2010 elections, the National Democratic Party (1981-2011) won all the seats. The Muslim Brotherhood, the only opposition party that participated, withdrew from the elections after the first two rounds.
However, genuinely addressing these issues may increase internal strife between the regime’s own agencies as well as regional tensions with its sponsors from the Gulf states.
Internally, the dispute regarding the provision of the necessary conditions for the National Dialogue’s start – most importantly, the release of political prisoners – has not yet been resolved. One of the dialogue secretaries told me that the agreed-upon results were changing the electoral law to be proportional rather than absolute as it is now, amending the pretrial detention law and preventing the blocking of some media websites.
These changes will not affect the nature of the political formula that produced Egypt’s current predicament, in which the regime and a narrow clique around it have complete political power to determine public policies and expenditure.
In this regard, we can add the dispute that may arise over the sale of military companies. Despite the offering of two out of 48 companies owned by the military institution, there has been no tangible progress in their sale so far.
The regime’s main problem, one it is unable to deal with, is the economic crisis. Despite exclusive decision-making powers and unprecedented international and regional support, it does not acknowledge or take any responsibility for the current state of affairs.
Instead, the regime’s narrative blames external factors such as the Covid-19 pandemic and the Ukrainian war or internal factors such as population growth. It does not address the foundational elements that produced this crisis. Moreover, it continues on the same path that created it. This means increasing debt, spending on infrastructure and prioritisation of real estate over other sectors.
Additionally, the Gulf states supporting Sisi have become increasingly nervous and demand serious reforms.
The regime began early preparations for the presidential elections by allowing the safe return of an opposition member from abroad, releasing several arrested key opposition members, increasing the salaries of state employees, raising pensions and increasing the number of social protection programmes. Finally, it reallowed the issuance of building permits in villages and cities after a three-year hiatus. This was done in an effort to appease Egyptians without any true changes in governance or the economy.
It remains possible for Sisi to exploit the many initiatives announced over a year ago to win the 2024 presidential elections, but can he stop the various players involved from obstructing them?
The opinions expressed in this publication are those of our writers. They do not purport to reflect the opinions or views of Fanack or its Board of Editors.